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РЖД-Партнер

Trans-Siberian Railway: Deceptive “Plus”

2008 finished with positive figures for the Trans-Siberian Mainline: the total cargo transportation volumes in large-capacity containers on international routes increased by 14%, imports by 13% and exports by 21%. The positive statistics were impaired a little by transit cargoes, which fell 24%.
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CONTRADICTORY RESULTS

In 2006 the number of large-capacity containers running on the Trans-Siberian Mainline was 8% more than in 2005, in 2007 the increase was 48%, but in 2008 the growth rates were down by 14%.

The situation with imported cargoes is similar - in 2006 the growth was a 46% increase on 2005, in 2007 it was 53%, but in 2008 it was only 13%. Export growth slowed from +41% in 2006 to +21%.

Also, numbers worked out by the Sea and River Transport Federal Agency show that the transhipment volume of loaded containers in Russian ports (all data is in TEU) has decreased by 17% in comparison with 2007. Exports decreased by 57%, but the good news is that imports grew by 14.9%.

It makes sense to analyse the structure of the goods turnover in OOO “East Stevedore Company”, which provides more than half of the container flow on the Trans-Siberian Railway. In spite of the fact that this company finished 2008 with 8% growth, in December its transhipment volume was already down by 23%. Simultaneously, last December ports of the North-West Basin lowered the number of container transhipments by 29.6%, meaning 37% of exports and 27.8% of imports were lost in comparison with 2007.

It must be mentioned that the difference in the cost of delivery of one 40-foot container from China to Moscow by sea and overland appears to be unfavourable for the latter, meanwhile, container ship charter rates continue to decrease. FESCO has stated that negotiations with cargo-owner clients in Asia Pacific countries have revealed their intentions to replace overland flows with ocean routes; and in the case of the disappearance of cargo traffic, there will be the real threat of losing the expertise in inter-modal Trans-Siberian routes which has been worked out by many carriers. “Because the decrease in transportation capacities will cause considerable expense, there is a high probability that the funds released will be directed into other profitable sectors of the economy, and if the cargo volumes restore, their return to the Trans-Siberian Mainline may not take place,” a representative of one transport group revealed.

LOST IN TRANSMISSION

So, most of the market participants believe hopes of increasing container cargo traffic on the Transsib have been raised due to strengthening trade relations with the Asia Pacific Region. We shall note that, despite generally positive figures in transportation graphs between APR countries and Russia, these rates are not growing fast. Compare for yourself: in 2007, commodity container circulation between China and Russia reached 235,188 TEU (having increased by 48% in comparison with 2006), and in 2008 about 274,385 TEU was transported (an increase of 17% on 2007). The situation is similar with Korea – 206,264 TEU in 2007 (+64% on the previous year) and 224,085 TEU last year (+9 % on 2007). Japan continues to maintain its stable growth rate, however, the quantity of containers does not influence loading with Transsib – 42,887 units in 2007 and 57,267 units in 2008.

Considering the fact that China is one of the most promising countries from the point of view of cargo traffic origin, it is interesting to learn what the representatives of Chinese companies think about the optimal cargo routes to Russia and Europe; about the advantages and disadvantages, and also about the level of their interaction with Russian transport and logistical companies.

There are known ways by which containers from China can get to Europe or Russia - direct routes through the border crossings of Manchuria/Zabaikalsk and Suifenhe/Grodekovo; by sea through Western Ports (for example, Hamburg) and the Great Port of St. Petersburg; and by transit through the territories of third countries – Kazakhstan and Mongolia via the crossings at Dostyk and Erlan Dzamyn Ude.
The majority of Chinese cargo senders questioned prefer to transport their cargos to Russia by a direct option, that is through Manchuria/Zabaikalsk and Suifenhe/Grodekovo, considering this to be the fastest and safest route, but at the same time they specified some of its disadvantages. Mr Sun Lee from China-Russia International Transportation Co., LTD observed that because the Manchuria border terminal throughput capacity was limited, there were constant delays for cargoes passing through.

“Because of the constant growth of cargo traffic from China to Russia it is necessary to improve the technical maintenance of the terminal in the Manchuria/Zabaikalsk area,” he recommended. Mr Syui Fushen, his colleague from Qingdao International United Logistics Co., Ltd, added that the main difficulty was the long process to reload goods because each wagon is loaded separately, therefore the cargoes are delayed regularly at the border terminal.

We noticed cases when information was received at extremely inconvenient times when trains were going through the territories of third countries, in particular Kazakhstan and Mongolia. Cargo delays at railway border crossings increase and the problem solving process in cases where goods are lost or damaged becomes too complicated because of the huge number of formalities and documents required, and also as a result of language problems. Nevertheless, in the opinion of Chinese cargo senders, the route to Russia through the Kazakhstan Ali mountain pass is the shortest way from the East to the North, thus transportation costs are considerably lower, and this is an important advantage. The way through the Mongolia-Russia border is a little shorter than through Manchuria, but the price is not very advantageous.

The smallest per cent of Asia Pacific goods get to Russia via Erlan. Because this route is too long, cost savings are small and there are other problems. The majority of carriers ignore this route because the detailed development of this delivery option requires considerable material and manpower resources.

Certainly, the high speed and convenience of railway routes do not make them free of certain complexities which inevitably face Chinese cargo owners. “First of all, reloading at border terminals is very slow,” says Syui Fushen. “A possible way out of this may be the upgrading of reloading equipment and an increase in reloading capacities. The second problem is customs. The process of examining goods is extremely burdensome and long, which leads to the accumulation of cargo at customs terminals. And finally, prices for cargo transportation are constantly growing.” The expert’s colleague from China-Russia International Transportation Co., LTD, Mr Sun Lee has added that information interchange problems between the parties regularly take place during customs clearance, which causes failures in delivery terms. “We recommend that all business correspondence be sent by e-mail, which will allow mutually advantageous solutions to be found in time and will make the transportation and cargo registration process more smooth and simple,” advises Mr Sun. In addition to sluggish goods unloading, Chinese experts also mentioned barbarous reloading practices and cases of lost or damaged cargo.

So it is no wonder that a significant number of Chinese partners have a low opinion of cooperation with Russian parties - “their service level is the lowest and they do not care about their reputation either.” “The waiting time for a simple price quotation can take as long as twenty days,” tells an expert from one Chinese company. “We also faced a lack of observance of contractual conditions. It happens that even a stipulated price can unexpectedly grow considerably, when the cargo is already on its way, and this is how they blackmail the sender”.
The impression is that Chinese cargo owners are simply forced to use their services because of a rather poor choice of alternatives - the sea route is too long. Certainly there are exceptions too. The company Qingdao International United Logistics Co., Ltd, have given a positive example of its effective work with OAO “TransContainer”, which also helped it to interact with Customs and the Railway.

“Cooperation is economically beneficial, accounts are signed off on time, prices are appropriate and information is duly received. If the company has railway containers and platforms, it is a big advantage,” the Chinese company has informed. Pan Lu from Shenzhen Wilcan International Freight Forwarding Co. Ltd. said that the worst shortcoming was the low overall performance level of Russian companies; the untimely reception of cargo information; the lack of understanding in the field of pricing and the long-term calculations of transportation costs. “But, in general, cooperation with Russian carriers is still considered quite possible,” said Pan Lu, softening his judgement.

Resume

The main problem is that the notorious crisis has put a question mark against most of the Russian transport sector’s plans for future transport development, including containers. Therefore, it is hard to expect that there will be enough financial resources directed to realise these declared projects on infrastructure improvement, construction of the necessary terminals and introduction of the latest technologies.
The only thing to do is to hope that cargo traffic from the Asia Pacific countries will not disappear and make every effort to entice them onto the Trans-Siberian Railway. However first of all, it will be necessary to begin with some self-analysis and addressing one’s own faults.

The opinion of “TransContainer” General Director “ Peter Baskakov is that the most effective way to raise global railway container transport competitiveness is to organise joint projects with transport companies from different countries. “If we want to switch to rail those cargoes which are going now from Asia Pacific countries to Western European countries by sea, it is necessary for us to cooperate much more closely with the operators working in those countries and to conclude tripartite, or even quadrilateral long-term agreements,” Mr Baskakov is convinced.

“TransContainer” has already a few such examples in its history. In particular, last year a memorandum with the Chinese company CRIMT was signed, concerning cooperation in container cargo transportations on Russian and Chinese territory. Subsequently, the creation of a joint venture with a site in Beijing is planned. Also, a memorandum between “TransContainer”, “TransGroupАС” and two Japanese logistical companies, Kamigumi Co and Kintetsu World Express (KWE) has been concluded, which concerns joint actions on container transhipment through the Port of Zarubino’s Sea Terminal (now under construction), with the further prospect of a joint venture. One more agreement has been concluded between “TransContainer”, KWE and Korean UNICO Logistics Co. “Together with these companies, we intend to create a tripartite joint venture in the sphere of rendering 3PL format complex services,” Mr Baskakov says. “This joint venture will offer a one-stop joint service solution to its clients from the Asia Pacific Region.”

Also, the decision has been taken to create a joint venture between “Kaztransservice” and OAO “TransEurasia”, which will have the main goal of offering cargo container transport services on Kazakhstan’s territory in the direction of the Russian Federation and adjacent states (Europe and the CIS).

by Victoria Merkusheva

viewpoint

Charles Howard LambCharles Howard Lamb,
Director General of OOO “Transsiberian Express Service”:

– 2008 was the first year since 1998 that transportation volumes in our company did not grow in comparison with the previous year, neither in total, nor in regard to container transportations involving Transsib. Good work by the company in the first half of the year, and a few organised container trains from Southern China to Central Europe, allowed the creation of a reserve which enabled us to finish the fiscal year in profit.
However, certainly, the economic situation in the country has affected transportation volumes, and in the last quarter of 2008 they decreased by 30% on the same period of the previous year. Our strategic plans for 2009 to open new representative offices and branches are now being seriously reconsidered.
We think that in 2009 transportation volumes using the Transsib will be considerably reduced. The reason is that demand for transportation changed as a result of the world economic crisis. Cargo owners aspire to reduce costs for the transportation of commodities, raw materials and accessories and, among other advantages which they are ready to sacrifice, they give up the opportunity to achieve better delivery times. Now sea lines are reducing prices noticeably and transportation by rail is becoming less and less competitive in price.
In such conditions our company is going to diversify its business and offer clients not only container transportation by the Trans-Siberian Railway, but also by other routes. In particular, we are planning more active use of the ports of St. Petersburg and Kotka, and also such large European ports as Rotterdam and Bremerhaven. Also we are planning to offer our clients services which have never been included in the “Transiberian Express Train Service” portfolio, such as cargo insurance, transportation of modular cargoes and warehouse services. We hope such a policy will compensate for the decrease in transportation volumes of traditional services.

Gleb KinderGleb Kinder,
General Director of ZAO “TC “Container Service”:

– Originally the busy character of the Transsib predetermined the choice of cities in which to organise company branches. Now offices in Perm, Ekaterinburg and Novosibirsk function successfully, using the Transsib as the main transport artery.
A negative development can be noticed when comparing cargo traffic managed by our company on the Transsib in 2007 and 2008. The total annual number of operations has decreased by 8%. But, despite this, volumes of transported cargo have grown because of an increasing amount of cargo per lot, so in terms of money the recession had no effect.
Certainly, the world economic crisis has forced many cargo senders to hide away, and the tendency for railway transport to lose its competitiveness in crisis conditions has been noticed. It happens for the following reasons.
It is obviously impossible to agree a delay in payment with a railway carrier directly, and also with forwarding agents, as they cannot obtain additional working capital from the banks in these tougher conditions.
Delivery times are much longer (two-fold and three-fold) in comparison with transport by road for distances less than 3,500 km.
The absence of cargo movement in accordance with the declared schedule and, as a consequence, the impossibility of defining delivery time (fluctuations can stretch from three to seven days, depending on the distance involved).
So, the use of railway transport services for small businesses starts to present problems because it is impossible to delay payment. And it becomes less and less acceptable to not define a delivery time, and consequently work out the period of time to get a return on an investment deal.
In connection with the obvious reduction in transportation volumes on the Trans-Siberian Railway, one can suppose that the first half of 2009 will see the gradual restoration of freight traffic. And if by summer 2009 container transportation has not significantly increased compared with 2008, then at least they will reach a similar level. And in the autumn, activity will probably show a growth of transportation in TEU terms of 14%.
First of all our company sees the current crisis exclusively as an additional stimulus to accelerate production optimisation processes and also to build interactive relations with the client not only from the position of service quality improvement, but also by reducing charges. It is possible if delivery time and experts’ work time is reduced, if a detailed technological scheme is developed and if an optimisation mechanism for logistical decisions is worked out.


Krzysztof NiemiecKrzysztof Niemiec,
Member of the Management Board, Director for the Development CTL Logistics S.A.:

– There is no doubt that it is necessary to search for development of rail transportation in international transport where a greater role is given to container transportation in an East-West direction. Therefore, separate railways should be open to international cooperation. It is possible to do this by the transition from administrative railway activity to market practices. Hence, it is necessary to change laws urgently so that they do not constrain, as often occurs now, but facilitate increases in transportation volumes. It is especially important today, during this period of recession, to use all opportunities. But also, will not be less important tomorrow because, in fact, a feature of all crises is that they go with time. So, it is necessary to apply our efforts in order to make the crisis in railway transport as short as possible.


Erik ShmukstErik Shmukst,
Board Member SJSC “Latvijas dzelzcels”:

– The involvement of our company in transportation via the Trans-Siberian Railway is defined by the container train “Baltic - Transit”, plying regularly the Baltics - Russia - Kazakhstan route. It has transported more than 60,500 TEU since the first container train ran in 2003. A peak of transportation volumes of 21,700 TEU was reached in 2007. Last year cargo traffic fell to 16,000 TEU, which happened mainly because of the reduction in the main transported cargo - cars. This decrease was caused by the introduction of additional restrictions on the importation of second-hand cars by Kazakhstan. The influence of what is happening in the world economy will certainly be reflected in this year’s volumes of transported container cargoes. The current situation in Central Asian regions shows that, with the devaluation of local currencies, consumer demand for imported goods will be reduced, and most likely, this circumstance will negatively affect the development of final transportation figures.
It would be too optimistic to imagine any possibility of volumes remaining at former levels in the present conditions. But, even at this difficult moment for everyone, we understand that the previously worked out scheme for container trains to run regularly is demanded from the point of view of both service and maintaining a good reputation. And, despite the worldwide recession, we realise that there are still long-term prospects for container transportation, including via the Trans-Siberian Mainline. [~DETAIL_TEXT] =>

CONTRADICTORY RESULTS

In 2006 the number of large-capacity containers running on the Trans-Siberian Mainline was 8% more than in 2005, in 2007 the increase was 48%, but in 2008 the growth rates were down by 14%.

The situation with imported cargoes is similar - in 2006 the growth was a 46% increase on 2005, in 2007 it was 53%, but in 2008 it was only 13%. Export growth slowed from +41% in 2006 to +21%.

Also, numbers worked out by the Sea and River Transport Federal Agency show that the transhipment volume of loaded containers in Russian ports (all data is in TEU) has decreased by 17% in comparison with 2007. Exports decreased by 57%, but the good news is that imports grew by 14.9%.

It makes sense to analyse the structure of the goods turnover in OOO “East Stevedore Company”, which provides more than half of the container flow on the Trans-Siberian Railway. In spite of the fact that this company finished 2008 with 8% growth, in December its transhipment volume was already down by 23%. Simultaneously, last December ports of the North-West Basin lowered the number of container transhipments by 29.6%, meaning 37% of exports and 27.8% of imports were lost in comparison with 2007.

It must be mentioned that the difference in the cost of delivery of one 40-foot container from China to Moscow by sea and overland appears to be unfavourable for the latter, meanwhile, container ship charter rates continue to decrease. FESCO has stated that negotiations with cargo-owner clients in Asia Pacific countries have revealed their intentions to replace overland flows with ocean routes; and in the case of the disappearance of cargo traffic, there will be the real threat of losing the expertise in inter-modal Trans-Siberian routes which has been worked out by many carriers. “Because the decrease in transportation capacities will cause considerable expense, there is a high probability that the funds released will be directed into other profitable sectors of the economy, and if the cargo volumes restore, their return to the Trans-Siberian Mainline may not take place,” a representative of one transport group revealed.

LOST IN TRANSMISSION

So, most of the market participants believe hopes of increasing container cargo traffic on the Transsib have been raised due to strengthening trade relations with the Asia Pacific Region. We shall note that, despite generally positive figures in transportation graphs between APR countries and Russia, these rates are not growing fast. Compare for yourself: in 2007, commodity container circulation between China and Russia reached 235,188 TEU (having increased by 48% in comparison with 2006), and in 2008 about 274,385 TEU was transported (an increase of 17% on 2007). The situation is similar with Korea – 206,264 TEU in 2007 (+64% on the previous year) and 224,085 TEU last year (+9 % on 2007). Japan continues to maintain its stable growth rate, however, the quantity of containers does not influence loading with Transsib – 42,887 units in 2007 and 57,267 units in 2008.

Considering the fact that China is one of the most promising countries from the point of view of cargo traffic origin, it is interesting to learn what the representatives of Chinese companies think about the optimal cargo routes to Russia and Europe; about the advantages and disadvantages, and also about the level of their interaction with Russian transport and logistical companies.

There are known ways by which containers from China can get to Europe or Russia - direct routes through the border crossings of Manchuria/Zabaikalsk and Suifenhe/Grodekovo; by sea through Western Ports (for example, Hamburg) and the Great Port of St. Petersburg; and by transit through the territories of third countries – Kazakhstan and Mongolia via the crossings at Dostyk and Erlan Dzamyn Ude.
The majority of Chinese cargo senders questioned prefer to transport their cargos to Russia by a direct option, that is through Manchuria/Zabaikalsk and Suifenhe/Grodekovo, considering this to be the fastest and safest route, but at the same time they specified some of its disadvantages. Mr Sun Lee from China-Russia International Transportation Co., LTD observed that because the Manchuria border terminal throughput capacity was limited, there were constant delays for cargoes passing through.

“Because of the constant growth of cargo traffic from China to Russia it is necessary to improve the technical maintenance of the terminal in the Manchuria/Zabaikalsk area,” he recommended. Mr Syui Fushen, his colleague from Qingdao International United Logistics Co., Ltd, added that the main difficulty was the long process to reload goods because each wagon is loaded separately, therefore the cargoes are delayed regularly at the border terminal.

We noticed cases when information was received at extremely inconvenient times when trains were going through the territories of third countries, in particular Kazakhstan and Mongolia. Cargo delays at railway border crossings increase and the problem solving process in cases where goods are lost or damaged becomes too complicated because of the huge number of formalities and documents required, and also as a result of language problems. Nevertheless, in the opinion of Chinese cargo senders, the route to Russia through the Kazakhstan Ali mountain pass is the shortest way from the East to the North, thus transportation costs are considerably lower, and this is an important advantage. The way through the Mongolia-Russia border is a little shorter than through Manchuria, but the price is not very advantageous.

The smallest per cent of Asia Pacific goods get to Russia via Erlan. Because this route is too long, cost savings are small and there are other problems. The majority of carriers ignore this route because the detailed development of this delivery option requires considerable material and manpower resources.

Certainly, the high speed and convenience of railway routes do not make them free of certain complexities which inevitably face Chinese cargo owners. “First of all, reloading at border terminals is very slow,” says Syui Fushen. “A possible way out of this may be the upgrading of reloading equipment and an increase in reloading capacities. The second problem is customs. The process of examining goods is extremely burdensome and long, which leads to the accumulation of cargo at customs terminals. And finally, prices for cargo transportation are constantly growing.” The expert’s colleague from China-Russia International Transportation Co., LTD, Mr Sun Lee has added that information interchange problems between the parties regularly take place during customs clearance, which causes failures in delivery terms. “We recommend that all business correspondence be sent by e-mail, which will allow mutually advantageous solutions to be found in time and will make the transportation and cargo registration process more smooth and simple,” advises Mr Sun. In addition to sluggish goods unloading, Chinese experts also mentioned barbarous reloading practices and cases of lost or damaged cargo.

So it is no wonder that a significant number of Chinese partners have a low opinion of cooperation with Russian parties - “their service level is the lowest and they do not care about their reputation either.” “The waiting time for a simple price quotation can take as long as twenty days,” tells an expert from one Chinese company. “We also faced a lack of observance of contractual conditions. It happens that even a stipulated price can unexpectedly grow considerably, when the cargo is already on its way, and this is how they blackmail the sender”.
The impression is that Chinese cargo owners are simply forced to use their services because of a rather poor choice of alternatives - the sea route is too long. Certainly there are exceptions too. The company Qingdao International United Logistics Co., Ltd, have given a positive example of its effective work with OAO “TransContainer”, which also helped it to interact with Customs and the Railway.

“Cooperation is economically beneficial, accounts are signed off on time, prices are appropriate and information is duly received. If the company has railway containers and platforms, it is a big advantage,” the Chinese company has informed. Pan Lu from Shenzhen Wilcan International Freight Forwarding Co. Ltd. said that the worst shortcoming was the low overall performance level of Russian companies; the untimely reception of cargo information; the lack of understanding in the field of pricing and the long-term calculations of transportation costs. “But, in general, cooperation with Russian carriers is still considered quite possible,” said Pan Lu, softening his judgement.

