Concor to take INSTC route for Russia to save transit time and cash

In a move that will bring down the transit time between India and Russia from around 50 days to 25 days, Container Corporation of India (Concor) will start using the International North-South Transport Corridor (INSTC) this year. This is expected to cut transportation costs by around 30 per cent.

“The route will be operational for Concor within three months and importers and exporters from both countries will be able to make use of it. There are a lot of goods, including pharmaceuticals, vegetables like onion, spices and tea from India that have huge demand in Russia,” said V Kalyana Rama, chairman and managing director (CMD) of Concor.

Concor and Russian Railways container transportation subsidiary RZD Logistics JSC on Tuesday signed a service agreement to transport cargo between the two countries using a single invoice. A memorandum of understanding in this regard was signed last year.

INSTC is a 7,200 km-long multi-mode network of ship, rail and road routes covering 13 countries — spanning India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, and other Central Asian and European countries. 

An official of RZD said the United States’s sanctions on Iran would not be applicable for the route and the concerns of banks and insurers had been addressed by the countries involved. “We have taken care of the concerns of our Indian clients and bankers. Transit time through INSTC will be half the traditional route,” the RZD official added.

An Indian official, however, said the INSTC route through the Chabahar Port and Bandar Abbas still has some cost and transit issues. India is operating the Chabahar Port in Iran. According to estimates, the cost of transportation right now is $4,900 per TEU (twenty-foot equivalent unit) and will become $3,400 per TEU with the new route. 

The distance on the current route through the Suez Canal to St Petersburg is 10,000 nautical miles. India was also exploring a separate maritime route connecting the two countries from Vladivostok, which takes around 20 days.

A senior official from the ministry of external affairs told Business Standard that several plans are being worked out to bring down the trading time between two countries and possibility of using the Vladivostok route was discussed during Prime Minister Narendra Modi’s visit to Russia in September.