Tracks Disrupted by Forest Encroachment

Rewritten Article:

Forestry product transportation via railways in Russia showed a growth spurt at the start of the year, but it wasn't all sunshine and roses. While domestically, the market held steady despite logistical issues stemming from the freakishly warm winter, export growth was primarily driven by last year's dismal performance. Prices stayed high due to wood scarcity, but some regions struggled with unprofitability due to low prices and hefty transportation costs.

According to "TransLes" analytical center, shipments of timber and sawn timber by rail, including container transport, surged by 3% year-on-year to a whopping 7.7 million tons in Q1 of 2025. Domestic wood transportation for processing rose by 4% to 4.8 million tons, despite transportation hurdles due to soggy roads in many regions. Experts attribute the average 10% increase in prices for sawn timber and veneer logs to the winter's wood scarcity.

Export of sawn timber jumped by 5% to 2.2 million tons, while roundwood saw a 13% drop to a mere 0.4 million tons. In total, the loading of these cargoes increased by 1%, but "TransLes" points out that this climb is largely due to the low base of the previous year. Compared to Q1 of 2023, export loading actually dropped by 8%.

Alexander Tsybinskiy, the Governor of the Arkhangelsk region, expressed concerns over the pulp and paper industry's support measures during a meeting in April. He stated that some effective measures from 2023 either lay abandoned or have significantly reduced.

China remained the primary consumer of forest cargo, snapping up 1.6 million tons of sawn timber and 0.4 million tons of roundwood from Russia in the first quarter - a small dip of 0.4% and 10%, respectively, compared to the previous year. The reason? Chinese consumers tend to prefer unprocessed wood, limiting Russia's market share.

JSC Russian Railways reported that the transportation of forestry cargo rose by 0.1% to 7 million tons in Q1, with forestry cargo transportation skyrocketing by 6.3% to 3.6 million tons in March alone. Export traffic saw a 1.5% increase to 1.3 million tons, while domestic traffic jumped by 8.4% to 2.1 million tons. Container transportation of forestry cargo in March swelled by 0.4% year-on-year to 51.4 thousand TEU.

The slowdown in real estate markets in key countries like China, the US, Europe, and Japan contributed to a general decrease in demand for forestry products. This decline has resulted in increased competition among supplying countries for the coveted Chinese market. Analysts suggest that US tariffs might impact demand in China as well.

Quotes for forestry products on both domestic and export routes remain low, with some companies in the northwest facing losses on exports. Water transport expenses have increased by 20% in the Arkhangelsk region, and navigation on some rivers is restricted. Additionally, rail transportation expenses have spiked, and there's a shortage of rolling stock in the market.

The Arkhangelsk region's struggle to secure priority for forestry products in railway transportation

Regional enterprises switched to railway transport, resulting in extended container turnover times and delayed revenue. Alexander Dyatlov, the head of the committee of the Arkhangelsk Legislative Assembly, suggests that subsidies for maritime transport from the ports of the northwest and increased compensation for railway transport expenses are necessary for improvement. The head of the Ministry of Industry and Trade, Anton Alikhanov, acknowledged the difficulty of providing additional subsidies for transport expenses during a meeting on the development of the forestry industry in April.

Segezha Group stated that the northwest direction is becoming increasingly significant due to the constraints of the eastern polygon and the unstable throughput capacity of southern routes. The company expects growth compared to 2024, but their success hinges on various factors such as the economic situation, construction season, opening of new markets, and other uncertainties.

Sources: Olga Mordyushenko, Natalia Skorlygina

Enrichment Insights:

Potential challenges faced by the Arkhangelsk region in securing priority for forestry products transportation by rail include infrastructure limitations, competition with other commodities, and regulatory/logistical issues.
Measures to address these challenges could involve infrastructure upgrades, specialized railway services, policy support, and enhanced collaboration and coordination between stakeholders.

The Arkhangelsk region faces challenges in securing priority for forestry products in railway transportation, leading to extended container turnover times and delayed revenue.
Alexander Dyatlov, head of the committee of the Arkhangelsk Legislative Assembly, proposes subsidies for maritime transport from the ports of the northwest and increased compensation for railway transport expenses as potential solutions.
Anton Alikhanov, head of the Ministry of Industry and Trade, acknowledges the difficulties in providing additional subsidies for transport expenses during a meeting on the development of the forestry industry.
By 2025, forestry product transportation via railways in the Arkhangelsk region might benefit from enforced priority, improved infrastructure, specialized railway services, and policy support to navigate regulatory and logistical issues, contributing to a more stable and profitable environmental-science and sports industry in the region.