Resume

The main problem is that the notorious crisis has put a question mark against most of the Russian transport sector’s plans for future transport development, including containers. Therefore, it is hard to expect that there will be enough financial resources directed to realise these declared projects on infrastructure improvement, construction of the necessary terminals and introduction of the latest technologies.
The only thing to do is to hope that cargo traffic from the Asia Pacific countries will not disappear and make every effort to entice them onto the Trans-Siberian Railway. However first of all, it will be necessary to begin with some self-analysis and addressing one’s own faults.

The opinion of “TransContainer” General Director “ Peter Baskakov is that the most effective way to raise global railway container transport competitiveness is to organise joint projects with transport companies from different countries. “If we want to switch to rail those cargoes which are going now from Asia Pacific countries to Western European countries by sea, it is necessary for us to cooperate much more closely with the operators working in those countries and to conclude tripartite, or even quadrilateral long-term agreements,” Mr Baskakov is convinced.

“TransContainer” has already a few such examples in its history. In particular, last year a memorandum with the Chinese company CRIMT was signed, concerning cooperation in container cargo transportations on Russian and Chinese territory. Subsequently, the creation of a joint venture with a site in Beijing is planned. Also, a memorandum between “TransContainer”, “TransGroupАС” and two Japanese logistical companies, Kamigumi Co and Kintetsu World Express (KWE) has been concluded, which concerns joint actions on container transhipment through the Port of Zarubino’s Sea Terminal (now under construction), with the further prospect of a joint venture. One more agreement has been concluded between “TransContainer”, KWE and Korean UNICO Logistics Co. “Together with these companies, we intend to create a tripartite joint venture in the sphere of rendering 3PL format complex services,” Mr Baskakov says. “This joint venture will offer a one-stop joint service solution to its clients from the Asia Pacific Region.”

Also, the decision has been taken to create a joint venture between “Kaztransservice” and OAO “TransEurasia”, which will have the main goal of offering cargo container transport services on Kazakhstan’s territory in the direction of the Russian Federation and adjacent states (Europe and the CIS).

by Victoria Merkusheva

viewpoint

Charles Howard LambCharles Howard Lamb,
Director General of OOO “Transsiberian Express Service”:

– 2008 was the first year since 1998 that transportation volumes in our company did not grow in comparison with the previous year, neither in total, nor in regard to container transportations involving Transsib. Good work by the company in the first half of the year, and a few organised container trains from Southern China to Central Europe, allowed the creation of a reserve which enabled us to finish the fiscal year in profit.
However, certainly, the economic situation in the country has affected transportation volumes, and in the last quarter of 2008 they decreased by 30% on the same period of the previous year. Our strategic plans for 2009 to open new representative offices and branches are now being seriously reconsidered.
We think that in 2009 transportation volumes using the Transsib will be considerably reduced. The reason is that demand for transportation changed as a result of the world economic crisis. Cargo owners aspire to reduce costs for the transportation of commodities, raw materials and accessories and, among other advantages which they are ready to sacrifice, they give up the opportunity to achieve better delivery times. Now sea lines are reducing prices noticeably and transportation by rail is becoming less and less competitive in price.
In such conditions our company is going to diversify its business and offer clients not only container transportation by the Trans-Siberian Railway, but also by other routes. In particular, we are planning more active use of the ports of St. Petersburg and Kotka, and also such large European ports as Rotterdam and Bremerhaven. Also we are planning to offer our clients services which have never been included in the “Transiberian Express Train Service” portfolio, such as cargo insurance, transportation of modular cargoes and warehouse services. We hope such a policy will compensate for the decrease in transportation volumes of traditional services.

Gleb KinderGleb Kinder,
General Director of ZAO “TC “Container Service”:

– Originally the busy character of the Transsib predetermined the choice of cities in which to organise company branches. Now offices in Perm, Ekaterinburg and Novosibirsk function successfully, using the Transsib as the main transport artery.
A negative development can be noticed when comparing cargo traffic managed by our company on the Transsib in 2007 and 2008. The total annual number of operations has decreased by 8%. But, despite this, volumes of transported cargo have grown because of an increasing amount of cargo per lot, so in terms of money the recession had no effect.
Certainly, the world economic crisis has forced many cargo senders to hide away, and the tendency for railway transport to lose its competitiveness in crisis conditions has been noticed. It happens for the following reasons.
It is obviously impossible to agree a delay in payment with a railway carrier directly, and also with forwarding agents, as they cannot obtain additional working capital from the banks in these tougher conditions.
Delivery times are much longer (two-fold and three-fold) in comparison with transport by road for distances less than 3,500 km.
The absence of cargo movement in accordance with the declared schedule and, as a consequence, the impossibility of defining delivery time (fluctuations can stretch from three to seven days, depending on the distance involved).
So, the use of railway transport services for small businesses starts to present problems because it is impossible to delay payment. And it becomes less and less acceptable to not define a delivery time, and consequently work out the period of time to get a return on an investment deal.
In connection with the obvious reduction in transportation volumes on the Trans-Siberian Railway, one can suppose that the first half of 2009 will see the gradual restoration of freight traffic. And if by summer 2009 container transportation has not significantly increased compared with 2008, then at least they will reach a similar level. And in the autumn, activity will probably show a growth of transportation in TEU terms of 14%.
First of all our company sees the current crisis exclusively as an additional stimulus to accelerate production optimisation processes and also to build interactive relations with the client not only from the position of service quality improvement, but also by reducing charges. It is possible if delivery time and experts’ work time is reduced, if a detailed technological scheme is developed and if an optimisation mechanism for logistical decisions is worked out.


Krzysztof NiemiecKrzysztof Niemiec,
Member of the Management Board, Director for the Development CTL Logistics S.A.:

– There is no doubt that it is necessary to search for development of rail transportation in international transport where a greater role is given to container transportation in an East-West direction. Therefore, separate railways should be open to international cooperation. It is possible to do this by the transition from administrative railway activity to market practices. Hence, it is necessary to change laws urgently so that they do not constrain, as often occurs now, but facilitate increases in transportation volumes. It is especially important today, during this period of recession, to use all opportunities. But also, will not be less important tomorrow because, in fact, a feature of all crises is that they go with time. So, it is necessary to apply our efforts in order to make the crisis in railway transport as short as possible.


Erik ShmukstErik Shmukst,
Board Member SJSC “Latvijas dzelzcels”:

– The involvement of our company in transportation via the Trans-Siberian Railway is defined by the container train “Baltic - Transit”, plying regularly the Baltics - Russia - Kazakhstan route. It has transported more than 60,500 TEU since the first container train ran in 2003. A peak of transportation volumes of 21,700 TEU was reached in 2007. Last year cargo traffic fell to 16,000 TEU, which happened mainly because of the reduction in the main transported cargo - cars. This decrease was caused by the introduction of additional restrictions on the importation of second-hand cars by Kazakhstan. The influence of what is happening in the world economy will certainly be reflected in this year’s volumes of transported container cargoes. The current situation in Central Asian regions shows that, with the devaluation of local currencies, consumer demand for imported goods will be reduced, and most likely, this circumstance will negatively affect the development of final transportation figures.
It would be too optimistic to imagine any possibility of volumes remaining at former levels in the present conditions. But, even at this difficult moment for everyone, we understand that the previously worked out scheme for container trains to run regularly is demanded from the point of view of both service and maintaining a good reputation. And, despite the worldwide recession, we realise that there are still long-term prospects for container transportation, including via the Trans-Siberian Mainline. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => 2008 finished with positive figures for the Trans-Siberian Mainline: the total cargo transportation volumes in large-capacity containers on international routes increased by 14%, imports by 13% and exports by 21%. The positive statistics were impaired a little by transit cargoes, which fell 24%. 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CONTRADICTORY RESULTS

In 2006 the number of large-capacity containers running on the Trans-Siberian Mainline was 8% more than in 2005, in 2007 the increase was 48%, but in 2008 the growth rates were down by 14%.

The situation with imported cargoes is similar - in 2006 the growth was a 46% increase on 2005, in 2007 it was 53%, but in 2008 it was only 13%. Export growth slowed from +41% in 2006 to +21%.

Also, numbers worked out by the Sea and River Transport Federal Agency show that the transhipment volume of loaded containers in Russian ports (all data is in TEU) has decreased by 17% in comparison with 2007. Exports decreased by 57%, but the good news is that imports grew by 14.9%.

It makes sense to analyse the structure of the goods turnover in OOO “East Stevedore Company”, which provides more than half of the container flow on the Trans-Siberian Railway. In spite of the fact that this company finished 2008 with 8% growth, in December its transhipment volume was already down by 23%. Simultaneously, last December ports of the North-West Basin lowered the number of container transhipments by 29.6%, meaning 37% of exports and 27.8% of imports were lost in comparison with 2007.

It must be mentioned that the difference in the cost of delivery of one 40-foot container from China to Moscow by sea and overland appears to be unfavourable for the latter, meanwhile, container ship charter rates continue to decrease. FESCO has stated that negotiations with cargo-owner clients in Asia Pacific countries have revealed their intentions to replace overland flows with ocean routes; and in the case of the disappearance of cargo traffic, there will be the real threat of losing the expertise in inter-modal Trans-Siberian routes which has been worked out by many carriers. “Because the decrease in transportation capacities will cause considerable expense, there is a high probability that the funds released will be directed into other profitable sectors of the economy, and if the cargo volumes restore, their return to the Trans-Siberian Mainline may not take place,” a representative of one transport group revealed.

LOST IN TRANSMISSION

So, most of the market participants believe hopes of increasing container cargo traffic on the Transsib have been raised due to strengthening trade relations with the Asia Pacific Region. We shall note that, despite generally positive figures in transportation graphs between APR countries and Russia, these rates are not growing fast. Compare for yourself: in 2007, commodity container circulation between China and Russia reached 235,188 TEU (having increased by 48% in comparison with 2006), and in 2008 about 274,385 TEU was transported (an increase of 17% on 2007). The situation is similar with Korea – 206,264 TEU in 2007 (+64% on the previous year) and 224,085 TEU last year (+9 % on 2007). Japan continues to maintain its stable growth rate, however, the quantity of containers does not influence loading with Transsib – 42,887 units in 2007 and 57,267 units in 2008.

Considering the fact that China is one of the most promising countries from the point of view of cargo traffic origin, it is interesting to learn what the representatives of Chinese companies think about the optimal cargo routes to Russia and Europe; about the advantages and disadvantages, and also about the level of their interaction with Russian transport and logistical companies.

There are known ways by which containers from China can get to Europe or Russia - direct routes through the border crossings of Manchuria/Zabaikalsk and Suifenhe/Grodekovo; by sea through Western Ports (for example, Hamburg) and the Great Port of St. Petersburg; and by transit through the territories of third countries – Kazakhstan and Mongolia via the crossings at Dostyk and Erlan Dzamyn Ude.
The majority of Chinese cargo senders questioned prefer to transport their cargos to Russia by a direct option, that is through Manchuria/Zabaikalsk and Suifenhe/Grodekovo, considering this to be the fastest and safest route, but at the same time they specified some of its disadvantages. Mr Sun Lee from China-Russia International Transportation Co., LTD observed that because the Manchuria border terminal throughput capacity was limited, there were constant delays for cargoes passing through.

“Because of the constant growth of cargo traffic from China to Russia it is necessary to improve the technical maintenance of the terminal in the Manchuria/Zabaikalsk area,” he recommended. Mr Syui Fushen, his colleague from Qingdao International United Logistics Co., Ltd, added that the main difficulty was the long process to reload goods because each wagon is loaded separately, therefore the cargoes are delayed regularly at the border terminal.

We noticed cases when information was received at extremely inconvenient times when trains were going through the territories of third countries, in particular Kazakhstan and Mongolia. Cargo delays at railway border crossings increase and the problem solving process in cases where goods are lost or damaged becomes too complicated because of the huge number of formalities and documents required, and also as a result of language problems. Nevertheless, in the opinion of Chinese cargo senders, the route to Russia through the Kazakhstan Ali mountain pass is the shortest way from the East to the North, thus transportation costs are considerably lower, and this is an important advantage. The way through the Mongolia-Russia border is a little shorter than through Manchuria, but the price is not very advantageous.

The smallest per cent of Asia Pacific goods get to Russia via Erlan. Because this route is too long, cost savings are small and there are other problems. The majority of carriers ignore this route because the detailed development of this delivery option requires considerable material and manpower resources.

Certainly, the high speed and convenience of railway routes do not make them free of certain complexities which inevitably face Chinese cargo owners. “First of all, reloading at border terminals is very slow,” says Syui Fushen. “A possible way out of this may be the upgrading of reloading equipment and an increase in reloading capacities. The second problem is customs. The process of examining goods is extremely burdensome and long, which leads to the accumulation of cargo at customs terminals. And finally, prices for cargo transportation are constantly growing.” The expert’s colleague from China-Russia International Transportation Co., LTD, Mr Sun Lee has added that information interchange problems between the parties regularly take place during customs clearance, which causes failures in delivery terms. “We recommend that all business correspondence be sent by e-mail, which will allow mutually advantageous solutions to be found in time and will make the transportation and cargo registration process more smooth and simple,” advises Mr Sun. In addition to sluggish goods unloading, Chinese experts also mentioned barbarous reloading practices and cases of lost or damaged cargo.

So it is no wonder that a significant number of Chinese partners have a low opinion of cooperation with Russian parties - “their service level is the lowest and they do not care about their reputation either.” “The waiting time for a simple price quotation can take as long as twenty days,” tells an expert from one Chinese company. “We also faced a lack of observance of contractual conditions. It happens that even a stipulated price can unexpectedly grow considerably, when the cargo is already on its way, and this is how they blackmail the sender”.
The impression is that Chinese cargo owners are simply forced to use their services because of a rather poor choice of alternatives - the sea route is too long. Certainly there are exceptions too. The company Qingdao International United Logistics Co., Ltd, have given a positive example of its effective work with OAO “TransContainer”, which also helped it to interact with Customs and the Railway.

“Cooperation is economically beneficial, accounts are signed off on time, prices are appropriate and information is duly received. If the company has railway containers and platforms, it is a big advantage,” the Chinese company has informed. Pan Lu from Shenzhen Wilcan International Freight Forwarding Co. Ltd. said that the worst shortcoming was the low overall performance level of Russian companies; the untimely reception of cargo information; the lack of understanding in the field of pricing and the long-term calculations of transportation costs. “But, in general, cooperation with Russian carriers is still considered quite possible,” said Pan Lu, softening his judgement.

Resume

The main problem is that the notorious crisis has put a question mark against most of the Russian transport sector’s plans for future transport development, including containers. Therefore, it is hard to expect that there will be enough financial resources directed to realise these declared projects on infrastructure improvement, construction of the necessary terminals and introduction of the latest technologies.
The only thing to do is to hope that cargo traffic from the Asia Pacific countries will not disappear and make every effort to entice them onto the Trans-Siberian Railway. However first of all, it will be necessary to begin with some self-analysis and addressing one’s own faults.

The opinion of “TransContainer” General Director “ Peter Baskakov is that the most effective way to raise global railway container transport competitiveness is to organise joint projects with transport companies from different countries. “If we want to switch to rail those cargoes which are going now from Asia Pacific countries to Western European countries by sea, it is necessary for us to cooperate much more closely with the operators working in those countries and to conclude tripartite, or even quadrilateral long-term agreements,” Mr Baskakov is convinced.

“TransContainer” has already a few such examples in its history. In particular, last year a memorandum with the Chinese company CRIMT was signed, concerning cooperation in container cargo transportations on Russian and Chinese territory. Subsequently, the creation of a joint venture with a site in Beijing is planned. Also, a memorandum between “TransContainer”, “TransGroupАС” and two Japanese logistical companies, Kamigumi Co and Kintetsu World Express (KWE) has been concluded, which concerns joint actions on container transhipment through the Port of Zarubino’s Sea Terminal (now under construction), with the further prospect of a joint venture. One more agreement has been concluded between “TransContainer”, KWE and Korean UNICO Logistics Co. “Together with these companies, we intend to create a tripartite joint venture in the sphere of rendering 3PL format complex services,” Mr Baskakov says. “This joint venture will offer a one-stop joint service solution to its clients from the Asia Pacific Region.”

Also, the decision has been taken to create a joint venture between “Kaztransservice” and OAO “TransEurasia”, which will have the main goal of offering cargo container transport services on Kazakhstan’s territory in the direction of the Russian Federation and adjacent states (Europe and the CIS).

by Victoria Merkusheva

viewpoint

Charles Howard LambCharles Howard Lamb,
Director General of OOO “Transsiberian Express Service”:

– 2008 was the first year since 1998 that transportation volumes in our company did not grow in comparison with the previous year, neither in total, nor in regard to container transportations involving Transsib. Good work by the company in the first half of the year, and a few organised container trains from Southern China to Central Europe, allowed the creation of a reserve which enabled us to finish the fiscal year in profit.
However, certainly, the economic situation in the country has affected transportation volumes, and in the last quarter of 2008 they decreased by 30% on the same period of the previous year. Our strategic plans for 2009 to open new representative offices and branches are now being seriously reconsidered.
We think that in 2009 transportation volumes using the Transsib will be considerably reduced. The reason is that demand for transportation changed as a result of the world economic crisis. Cargo owners aspire to reduce costs for the transportation of commodities, raw materials and accessories and, among other advantages which they are ready to sacrifice, they give up the opportunity to achieve better delivery times. Now sea lines are reducing prices noticeably and transportation by rail is becoming less and less competitive in price.
In such conditions our company is going to diversify its business and offer clients not only container transportation by the Trans-Siberian Railway, but also by other routes. In particular, we are planning more active use of the ports of St. Petersburg and Kotka, and also such large European ports as Rotterdam and Bremerhaven. Also we are planning to offer our clients services which have never been included in the “Transiberian Express Train Service” portfolio, such as cargo insurance, transportation of modular cargoes and warehouse services. We hope such a policy will compensate for the decrease in transportation volumes of traditional services.

Gleb KinderGleb Kinder,
General Director of ZAO “TC “Container Service”:

– Originally the busy character of the Transsib predetermined the choice of cities in which to organise company branches. Now offices in Perm, Ekaterinburg and Novosibirsk function successfully, using the Transsib as the main transport artery.
A negative development can be noticed when comparing cargo traffic managed by our company on the Transsib in 2007 and 2008. The total annual number of operations has decreased by 8%. But, despite this, volumes of transported cargo have grown because of an increasing amount of cargo per lot, so in terms of money the recession had no effect.
Certainly, the world economic crisis has forced many cargo senders to hide away, and the tendency for railway transport to lose its competitiveness in crisis conditions has been noticed. It happens for the following reasons.
It is obviously impossible to agree a delay in payment with a railway carrier directly, and also with forwarding agents, as they cannot obtain additional working capital from the banks in these tougher conditions.
Delivery times are much longer (two-fold and three-fold) in comparison with transport by road for distances less than 3,500 km.
The absence of cargo movement in accordance with the declared schedule and, as a consequence, the impossibility of defining delivery time (fluctuations can stretch from three to seven days, depending on the distance involved).
So, the use of railway transport services for small businesses starts to present problems because it is impossible to delay payment. And it becomes less and less acceptable to not define a delivery time, and consequently work out the period of time to get a return on an investment deal.
In connection with the obvious reduction in transportation volumes on the Trans-Siberian Railway, one can suppose that the first half of 2009 will see the gradual restoration of freight traffic. And if by summer 2009 container transportation has not significantly increased compared with 2008, then at least they will reach a similar level. And in the autumn, activity will probably show a growth of transportation in TEU terms of 14%.
First of all our company sees the current crisis exclusively as an additional stimulus to accelerate production optimisation processes and also to build interactive relations with the client not only from the position of service quality improvement, but also by reducing charges. It is possible if delivery time and experts’ work time is reduced, if a detailed technological scheme is developed and if an optimisation mechanism for logistical decisions is worked out.


Krzysztof NiemiecKrzysztof Niemiec,
Member of the Management Board, Director for the Development CTL Logistics S.A.:

– There is no doubt that it is necessary to search for development of rail transportation in international transport where a greater role is given to container transportation in an East-West direction. Therefore, separate railways should be open to international cooperation. It is possible to do this by the transition from administrative railway activity to market practices. Hence, it is necessary to change laws urgently so that they do not constrain, as often occurs now, but facilitate increases in transportation volumes. It is especially important today, during this period of recession, to use all opportunities. But also, will not be less important tomorrow because, in fact, a feature of all crises is that they go with time. So, it is necessary to apply our efforts in order to make the crisis in railway transport as short as possible.


