Sanctions have ‘destroyed virtually all logistics’ in Russia, transport minister admits

A Kremlin official admitted that Western sanctions hampered the functioning of the Russian economy.

Transport minister Vitaly Savelyev told state media that punitive measures had “virtually destroyed” Russia’s trade logistics, the Kremlin’s transport minister told Interfax.

He said Russia was forced to consider alternative trade routes, including the north-south corridor that runs from Moscow through Central Asia to India.

“The sanctions imposed on the Russian Federation today have destroyed almost all logistics in our country. And we are forced to look for new logistics corridors,” said Mr. Savelyev.

Much of Russian trade on the standard route from St. Petersburg through Europe and through the Suez Canal has been cut off by trade embargoes from Western countries.

The three largest shipping companies in the world, MSC, Maersk and CMA CGM, are all banned from trading with Russia due to sanctions.

Savelyev said Russia could turn to the north-south corridor to ease its trade problems. The corridor is a transit route for moving freight between India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia and Europe – by ship, rail and road.

Russia could benefit from the Caspian Sea ports of Astrakhan, Olya and Makhachkala, Savelyev said, though he warned the ports may not have the capacity to handle the trade volume previously shipped on the standard route.

Asia has become increasingly important to the Russian market in recent years as western countries hit Moscow with successive rounds of sanctions against its economy.

The total value of imports and exports with China increased by more than 50 percent from 2014 — when Russia was sanctioned for annexing Crimea — to 2021.

China and India, the 1st and 3rd largest Asian economies, have refused to cut ties with Russia over the invading Ukraine. India plans a $2 billion increase in shipments of goods to Russia, according to Bloomberg.

Russia negotiated sanctions with the west earlier this week. The Russian blockade of Ukrainian ports is forcing food prices on the global market as one of the world’s largest grain exporters cannot reach foreign markets.

The UN has warned that the world is facing an unprecedented crisis with widespread hunger in poorer countries and the risk of political unrest even in richer countries as food supplies dwindle.

Russia said it would only end the blockade of Ukrainian ports in exchange for sanctions relief. In response, the US said Russia was using food shortages to hold the world hostage.

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