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Russia’s FESCO transport company is launching intermodal container transport to landlocked Laos in southeast Asia, via the Vietnamese port of Da Nang as part of its efforts to expand logistics operations into the region. The transit time for deliveries between Russia and Laos via Vladivostok and Da Nang is about 35 days.
Loading and dispatch of containers takes place in ten major locations in Laos. From there, cargo will be shipped by road to Da Nang within 24 hours and packed into feeder vessels bound for Ho Chi Minh in Vietnam or China’s ports. The containers are then sent via regular shipping lines to Vladivostok, Novorossiysk and St. Petersburg. When exporting to Laos, the same routes will be used in reverse.
Russia-Laos bilateral trade is small at about US$500,000 however the two countries have long diplomatic ties going back to the Cold War era. Laos is landlocked, hence trade volumes are small. Laos is a member of ASEAN, which gives it free trade access to Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. It also has FTA with China and India. Laos has a population just under 8 million, and a GDP of US$74 billion.
Laos does pick up some manufacturing investments from neighbouring countries such as Thailand and China, and it also has a developing tourism industry. What trade there is, is typically energy produce from Russia and agricultural products such as fruits from Laos. The country is also quite mountainous which has created additional connectivity issues.
Last year, the Russian Minister of Transport, Roman Starovoit held discussions with a Laos delegation attending the BRICS conference in Kazan. There may be opportunities for Russian Railways to provide rolling stock to the country, which is looking to improve railway connections through to China.
Bilateral Central Bank discussions also took place, and imply the potential use of Russian MIR cards in Laos, or to formalise Ruble-Kip trading and move to sovereign currency use in trade relations.
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