Erik ShmukstErik Shmukst,
Board Member SJSC “Latvijas dzelzcels”:

– The involvement of our company in transportation via the Trans-Siberian Railway is defined by the container train “Baltic - Transit”, plying regularly the Baltics - Russia - Kazakhstan route. It has transported more than 60,500 TEU since the first container train ran in 2003. A peak of transportation volumes of 21,700 TEU was reached in 2007. Last year cargo traffic fell to 16,000 TEU, which happened mainly because of the reduction in the main transported cargo - cars. This decrease was caused by the introduction of additional restrictions on the importation of second-hand cars by Kazakhstan. The influence of what is happening in the world economy will certainly be reflected in this year’s volumes of transported container cargoes. The current situation in Central Asian regions shows that, with the devaluation of local currencies, consumer demand for imported goods will be reduced, and most likely, this circumstance will negatively affect the development of final transportation figures.
It would be too optimistic to imagine any possibility of volumes remaining at former levels in the present conditions. But, even at this difficult moment for everyone, we understand that the previously worked out scheme for container trains to run regularly is demanded from the point of view of both service and maintaining a good reputation. And, despite the worldwide recession, we realise that there are still long-term prospects for container transportation, including via the Trans-Siberian Mainline. [~DETAIL_TEXT] =>

CONTRADICTORY RESULTS

In 2006 the number of large-capacity containers running on the Trans-Siberian Mainline was 8% more than in 2005, in 2007 the increase was 48%, but in 2008 the growth rates were down by 14%.

The situation with imported cargoes is similar - in 2006 the growth was a 46% increase on 2005, in 2007 it was 53%, but in 2008 it was only 13%. Export growth slowed from +41% in 2006 to +21%.

Also, numbers worked out by the Sea and River Transport Federal Agency show that the transhipment volume of loaded containers in Russian ports (all data is in TEU) has decreased by 17% in comparison with 2007. Exports decreased by 57%, but the good news is that imports grew by 14.9%.

It makes sense to analyse the structure of the goods turnover in OOO “East Stevedore Company”, which provides more than half of the container flow on the Trans-Siberian Railway. In spite of the fact that this company finished 2008 with 8% growth, in December its transhipment volume was already down by 23%. Simultaneously, last December ports of the North-West Basin lowered the number of container transhipments by 29.6%, meaning 37% of exports and 27.8% of imports were lost in comparison with 2007.

It must be mentioned that the difference in the cost of delivery of one 40-foot container from China to Moscow by sea and overland appears to be unfavourable for the latter, meanwhile, container ship charter rates continue to decrease. FESCO has stated that negotiations with cargo-owner clients in Asia Pacific countries have revealed their intentions to replace overland flows with ocean routes; and in the case of the disappearance of cargo traffic, there will be the real threat of losing the expertise in inter-modal Trans-Siberian routes which has been worked out by many carriers. “Because the decrease in transportation capacities will cause considerable expense, there is a high probability that the funds released will be directed into other profitable sectors of the economy, and if the cargo volumes restore, their return to the Trans-Siberian Mainline may not take place,” a representative of one transport group revealed.

LOST IN TRANSMISSION

So, most of the market participants believe hopes of increasing container cargo traffic on the Transsib have been raised due to strengthening trade relations with the Asia Pacific Region. We shall note that, despite generally positive figures in transportation graphs between APR countries and Russia, these rates are not growing fast. Compare for yourself: in 2007, commodity container circulation between China and Russia reached 235,188 TEU (having increased by 48% in comparison with 2006), and in 2008 about 274,385 TEU was transported (an increase of 17% on 2007). The situation is similar with Korea – 206,264 TEU in 2007 (+64% on the previous year) and 224,085 TEU last year (+9 % on 2007). Japan continues to maintain its stable growth rate, however, the quantity of containers does not influence loading with Transsib – 42,887 units in 2007 and 57,267 units in 2008.

Considering the fact that China is one of the most promising countries from the point of view of cargo traffic origin, it is interesting to learn what the representatives of Chinese companies think about the optimal cargo routes to Russia and Europe; about the advantages and disadvantages, and also about the level of their interaction with Russian transport and logistical companies.

There are known ways by which containers from China can get to Europe or Russia - direct routes through the border crossings of Manchuria/Zabaikalsk and Suifenhe/Grodekovo; by sea through Western Ports (for example, Hamburg) and the Great Port of St. Petersburg; and by transit through the territories of third countries – Kazakhstan and Mongolia via the crossings at Dostyk and Erlan Dzamyn Ude.
The majority of Chinese cargo senders questioned prefer to transport their cargos to Russia by a direct option, that is through Manchuria/Zabaikalsk and Suifenhe/Grodekovo, considering this to be the fastest and safest route, but at the same time they specified some of its disadvantages. Mr Sun Lee from China-Russia International Transportation Co., LTD observed that because the Manchuria border terminal throughput capacity was limited, there were constant delays for cargoes passing through.

“Because of the constant growth of cargo traffic from China to Russia it is necessary to improve the technical maintenance of the terminal in the Manchuria/Zabaikalsk area,” he recommended. Mr Syui Fushen, his colleague from Qingdao International United Logistics Co., Ltd, added that the main difficulty was the long process to reload goods because each wagon is loaded separately, therefore the cargoes are delayed regularly at the border terminal.

We noticed cases when information was received at extremely inconvenient times when trains were going through the territories of third countries, in particular Kazakhstan and Mongolia. Cargo delays at railway border crossings increase and the problem solving process in cases where goods are lost or damaged becomes too complicated because of the huge number of formalities and documents required, and also as a result of language problems. Nevertheless, in the opinion of Chinese cargo senders, the route to Russia through the Kazakhstan Ali mountain pass is the shortest way from the East to the North, thus transportation costs are considerably lower, and this is an important advantage. The way through the Mongolia-Russia border is a little shorter than through Manchuria, but the price is not very advantageous.

The smallest per cent of Asia Pacific goods get to Russia via Erlan. Because this route is too long, cost savings are small and there are other problems. The majority of carriers ignore this route because the detailed development of this delivery option requires considerable material and manpower resources.

Certainly, the high speed and convenience of railway routes do not make them free of certain complexities which inevitably face Chinese cargo owners. “First of all, reloading at border terminals is very slow,” says Syui Fushen. “A possible way out of this may be the upgrading of reloading equipment and an increase in reloading capacities. The second problem is customs. The process of examining goods is extremely burdensome and long, which leads to the accumulation of cargo at customs terminals. And finally, prices for cargo transportation are constantly growing.” The expert’s colleague from China-Russia International Transportation Co., LTD, Mr Sun Lee has added that information interchange problems between the parties regularly take place during customs clearance, which causes failures in delivery terms. “We recommend that all business correspondence be sent by e-mail, which will allow mutually advantageous solutions to be found in time and will make the transportation and cargo registration process more smooth and simple,” advises Mr Sun. In addition to sluggish goods unloading, Chinese experts also mentioned barbarous reloading practices and cases of lost or damaged cargo.

So it is no wonder that a significant number of Chinese partners have a low opinion of cooperation with Russian parties - “their service level is the lowest and they do not care about their reputation either.” “The waiting time for a simple price quotation can take as long as twenty days,” tells an expert from one Chinese company. “We also faced a lack of observance of contractual conditions. It happens that even a stipulated price can unexpectedly grow considerably, when the cargo is already on its way, and this is how they blackmail the sender”.
The impression is that Chinese cargo owners are simply forced to use their services because of a rather poor choice of alternatives - the sea route is too long. Certainly there are exceptions too. The company Qingdao International United Logistics Co., Ltd, have given a positive example of its effective work with OAO “TransContainer”, which also helped it to interact with Customs and the Railway.

“Cooperation is economically beneficial, accounts are signed off on time, prices are appropriate and information is duly received. If the company has railway containers and platforms, it is a big advantage,” the Chinese company has informed. Pan Lu from Shenzhen Wilcan International Freight Forwarding Co. Ltd. said that the worst shortcoming was the low overall performance level of Russian companies; the untimely reception of cargo information; the lack of understanding in the field of pricing and the long-term calculations of transportation costs. “But, in general, cooperation with Russian carriers is still considered quite possible,” said Pan Lu, softening his judgement.

Resume

The main problem is that the notorious crisis has put a question mark against most of the Russian transport sector’s plans for future transport development, including containers. Therefore, it is hard to expect that there will be enough financial resources directed to realise these declared projects on infrastructure improvement, construction of the necessary terminals and introduction of the latest technologies.
The only thing to do is to hope that cargo traffic from the Asia Pacific countries will not disappear and make every effort to entice them onto the Trans-Siberian Railway. However first of all, it will be necessary to begin with some self-analysis and addressing one’s own faults.

The opinion of “TransContainer” General Director “ Peter Baskakov is that the most effective way to raise global railway container transport competitiveness is to organise joint projects with transport companies from different countries. “If we want to switch to rail those cargoes which are going now from Asia Pacific countries to Western European countries by sea, it is necessary for us to cooperate much more closely with the operators working in those countries and to conclude tripartite, or even quadrilateral long-term agreements,” Mr Baskakov is convinced.

“TransContainer” has already a few such examples in its history. In particular, last year a memorandum with the Chinese company CRIMT was signed, concerning cooperation in container cargo transportations on Russian and Chinese territory. Subsequently, the creation of a joint venture with a site in Beijing is planned. Also, a memorandum between “TransContainer”, “TransGroupАС” and two Japanese logistical companies, Kamigumi Co and Kintetsu World Express (KWE) has been concluded, which concerns joint actions on container transhipment through the Port of Zarubino’s Sea Terminal (now under construction), with the further prospect of a joint venture. One more agreement has been concluded between “TransContainer”, KWE and Korean UNICO Logistics Co. “Together with these companies, we intend to create a tripartite joint venture in the sphere of rendering 3PL format complex services,” Mr Baskakov says. “This joint venture will offer a one-stop joint service solution to its clients from the Asia Pacific Region.”

Also, the decision has been taken to create a joint venture between “Kaztransservice” and OAO “TransEurasia”, which will have the main goal of offering cargo container transport services on Kazakhstan’s territory in the direction of the Russian Federation and adjacent states (Europe and the CIS).

by Victoria Merkusheva

viewpoint

Charles Howard LambCharles Howard Lamb,
Director General of OOO “Transsiberian Express Service”:

– 2008 was the first year since 1998 that transportation volumes in our company did not grow in comparison with the previous year, neither in total, nor in regard to container transportations involving Transsib. Good work by the company in the first half of the year, and a few organised container trains from Southern China to Central Europe, allowed the creation of a reserve which enabled us to finish the fiscal year in profit.
However, certainly, the economic situation in the country has affected transportation volumes, and in the last quarter of 2008 they decreased by 30% on the same period of the previous year. Our strategic plans for 2009 to open new representative offices and branches are now being seriously reconsidered.
We think that in 2009 transportation volumes using the Transsib will be considerably reduced. The reason is that demand for transportation changed as a result of the world economic crisis. Cargo owners aspire to reduce costs for the transportation of commodities, raw materials and accessories and, among other advantages which they are ready to sacrifice, they give up the opportunity to achieve better delivery times. Now sea lines are reducing prices noticeably and transportation by rail is becoming less and less competitive in price.
In such conditions our company is going to diversify its business and offer clients not only container transportation by the Trans-Siberian Railway, but also by other routes. In particular, we are planning more active use of the ports of St. Petersburg and Kotka, and also such large European ports as Rotterdam and Bremerhaven. Also we are planning to offer our clients services which have never been included in the “Transiberian Express Train Service” portfolio, such as cargo insurance, transportation of modular cargoes and warehouse services. We hope such a policy will compensate for the decrease in transportation volumes of traditional services.

Gleb KinderGleb Kinder,
General Director of ZAO “TC “Container Service”:

– Originally the busy character of the Transsib predetermined the choice of cities in which to organise company branches. Now offices in Perm, Ekaterinburg and Novosibirsk function successfully, using the Transsib as the main transport artery.
A negative development can be noticed when comparing cargo traffic managed by our company on the Transsib in 2007 and 2008. The total annual number of operations has decreased by 8%. But, despite this, volumes of transported cargo have grown because of an increasing amount of cargo per lot, so in terms of money the recession had no effect.
Certainly, the world economic crisis has forced many cargo senders to hide away, and the tendency for railway transport to lose its competitiveness in crisis conditions has been noticed. It happens for the following reasons.
It is obviously impossible to agree a delay in payment with a railway carrier directly, and also with forwarding agents, as they cannot obtain additional working capital from the banks in these tougher conditions.
Delivery times are much longer (two-fold and three-fold) in comparison with transport by road for distances less than 3,500 km.
The absence of cargo movement in accordance with the declared schedule and, as a consequence, the impossibility of defining delivery time (fluctuations can stretch from three to seven days, depending on the distance involved).
So, the use of railway transport services for small businesses starts to present problems because it is impossible to delay payment. And it becomes less and less acceptable to not define a delivery time, and consequently work out the period of time to get a return on an investment deal.
In connection with the obvious reduction in transportation volumes on the Trans-Siberian Railway, one can suppose that the first half of 2009 will see the gradual restoration of freight traffic. And if by summer 2009 container transportation has not significantly increased compared with 2008, then at least they will reach a similar level. And in the autumn, activity will probably show a growth of transportation in TEU terms of 14%.
First of all our company sees the current crisis exclusively as an additional stimulus to accelerate production optimisation processes and also to build interactive relations with the client not only from the position of service quality improvement, but also by reducing charges. It is possible if delivery time and experts’ work time is reduced, if a detailed technological scheme is developed and if an optimisation mechanism for logistical decisions is worked out.


Krzysztof NiemiecKrzysztof Niemiec,
Member of the Management Board, Director for the Development CTL Logistics S.A.:

– There is no doubt that it is necessary to search for development of rail transportation in international transport where a greater role is given to container transportation in an East-West direction. Therefore, separate railways should be open to international cooperation. It is possible to do this by the transition from administrative railway activity to market practices. Hence, it is necessary to change laws urgently so that they do not constrain, as often occurs now, but facilitate increases in transportation volumes. It is especially important today, during this period of recession, to use all opportunities. But also, will not be less important tomorrow because, in fact, a feature of all crises is that they go with time. So, it is necessary to apply our efforts in order to make the crisis in railway transport as short as possible.


Erik ShmukstErik Shmukst,
Board Member SJSC “Latvijas dzelzcels”:

– The involvement of our company in transportation via the Trans-Siberian Railway is defined by the container train “Baltic - Transit”, plying regularly the Baltics - Russia - Kazakhstan route. It has transported more than 60,500 TEU since the first container train ran in 2003. A peak of transportation volumes of 21,700 TEU was reached in 2007. Last year cargo traffic fell to 16,000 TEU, which happened mainly because of the reduction in the main transported cargo - cars. This decrease was caused by the introduction of additional restrictions on the importation of second-hand cars by Kazakhstan. The influence of what is happening in the world economy will certainly be reflected in this year’s volumes of transported container cargoes. The current situation in Central Asian regions shows that, with the devaluation of local currencies, consumer demand for imported goods will be reduced, and most likely, this circumstance will negatively affect the development of final transportation figures.
It would be too optimistic to imagine any possibility of volumes remaining at former levels in the present conditions. But, even at this difficult moment for everyone, we understand that the previously worked out scheme for container trains to run regularly is demanded from the point of view of both service and maintaining a good reputation. And, despite the worldwide recession, we realise that there are still long-term prospects for container transportation, including via the Trans-Siberian Mainline. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => 2008 finished with positive figures for the Trans-Siberian Mainline: the total cargo transportation volumes in large-capacity containers on international routes increased by 14%, imports by 13% and exports by 21%. The positive statistics were impaired a little by transit cargoes, which fell 24%. 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РЖД-Партнер

Panorama. Transportation

Despite the transport market slump at the end of the year, OAO TransContainer’s financial report in 2008 highlighted quite a positive performance by the company. The volume of cargo carried on container flat wagons in Russia and abroad grew by 15% against the previous year. The number of dispatched container trains made up of TransContainer’s flat wagons grew by 2.5 times year-on-year.
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In 2008 TransContainer Increased Its Cargo Transportation Volume by 15%

Despite the transport market slump at the end of the year, OAO TransContainer’s financial report in 2008 highlighted quite a positive performance by the company.
The volume of cargo carried on container flat wagons in Russia and abroad grew by 15% against the previous year. The number of dispatched container trains made up of TransContainer’s flat wagons grew by 2.5 times year-on-year.
Also, in 2008, the company’s terminals handled 36.5% of the total container volume serviced on the Russian railway network.
OAO TransContainer retains the position of market leader and leases its flat wagons to other companies operating on the container transportation market. Last year, more than 60% of containers were carried along the Russian railway network by OAO TransContainer flat wagons.

Opinion Exchange

The customs services of Russia and Finland consider that the issue of cargo flow re-distribution between the existing border crossings must be analysed thoroughly. At a meeting of Andrey Belyaninov, Head of the RF Federal Customs Service, with Tapani Erling, Director General of the Finnish Customs, the parties supported the idea of using the potential of railways and Baltic Sea ports more intensively, because the volume of cargo carried between the two states is too large to be carried by road haulage only.
The parties exchanged opinions on how to make the Russian-Finnish border crossing more efficient, including, first of all, the development of the system of preliminary e-informing about the transported goods and modernisation of customs and transport infrastructure objects. 
Russian and Finnish customs agreed to intensify the bilateral cooperation in such spheres as staff training, application of inspecting and searching complexes and the customs control for radioactive materials.

Volga Shipping Transported 7 Million Tons of Freight in 2008

In 2008, cargo fleet of Volga Shipping delivered 6.9 million tons of cargoes, which is 1.4% below the previous year’s results. Cargo traffic came to 10 billion t/km (-9.2%). The company’s passenger boats carried 454,000 passengers throughout the year.
Export cargo traffic – cargoes loaded at river ports and delivered to estuary or sea ports – accounted for 1.9 million tons, which is 24% below 2007 figures.
The volumes of cargo transportations fell last year due to cessation of the Russian-Ukrainian Agreement regulating navigation of Russian boats between the two countries. In particular, Volga Shipping had to stop conveying metal from Mariupol, Ukraine, as well transshipping imported titanic iron ore and export crops at port of Kerch, Ukraine. To reduce the negative impact, Volga Shipping shifted traffic – the lost volumes of export traffic were compensated for by growing inland transportations. Inland cargo transportation via the rivers of Russia amounted to 3.6 million tons (+24% of the year 2007).
Sea cargo traffic shrank by 16% against 2007 volumes and amounted to 1.4 million tons. And it was quite expected – the international shippers’ business activities went down under the negative economic conditions of Q3 and Q4, 2008. The range of transported goods remained unchanged – metals, crops, mineral fertilisers, containers, general cargo.
In 2008, the Volga-Baltic Management Company completed a shipbuilding program launched in 2002. During the past seven years, Volga Shipping and Northwest Shipping Company received 12 new short-sea cargo carriers of the “Russich” project. 

Kazakstan Temir Zholy: The Task for 2008 Was Fulfilled    

National company Kazakstan Temir Zholy fulfilled the set task of freight and passenger transportation in 2008, said Ermek Kizatov, the company’s Vice President for Development, at a meeting with the Ministry of Transport and Communication.
In his words, the volume of transportation grew by 3% year-on-year to 269 million tons. The throughput amounted to 215 billion tonne-kilometres, 7% more in comparison with 2007.
The passenger turnover (excluding private transporters) amounted to 10.6 billion passenger-kilometres, 26% down year-on-year. The decline was caused by the transfer of some routes, which used to be serviced by Passenger Transportation JSC, to private companies.
In the words of Mr Kizatov, the revenues of Kazakstan Temir Zholy and its daughter companies increased by 15% to 502 billion tenge (EUR 2.6 billion). The revenues grew due to the throughput rise and implementation of higher tariffs on freight transportation on April 1, 2008.
The company’s net profit amounted to 32.5 billion tenge (EUR 207.24 million), 27% up year-on-year. The volume of capital investments grew by 40% and reached 139 billion tenge (EUR 886.37 million).
Due to the larger investment volume, Kazakstan Temir Zholy fulfilled the capital repair of 480 km of tracks and purchased 2,420 cargo railcars and 63 locomotives.

Akron Wishes to Turn Back to Estonia    

In January OAO Akron asked for the recommencement of mineral fertilisers transportation via AS DBT terminal in the port of Muuga (Estonia).
In the words of Alexander Popov, Chairman of Akron’s Board of Directors, freight transportation via the terminal in the Muuga port practically stopped in April 2008 because transit cargo could hardly be transported in that direction.
The company included this in the list of suggestions of support for the company and the mineral fertiliser-producing sector. Earlier, he had enumerated them at a meeting of a committee for improving the stability of industry and trade development at the RF Ministry of Industry and Trade. Mr Popov said that the company used to transport annually 1.5 million tons of cargoes via the Muuga port, including NPK-fertilisers, carbamide and ammonium nitrate. The capacity of the terminal was 2 million tons of mineral fertilisers per annum.
Nowadays, Akron uses terminals in Latvia and Finland. In the words of Mr Popov, tariffs on freight transportation in these states are higher than in Estonia.

LDz Cargo: New Record

LDz Cargo, a subsidiary of Latvian railway company Latvijas Dzelzcels (LDz), carried a record volume of freight last year – 56.061 million tons, 7.5% up year-on-year. In 2007, the company transported 52.164 million tons.
Transportation of import cargo increased significantly: 10.1% up year-on-year to 47.116 million tons. Export transportation grew by 12.5% to 2.652 million tons.
In 2008, the company’s volume of transit and domestic transportation reduced to 4.606 million tons (-8.5%) and 1.687 million tons
(-15.6%) respectively.
Oil, oil products and coal made the larger share of the company’s throughput. LDz Cargo carried 19.492 million tons of oil and oil products (+0.8%), 18.565 million tons of coal (+26.1%), 2.817 million tons of chemicals (+58.3%), 1.22 million tons of grain and flour (+28.6%), 2.637 million tons of ferrous metals, and 5.196 million tons of mineral fertilisers (-7.7%). Container transportation volume amounted to 52,760 TEU. 

