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Mongolia struggles to keep freight on track
Real estate news By Jonathan Dow
Oct 15, 2007
Mongolia has almost no paved roads and a creaking rail network with a classic bottleneck on the border with China where the change-of-gauge cannot handle the rising volume of freight. But it is situated right between Asia and Europe - a position it has big plans to capitalise on. At the moment these plans are hampered by the state of the railway - and by the fact that this is the only way freight from China can transit Mongolia or reach the capital Ulan Bator. Freight is often delayed at the border and Mongolian railway cannot say how long the wait will be, said Bat-Erdene G, sales manager at Tuushin, which in 1991 was the first private transport company to be established in Mongolia.
The Chinese are building a paved road from the Mongolian capital to the Chinese border town of Erlian but it is not scheduled to be finished until October next year. Bat-Erdene said the delays have made people talk of switching to importing via the northern border with Russia but this is expensive. The problems at the border with China have actually helped push Tuushin's Mongolian Vector service, which has containers leave Brest in Belarus on the 15th and arrive in Ulon Bator on the 30th of each month. The service, which has operated since 2001 and carries 400-500 containers each year, has been really successful because of the southern border crowding, said Bat-Erdene. The company now has a service from Hohhot, in China's province of Inner Mongolia, to Frankfurt, Germany in 18 days.
As the short-cut between China and Russia, Mongolia's potential as a transit country is obvious, said Otgonbayer Sandagdorj, an economist working on a USAID-funded project to reform policy and increase Mongolia's competitiveness. Already 70 percent of the rail freight in Mongolia is transit, he said. And they want to increase this by encouraging freight forwarders to choose the more expensive option of sending freight between China and Europe overland over the slower sea route. Kazakhstan is the other overland option and at the moment wins business, despite being less direct, because it has better infrastructure, Sandagdorj said.
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