Samsung Electronics and Russian Railways have signed in Moscow a memorandum of understanding for collaboration on the Trans-Siberian Railway (TSR) Project.
Samsug will shift from marine transportation to rail transportation via TSR when transporting materials and end products from Korea or China to Eastern Europe.
Using TSR will allow Samsung to utilize the routes to production and sales sites in Russia and Europe, enabling a reduction in lead time and logistical costs.
Since January 2016, Samsung has been delivering the components and materials from China to the Kaluga factory in Russia, where TVs and washing machines are manufactured, through TSR and Trans-Manchuria Railway (TMR). This route shortened the lead time from 50 days to 18 days and saved logistical costs.
Additional routes included in the MOU are routes to European countries and Russia. Once the container ships arrive in Vladivostok from Korea and China, the containers will be transferred via TSR to Slovakia, Hungary, and Poland. This will drastically reduce the lead time from 35 days to 18 days.
Shortened lead times will bring Samsung more benefits, including stable inventory control and immediate and efficient adjustment when product models change.
This case exemplifies practical business collaboration which incorporates the concepts of Russian ‘New Eastern Policy’, Chinese ‘One Belt One Road’, and Korean ‘Eurasian Initiative’ and utilizes Eurasian Networks.
Through close collaboration with Russian Railways, Samsung will endeavor to build up a more efficient and economical logistics network and diversify transportation routes to mitigate unexpected global risks.