Across Siberia

 

It has been confirmed that Samsung Electronics is in discussions with Russia to transport its products via combined railways such as a railroad from Dalian, China, the Mongolian Railroad and the Trans-Siberian Railroad (TSR). This idea is quite meaningful in that big Korean companies led by Samsung will develop a new northern logistics route.

When using a ship, it takes 48 days for a ship to leaves Korea and goes to St. Petersburg in Russia via the Suez Canal. But TSR can halve the transportation time and enable Samsung Electronics to deliver its products faster and save the tech giant logistics costs. In a broad sense, this plan is in touch with the “Eurasia Initiative” that the Park Geun-hye administration is pushing for and can become an opportunity for Korea to take the lead in the Eurasian continental economy.

According to the Samsung Group on Nov. 4, it was confirmed that Samsung Electronics had an eleventh-hour discussion about this plan with the Korean government and Russia. It is said that Samsung is pondering a plan to transport its products from Dalian in the south of the Liaodong Peninsula to Mongolia to Belarus between Russia and Poland via the TSR.

At the moment, Samsung Electronics is producing TVs and washing machines in its Kaluga factory near Moscow. Its smartphones and major home electronics products are being exported to Russia.

The new logistics plan is a tool to supply its products to the CIS, including Russia. Samsung products produced not only in Korea but also in China can be transported to Russia via this route. In particular, this plan can move products to Poland, an eastern gateway of Europe, giving Samsung a wider selection about Samsung products’ destinations.

A future possibility is that Korea can export its goods by connecting the Trans-Korea Railway to the RSR.

Last year, Samsung posted 20.8982 trillion won (US$18.3890 billion) in sales in Europe, including Russia.

The new route outweighs current routes in terms of cost competitiveness. The logistics industry assumes that the TSR service is 10 percent cheaper than the sea route from Busan Port to Russia, thanks to a weak Russian ruble.

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