Freight Turnover of First Cargo Company in 2008 – 100 Million Tons

Freight turnover of the First Cargo Company in 2008 amounted to 100 million tons.
A total of more than 34 million tons of oil bulk, more than 33.4 million tons of coal, about 13.8 million tons of cement, more than six tons of construction materials, 7.3 million tons of ore and 1.3 million tons of ferrous metals were transported.
The share of the First Cargo Company in the total volume of cargos carried via Russian railway network in 2008 reached 6.8%.
“In spite of the economic recession in the country, impacting the transport sector, the First Cargo Company succeeds in keeping the transportation volume at the same level as earlier, and even increasing transportation of some cargoes. In particular, last December coal and ore transportation grew by 8.8% and 30% respectively month-on-month,” said Igor Asaturov, First Deputy CEO of the First Cargo Company.

Throughput of Latvian ports 1.9% Up 

Latvian ports handled a total of 63.64 million tons of cargo in 2008, which is 1.9% more than in 2007. Latvian ports’ cargo turnover increased significantly at the beginning of 2008, by 26.5%, but the growth gradually slowed down to approximately 2% in the second half of 2008.
Of the large ports, the Riga Port registered the steepest increase in cargo turnover from 2007 – 14% to 29.56 million tons.
The Liepaja Port’s cargo turnover increased by 3.7% to 4.2 million tons, whereas cargo turnover at the Ventspils Port decreased 8% last year to 28.57 million tons.
According to the Transport Ministry’s statistics, bulk cargo made up the largest part of the Latvian ports’ cargo turnover last year – 30.26 million tons, a 14.9% increase on 2007.
The Latvian ports handled 18.32 million tons of coal (25.7% increase), while handling of other types of bulk cargo decreased: the volume of chemical cargo handled at the Latvian ports was 4.7 million tons (9.2% decrease) and the volume of wood chips was 1.5 million tons (12.5% fall). The volume of liquid bulk handled at the Latvian ports decreased 5.7% to 24.2 million tons in 2008. Last year, the Latvian ports handled 20.9 million tons of oil products (5.7% decrease) and 1.7 million tons of crude oil (21.4% decrease). General cargo turnover at the Latvian large ports reached 9.2 million tons last year, which is 12% less than in 2007. The three ports also handled 3.7 million tons of wood last year (a 23.8% decrease on 2007), 229,248 units of containerised cargo (3% down), and 533,800 tons of ferrous metals (a 29.1% decrease).

Eesti Raudtee: More Boxes and Less Other Cargoes

Last year, Eesti Raudtee (Estonian Railway) transported 26.07 million tons of cargo, 28.9% or 10.63 million tons less in comparison with 2007.
The share of transit in the total transportation volume was 74% but has fallen to 31% year-on-year, to 19.31 million tons.
Eesti Raudtee carried 18.35 million tons of oil and oil products (-18% year-on-year), 2.8 million tons of slate and 0.83 million tons of mineral fertilisers. Transportation volume of almost all cargoes fell. Meanwhile, container transportation increased by 30% – in 2008 the railway carried 21,189 boxes.

[~DETAIL_TEXT] =>

In 2008 TransContainer Increased Its Cargo Transportation Volume by 15%

Despite the transport market slump at the end of the year, OAO TransContainer’s financial report in 2008 highlighted quite a positive performance by the company.
The volume of cargo carried on container flat wagons in Russia and abroad grew by 15% against the previous year. The number of dispatched container trains made up of TransContainer’s flat wagons grew by 2.5 times year-on-year.
Also, in 2008, the company’s terminals handled 36.5% of the total container volume serviced on the Russian railway network.
OAO TransContainer retains the position of market leader and leases its flat wagons to other companies operating on the container transportation market. Last year, more than 60% of containers were carried along the Russian railway network by OAO TransContainer flat wagons.

Opinion Exchange

The customs services of Russia and Finland consider that the issue of cargo flow re-distribution between the existing border crossings must be analysed thoroughly. At a meeting of Andrey Belyaninov, Head of the RF Federal Customs Service, with Tapani Erling, Director General of the Finnish Customs, the parties supported the idea of using the potential of railways and Baltic Sea ports more intensively, because the volume of cargo carried between the two states is too large to be carried by road haulage only.
The parties exchanged opinions on how to make the Russian-Finnish border crossing more efficient, including, first of all, the development of the system of preliminary e-informing about the transported goods and modernisation of customs and transport infrastructure objects. 
Russian and Finnish customs agreed to intensify the bilateral cooperation in such spheres as staff training, application of inspecting and searching complexes and the customs control for radioactive materials.

Volga Shipping Transported 7 Million Tons of Freight in 2008

In 2008, cargo fleet of Volga Shipping delivered 6.9 million tons of cargoes, which is 1.4% below the previous year’s results. Cargo traffic came to 10 billion t/km (-9.2%). The company’s passenger boats carried 454,000 passengers throughout the year.
Export cargo traffic – cargoes loaded at river ports and delivered to estuary or sea ports – accounted for 1.9 million tons, which is 24% below 2007 figures.
The volumes of cargo transportations fell last year due to cessation of the Russian-Ukrainian Agreement regulating navigation of Russian boats between the two countries. In particular, Volga Shipping had to stop conveying metal from Mariupol, Ukraine, as well transshipping imported titanic iron ore and export crops at port of Kerch, Ukraine. To reduce the negative impact, Volga Shipping shifted traffic – the lost volumes of export traffic were compensated for by growing inland transportations. Inland cargo transportation via the rivers of Russia amounted to 3.6 million tons (+24% of the year 2007).
Sea cargo traffic shrank by 16% against 2007 volumes and amounted to 1.4 million tons. And it was quite expected – the international shippers’ business activities went down under the negative economic conditions of Q3 and Q4, 2008. The range of transported goods remained unchanged – metals, crops, mineral fertilisers, containers, general cargo.
In 2008, the Volga-Baltic Management Company completed a shipbuilding program launched in 2002. During the past seven years, Volga Shipping and Northwest Shipping Company received 12 new short-sea cargo carriers of the “Russich” project. 

Kazakstan Temir Zholy: The Task for 2008 Was Fulfilled    

National company Kazakstan Temir Zholy fulfilled the set task of freight and passenger transportation in 2008, said Ermek Kizatov, the company’s Vice President for Development, at a meeting with the Ministry of Transport and Communication.
In his words, the volume of transportation grew by 3% year-on-year to 269 million tons. The throughput amounted to 215 billion tonne-kilometres, 7% more in comparison with 2007.
The passenger turnover (excluding private transporters) amounted to 10.6 billion passenger-kilometres, 26% down year-on-year. The decline was caused by the transfer of some routes, which used to be serviced by Passenger Transportation JSC, to private companies.
In the words of Mr Kizatov, the revenues of Kazakstan Temir Zholy and its daughter companies increased by 15% to 502 billion tenge (EUR 2.6 billion). The revenues grew due to the throughput rise and implementation of higher tariffs on freight transportation on April 1, 2008.
The company’s net profit amounted to 32.5 billion tenge (EUR 207.24 million), 27% up year-on-year. The volume of capital investments grew by 40% and reached 139 billion tenge (EUR 886.37 million).
Due to the larger investment volume, Kazakstan Temir Zholy fulfilled the capital repair of 480 km of tracks and purchased 2,420 cargo railcars and 63 locomotives.

Akron Wishes to Turn Back to Estonia    

In January OAO Akron asked for the recommencement of mineral fertilisers transportation via AS DBT terminal in the port of Muuga (Estonia).
In the words of Alexander Popov, Chairman of Akron’s Board of Directors, freight transportation via the terminal in the Muuga port practically stopped in April 2008 because transit cargo could hardly be transported in that direction.
The company included this in the list of suggestions of support for the company and the mineral fertiliser-producing sector. Earlier, he had enumerated them at a meeting of a committee for improving the stability of industry and trade development at the RF Ministry of Industry and Trade. Mr Popov said that the company used to transport annually 1.5 million tons of cargoes via the Muuga port, including NPK-fertilisers, carbamide and ammonium nitrate. The capacity of the terminal was 2 million tons of mineral fertilisers per annum.
Nowadays, Akron uses terminals in Latvia and Finland. In the words of Mr Popov, tariffs on freight transportation in these states are higher than in Estonia.

LDz Cargo: New Record

LDz Cargo, a subsidiary of Latvian railway company Latvijas Dzelzcels (LDz), carried a record volume of freight last year – 56.061 million tons, 7.5% up year-on-year. In 2007, the company transported 52.164 million tons.
Transportation of import cargo increased significantly: 10.1% up year-on-year to 47.116 million tons. Export transportation grew by 12.5% to 2.652 million tons.
In 2008, the company’s volume of transit and domestic transportation reduced to 4.606 million tons (-8.5%) and 1.687 million tons
(-15.6%) respectively.
Oil, oil products and coal made the larger share of the company’s throughput. LDz Cargo carried 19.492 million tons of oil and oil products (+0.8%), 18.565 million tons of coal (+26.1%), 2.817 million tons of chemicals (+58.3%), 1.22 million tons of grain and flour (+28.6%), 2.637 million tons of ferrous metals, and 5.196 million tons of mineral fertilisers (-7.7%). Container transportation volume amounted to 52,760 TEU. 

Freight Turnover of First Cargo Company in 2008 – 100 Million Tons

Freight turnover of the First Cargo Company in 2008 amounted to 100 million tons.
A total of more than 34 million tons of oil bulk, more than 33.4 million tons of coal, about 13.8 million tons of cement, more than six tons of construction materials, 7.3 million tons of ore and 1.3 million tons of ferrous metals were transported.
The share of the First Cargo Company in the total volume of cargos carried via Russian railway network in 2008 reached 6.8%.
“In spite of the economic recession in the country, impacting the transport sector, the First Cargo Company succeeds in keeping the transportation volume at the same level as earlier, and even increasing transportation of some cargoes. In particular, last December coal and ore transportation grew by 8.8% and 30% respectively month-on-month,” said Igor Asaturov, First Deputy CEO of the First Cargo Company.

Throughput of Latvian ports 1.9% Up 

Latvian ports handled a total of 63.64 million tons of cargo in 2008, which is 1.9% more than in 2007. Latvian ports’ cargo turnover increased significantly at the beginning of 2008, by 26.5%, but the growth gradually slowed down to approximately 2% in the second half of 2008.
Of the large ports, the Riga Port registered the steepest increase in cargo turnover from 2007 – 14% to 29.56 million tons.
The Liepaja Port’s cargo turnover increased by 3.7% to 4.2 million tons, whereas cargo turnover at the Ventspils Port decreased 8% last year to 28.57 million tons.
According to the Transport Ministry’s statistics, bulk cargo made up the largest part of the Latvian ports’ cargo turnover last year – 30.26 million tons, a 14.9% increase on 2007.
The Latvian ports handled 18.32 million tons of coal (25.7% increase), while handling of other types of bulk cargo decreased: the volume of chemical cargo handled at the Latvian ports was 4.7 million tons (9.2% decrease) and the volume of wood chips was 1.5 million tons (12.5% fall). The volume of liquid bulk handled at the Latvian ports decreased 5.7% to 24.2 million tons in 2008. Last year, the Latvian ports handled 20.9 million tons of oil products (5.7% decrease) and 1.7 million tons of crude oil (21.4% decrease). General cargo turnover at the Latvian large ports reached 9.2 million tons last year, which is 12% less than in 2007. The three ports also handled 3.7 million tons of wood last year (a 23.8% decrease on 2007), 229,248 units of containerised cargo (3% down), and 533,800 tons of ferrous metals (a 29.1% decrease).

Eesti Raudtee: More Boxes and Less Other Cargoes

Last year, Eesti Raudtee (Estonian Railway) transported 26.07 million tons of cargo, 28.9% or 10.63 million tons less in comparison with 2007.
The share of transit in the total transportation volume was 74% but has fallen to 31% year-on-year, to 19.31 million tons.
Eesti Raudtee carried 18.35 million tons of oil and oil products (-18% year-on-year), 2.8 million tons of slate and 0.83 million tons of mineral fertilisers. Transportation volume of almost all cargoes fell. Meanwhile, container transportation increased by 30% – in 2008 the railway carried 21,189 boxes.

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In 2008 TransContainer Increased Its Cargo Transportation Volume by 15%

Despite the transport market slump at the end of the year, OAO TransContainer’s financial report in 2008 highlighted quite a positive performance by the company.
The volume of cargo carried on container flat wagons in Russia and abroad grew by 15% against the previous year. The number of dispatched container trains made up of TransContainer’s flat wagons grew by 2.5 times year-on-year.
Also, in 2008, the company’s terminals handled 36.5% of the total container volume serviced on the Russian railway network.
OAO TransContainer retains the position of market leader and leases its flat wagons to other companies operating on the container transportation market. Last year, more than 60% of containers were carried along the Russian railway network by OAO TransContainer flat wagons.

Opinion Exchange

The customs services of Russia and Finland consider that the issue of cargo flow re-distribution between the existing border crossings must be analysed thoroughly. At a meeting of Andrey Belyaninov, Head of the RF Federal Customs Service, with Tapani Erling, Director General of the Finnish Customs, the parties supported the idea of using the potential of railways and Baltic Sea ports more intensively, because the volume of cargo carried between the two states is too large to be carried by road haulage only.
The parties exchanged opinions on how to make the Russian-Finnish border crossing more efficient, including, first of all, the development of the system of preliminary e-informing about the transported goods and modernisation of customs and transport infrastructure objects. 
Russian and Finnish customs agreed to intensify the bilateral cooperation in such spheres as staff training, application of inspecting and searching complexes and the customs control for radioactive materials.

Volga Shipping Transported 7 Million Tons of Freight in 2008

In 2008, cargo fleet of Volga Shipping delivered 6.9 million tons of cargoes, which is 1.4% below the previous year’s results. Cargo traffic came to 10 billion t/km (-9.2%). The company’s passenger boats carried 454,000 passengers throughout the year.
Export cargo traffic – cargoes loaded at river ports and delivered to estuary or sea ports – accounted for 1.9 million tons, which is 24% below 2007 figures.
The volumes of cargo transportations fell last year due to cessation of the Russian-Ukrainian Agreement regulating navigation of Russian boats between the two countries. In particular, Volga Shipping had to stop conveying metal from Mariupol, Ukraine, as well transshipping imported titanic iron ore and export crops at port of Kerch, Ukraine. To reduce the negative impact, Volga Shipping shifted traffic – the lost volumes of export traffic were compensated for by growing inland transportations. Inland cargo transportation via the rivers of Russia amounted to 3.6 million tons (+24% of the year 2007).
Sea cargo traffic shrank by 16% against 2007 volumes and amounted to 1.4 million tons. And it was quite expected – the international shippers’ business activities went down under the negative economic conditions of Q3 and Q4, 2008. The range of transported goods remained unchanged – metals, crops, mineral fertilisers, containers, general cargo.
In 2008, the Volga-Baltic Management Company completed a shipbuilding program launched in 2002. During the past seven years, Volga Shipping and Northwest Shipping Company received 12 new short-sea cargo carriers of the “Russich” project. 

Kazakstan Temir Zholy: The Task for 2008 Was Fulfilled    

National company Kazakstan Temir Zholy fulfilled the set task of freight and passenger transportation in 2008, said Ermek Kizatov, the company’s Vice President for Development, at a meeting with the Ministry of Transport and Communication.
In his words, the volume of transportation grew by 3% year-on-year to 269 million tons. The throughput amounted to 215 billion tonne-kilometres, 7% more in comparison with 2007.
The passenger turnover (excluding private transporters) amounted to 10.6 billion passenger-kilometres, 26% down year-on-year. The decline was caused by the transfer of some routes, which used to be serviced by Passenger Transportation JSC, to private companies.
In the words of Mr Kizatov, the revenues of Kazakstan Temir Zholy and its daughter companies increased by 15% to 502 billion tenge (EUR 2.6 billion). The revenues grew due to the throughput rise and implementation of higher tariffs on freight transportation on April 1, 2008.
The company’s net profit amounted to 32.5 billion tenge (EUR 207.24 million), 27% up year-on-year. The volume of capital investments grew by 40% and reached 139 billion tenge (EUR 886.37 million).
Due to the larger investment volume, Kazakstan Temir Zholy fulfilled the capital repair of 480 km of tracks and purchased 2,420 cargo railcars and 63 locomotives.

Akron Wishes to Turn Back to Estonia    

In January OAO Akron asked for the recommencement of mineral fertilisers transportation via AS DBT terminal in the port of Muuga (Estonia).
In the words of Alexander Popov, Chairman of Akron’s Board of Directors, freight transportation via the terminal in the Muuga port practically stopped in April 2008 because transit cargo could hardly be transported in that direction.
The company included this in the list of suggestions of support for the company and the mineral fertiliser-producing sector. Earlier, he had enumerated them at a meeting of a committee for improving the stability of industry and trade development at the RF Ministry of Industry and Trade. Mr Popov said that the company used to transport annually 1.5 million tons of cargoes via the Muuga port, including NPK-fertilisers, carbamide and ammonium nitrate. The capacity of the terminal was 2 million tons of mineral fertilisers per annum.
Nowadays, Akron uses terminals in Latvia and Finland. In the words of Mr Popov, tariffs on freight transportation in these states are higher than in Estonia.

LDz Cargo: New Record

LDz Cargo, a subsidiary of Latvian railway company Latvijas Dzelzcels (LDz), carried a record volume of freight last year – 56.061 million tons, 7.5% up year-on-year. In 2007, the company transported 52.164 million tons.
Transportation of import cargo increased significantly: 10.1% up year-on-year to 47.116 million tons. Export transportation grew by 12.5% to 2.652 million tons.
In 2008, the company’s volume of transit and domestic transportation reduced to 4.606 million tons (-8.5%) and 1.687 million tons
(-15.6%) respectively.
Oil, oil products and coal made the larger share of the company’s throughput. LDz Cargo carried 19.492 million tons of oil and oil products (+0.8%), 18.565 million tons of coal (+26.1%), 2.817 million tons of chemicals (+58.3%), 1.22 million tons of grain and flour (+28.6%), 2.637 million tons of ferrous metals, and 5.196 million tons of mineral fertilisers (-7.7%). Container transportation volume amounted to 52,760 TEU. 

Freight Turnover of First Cargo Company in 2008 – 100 Million Tons

Freight turnover of the First Cargo Company in 2008 amounted to 100 million tons.
A total of more than 34 million tons of oil bulk, more than 33.4 million tons of coal, about 13.8 million tons of cement, more than six tons of construction materials, 7.3 million tons of ore and 1.3 million tons of ferrous metals were transported.
The share of the First Cargo Company in the total volume of cargos carried via Russian railway network in 2008 reached 6.8%.
“In spite of the economic recession in the country, impacting the transport sector, the First Cargo Company succeeds in keeping the transportation volume at the same level as earlier, and even increasing transportation of some cargoes. In particular, last December coal and ore transportation grew by 8.8% and 30% respectively month-on-month,” said Igor Asaturov, First Deputy CEO of the First Cargo Company.

Throughput of Latvian ports 1.9% Up 

Latvian ports handled a total of 63.64 million tons of cargo in 2008, which is 1.9% more than in 2007. Latvian ports’ cargo turnover increased significantly at the beginning of 2008, by 26.5%, but the growth gradually slowed down to approximately 2% in the second half of 2008.
Of the large ports, the Riga Port registered the steepest increase in cargo turnover from 2007 – 14% to 29.56 million tons.
The Liepaja Port’s cargo turnover increased by 3.7% to 4.2 million tons, whereas cargo turnover at the Ventspils Port decreased 8% last year to 28.57 million tons.
According to the Transport Ministry’s statistics, bulk cargo made up the largest part of the Latvian ports’ cargo turnover last year – 30.26 million tons, a 14.9% increase on 2007.
The Latvian ports handled 18.32 million tons of coal (25.7% increase), while handling of other types of bulk cargo decreased: the volume of chemical cargo handled at the Latvian ports was 4.7 million tons (9.2% decrease) and the volume of wood chips was 1.5 million tons (12.5% fall). The volume of liquid bulk handled at the Latvian ports decreased 5.7% to 24.2 million tons in 2008. Last year, the Latvian ports handled 20.9 million tons of oil products (5.7% decrease) and 1.7 million tons of crude oil (21.4% decrease). General cargo turnover at the Latvian large ports reached 9.2 million tons last year, which is 12% less than in 2007. The three ports also handled 3.7 million tons of wood last year (a 23.8% decrease on 2007), 229,248 units of containerised cargo (3% down), and 533,800 tons of ferrous metals (a 29.1% decrease).

Eesti Raudtee: More Boxes and Less Other Cargoes

Last year, Eesti Raudtee (Estonian Railway) transported 26.07 million tons of cargo, 28.9% or 10.63 million tons less in comparison with 2007.
The share of transit in the total transportation volume was 74% but has fallen to 31% year-on-year, to 19.31 million tons.
Eesti Raudtee carried 18.35 million tons of oil and oil products (-18% year-on-year), 2.8 million tons of slate and 0.83 million tons of mineral fertilisers. Transportation volume of almost all cargoes fell. Meanwhile, container transportation increased by 30% – in 2008 the railway carried 21,189 boxes.

