Could improved railway connectivity to Russia be the answer to the Tianjin container crisis?Economy
Ulaanbaatar /MONTSAME/. EuroChamber’s second
webinar on “Logistics & Connectivity with Europe” was held on June 29.
2021. Now, a regular event, the webinar aimed to expose, analyse and provide
potential solutions for challenges to trading with Europe.
For the past several months Mongolia’s trade has been strongly affected by delays in container shipments from China. This includes transit goods originating in Europe. The crisis culminated with attempts by Cosco to appoint an exclusive agent to represent its business interests in Mongolia. Cosco, the Chinese government-controlled transportation & logistics conglomerate controls all the sea-freight delivered by railway throughout China, including the one to Mongolia. Prior to the appointment attempts of an exclusive agent to Mongolia, local freight forwarders were able to receive containers directly from Cosco. Now they will have to go through the locally appointed exclusive agent. The result is increased delivery and clearance times, plus extra costs that can be already felt by Mongolian manufacturers and the general public.
Preliminary results of a joint survey conducted at the end of June 2021 by the EuroChamber Mongolia and the Federation of the Mongolian Freight Forwarders show 14.3% of the participants experienced revenue decrease of 10-25%, compared to the previous year.
The results also show that international shipments incurred significant delays, with 20% of the participants experiencing schedule delays of 10% or less, while a 13.3% of saying they experienced far more significant delays of 50-75%. The complete survey results were made public on July 8 on the EuroChamber’s website at www.eurochamber.mn.
Addressing the "Tianjin Container Crisis" issue in a webinar organised by the EuroChamber, Orgil Gansukh, Chairman of the Board at Mongolian Freight Forwarders Federation said: “We need to address our underlying challenges by diversifying our transport partners and channels. For example, if we look at our sea freight-forwarder, we are mainly partnering with Cosco, perhaps the EU Delegation and countries can advise/involve on introducing other viable options of service providers. More importantly, the unified logistics terminal concept needs urgent and focused attention from all of us. Businesses need to identify capital raising while the Government needs to collaborate for a long-term mutual goal.”
According to Batbold Sandagdorj, State Secretary in the Ministry of Road, Transportation Development, one way to diversify freight forwarding is to develop the Mongolian railway transport system and its connections to Russia. Batbold said: “To increase a better flow of import and export, the Government is proposing to further develop railways in parallel to conventional www.eurochamber.mn +976 9525-2050 / 9909-1557 Page 2 of 3 road transportation. Feasibility study of Western part of the country’s vertical railway is being developed and several other lines connecting both to the north and south have been identified or planned.”
The importance of reliable connections to Europe has been also highlighted by H.E. Mr Traian Hristea, Ambassador of the European Union to Mongolia: “Finding alternative methods, routes and modes for connecting Mongolia with Europe has gotten even more important as COVID-19 continues to exert its influence on the economic activity everywhere in the world. Asia is a significant economic partner to Europe, representing 35% of the EU's exports and 45% of the EU's imports and the volumes have been growing for a number of years. As a reflection on this global change, in 2018 the EU adopted its Connectivity Strategy. Through this strategy the EU is promoting a new approach to enhance the connections between our regions in terms of quality and scale with the overall aim to create transport links, energy and digital networks and human connections Sustainable Connectivity can help unlock growth, shared prosperity and ensure a cleaner environment”.
As a result of the webinar and on behalf of its members, the EuroChamber Mongolia sent an official request to the MRTD. The letter calls, among others, for the Mongolian Government to improve the regulatory framework and ease the restrictions imposed due to the COVID-19 pandemic. All this in the hope to enable a more efficient cargo flow across the borders. The EuroChamber’s CEO, Tomas Bravenec says that he is expecting that the government will take such measures after Naadam Holidays, especially at the northern border.
This year’s speakers were:
- Mr. Tomas Bravenec, Executive Director of EuroChamber Mongolia;
- His Excellency Mr. Traian Laurentiu Hristea, Ambassador of the European Union to Mongolia;
- Mr. Batbold Sandagdorj, Secretary of State of Ministry of Road & Transport Development;
- Ms. Unurjargal D, Regional Cooperation Officer, Mr. Anand G, Transportation Officer of ADB Mongolia office; and
- Mr. Orgil Gansukh, Chairman of the Board of Federation of Mongolian Freight Forwarders.
About the EuroChamber Mongolia
Leading European banks and companies active in Mongolia founded the EuroChamber in the second half of 2019. The Chamber enjoys strong support and cooperation with the EU Delegation. The founding member companies are: EBRD, ING Bank, MSM Group, Termigas Impianti Tecnologici and ARI Net Associates.
EuroChamber concluded a close Cooperation agreement with DMUV, FMCCI and BBG, thus now representing a united voice of European business in Mongolia and over 175 members. The mission of EuroChamber is to contribute to the improvement of business and investment climate in Mongolia through targeted advocacy and policy dialogue with the Government and other stakeholders. For further information about the EuroChamber and webinar, including media requests please call Communications Offcer at 9525-2050 number.