Russian Port of Ust-Luga Emerges as a Strategic Alternative to the Transport Sectors of Baltic States

On October 22, one of Russia’s largest railway rolling stock operators, Novotrans Group, made its first rail-ferry-rail transshipment to Poland, delivering coal via a ferry dispatched from the Ust-Luga port, located in the region of Leningrad.  The delivery was characterized as a symbolic victory in Russia’s efforts to develop alternative transport infrastructure to that of the Baltic states, which Russian companies have traditionally utilized significantly for delivering cargo to Europe and beyond.  Russian media envisioned this same capability being applied to other cargo, such as fertilizers and ore.

The success of Ust-Luga in serving this purpose both diminishes Russian dependency on the ports of Baltic states that have aligned themselves with NATO and the EU and provides leverage for Moscow over these countries whose important transport sectors have come to depend on Russian business.  Over the past two decades, the Kremlin has invested heavily in the port, at least in part with these strategic objectives in mind.

Moscow has even encouraged Belarus to divert some of its transport needs to Ust-Luga, away from Baltic state infrastructure.  The Director of the Ust-Luga complex, Denis Mechev, recently argued that cargo exports to Europe using the Ust-Luga — Baltiysk (Kaliningrad) route is a preferred alternative to the overland path through Belarus and Lithuania.  Russia has seemingly had better success persuading Minsk of this since Lithuania, Latvia, and Estonia imposed travel bans on Belarusian President Alexander Lukashenko and 29 other officials following election fraud accusations in August, after which the Belarusian leader threatened to change course on this issue.  More than 30 percent of the cargo turnover at Lithuania’s Port of Klaipeda is reportedly Belarusian (primarily oil and fertilizers).

The leverage that Ust-Luga could offer Moscow and Minsk has potentially broader implications.  One example is the bargaining chip it could offer to Russia in its efforts to persuade the Baltic states to purchase nuclear power from the new Astravyets nuclear power plant (NPP).  Lithuania has already preemptively banned all power imports from the NPP, citing concerns about safety and national security.  The NPP has long been accused of having strategic motivations, built close to the Lithuanian border and generating significant excess capacity that, by design, would need to be exported.  The Baltic states, however, being the natural consumers of these power supplies, have been trying to disconnect from the Russian power grid, cut its dependency on Russian power supplies, and sync up with EU power infrastructure as part of its strategic hedge against threats emanating from Russia in the economic domain.  Diverting cargo shipments from Lithuania (and other Baltic states) could be a means of persuading them to reconsider such policies.

Since June 2019, Novotrans has been the principal operator of the road-rail-ferry complex at the Ust-Luga port and has invested significantly in a new universal terminal at the facility.  In April, using this facility, the company exported grain from Kazakhstan to Belgium for the first time.