[~DETAIL_TEXT] =>

In 2008 TransContainer Increased Its Cargo Transportation Volume by 15%

Despite the transport market slump at the end of the year, OAO TransContainer’s financial report in 2008 highlighted quite a positive performance by the company.
The volume of cargo carried on container flat wagons in Russia and abroad grew by 15% against the previous year. The number of dispatched container trains made up of TransContainer’s flat wagons grew by 2.5 times year-on-year.
Also, in 2008, the company’s terminals handled 36.5% of the total container volume serviced on the Russian railway network.
OAO TransContainer retains the position of market leader and leases its flat wagons to other companies operating on the container transportation market. Last year, more than 60% of containers were carried along the Russian railway network by OAO TransContainer flat wagons.

Opinion Exchange

The customs services of Russia and Finland consider that the issue of cargo flow re-distribution between the existing border crossings must be analysed thoroughly. At a meeting of Andrey Belyaninov, Head of the RF Federal Customs Service, with Tapani Erling, Director General of the Finnish Customs, the parties supported the idea of using the potential of railways and Baltic Sea ports more intensively, because the volume of cargo carried between the two states is too large to be carried by road haulage only.
The parties exchanged opinions on how to make the Russian-Finnish border crossing more efficient, including, first of all, the development of the system of preliminary e-informing about the transported goods and modernisation of customs and transport infrastructure objects. 
Russian and Finnish customs agreed to intensify the bilateral cooperation in such spheres as staff training, application of inspecting and searching complexes and the customs control for radioactive materials.

Volga Shipping Transported 7 Million Tons of Freight in 2008

In 2008, cargo fleet of Volga Shipping delivered 6.9 million tons of cargoes, which is 1.4% below the previous year’s results. Cargo traffic came to 10 billion t/km (-9.2%). The company’s passenger boats carried 454,000 passengers throughout the year.
Export cargo traffic – cargoes loaded at river ports and delivered to estuary or sea ports – accounted for 1.9 million tons, which is 24% below 2007 figures.
The volumes of cargo transportations fell last year due to cessation of the Russian-Ukrainian Agreement regulating navigation of Russian boats between the two countries. In particular, Volga Shipping had to stop conveying metal from Mariupol, Ukraine, as well transshipping imported titanic iron ore and export crops at port of Kerch, Ukraine. To reduce the negative impact, Volga Shipping shifted traffic – the lost volumes of export traffic were compensated for by growing inland transportations. Inland cargo transportation via the rivers of Russia amounted to 3.6 million tons (+24% of the year 2007).
Sea cargo traffic shrank by 16% against 2007 volumes and amounted to 1.4 million tons. And it was quite expected – the international shippers’ business activities went down under the negative economic conditions of Q3 and Q4, 2008. The range of transported goods remained unchanged – metals, crops, mineral fertilisers, containers, general cargo.
In 2008, the Volga-Baltic Management Company completed a shipbuilding program launched in 2002. During the past seven years, Volga Shipping and Northwest Shipping Company received 12 new short-sea cargo carriers of the “Russich” project. 

Kazakstan Temir Zholy: The Task for 2008 Was Fulfilled    

National company Kazakstan Temir Zholy fulfilled the set task of freight and passenger transportation in 2008, said Ermek Kizatov, the company’s Vice President for Development, at a meeting with the Ministry of Transport and Communication.
In his words, the volume of transportation grew by 3% year-on-year to 269 million tons. The throughput amounted to 215 billion tonne-kilometres, 7% more in comparison with 2007.
The passenger turnover (excluding private transporters) amounted to 10.6 billion passenger-kilometres, 26% down year-on-year. The decline was caused by the transfer of some routes, which used to be serviced by Passenger Transportation JSC, to private companies.
In the words of Mr Kizatov, the revenues of Kazakstan Temir Zholy and its daughter companies increased by 15% to 502 billion tenge (EUR 2.6 billion). The revenues grew due to the throughput rise and implementation of higher tariffs on freight transportation on April 1, 2008.
The company’s net profit amounted to 32.5 billion tenge (EUR 207.24 million), 27% up year-on-year. The volume of capital investments grew by 40% and reached 139 billion tenge (EUR 886.37 million).
Due to the larger investment volume, Kazakstan Temir Zholy fulfilled the capital repair of 480 km of tracks and purchased 2,420 cargo railcars and 63 locomotives.

Akron Wishes to Turn Back to Estonia    

In January OAO Akron asked for the recommencement of mineral fertilisers transportation via AS DBT terminal in the port of Muuga (Estonia).
In the words of Alexander Popov, Chairman of Akron’s Board of Directors, freight transportation via the terminal in the Muuga port practically stopped in April 2008 because transit cargo could hardly be transported in that direction.
The company included this in the list of suggestions of support for the company and the mineral fertiliser-producing sector. Earlier, he had enumerated them at a meeting of a committee for improving the stability of industry and trade development at the RF Ministry of Industry and Trade. Mr Popov said that the company used to transport annually 1.5 million tons of cargoes via the Muuga port, including NPK-fertilisers, carbamide and ammonium nitrate. The capacity of the terminal was 2 million tons of mineral fertilisers per annum.
Nowadays, Akron uses terminals in Latvia and Finland. In the words of Mr Popov, tariffs on freight transportation in these states are higher than in Estonia.

LDz Cargo: New Record

LDz Cargo, a subsidiary of Latvian railway company Latvijas Dzelzcels (LDz), carried a record volume of freight last year – 56.061 million tons, 7.5% up year-on-year. In 2007, the company transported 52.164 million tons.
Transportation of import cargo increased significantly: 10.1% up year-on-year to 47.116 million tons. Export transportation grew by 12.5% to 2.652 million tons.
In 2008, the company’s volume of transit and domestic transportation reduced to 4.606 million tons (-8.5%) and 1.687 million tons
(-15.6%) respectively.
Oil, oil products and coal made the larger share of the company’s throughput. LDz Cargo carried 19.492 million tons of oil and oil products (+0.8%), 18.565 million tons of coal (+26.1%), 2.817 million tons of chemicals (+58.3%), 1.22 million tons of grain and flour (+28.6%), 2.637 million tons of ferrous metals, and 5.196 million tons of mineral fertilisers (-7.7%). Container transportation volume amounted to 52,760 TEU. 

Freight Turnover of First Cargo Company in 2008 – 100 Million Tons

Freight turnover of the First Cargo Company in 2008 amounted to 100 million tons.
A total of more than 34 million tons of oil bulk, more than 33.4 million tons of coal, about 13.8 million tons of cement, more than six tons of construction materials, 7.3 million tons of ore and 1.3 million tons of ferrous metals were transported.
The share of the First Cargo Company in the total volume of cargos carried via Russian railway network in 2008 reached 6.8%.
“In spite of the economic recession in the country, impacting the transport sector, the First Cargo Company succeeds in keeping the transportation volume at the same level as earlier, and even increasing transportation of some cargoes. In particular, last December coal and ore transportation grew by 8.8% and 30% respectively month-on-month,” said Igor Asaturov, First Deputy CEO of the First Cargo Company.

Throughput of Latvian ports 1.9% Up 

Latvian ports handled a total of 63.64 million tons of cargo in 2008, which is 1.9% more than in 2007. Latvian ports’ cargo turnover increased significantly at the beginning of 2008, by 26.5%, but the growth gradually slowed down to approximately 2% in the second half of 2008.
Of the large ports, the Riga Port registered the steepest increase in cargo turnover from 2007 – 14% to 29.56 million tons.
The Liepaja Port’s cargo turnover increased by 3.7% to 4.2 million tons, whereas cargo turnover at the Ventspils Port decreased 8% last year to 28.57 million tons.
According to the Transport Ministry’s statistics, bulk cargo made up the largest part of the Latvian ports’ cargo turnover last year – 30.26 million tons, a 14.9% increase on 2007.
The Latvian ports handled 18.32 million tons of coal (25.7% increase), while handling of other types of bulk cargo decreased: the volume of chemical cargo handled at the Latvian ports was 4.7 million tons (9.2% decrease) and the volume of wood chips was 1.5 million tons (12.5% fall). The volume of liquid bulk handled at the Latvian ports decreased 5.7% to 24.2 million tons in 2008. Last year, the Latvian ports handled 20.9 million tons of oil products (5.7% decrease) and 1.7 million tons of crude oil (21.4% decrease). General cargo turnover at the Latvian large ports reached 9.2 million tons last year, which is 12% less than in 2007. The three ports also handled 3.7 million tons of wood last year (a 23.8% decrease on 2007), 229,248 units of containerised cargo (3% down), and 533,800 tons of ferrous metals (a 29.1% decrease).

Eesti Raudtee: More Boxes and Less Other Cargoes

Last year, Eesti Raudtee (Estonian Railway) transported 26.07 million tons of cargo, 28.9% or 10.63 million tons less in comparison with 2007.
The share of transit in the total transportation volume was 74% but has fallen to 31% year-on-year, to 19.31 million tons.
Eesti Raudtee carried 18.35 million tons of oil and oil products (-18% year-on-year), 2.8 million tons of slate and 0.83 million tons of mineral fertilisers. Transportation volume of almost all cargoes fell. Meanwhile, container transportation increased by 30% – in 2008 the railway carried 21,189 boxes.

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РЖД-Партнер

Roszheldor

In this issue we present the structure of the main railway government body in Russia: the Federal Agency for Railway Transport.
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    [DETAIL_TEXT] => The structure of state management in the railway transport sector consists of three units. The Ministry of Transport defines the state policy and is responsible for development of the normative base in the railway segment as well as in the whole transport sector. 
The Federal Service for Supervision in the Transport Sphere fulfils supervision functions. The main function of the Federal Agency for Railway Transport, launched in 2004, is carrying out state policy in the railway transport sphere.
The Federal Agency for Railway Transport is a federal body of executive power, carrying out state policy, providing state services and managing state property in the railway sector.
The agency has the powers of the Russian railway administration to fulfil obligations, envisaged by the international agreements concluded by the Russian Federation in terms of carrying out state policy, providing state services and managing state property.
The Federal Agency for Railway Transport is in the jurisdiction of the RF Transport Ministry. To make its work more effective, the agency launched a Council coordinating the actions of all the top managers and staff at the agency, its regional administrations and the enterprises in its jurisdiction.
A Public Council of the Federal Agency for Railway Transport was launched to attract railway transport organisations, consumers and interested market players to participate in developing suggestions for forming and carrying out state policy in the railway transport sector.
One of the basic directions of the Agency’s work is realisation of the sub-programme “Railway Transport” (a part of the Federal Target Programme “Modernisation of Russian Transport System (2002-2010)”) using public-private partnership principles.
The Head of the Federal Agency for Railway Transport is Gennady Petrakov. [~DETAIL_TEXT] => The structure of state management in the railway transport sector consists of three units. The Ministry of Transport defines the state policy and is responsible for development of the normative base in the railway segment as well as in the whole transport sector.
The Federal Service for Supervision in the Transport Sphere fulfils supervision functions. The main function of the Federal Agency for Railway Transport, launched in 2004, is carrying out state policy in the railway transport sphere.
The Federal Agency for Railway Transport is a federal body of executive power, carrying out state policy, providing state services and managing state property in the railway sector.
The agency has the powers of the Russian railway administration to fulfil obligations, envisaged by the international agreements concluded by the Russian Federation in terms of carrying out state policy, providing state services and managing state property.
The Federal Agency for Railway Transport is in the jurisdiction of the RF Transport Ministry. To make its work more effective, the agency launched a Council coordinating the actions of all the top managers and staff at the agency, its regional administrations and the enterprises in its jurisdiction.
A Public Council of the Federal Agency for Railway Transport was launched to attract railway transport organisations, consumers and interested market players to participate in developing suggestions for forming and carrying out state policy in the railway transport sector.
One of the basic directions of the Agency’s work is realisation of the sub-programme “Railway Transport” (a part of the Federal Target Programme “Modernisation of Russian Transport System (2002-2010)”) using public-private partnership principles.
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    [DETAIL_TEXT] => The structure of state management in the railway transport sector consists of three units. The Ministry of Transport defines the state policy and is responsible for development of the normative base in the railway segment as well as in the whole transport sector. 
The Federal Service for Supervision in the Transport Sphere fulfils supervision functions. The main function of the Federal Agency for Railway Transport, launched in 2004, is carrying out state policy in the railway transport sphere.
The Federal Agency for Railway Transport is a federal body of executive power, carrying out state policy, providing state services and managing state property in the railway sector.
The agency has the powers of the Russian railway administration to fulfil obligations, envisaged by the international agreements concluded by the Russian Federation in terms of carrying out state policy, providing state services and managing state property.
The Federal Agency for Railway Transport is in the jurisdiction of the RF Transport Ministry. To make its work more effective, the agency launched a Council coordinating the actions of all the top managers and staff at the agency, its regional administrations and the enterprises in its jurisdiction.
A Public Council of the Federal Agency for Railway Transport was launched to attract railway transport organisations, consumers and interested market players to participate in developing suggestions for forming and carrying out state policy in the railway transport sector.
One of the basic directions of the Agency’s work is realisation of the sub-programme “Railway Transport” (a part of the Federal Target Programme “Modernisation of Russian Transport System (2002-2010)”) using public-private partnership principles.
The Head of the Federal Agency for Railway Transport is Gennady Petrakov. [~DETAIL_TEXT] => The structure of state management in the railway transport sector consists of three units. The Ministry of Transport defines the state policy and is responsible for development of the normative base in the railway segment as well as in the whole transport sector.
The Federal Service for Supervision in the Transport Sphere fulfils supervision functions. The main function of the Federal Agency for Railway Transport, launched in 2004, is carrying out state policy in the railway transport sphere.
The Federal Agency for Railway Transport is a federal body of executive power, carrying out state policy, providing state services and managing state property in the railway sector.
The agency has the powers of the Russian railway administration to fulfil obligations, envisaged by the international agreements concluded by the Russian Federation in terms of carrying out state policy, providing state services and managing state property.
The Federal Agency for Railway Transport is in the jurisdiction of the RF Transport Ministry. To make its work more effective, the agency launched a Council coordinating the actions of all the top managers and staff at the agency, its regional administrations and the enterprises in its jurisdiction.
A Public Council of the Federal Agency for Railway Transport was launched to attract railway transport organisations, consumers and interested market players to participate in developing suggestions for forming and carrying out state policy in the railway transport sector.
One of the basic directions of the Agency’s work is realisation of the sub-programme “Railway Transport” (a part of the Federal Target Programme “Modernisation of Russian Transport System (2002-2010)”) using public-private partnership principles.
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РЖД-Партнер

Kazakhstan: A Pleasant Exception

 Despite the economic crisis, railway transport in Kazakhstan has shown quite good results in the final reports for 2008 - AO National Company “Kazakhstan Temir Zholy“ not only maintained its cargo transportation volumes but has also even exceeded the previous year.
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    [DETAIL_TEXT] => 

Work Done With Profit

The transportation volume in 2008 was 269 million tons of cargo, which was 3% more than in 2007. The turnover of goods grew by 7% in comparison with 2007, to 215 billion t/km. The increase was across all types of transport.

The incomes of AO NC “KTZ” and its branches increased by 15% and were about 502 billion Kazakh tenge. This was possible because of the increase in goods turnover and the raising of cargo transport service tariffs from April 1, 2008. According to the investment program of the company for 2008 to 2012, which has been approved by the Republic of Kazakhstan’s Government, an annual increase in tariffs is planned at a rate of about 15%.

Due to the growth in investments last year, KTZ made major track repairs on 480km of railway lines, bought 2,420 wagons, upgraded 63 locomotives and 700 container units and also acquired road equipment.

Positive AO NC “KTZ” figures occurred because of the growth of transportation volumes in the first three quarters of 2008. In November, a small decrease in volume took place, but at the same time cargo transportation continued to be carried out according to plan. And let us not forget that, for the past two years, a severe shortage of rolling stock has been felt in Kazakhstan, especially in gondolas. In 2007, about 10-12 million tons of cargo was not transported at all. The situation in the second half of 2008 became favourable for those cargo senders who previously had no chance of obtaining a wagon. As a result, by the end of the year the loading volume had increased in comparison to the previous year, as had been planned. And that is with the crisis looming in the background!

However, the turnover of goods across the territory of Kazakhstan is expected to slow down very soon. But railwaymen will be able to take some advantage even from such a situation. “On the one hand, it is a problem. On the other, it is an opportunity for additional investment in this region’s infrastructure. Firstly, it will give us additional opportunities in the future when economic growth starts again and, secondly, investment in the infrastructure will stimulate development of the economy,” Kazakhstan’s Prime Minister Karim Massimov has declared.

Let’s Support Each Other

In order to develop the competitiveness of Kazakhstani companies and increase efficiency in the national economy, President Noursultan Nazarbaev has instructed the Cabinet to make changes to legislation on state purchases and told national companies to fulfil state orders from domestic producers.

Shortly afterwards, the Program of Increasing Kazakhstan’s Share in the Volume of Commodity-Material Assets Bought for the Needs of the National Company and its Branches for the period from 2009 to 2013 was approved in NC KTZ. The main goals of the program are to create new, competitive, export-oriented manufacturing facilities, to expand and modernise existing facilities and to eliminate legal barriers that prevent KTZ using local manufacturers.

Before that, in 2006, KTZ had already created a centre for the development of new manufacturing facilities to replace imports and, at present, the company is cooperating with more than 550 domestic enterprises. For the last few years, the share of Kazakhstan enterprises in the purchase of work and services in the railway sector has become stable and the development is sustainable. But domestically-produced machines, track materials and other products only account for 6.2% of the total amount of goods purchased.

However, by the beginning of 2009, the market share of Kazakhstan’s commodity manufacturers in the railway industry should already have increased several times over. So, KTZ has started the realisation of some mechanical engineering projects:
• To build a factory with American company General Electric, which will assemble Evolution series diesel locomotives at a rate of 100 per year.
• To build passenger carriages with joint-stock company “Almaty Carriage-Repair Factory” at a rate of 100 per year.
• Build a factory for the creation of mainline cargo electric alternating current locomotives with the joint-stock company “Byterek A” with an output of 50 electric locomotives per year.
• Build a factory to manufacture wagons at the “Taman” plant with an output of up to 2,500 wagons per year.

Priority is also being given to projects developing large rolling stock mouldings; organising manufacture of sprung suspension units; producing axles and spare parts for locomotives and organising major repairs and production of power transformers for traction sub-stations. The company is initiating the production of rails via domestic manufacturers.

The National Carrier’s purchasing plan for 2009 amounts to 336.98 billion tenge, and the purchase plan of KTZ’s dependent affiliated organisations is 270.72 billion tenge. However, KTZ Vice-President Eric Sultanov said that, once the results of the first quarter of 2009 have been considered and in view of the anti-recessionary measures adopted, the plans could be changed. But it is already decided that the share of purchases from domestic manufacturers will grow from about 16.2 billion tenge in 2009 up to 175.9 billion tenge by 2013.

The Outlook Is Optimistic

In conditions of economic crisis the question of funding investment projects is raised, including their crediting. Here, it is particularly important to estimate cargo traffic volumes adequately, because it influences an investment project’s repayment rate. In the present economic situation there is a need to set priorities more accurately.

General Director of “Economtransconsulting” Nigmatzhan Isingarin makes rather courageous forecasts regarding the volume of transportation in Kazakhstan up to 2020. In his opinion, by 2020 the total growth of transportation will be about 53% in comparison with 2007. The transit transport growth rate will be the highest – a three-fold increase over the forecasted period. Thus the transit transportation share in the tonnage of total cargo volume will become twice as large – an increase from 5.1% to 10%. This is what will define the efficiency of the railway transit potential in Kazakhstan.

Imports will also grow rapidly, by 184% but in tonnage the gain will be about 20 million tons; the growth in exports will be only about 40%, or 35 million tons. “A possible explanation for the lower growth rates in cargo exports is that the effects have yet to be seen of policies that expanded industrial limits, increased the value of carried cargo by the internal processing of raw materials and increased the share of finished products. It is also the export of oil products, processed coal and coke, concentrates instead of ores, flour instead of grain and so on,” emphasises Mr Isingarin.

On internal routes, transportation growth will be just over 40% but, considering its significant volume, the gain should be about 60 million tons. There should be a reduction in its share of the total number of transportation journeys from 53.8% in 2007 to 50% in 2020.

These forecasts were made before the crisis. It will certainly affect the different industrial and financial economic spheres of Kazakhstan, including cargo rail transportation volumes.

“Probably, the growth in transportation volumes in 2009 will be much lower - somewhere in the region of 5-6 million tons but I think by next winter the demand for cargo wagons will have been already restored. Therefore, we do not change our forecast for the period to 2020,” Mr Isingarin remarks.

The big hopes of KTZ are connected to its partnerships with Russian colleagues. A Comprehensive Plan of Joint Action in the Basic Direction of Cooperation Between OAO “RZD” and AO NC “KTZ” was signed within the framework of the December 2008 Business-Forum “Strategic Partnership 1520: Central Asia” (organised by the company “Business Dialogue” with the support of OAO “Russian Railways”). The planned actions are to be realised between 2009 and 2011. The document assumes cooperation in such spheres as tariff policy, organisation of passenger, container and cargo traffic, development of joint business projects, manufacture and repair of rolling stock, introduction of advanced information technologies and scientific development and also the harmonisation of a normative legal base. An agreement between OAO “The First Cargo Company” and “Kazakhstan Temir Zholy” was also concluded. The contract defines the order of Russian cargo wagon operations on Kazakhstan’s territory and allows the organisation of their return loading. Both documents create the potential for growth in cargo transportation volumes in both countries.

Operation “Anti-Crisis”

The main task of the national company in 2009 is to satisfy the transport needs of Kazakhstan’s economy and society. The anti-recessionary program for 2009 was developed with the purpose of softening the negative influence of the worldwide economic recession on AO NC “KTZ”’s industrial and financial activity. It provides cost reduction measures depending on the scenarios of a decrease in the turnover of goods.

Similar programs are being accepted in other transport companies too. For example, the “Locomotive” company (KTZ branch) has approved a similar program up to 2010 in order to tackle the effects of the crisis. “Regardless of the volume of work, the locomotive park already exists and it is necessary to maintain, repair and update it in due course. The crisis cannot last forever and today we should already be thinking of the future and optimising our work. Certainly, some losses are inevitable but we shall try and muster all our forces to minimise these losses,” the President of “Locomotive” company Kadyl Talaspekov declares.

In the first quarter of 2009 a decrease in rail transportation volumes is expected in Kazakhstan. The forecasts of the Kazakhstan Republic Transport and Communications Ministry are that cargo traffic volumes will fall by about 3-4%. This reduction will be connected with the decrease in volumes of industrial production and the reduction in exports by large Kazakhstan enterprises such as “SSGPO”, “Arcelor Mittal Temirtau“, “Kazakhmys Corporation”, “Aluminium of Kazakhstan” and “Bogatyr Access Komyr”.

“The observable decrease is generally comparable to seasonal fluctuation and is not critical. We shall not be able to see a clearer picture of the situation in the sector earlier than May-June,” the Transport and Communications Minister Serik Ahmetov notes. His opinion is that, together with the observable recession in the world economy, the crisis will have a negative influence on Kazakhstan railway by autumn 2009. “It will come to a critical point if transportation volumes fall by 15-20%. That, in turn, will lead to the need to halve the investment budget on the main network, a cut of 36.5 billion tenge,” Mr Ahmetov has explained.

Resume

Negative tendencies in the sector can also affect the national carrier’s international rating. Moody’s has already put the rating of “Kazakhstan Temir Zholy” on revision with the possibility of a downturn. Such action reflects the risks of the worsening economic and financial situation in the country which can negatively reflect on KTZ’s work and on its ability to finance its current programs. At the same time, KTZ plays a strategic role in the economy of Kazakhstan and is supported by the Government, so in a critical situation KTZ can probably count on support and preferential treatment.

by Elena Ushkova

[~DETAIL_TEXT] =>

Work Done With Profit

The transportation volume in 2008 was 269 million tons of cargo, which was 3% more than in 2007. The turnover of goods grew by 7% in comparison with 2007, to 215 billion t/km. The increase was across all types of transport.

The incomes of AO NC “KTZ” and its branches increased by 15% and were about 502 billion Kazakh tenge. This was possible because of the increase in goods turnover and the raising of cargo transport service tariffs from April 1, 2008. According to the investment program of the company for 2008 to 2012, which has been approved by the Republic of Kazakhstan’s Government, an annual increase in tariffs is planned at a rate of about 15%.

Due to the growth in investments last year, KTZ made major track repairs on 480km of railway lines, bought 2,420 wagons, upgraded 63 locomotives and 700 container units and also acquired road equipment.

Positive AO NC “KTZ” figures occurred because of the growth of transportation volumes in the first three quarters of 2008. In November, a small decrease in volume took place, but at the same time cargo transportation continued to be carried out according to plan. And let us not forget that, for the past two years, a severe shortage of rolling stock has been felt in Kazakhstan, especially in gondolas. In 2007, about 10-12 million tons of cargo was not transported at all. The situation in the second half of 2008 became favourable for those cargo senders who previously had no chance of obtaining a wagon. As a result, by the end of the year the loading volume had increased in comparison to the previous year, as had been planned. And that is with the crisis looming in the background!

However, the turnover of goods across the territory of Kazakhstan is expected to slow down very soon. But railwaymen will be able to take some advantage even from such a situation. “On the one hand, it is a problem. On the other, it is an opportunity for additional investment in this region’s infrastructure. Firstly, it will give us additional opportunities in the future when economic growth starts again and, secondly, investment in the infrastructure will stimulate development of the economy,” Kazakhstan’s Prime Minister Karim Massimov has declared.

Let’s Support Each Other

In order to develop the competitiveness of Kazakhstani companies and increase efficiency in the national economy, President Noursultan Nazarbaev has instructed the Cabinet to make changes to legislation on state purchases and told national companies to fulfil state orders from domestic producers.

Shortly afterwards, the Program of Increasing Kazakhstan’s Share in the Volume of Commodity-Material Assets Bought for the Needs of the National Company and its Branches for the period from 2009 to 2013 was approved in NC KTZ. The main goals of the program are to create new, competitive, export-oriented manufacturing facilities, to expand and modernise existing facilities and to eliminate legal barriers that prevent KTZ using local manufacturers.

Before that, in 2006, KTZ had already created a centre for the development of new manufacturing facilities to replace imports and, at present, the company is cooperating with more than 550 domestic enterprises. For the last few years, the share of Kazakhstan enterprises in the purchase of work and services in the railway sector has become stable and the development is sustainable. But domestically-produced machines, track materials and other products only account for 6.2% of the total amount of goods purchased.

However, by the beginning of 2009, the market share of Kazakhstan’s commodity manufacturers in the railway industry should already have increased several times over. So, KTZ has started the realisation of some mechanical engineering projects:
• To build a factory with American company General Electric, which will assemble Evolution series diesel locomotives at a rate of 100 per year.
• To build passenger carriages with joint-stock company “Almaty Carriage-Repair Factory” at a rate of 100 per year.
• Build a factory for the creation of mainline cargo electric alternating current locomotives with the joint-stock company “Byterek A” with an output of 50 electric locomotives per year.
• Build a factory to manufacture wagons at the “Taman” plant with an output of up to 2,500 wagons per year.

Priority is also being given to projects developing large rolling stock mouldings; organising manufacture of sprung suspension units; producing axles and spare parts for locomotives and organising major repairs and production of power transformers for traction sub-stations. The company is initiating the production of rails via domestic manufacturers.

The National Carrier’s purchasing plan for 2009 amounts to 336.98 billion tenge, and the purchase plan of KTZ’s dependent affiliated organisations is 270.72 billion tenge. However, KTZ Vice-President Eric Sultanov said that, once the results of the first quarter of 2009 have been considered and in view of the anti-recessionary measures adopted, the plans could be changed. But it is already decided that the share of purchases from domestic manufacturers will grow from about 16.2 billion tenge in 2009 up to 175.9 billion tenge by 2013.

The Outlook Is Optimistic

In conditions of economic crisis the question of funding investment projects is raised, including their crediting. Here, it is particularly important to estimate cargo traffic volumes adequately, because it influences an investment project’s repayment rate. In the present economic situation there is a need to set priorities more accurately.

General Director of “Economtransconsulting” Nigmatzhan Isingarin makes rather courageous forecasts regarding the volume of transportation in Kazakhstan up to 2020. In his opinion, by 2020 the total growth of transportation will be about 53% in comparison with 2007. The transit transport growth rate will be the highest – a three-fold increase over the forecasted period. Thus the transit transportation share in the tonnage of total cargo volume will become twice as large – an increase from 5.1% to 10%. This is what will define the efficiency of the railway transit potential in Kazakhstan.

Imports will also grow rapidly, by 184% but in tonnage the gain will be about 20 million tons; the growth in exports will be only about 40%, or 35 million tons. “A possible explanation for the lower growth rates in cargo exports is that the effects have yet to be seen of policies that expanded industrial limits, increased the value of carried cargo by the internal processing of raw materials and increased the share of finished products. It is also the export of oil products, processed coal and coke, concentrates instead of ores, flour instead of grain and so on,” emphasises Mr Isingarin.

On internal routes, transportation growth will be just over 40% but, considering its significant volume, the gain should be about 60 million tons. There should be a reduction in its share of the total number of transportation journeys from 53.8% in 2007 to 50% in 2020.

These forecasts were made before the crisis. It will certainly affect the different industrial and financial economic spheres of Kazakhstan, including cargo rail transportation volumes.

“Probably, the growth in transportation volumes in 2009 will be much lower - somewhere in the region of 5-6 million tons but I think by next winter the demand for cargo wagons will have been already restored. Therefore, we do not change our forecast for the period to 2020,” Mr Isingarin remarks.

The big hopes of KTZ are connected to its partnerships with Russian colleagues. A Comprehensive Plan of Joint Action in the Basic Direction of Cooperation Between OAO “RZD” and AO NC “KTZ” was signed within the framework of the December 2008 Business-Forum “Strategic Partnership 1520: Central Asia” (organised by the company “Business Dialogue” with the support of OAO “Russian Railways”). The planned actions are to be realised between 2009 and 2011. The document assumes cooperation in such spheres as tariff policy, organisation of passenger, container and cargo traffic, development of joint business projects, manufacture and repair of rolling stock, introduction of advanced information technologies and scientific development and also the harmonisation of a normative legal base. An agreement between OAO “The First Cargo Company” and “Kazakhstan Temir Zholy” was also concluded. The contract defines the order of Russian cargo wagon operations on Kazakhstan’s territory and allows the organisation of their return loading. Both documents create the potential for growth in cargo transportation volumes in both countries.

Operation “Anti-Crisis”

The main task of the national company in 2009 is to satisfy the transport needs of Kazakhstan’s economy and society. The anti-recessionary program for 2009 was developed with the purpose of softening the negative influence of the worldwide economic recession on AO NC “KTZ”’s industrial and financial activity. It provides cost reduction measures depending on the scenarios of a decrease in the turnover of goods.

Similar programs are being accepted in other transport companies too. For example, the “Locomotive” company (KTZ branch) has approved a similar program up to 2010 in order to tackle the effects of the crisis. “Regardless of the volume of work, the locomotive park already exists and it is necessary to maintain, repair and update it in due course. The crisis cannot last forever and today we should already be thinking of the future and optimising our work. Certainly, some losses are inevitable but we shall try and muster all our forces to minimise these losses,” the President of “Locomotive” company Kadyl Talaspekov declares.

In the first quarter of 2009 a decrease in rail transportation volumes is expected in Kazakhstan. The forecasts of the Kazakhstan Republic Transport and Communications Ministry are that cargo traffic volumes will fall by about 3-4%. This reduction will be connected with the decrease in volumes of industrial production and the reduction in exports by large Kazakhstan enterprises such as “SSGPO”, “Arcelor Mittal Temirtau“, “Kazakhmys Corporation”, “Aluminium of Kazakhstan” and “Bogatyr Access Komyr”.

“The observable decrease is generally comparable to seasonal fluctuation and is not critical. We shall not be able to see a clearer picture of the situation in the sector earlier than May-June,” the Transport and Communications Minister Serik Ahmetov notes. His opinion is that, together with the observable recession in the world economy, the crisis will have a negative influence on Kazakhstan railway by autumn 2009. “It will come to a critical point if transportation volumes fall by 15-20%. That, in turn, will lead to the need to halve the investment budget on the main network, a cut of 36.5 billion tenge,” Mr Ahmetov has explained.

Resume

Negative tendencies in the sector can also affect the national carrier’s international rating. Moody’s has already put the rating of “Kazakhstan Temir Zholy” on revision with the possibility of a downturn. Such action reflects the risks of the worsening economic and financial situation in the country which can negatively reflect on KTZ’s work and on its ability to finance its current programs. At the same time, KTZ plays a strategic role in the economy of Kazakhstan and is supported by the Government, so in a critical situation KTZ can probably count on support and preferential treatment.

by Elena Ushkova

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Work Done With Profit

The transportation volume in 2008 was 269 million tons of cargo, which was 3% more than in 2007. The turnover of goods grew by 7% in comparison with 2007, to 215 billion t/km. The increase was across all types of transport.

The incomes of AO NC “KTZ” and its branches increased by 15% and were about 502 billion Kazakh tenge. This was possible because of the increase in goods turnover and the raising of cargo transport service tariffs from April 1, 2008. According to the investment program of the company for 2008 to 2012, which has been approved by the Republic of Kazakhstan’s Government, an annual increase in tariffs is planned at a rate of about 15%.

Due to the growth in investments last year, KTZ made major track repairs on 480km of railway lines, bought 2,420 wagons, upgraded 63 locomotives and 700 container units and also acquired road equipment.

Positive AO NC “KTZ” figures occurred because of the growth of transportation volumes in the first three quarters of 2008. In November, a small decrease in volume took place, but at the same time cargo transportation continued to be carried out according to plan. And let us not forget that, for the past two years, a severe shortage of rolling stock has been felt in Kazakhstan, especially in gondolas. In 2007, about 10-12 million tons of cargo was not transported at all. The situation in the second half of 2008 became favourable for those cargo senders who previously had no chance of obtaining a wagon. As a result, by the end of the year the loading volume had increased in comparison to the previous year, as had been planned. And that is with the crisis looming in the background!

However, the turnover of goods across the territory of Kazakhstan is expected to slow down very soon. But railwaymen will be able to take some advantage even from such a situation. “On the one hand, it is a problem. On the other, it is an opportunity for additional investment in this region’s infrastructure. Firstly, it will give us additional opportunities in the future when economic growth starts again and, secondly, investment in the infrastructure will stimulate development of the economy,” Kazakhstan’s Prime Minister Karim Massimov has declared.

Let’s Support Each Other

In order to develop the competitiveness of Kazakhstani companies and increase efficiency in the national economy, President Noursultan Nazarbaev has instructed the Cabinet to make changes to legislation on state purchases and told national companies to fulfil state orders from domestic producers.

Shortly afterwards, the Program of Increasing Kazakhstan’s Share in the Volume of Commodity-Material Assets Bought for the Needs of the National Company and its Branches for the period from 2009 to 2013 was approved in NC KTZ. The main goals of the program are to create new, competitive, export-oriented manufacturing facilities, to expand and modernise existing facilities and to eliminate legal barriers that prevent KTZ using local manufacturers.

Before that, in 2006, KTZ had already created a centre for the development of new manufacturing facilities to replace imports and, at present, the company is cooperating with more than 550 domestic enterprises. For the last few years, the share of Kazakhstan enterprises in the purchase of work and services in the railway sector has become stable and the development is sustainable. But domestically-produced machines, track materials and other products only account for 6.2% of the total amount of goods purchased.

However, by the beginning of 2009, the market share of Kazakhstan’s commodity manufacturers in the railway industry should already have increased several times over. So, KTZ has started the realisation of some mechanical engineering projects:
• To build a factory with American company General Electric, which will assemble Evolution series diesel locomotives at a rate of 100 per year.
• To build passenger carriages with joint-stock company “Almaty Carriage-Repair Factory” at a rate of 100 per year.
• Build a factory for the creation of mainline cargo electric alternating current locomotives with the joint-stock company “Byterek A” with an output of 50 electric locomotives per year.
• Build a factory to manufacture wagons at the “Taman” plant with an output of up to 2,500 wagons per year.

Priority is also being given to projects developing large rolling stock mouldings; organising manufacture of sprung suspension units; producing axles and spare parts for locomotives and organising major repairs and production of power transformers for traction sub-stations. The company is initiating the production of rails via domestic manufacturers.

The National Carrier’s purchasing plan for 2009 amounts to 336.98 billion tenge, and the purchase plan of KTZ’s dependent affiliated organisations is 270.72 billion tenge. However, KTZ Vice-President Eric Sultanov said that, once the results of the first quarter of 2009 have been considered and in view of the anti-recessionary measures adopted, the plans could be changed. But it is already decided that the share of purchases from domestic manufacturers will grow from about 16.2 billion tenge in 2009 up to 175.9 billion tenge by 2013.

The Outlook Is Optimistic

In conditions of economic crisis the question of funding investment projects is raised, including their crediting. Here, it is particularly important to estimate cargo traffic volumes adequately, because it influences an investment project’s repayment rate. In the present economic situation there is a need to set priorities more accurately.

General Director of “Economtransconsulting” Nigmatzhan Isingarin makes rather courageous forecasts regarding the volume of transportation in Kazakhstan up to 2020. In his opinion, by 2020 the total growth of transportation will be about 53% in comparison with 2007. The transit transport growth rate will be the highest – a three-fold increase over the forecasted period. Thus the transit transportation share in the tonnage of total cargo volume will become twice as large – an increase from 5.1% to 10%. This is what will define the efficiency of the railway transit potential in Kazakhstan.

Imports will also grow rapidly, by 184% but in tonnage the gain will be about 20 million tons; the growth in exports will be only about 40%, or 35 million tons. “A possible explanation for the lower growth rates in cargo exports is that the effects have yet to be seen of policies that expanded industrial limits, increased the value of carried cargo by the internal processing of raw materials and increased the share of finished products. It is also the export of oil products, processed coal and coke, concentrates instead of ores, flour instead of grain and so on,” emphasises Mr Isingarin.

On internal routes, transportation growth will be just over 40% but, considering its significant volume, the gain should be about 60 million tons. There should be a reduction in its share of the total number of transportation journeys from 53.8% in 2007 to 50% in 2020.

These forecasts were made before the crisis. It will certainly affect the different industrial and financial economic spheres of Kazakhstan, including cargo rail transportation volumes.

“Probably, the growth in transportation volumes in 2009 will be much lower - somewhere in the region of 5-6 million tons but I think by next winter the demand for cargo wagons will have been already restored. Therefore, we do not change our forecast for the period to 2020,” Mr Isingarin remarks.

The big hopes of KTZ are connected to its partnerships with Russian colleagues. A Comprehensive Plan of Joint Action in the Basic Direction of Cooperation Between OAO “RZD” and AO NC “KTZ” was signed within the framework of the December 2008 Business-Forum “Strategic Partnership 1520: Central Asia” (organised by the company “Business Dialogue” with the support of OAO “Russian Railways”). The planned actions are to be realised between 2009 and 2011. The document assumes cooperation in such spheres as tariff policy, organisation of passenger, container and cargo traffic, development of joint business projects, manufacture and repair of rolling stock, introduction of advanced information technologies and scientific development and also the harmonisation of a normative legal base. An agreement between OAO “The First Cargo Company” and “Kazakhstan Temir Zholy” was also concluded. The contract defines the order of Russian cargo wagon operations on Kazakhstan’s territory and allows the organisation of their return loading. Both documents create the potential for growth in cargo transportation volumes in both countries.

Operation “Anti-Crisis”

The main task of the national company in 2009 is to satisfy the transport needs of Kazakhstan’s economy and society. The anti-recessionary program for 2009 was developed with the purpose of softening the negative influence of the worldwide economic recession on AO NC “KTZ”’s industrial and financial activity. It provides cost reduction measures depending on the scenarios of a decrease in the turnover of goods.

Similar programs are being accepted in other transport companies too. For example, the “Locomotive” company (KTZ branch) has approved a similar program up to 2010 in order to tackle the effects of the crisis. “Regardless of the volume of work, the locomotive park already exists and it is necessary to maintain, repair and update it in due course. The crisis cannot last forever and today we should already be thinking of the future and optimising our work. Certainly, some losses are inevitable but we shall try and muster all our forces to minimise these losses,” the President of “Locomotive” company Kadyl Talaspekov declares.

In the first quarter of 2009 a decrease in rail transportation volumes is expected in Kazakhstan. The forecasts of the Kazakhstan Republic Transport and Communications Ministry are that cargo traffic volumes will fall by about 3-4%. This reduction will be connected with the decrease in volumes of industrial production and the reduction in exports by large Kazakhstan enterprises such as “SSGPO”, “Arcelor Mittal Temirtau“, “Kazakhmys Corporation”, “Aluminium of Kazakhstan” and “Bogatyr Access Komyr”.

“The observable decrease is generally comparable to seasonal fluctuation and is not critical. We shall not be able to see a clearer picture of the situation in the sector earlier than May-June,” the Transport and Communications Minister Serik Ahmetov notes. His opinion is that, together with the observable recession in the world economy, the crisis will have a negative influence on Kazakhstan railway by autumn 2009. “It will come to a critical point if transportation volumes fall by 15-20%. That, in turn, will lead to the need to halve the investment budget on the main network, a cut of 36.5 billion tenge,” Mr Ahmetov has explained.

Resume

Negative tendencies in the sector can also affect the national carrier’s international rating. Moody’s has already put the rating of “Kazakhstan Temir Zholy” on revision with the possibility of a downturn. Such action reflects the risks of the worsening economic and financial situation in the country which can negatively reflect on KTZ’s work and on its ability to finance its current programs. At the same time, KTZ plays a strategic role in the economy of Kazakhstan and is supported by the Government, so in a critical situation KTZ can probably count on support and preferential treatment.

by Elena Ushkova

[~DETAIL_TEXT] =>

Work Done With Profit

The transportation volume in 2008 was 269 million tons of cargo, which was 3% more than in 2007. The turnover of goods grew by 7% in comparison with 2007, to 215 billion t/km. The increase was across all types of transport.

The incomes of AO NC “KTZ” and its branches increased by 15% and were about 502 billion Kazakh tenge. This was possible because of the increase in goods turnover and the raising of cargo transport service tariffs from April 1, 2008. According to the investment program of the company for 2008 to 2012, which has been approved by the Republic of Kazakhstan’s Government, an annual increase in tariffs is planned at a rate of about 15%.

Due to the growth in investments last year, KTZ made major track repairs on 480km of railway lines, bought 2,420 wagons, upgraded 63 locomotives and 700 container units and also acquired road equipment.

Positive AO NC “KTZ” figures occurred because of the growth of transportation volumes in the first three quarters of 2008. In November, a small decrease in volume took place, but at the same time cargo transportation continued to be carried out according to plan. And let us not forget that, for the past two years, a severe shortage of rolling stock has been felt in Kazakhstan, especially in gondolas. In 2007, about 10-12 million tons of cargo was not transported at all. The situation in the second half of 2008 became favourable for those cargo senders who previously had no chance of obtaining a wagon. As a result, by the end of the year the loading volume had increased in comparison to the previous year, as had been planned. And that is with the crisis looming in the background!

However, the turnover of goods across the territory of Kazakhstan is expected to slow down very soon. But railwaymen will be able to take some advantage even from such a situation. “On the one hand, it is a problem. On the other, it is an opportunity for additional investment in this region’s infrastructure. Firstly, it will give us additional opportunities in the future when economic growth starts again and, secondly, investment in the infrastructure will stimulate development of the economy,” Kazakhstan’s Prime Minister Karim Massimov has declared.

Let’s Support Each Other

In order to develop the competitiveness of Kazakhstani companies and increase efficiency in the national economy, President Noursultan Nazarbaev has instructed the Cabinet to make changes to legislation on state purchases and told national companies to fulfil state orders from domestic producers.

Shortly afterwards, the Program of Increasing Kazakhstan’s Share in the Volume of Commodity-Material Assets Bought for the Needs of the National Company and its Branches for the period from 2009 to 2013 was approved in NC KTZ. The main goals of the program are to create new, competitive, export-oriented manufacturing facilities, to expand and modernise existing facilities and to eliminate legal barriers that prevent KTZ using local manufacturers.

Before that, in 2006, KTZ had already created a centre for the development of new manufacturing facilities to replace imports and, at present, the company is cooperating with more than 550 domestic enterprises. For the last few years, the share of Kazakhstan enterprises in the purchase of work and services in the railway sector has become stable and the development is sustainable. But domestically-produced machines, track materials and other products only account for 6.2% of the total amount of goods purchased.

However, by the beginning of 2009, the market share of Kazakhstan’s commodity manufacturers in the railway industry should already have increased several times over. So, KTZ has started the realisation of some mechanical engineering projects:
• To build a factory with American company General Electric, which will assemble Evolution series diesel locomotives at a rate of 100 per year.
• To build passenger carriages with joint-stock company “Almaty Carriage-Repair Factory” at a rate of 100 per year.
• Build a factory for the creation of mainline cargo electric alternating current locomotives with the joint-stock company “Byterek A” with an output of 50 electric locomotives per year.
• Build a factory to manufacture wagons at the “Taman” plant with an output of up to 2,500 wagons per year.

Priority is also being given to projects developing large rolling stock mouldings; organising manufacture of sprung suspension units; producing axles and spare parts for locomotives and organising major repairs and production of power transformers for traction sub-stations. The company is initiating the production of rails via domestic manufacturers.

The National Carrier’s purchasing plan for 2009 amounts to 336.98 billion tenge, and the purchase plan of KTZ’s dependent affiliated organisations is 270.72 billion tenge. However, KTZ Vice-President Eric Sultanov said that, once the results of the first quarter of 2009 have been considered and in view of the anti-recessionary measures adopted, the plans could be changed. But it is already decided that the share of purchases from domestic manufacturers will grow from about 16.2 billion tenge in 2009 up to 175.9 billion tenge by 2013.

The Outlook Is Optimistic

In conditions of economic crisis the question of funding investment projects is raised, including their crediting. Here, it is particularly important to estimate cargo traffic volumes adequately, because it influences an investment project’s repayment rate. In the present economic situation there is a need to set priorities more accurately.

General Director of “Economtransconsulting” Nigmatzhan Isingarin makes rather courageous forecasts regarding the volume of transportation in Kazakhstan up to 2020. In his opinion, by 2020 the total growth of transportation will be about 53% in comparison with 2007. The transit transport growth rate will be the highest – a three-fold increase over the forecasted period. Thus the transit transportation share in the tonnage of total cargo volume will become twice as large – an increase from 5.1% to 10%. This is what will define the efficiency of the railway transit potential in Kazakhstan.

Imports will also grow rapidly, by 184% but in tonnage the gain will be about 20 million tons; the growth in exports will be only about 40%, or 35 million tons. “A possible explanation for the lower growth rates in cargo exports is that the effects have yet to be seen of policies that expanded industrial limits, increased the value of carried cargo by the internal processing of raw materials and increased the share of finished products. It is also the export of oil products, processed coal and coke, concentrates instead of ores, flour instead of grain and so on,” emphasises Mr Isingarin.

On internal routes, transportation growth will be just over 40% but, considering its significant volume, the gain should be about 60 million tons. There should be a reduction in its share of the total number of transportation journeys from 53.8% in 2007 to 50% in 2020.

These forecasts were made before the crisis. It will certainly affect the different industrial and financial economic spheres of Kazakhstan, including cargo rail transportation volumes.

“Probably, the growth in transportation volumes in 2009 will be much lower - somewhere in the region of 5-6 million tons but I think by next winter the demand for cargo wagons will have been already restored. Therefore, we do not change our forecast for the period to 2020,” Mr Isingarin remarks.

The big hopes of KTZ are connected to its partnerships with Russian colleagues. A Comprehensive Plan of Joint Action in the Basic Direction of Cooperation Between OAO “RZD” and AO NC “KTZ” was signed within the framework of the December 2008 Business-Forum “Strategic Partnership 1520: Central Asia” (organised by the company “Business Dialogue” with the support of OAO “Russian Railways”). The planned actions are to be realised between 2009 and 2011. The document assumes cooperation in such spheres as tariff policy, organisation of passenger, container and cargo traffic, development of joint business projects, manufacture and repair of rolling stock, introduction of advanced information technologies and scientific development and also the harmonisation of a normative legal base. An agreement between OAO “The First Cargo Company” and “Kazakhstan Temir Zholy” was also concluded. The contract defines the order of Russian cargo wagon operations on Kazakhstan’s territory and allows the organisation of their return loading. Both documents create the potential for growth in cargo transportation volumes in both countries.

Operation “Anti-Crisis”

The main task of the national company in 2009 is to satisfy the transport needs of Kazakhstan’s economy and society. The anti-recessionary program for 2009 was developed with the purpose of softening the negative influence of the worldwide economic recession on AO NC “KTZ”’s industrial and financial activity. It provides cost reduction measures depending on the scenarios of a decrease in the turnover of goods.

Similar programs are being accepted in other transport companies too. For example, the “Locomotive” company (KTZ branch) has approved a similar program up to 2010 in order to tackle the effects of the crisis. “Regardless of the volume of work, the locomotive park already exists and it is necessary to maintain, repair and update it in due course. The crisis cannot last forever and today we should already be thinking of the future and optimising our work. Certainly, some losses are inevitable but we shall try and muster all our forces to minimise these losses,” the President of “Locomotive” company Kadyl Talaspekov declares.

In the first quarter of 2009 a decrease in rail transportation volumes is expected in Kazakhstan. The forecasts of the Kazakhstan Republic Transport and Communications Ministry are that cargo traffic volumes will fall by about 3-4%. This reduction will be connected with the decrease in volumes of industrial production and the reduction in exports by large Kazakhstan enterprises such as “SSGPO”, “Arcelor Mittal Temirtau“, “Kazakhmys Corporation”, “Aluminium of Kazakhstan” and “Bogatyr Access Komyr”.

“The observable decrease is generally comparable to seasonal fluctuation and is not critical. We shall not be able to see a clearer picture of the situation in the sector earlier than May-June,” the Transport and Communications Minister Serik Ahmetov notes. His opinion is that, together with the observable recession in the world economy, the crisis will have a negative influence on Kazakhstan railway by autumn 2009. “It will come to a critical point if transportation volumes fall by 15-20%. That, in turn, will lead to the need to halve the investment budget on the main network, a cut of 36.5 billion tenge,” Mr Ahmetov has explained.

Resume

Negative tendencies in the sector can also affect the national carrier’s international rating. Moody’s has already put the rating of “Kazakhstan Temir Zholy” on revision with the possibility of a downturn. Such action reflects the risks of the worsening economic and financial situation in the country which can negatively reflect on KTZ’s work and on its ability to finance its current programs. At the same time, KTZ plays a strategic role in the economy of Kazakhstan and is supported by the Government, so in a critical situation KTZ can probably count on support and preferential treatment.

by Elena Ushkova

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РЖД-Партнер

Transport in the Ukraine Is Between a Rock and a Hard Place

 Last year cargo transportation by all means of Ukrainian transport dropped by 0.3%. For the first time in a decade, the Ukrainian transport branch fell into minus figures, thus following the universal economic trend.
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Falling in all Sectors

The crisis in the form of a decrease in transportation volumes has affected all means of Ukrainian transport, but railways and ports which carry the most mass industrial cargo volumes have appeared to be the worst affected. Thus, the reduction in Ukrainian production has led to decreases in internal and export transportation by railway of 3.2% and 7% respectively; ferrous metal cargo transportation volume has fallen by 12%. The fall in Russian exports has caused a 3.1% reduction in railway transit through the Ukraine. We should like to mention here that a year earlier, in 2007, “Ukrzaliznytsya” (Ukrainian Railways) transit added 20% to their volume and railwaymen made their plans counting on further steady rates of growth.

Railway transport has generally appeared to be affected by the crisis most of all. Month by month since last autumn, “Ukrzaliznytsya” was losing transport volumes (including self-loading, import and transit) – of 38.8 million tons in October; 30.4 million tons in November and 30 million tons in December. As a result, in the course of 2008, the industry lost 13.7 million tons of cargo, which was 3% down on the previous year. An even more considerable fact was the 4% annual reduction (16.2 million tons) in cargo departures (Ukrzaliznytsya’s own loading) by railway. Practically the whole range of cargoes sent, except for coal (for heating) and grain cargoes, has collapsed. “Ukrzaliznytsya” has managed to maintain these two positions in the transit structure, thus compensating for lost volumes.

Road transport has managed to keep a positive momentum because its relative share in the movement of industrial cargoes has been extremely insignificant until now. Its annual growth was +10%; however monthly estimates give a picture of impending recession here too: 17 million tons in October; 14.8 million in November and 13.6 million in December. The general economic situation in the country - the bank crisis, a frozen home market and inflation - has affected it.

The general picture of developments would be incomplete without mentioning –the volumes in marine transport, which shrink year by year. It is difficult to specify the factors in the present crisis here because an independent Ukraine, which lost its bases, in the form of the USSR’s fleet, and does not have the resources for restoration, consistently loses its position in the sea cargo shipment market. Nevertheless, it is possible to notice a sharp fall in the sector where the positions of the Ukraine had been steady enough – i.e. river transportation of iron ores from ports on the Ukrainian Danube to European manufacturers of metal products.

The sea ports of the Ukraine have finished the year with a positive result due to the safety factor gained at the beginning of the year. In the second half of the year, port loadings became unstable and tended to decrease. The collapse of the world ferrous metals market has led to a sharp fall in cargo transport services for the whole metallurgical ores sector. As a result, transits in which coal, ore and ferrous metals traditionally prevailed, have shown a 4.1% annual decrease. More diversified than before, exports in these sectors have kept their growth to a level of +19.5%. However, monthly transport service volumes have fallen from 16 million tons in the first quarter down to 14 million tons in the last one.

Cargo Owners’ Interests Are Above Those Of Transporters

In crisis conditions the state, which traditionally considers the state transport sector from a fiscal point of view, has renounced transporters’ interests in favour of the industrial lobby, because industry creates export volumes. In November, the Ukrainian Government signed a memorandum with representatives of the metallurgical ores complex, stabilising “Ukrzaliznytsya” cargo railway rates. In spite of the fact that the promise given by the metallurgists in exchange to reduce metal prices for railwaymen remains unfulfilled, the moratorium on growth of tariffs was extended up to the end of 2008 and then prolonged to the first quarter of the current year. “Ukrzaliznytsya” has estimated that the agreement with metallurgists cost the industry $0.5 billion in lost revenues. About another $0.3 billion in revenue was lost by the railwaymen because of falling cargo traffic volumes. Together with a third damaging factor, crisis-born inflation, the decrease in “Ukrzaliznytsya”’s income was at least $2 billion compared with the original plan for 2008. All these factors affect the financial stability of the railway sector. “The “Ukrzaliznytsya” debt to foreign banks at the beginning of 2009 was more than $1 billion. This year payments of about $0.45 billion are required just to maintain this debt,” Vadim Tkachev, the Chairman of the Ukrainian Trade Union of Railwaymen has announced, while insisting that the Government revises its policies regarding “Ukrzaliznytsya”.

Representatives of ports also have their own reasons to approach the government, being anxious after the cancellation of discounts in cargo transit tariffs. The system of discounts, which covers a wide variety of ports, had been a powerful method to attract mass cargo transits from Russia. The Ukrainian Ministry of Transport and Communication, declaring its idea to replace the failed export market with transits, cancelled the tariff discounts for Russian cargoes that had been forming the cargo base, not only for ports, but also for “Ukrzaliznytsya” too. “Discounts are a corruption,” the Ukrainian Minister of Transport and Communication Joseph Vinsky has declared, and he demanded equal tariff conditions for all ports. In the conditions of an already unstable cargo base, the ports will lose their ties with the cargo owners, which have been developed over centuries, and this will hardly strengthen the position of this sector of the economy.

Meanwhile, the Ministry demands that ports remain profitable in the current year. The same has been required of state railway enterprises. A considerable 30-40% decrease in the profit base is not allowed either, though the question of raising prices for cargo transportations has not been raised so far. At the same time, the Ministry of Transport and Communications has worked out that last year it was tariff growth that provided 90% of Ukrzaliznytsya’s profit. Measures introduced in the plan of action to reduce the negative effect of the economic crisis in the state’s transport complex are either too obvious (for example, to search for additional transit volumes and export cargoes, or to improve tariff policies), too unrealistic (a reduction in the price of metals for transport), too risky (to create the conditions that would attract more investment), or too anti-social (the transfer of a part of the personnel to a shorter working week, or a moratorium on wage increases). The most recent and up-to-date idea of saving energy looks to have more potential, though it is hardly able to make a fundamental change to the situation in the sector. The Ministry is putting its emphasis on strengthening vertical management and sorting out financial flows in this sector. “Our reply to the crisis is reform,” Mr Vinsky has announced. For the railway sector this means the creation of the State Enterprise “Ukrzaliznytsya” by the end of 2009 on the basis of the six existing railways in the Ukraine. But in spite of all the positivity of the measures outlined, they will hardly be able to help overcome the features of the crisis in the Ukraine, which is too prone to political instability.

By Vladimir Katkevich

[~DETAIL_TEXT] =>

Falling in all Sectors

The crisis in the form of a decrease in transportation volumes has affected all means of Ukrainian transport, but railways and ports which carry the most mass industrial cargo volumes have appeared to be the worst affected. Thus, the reduction in Ukrainian production has led to decreases in internal and export transportation by railway of 3.2% and 7% respectively; ferrous metal cargo transportation volume has fallen by 12%. The fall in Russian exports has caused a 3.1% reduction in railway transit through the Ukraine. We should like to mention here that a year earlier, in 2007, “Ukrzaliznytsya” (Ukrainian Railways) transit added 20% to their volume and railwaymen made their plans counting on further steady rates of growth.

Railway transport has generally appeared to be affected by the crisis most of all. Month by month since last autumn, “Ukrzaliznytsya” was losing transport volumes (including self-loading, import and transit) – of 38.8 million tons in October; 30.4 million tons in November and 30 million tons in December. As a result, in the course of 2008, the industry lost 13.7 million tons of cargo, which was 3% down on the previous year. An even more considerable fact was the 4% annual reduction (16.2 million tons) in cargo departures (Ukrzaliznytsya’s own loading) by railway. Practically the whole range of cargoes sent, except for coal (for heating) and grain cargoes, has collapsed. “Ukrzaliznytsya” has managed to maintain these two positions in the transit structure, thus compensating for lost volumes.

Road transport has managed to keep a positive momentum because its relative share in the movement of industrial cargoes has been extremely insignificant until now. Its annual growth was +10%; however monthly estimates give a picture of impending recession here too: 17 million tons in October; 14.8 million in November and 13.6 million in December. The general economic situation in the country - the bank crisis, a frozen home market and inflation - has affected it.

The general picture of developments would be incomplete without mentioning –the volumes in marine transport, which shrink year by year. It is difficult to specify the factors in the present crisis here because an independent Ukraine, which lost its bases, in the form of the USSR’s fleet, and does not have the resources for restoration, consistently loses its position in the sea cargo shipment market. Nevertheless, it is possible to notice a sharp fall in the sector where the positions of the Ukraine had been steady enough – i.e. river transportation of iron ores from ports on the Ukrainian Danube to European manufacturers of metal products.

The sea ports of the Ukraine have finished the year with a positive result due to the safety factor gained at the beginning of the year. In the second half of the year, port loadings became unstable and tended to decrease. The collapse of the world ferrous metals market has led to a sharp fall in cargo transport services for the whole metallurgical ores sector. As a result, transits in which coal, ore and ferrous metals traditionally prevailed, have shown a 4.1% annual decrease. More diversified than before, exports in these sectors have kept their growth to a level of +19.5%. However, monthly transport service volumes have fallen from 16 million tons in the first quarter down to 14 million tons in the last one.

Cargo Owners’ Interests Are Above Those Of Transporters

In crisis conditions the state, which traditionally considers the state transport sector from a fiscal point of view, has renounced transporters’ interests in favour of the industrial lobby, because industry creates export volumes. In November, the Ukrainian Government signed a memorandum with representatives of the metallurgical ores complex, stabilising “Ukrzaliznytsya” cargo railway rates. In spite of the fact that the promise given by the metallurgists in exchange to reduce metal prices for railwaymen remains unfulfilled, the moratorium on growth of tariffs was extended up to the end of 2008 and then prolonged to the first quarter of the current year. “Ukrzaliznytsya” has estimated that the agreement with metallurgists cost the industry $0.5 billion in lost revenues. About another $0.3 billion in revenue was lost by the railwaymen because of falling cargo traffic volumes. Together with a third damaging factor, crisis-born inflation, the decrease in “Ukrzaliznytsya”’s income was at least $2 billion compared with the original plan for 2008. All these factors affect the financial stability of the railway sector. “The “Ukrzaliznytsya” debt to foreign banks at the beginning of 2009 was more than $1 billion. This year payments of about $0.45 billion are required just to maintain this debt,” Vadim Tkachev, the Chairman of the Ukrainian Trade Union of Railwaymen has announced, while insisting that the Government revises its policies regarding “Ukrzaliznytsya”.

Representatives of ports also have their own reasons to approach the government, being anxious after the cancellation of discounts in cargo transit tariffs. The system of discounts, which covers a wide variety of ports, had been a powerful method to attract mass cargo transits from Russia. The Ukrainian Ministry of Transport and Communication, declaring its idea to replace the failed export market with transits, cancelled the tariff discounts for Russian cargoes that had been forming the cargo base, not only for ports, but also for “Ukrzaliznytsya” too. “Discounts are a corruption,” the Ukrainian Minister of Transport and Communication Joseph Vinsky has declared, and he demanded equal tariff conditions for all ports. In the conditions of an already unstable cargo base, the ports will lose their ties with the cargo owners, which have been developed over centuries, and this will hardly strengthen the position of this sector of the economy.

Meanwhile, the Ministry demands that ports remain profitable in the current year. The same has been required of state railway enterprises. A considerable 30-40% decrease in the profit base is not allowed either, though the question of raising prices for cargo transportations has not been raised so far. At the same time, the Ministry of Transport and Communications has worked out that last year it was tariff growth that provided 90% of Ukrzaliznytsya’s profit. Measures introduced in the plan of action to reduce the negative effect of the economic crisis in the state’s transport complex are either too obvious (for example, to search for additional transit volumes and export cargoes, or to improve tariff policies), too unrealistic (a reduction in the price of metals for transport), too risky (to create the conditions that would attract more investment), or too anti-social (the transfer of a part of the personnel to a shorter working week, or a moratorium on wage increases). The most recent and up-to-date idea of saving energy looks to have more potential, though it is hardly able to make a fundamental change to the situation in the sector. The Ministry is putting its emphasis on strengthening vertical management and sorting out financial flows in this sector. “Our reply to the crisis is reform,” Mr Vinsky has announced. For the railway sector this means the creation of the State Enterprise “Ukrzaliznytsya” by the end of 2009 on the basis of the six existing railways in the Ukraine. But in spite of all the positivity of the measures outlined, they will hardly be able to help overcome the features of the crisis in the Ukraine, which is too prone to political instability.

By Vladimir Katkevich

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Falling in all Sectors

The crisis in the form of a decrease in transportation volumes has affected all means of Ukrainian transport, but railways and ports which carry the most mass industrial cargo volumes have appeared to be the worst affected. Thus, the reduction in Ukrainian production has led to decreases in internal and export transportation by railway of 3.2% and 7% respectively; ferrous metal cargo transportation volume has fallen by 12%. The fall in Russian exports has caused a 3.1% reduction in railway transit through the Ukraine. We should like to mention here that a year earlier, in 2007, “Ukrzaliznytsya” (Ukrainian Railways) transit added 20% to their volume and railwaymen made their plans counting on further steady rates of growth.

Railway transport has generally appeared to be affected by the crisis most of all. Month by month since last autumn, “Ukrzaliznytsya” was losing transport volumes (including self-loading, import and transit) – of 38.8 million tons in October; 30.4 million tons in November and 30 million tons in December. As a result, in the course of 2008, the industry lost 13.7 million tons of cargo, which was 3% down on the previous year. An even more considerable fact was the 4% annual reduction (16.2 million tons) in cargo departures (Ukrzaliznytsya’s own loading) by railway. Practically the whole range of cargoes sent, except for coal (for heating) and grain cargoes, has collapsed. “Ukrzaliznytsya” has managed to maintain these two positions in the transit structure, thus compensating for lost volumes.

Road transport has managed to keep a positive momentum because its relative share in the movement of industrial cargoes has been extremely insignificant until now. Its annual growth was +10%; however monthly estimates give a picture of impending recession here too: 17 million tons in October; 14.8 million in November and 13.6 million in December. The general economic situation in the country - the bank crisis, a frozen home market and inflation - has affected it.

The general picture of developments would be incomplete without mentioning –the volumes in marine transport, which shrink year by year. It is difficult to specify the factors in the present crisis here because an independent Ukraine, which lost its bases, in the form of the USSR’s fleet, and does not have the resources for restoration, consistently loses its position in the sea cargo shipment market. Nevertheless, it is possible to notice a sharp fall in the sector where the positions of the Ukraine had been steady enough – i.e. river transportation of iron ores from ports on the Ukrainian Danube to European manufacturers of metal products.

The sea ports of the Ukraine have finished the year with a positive result due to the safety factor gained at the beginning of the year. In the second half of the year, port loadings became unstable and tended to decrease. The collapse of the world ferrous metals market has led to a sharp fall in cargo transport services for the whole metallurgical ores sector. As a result, transits in which coal, ore and ferrous metals traditionally prevailed, have shown a 4.1% annual decrease. More diversified than before, exports in these sectors have kept their growth to a level of +19.5%. However, monthly transport service volumes have fallen from 16 million tons in the first quarter down to 14 million tons in the last one.

Cargo Owners’ Interests Are Above Those Of Transporters

In crisis conditions the state, which traditionally considers the state transport sector from a fiscal point of view, has renounced transporters’ interests in favour of the industrial lobby, because industry creates export volumes. In November, the Ukrainian Government signed a memorandum with representatives of the metallurgical ores complex, stabilising “Ukrzaliznytsya” cargo railway rates. In spite of the fact that the promise given by the metallurgists in exchange to reduce metal prices for railwaymen remains unfulfilled, the moratorium on growth of tariffs was extended up to the end of 2008 and then prolonged to the first quarter of the current year. “Ukrzaliznytsya” has estimated that the agreement with metallurgists cost the industry $0.5 billion in lost revenues. About another $0.3 billion in revenue was lost by the railwaymen because of falling cargo traffic volumes. Together with a third damaging factor, crisis-born inflation, the decrease in “Ukrzaliznytsya”’s income was at least $2 billion compared with the original plan for 2008. All these factors affect the financial stability of the railway sector. “The “Ukrzaliznytsya” debt to foreign banks at the beginning of 2009 was more than $1 billion. This year payments of about $0.45 billion are required just to maintain this debt,” Vadim Tkachev, the Chairman of the Ukrainian Trade Union of Railwaymen has announced, while insisting that the Government revises its policies regarding “Ukrzaliznytsya”.

Representatives of ports also have their own reasons to approach the government, being anxious after the cancellation of discounts in cargo transit tariffs. The system of discounts, which covers a wide variety of ports, had been a powerful method to attract mass cargo transits from Russia. The Ukrainian Ministry of Transport and Communication, declaring its idea to replace the failed export market with transits, cancelled the tariff discounts for Russian cargoes that had been forming the cargo base, not only for ports, but also for “Ukrzaliznytsya” too. “Discounts are a corruption,” the Ukrainian Minister of Transport and Communication Joseph Vinsky has declared, and he demanded equal tariff conditions for all ports. In the conditions of an already unstable cargo base, the ports will lose their ties with the cargo owners, which have been developed over centuries, and this will hardly strengthen the position of this sector of the economy.

Meanwhile, the Ministry demands that ports remain profitable in the current year. The same has been required of state railway enterprises. A considerable 30-40% decrease in the profit base is not allowed either, though the question of raising prices for cargo transportations has not been raised so far. At the same time, the Ministry of Transport and Communications has worked out that last year it was tariff growth that provided 90% of Ukrzaliznytsya’s profit. Measures introduced in the plan of action to reduce the negative effect of the economic crisis in the state’s transport complex are either too obvious (for example, to search for additional transit volumes and export cargoes, or to improve tariff policies), too unrealistic (a reduction in the price of metals for transport), too risky (to create the conditions that would attract more investment), or too anti-social (the transfer of a part of the personnel to a shorter working week, or a moratorium on wage increases). The most recent and up-to-date idea of saving energy looks to have more potential, though it is hardly able to make a fundamental change to the situation in the sector. The Ministry is putting its emphasis on strengthening vertical management and sorting out financial flows in this sector. “Our reply to the crisis is reform,” Mr Vinsky has announced. For the railway sector this means the creation of the State Enterprise “Ukrzaliznytsya” by the end of 2009 on the basis of the six existing railways in the Ukraine. But in spite of all the positivity of the measures outlined, they will hardly be able to help overcome the features of the crisis in the Ukraine, which is too prone to political instability.

By Vladimir Katkevich

[~DETAIL_TEXT] =>

Falling in all Sectors

The crisis in the form of a decrease in transportation volumes has affected all means of Ukrainian transport, but railways and ports which carry the most mass industrial cargo volumes have appeared to be the worst affected. Thus, the reduction in Ukrainian production has led to decreases in internal and export transportation by railway of 3.2% and 7% respectively; ferrous metal cargo transportation volume has fallen by 12%. The fall in Russian exports has caused a 3.1% reduction in railway transit through the Ukraine. We should like to mention here that a year earlier, in 2007, “Ukrzaliznytsya” (Ukrainian Railways) transit added 20% to their volume and railwaymen made their plans counting on further steady rates of growth.

Railway transport has generally appeared to be affected by the crisis most of all. Month by month since last autumn, “Ukrzaliznytsya” was losing transport volumes (including self-loading, import and transit) – of 38.8 million tons in October; 30.4 million tons in November and 30 million tons in December. As a result, in the course of 2008, the industry lost 13.7 million tons of cargo, which was 3% down on the previous year. An even more considerable fact was the 4% annual reduction (16.2 million tons) in cargo departures (Ukrzaliznytsya’s own loading) by railway. Practically the whole range of cargoes sent, except for coal (for heating) and grain cargoes, has collapsed. “Ukrzaliznytsya” has managed to maintain these two positions in the transit structure, thus compensating for lost volumes.

Road transport has managed to keep a positive momentum because its relative share in the movement of industrial cargoes has been extremely insignificant until now. Its annual growth was +10%; however monthly estimates give a picture of impending recession here too: 17 million tons in October; 14.8 million in November and 13.6 million in December. The general economic situation in the country - the bank crisis, a frozen home market and inflation - has affected it.

The general picture of developments would be incomplete without mentioning –the volumes in marine transport, which shrink year by year. It is difficult to specify the factors in the present crisis here because an independent Ukraine, which lost its bases, in the form of the USSR’s fleet, and does not have the resources for restoration, consistently loses its position in the sea cargo shipment market. Nevertheless, it is possible to notice a sharp fall in the sector where the positions of the Ukraine had been steady enough – i.e. river transportation of iron ores from ports on the Ukrainian Danube to European manufacturers of metal products.

The sea ports of the Ukraine have finished the year with a positive result due to the safety factor gained at the beginning of the year. In the second half of the year, port loadings became unstable and tended to decrease. The collapse of the world ferrous metals market has led to a sharp fall in cargo transport services for the whole metallurgical ores sector. As a result, transits in which coal, ore and ferrous metals traditionally prevailed, have shown a 4.1% annual decrease. More diversified than before, exports in these sectors have kept their growth to a level of +19.5%. However, monthly transport service volumes have fallen from 16 million tons in the first quarter down to 14 million tons in the last one.

Cargo Owners’ Interests Are Above Those Of Transporters

In crisis conditions the state, which traditionally considers the state transport sector from a fiscal point of view, has renounced transporters’ interests in favour of the industrial lobby, because industry creates export volumes. In November, the Ukrainian Government signed a memorandum with representatives of the metallurgical ores complex, stabilising “Ukrzaliznytsya” cargo railway rates. In spite of the fact that the promise given by the metallurgists in exchange to reduce metal prices for railwaymen remains unfulfilled, the moratorium on growth of tariffs was extended up to the end of 2008 and then prolonged to the first quarter of the current year. “Ukrzaliznytsya” has estimated that the agreement with metallurgists cost the industry $0.5 billion in lost revenues. About another $0.3 billion in revenue was lost by the railwaymen because of falling cargo traffic volumes. Together with a third damaging factor, crisis-born inflation, the decrease in “Ukrzaliznytsya”’s income was at least $2 billion compared with the original plan for 2008. All these factors affect the financial stability of the railway sector. “The “Ukrzaliznytsya” debt to foreign banks at the beginning of 2009 was more than $1 billion. This year payments of about $0.45 billion are required just to maintain this debt,” Vadim Tkachev, the Chairman of the Ukrainian Trade Union of Railwaymen has announced, while insisting that the Government revises its policies regarding “Ukrzaliznytsya”.

Representatives of ports also have their own reasons to approach the government, being anxious after the cancellation of discounts in cargo transit tariffs. The system of discounts, which covers a wide variety of ports, had been a powerful method to attract mass cargo transits from Russia. The Ukrainian Ministry of Transport and Communication, declaring its idea to replace the failed export market with transits, cancelled the tariff discounts for Russian cargoes that had been forming the cargo base, not only for ports, but also for “Ukrzaliznytsya” too. “Discounts are a corruption,” the Ukrainian Minister of Transport and Communication Joseph Vinsky has declared, and he demanded equal tariff conditions for all ports. In the conditions of an already unstable cargo base, the ports will lose their ties with the cargo owners, which have been developed over centuries, and this will hardly strengthen the position of this sector of the economy.

Meanwhile, the Ministry demands that ports remain profitable in the current year. The same has been required of state railway enterprises. A considerable 30-40% decrease in the profit base is not allowed either, though the question of raising prices for cargo transportations has not been raised so far. At the same time, the Ministry of Transport and Communications has worked out that last year it was tariff growth that provided 90% of Ukrzaliznytsya’s profit. Measures introduced in the plan of action to reduce the negative effect of the economic crisis in the state’s transport complex are either too obvious (for example, to search for additional transit volumes and export cargoes, or to improve tariff policies), too unrealistic (a reduction in the price of metals for transport), too risky (to create the conditions that would attract more investment), or too anti-social (the transfer of a part of the personnel to a shorter working week, or a moratorium on wage increases). The most recent and up-to-date idea of saving energy looks to have more potential, though it is hardly able to make a fundamental change to the situation in the sector. The Ministry is putting its emphasis on strengthening vertical management and sorting out financial flows in this sector. “Our reply to the crisis is reform,” Mr Vinsky has announced. For the railway sector this means the creation of the State Enterprise “Ukrzaliznytsya” by the end of 2009 on the basis of the six existing railways in the Ukraine. But in spite of all the positivity of the measures outlined, they will hardly be able to help overcome the features of the crisis in the Ukraine, which is too prone to political instability.

By Vladimir Katkevich

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РЖД-Партнер

Baltic States Soften the Blow

 While transport authorities and analysts are discussing all possible avenues for transport sector development in the Baltic states during the crisis, regional railwaymen and portmen are being cautious in their assessments. In their opinion, the first results will appear not later than after the first quarter of the year, and then it will be high time to think about future prospects.
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Results of 2008: Still Positive

The echo of the world economic crisis, and its influence on the transport and logistics sector of the Baltic states appeared in the region stage-by-stage. Last May, Latvian hauliers faced the problem of irregular freight deliveries to ports for the first time. Russian clients began to refuse transportation more and more often because of a lack of money to pay for the goods. Then Lithuanian hauliers officially announced the bankruptcy of dozens of haulage companies. The traditional queues on the border of Russia practically disappeared overnight.

Portmen and railwaymen felt the economic slowdown later – in the middle of autumn and at the end of the year. Meanwhile, the results of most Baltic companies were not worse than in 2007 but possible prerequisites for volume reduction in 2009 were recorded.

Statistics shows that the dynamics of Baltic ports and railways are mainly positive. Among harbours the exceptions are the Latvian port of Ventspils (-8% year-on-year) and the Estonian port of Tallinn (-19.3% year-on-year). The only railway in the region, the dynamics of which were negative, was the Estonian railway – it transported 27.7% less freight than in 2007.

Some experts consider that, in 2009, the crisis will hit all Baltic ports, with their annual throughput falling by an average of 10% for the next year or two.

Lithuania: No Trucks for Ferries in Klaipeda

Last year, the Klaipeda sea port set a new record with a throughput of 29.876 million tons (+9.2% year-on-year) and became the leader among the Baltic ports. The growth was based on constantly increasing handling volumes of oil products, containers, and mineral fertilisers. But if we compare the throughput in Q4 in 2008 with 2007, there is a decline in handling volume of almost all cargoes.

A characteristic tendency in the Lithuanian harbour is the reduction of timber and ro-ro handling volume.

In the opinion of Arturas Grgungilas, Marketing Director in the Klaipeda port, the forecasts for the port’s activity this year should be done thoroughly and not earlier than February-March 2009. Nowadays, the port specialists consider cargo flows will fall by 10%.

Analysts say that there are two ways in which the situation could develop over the next two years. According to the pessimistic one, throughput will fall by 10-15% in 2009, while the optimistic forecast is that it will shrink by 5-7%. Specialists at Klaipeda port do not fear the temporary cargo volume decline because the port’s throughput has increased by 8.5% for nine years running. Moreover, this year the port authorities are going to invest USD 65-69 million into harbour development – the same as in 2008.

The experts of the Lithuanian railway are cautious in their forecasts: they say that cargo transportation volumes may fall by 20%. In the words of Vladas Ambrozyavichus, head of the railway’s Marketing Department, transportation of the basic cargoes – oil products, construction materials and metals – may drop. Staff numbers will be also cut: up to 66 specialists will be made redundant during the company’s reorganisation.

Riga, Ventspils And Liepaja Are Losing Boxes

The Riga port is second among the Baltic ports according to throughput: in 2008, it handled 29.57 million tons of cargo, 14% up year-on-year. The growth was caused by an increasing handling volume of oil products and coal. The port of Ventspils occupies second place among Latvian ports – it serviced 28.569 million tons of cargo, 8% down year-on-year. The reason for the decline was a reduction in handling of mineral fertilisers and oil products. Liepaja is in third position with 4,138 million tons (+3.7% year-on-year).

In Q4 of 2008, Latvia’s traditional oil products throughput grew in Riga, was uneven in Ventspils and fell in Liepaja.

A special tendency in the Riga port is the declining throughput of boxes from China: 210,900 TEU, 0.4% down year-on-year. This negative dynamic took place in other Latvian ports also: the Ventspils port serviced 14,068 TEU (-16.5% year-on-year) and the Liepaja port handled 4,227 TEU (-44.9%).

According to preliminary data, the basic cargoes carried from Russia (oil products and coal) will continue to form the biggest share of volumes serviced by the ports as well as Latvian railways. Ainars Slesers, Latvian Minster of Communication, believes that the volume transported by the national railway company will remain almost the same (in 2008, the railway carried 56 million tons of cargo, 7.5% more compared with 2007). Nevertheless, specialists at Latvian railway are now elaborating new schemes and possible corridors to transport goods from the West to the East so that they can be sold in Russia, Kazakhstan, China and the Far East.

Estonia Got Used to the Crisis

Throughput reduction started on Estonia’s railway and at the port of Tallinn long before the economic crisis – the decline happened soon after the political events of spring 2007. Last year, the Estonian railway carried 26 million tons of freight (in 2007, the figure was 36 million tons). Both railway and port managed to keep up their handling volumes due to Russian oil products. The share of this cargo in the port amounts to 70.6%.

Last year, the throughput of almost all cargoes in the port and on the railway continued to fall: coal (-91.6% year-on-year, 314,100 tons was handled), oil products (-8.3%, 20.49 million tons), mineral fertilisers (-66.2%, 624,800 tons), and grain (-55.2%, 468,000 tons).

According to unofficial data, this year transportation of black oil via Estonia may decrease by 5-5.5 million tons. On the other hand, the port serviced more coal last year and the same amount of containerised freight. The flow of Russian mineral fertilisers may come back to Estonia.
Due to the decrease of cargo flows, the companies cut their personnel – the railway discharged 500 of its 2,300 employees and the port released 34 employees out of 400. Nevertheless, the companies continue to invest in their development: the railway invests USD 54.8 million into infrastructure on the lines Tallinn-Tartu and Tartu-Valga.

According to Urmas Glaze, press secretary of the Estonian railway, the company forecasts a throughput of 23-26 million tons, 10 million of which will be new cargoes for the railroad.

by Natalia Don

viewpoint

Georg LansmanisGeorg Lansmanis,
Advisor to the Minister of Transport and Communications of the Republic of Latvia:

– According to our forecasts, throughput in Riga will fall by 5-7% and Liepaja and Ventspils will suffer 10-20% and 10% drops respectively. These figures are based on the tendencies of the world economy in the Baltic region, the transportation volume of OAO RZD and the Latvian transport sector. I believe that during the economic crisis the country’s transport structures and sectors should consolidate to be able to compete in the market. Everyone is looking for new opportunities for business development. I think the state must support our ports more actively and companies should invest in the transport sector. The Latvian railway will invest approximately USD 200 million this year.

Vladimir Makarovs,
Head of Strategic Planning Department, the port of Riga:

– My forecast is not positive, the crisis becomes worse and impacts the economies of all the states, on whose cargo-producing potential we are dependent. So it is difficult to forecast the future.
Our stevedoring companies, which usually handle 5-8 million tons, are ready for future difficulties, in particular long-term contracts will help. The position of companies whose throughput is less than 0.5 million tons is not simple – they are looking for a way out. On the whole, stevedores are optimistic. One of the reasons for this is the constantly growing volume of oil bulk and coal, handled by the largest stevedores in the port.
In their opinion, in 2009 throughput will decline by not more than 4-6% (the forecast is based on the contracts concluded for the current year).
We are ready to do everything we can to keep old contracts and attract new cargoes. Moreover, we must be ready to handle any freight. New “atypical” cargoes in containers may appear in Riga.

Arvidas VaitkusArvidas Vaitkus,
Secretary of the Lithuanian Ministry of Transport and Communication:

– The situation in the country is not simple, although there are no reasons for a panic. Nowadays, it is necessary to invest in the Republic’s economy, into the infrastructure of the port, the railway and the motorways. This year we plan to complete the port deepening, construct a ro-pax terminal, to continue the development of a container terminal south of the port and build a terminal to service refcargoes.
The Lithuanian Ministry of Transport and Communication is going to launch a Coordinating Council, where representatives of all transport sectors will be able to discuss current transport and transit policy and make optimal decisions for the further development of the sector. We plan to meet colleagues from Belarus, Kazakhstan, Russia and other states regularly.

 

[~DETAIL_TEXT] =>

Results of 2008: Still Positive

The echo of the world economic crisis, and its influence on the transport and logistics sector of the Baltic states appeared in the region stage-by-stage. Last May, Latvian hauliers faced the problem of irregular freight deliveries to ports for the first time. Russian clients began to refuse transportation more and more often because of a lack of money to pay for the goods. Then Lithuanian hauliers officially announced the bankruptcy of dozens of haulage companies. The traditional queues on the border of Russia practically disappeared overnight.

Portmen and railwaymen felt the economic slowdown later – in the middle of autumn and at the end of the year. Meanwhile, the results of most Baltic companies were not worse than in 2007 but possible prerequisites for volume reduction in 2009 were recorded.

Statistics shows that the dynamics of Baltic ports and railways are mainly positive. Among harbours the exceptions are the Latvian port of Ventspils (-8% year-on-year) and the Estonian port of Tallinn (-19.3% year-on-year). The only railway in the region, the dynamics of which were negative, was the Estonian railway – it transported 27.7% less freight than in 2007.

Some experts consider that, in 2009, the crisis will hit all Baltic ports, with their annual throughput falling by an average of 10% for the next year or two.

Lithuania: No Trucks for Ferries in Klaipeda

Last year, the Klaipeda sea port set a new record with a throughput of 29.876 million tons (+9.2% year-on-year) and became the leader among the Baltic ports. The growth was based on constantly increasing handling volumes of oil products, containers, and mineral fertilisers. But if we compare the throughput in Q4 in 2008 with 2007, there is a decline in handling volume of almost all cargoes.

A characteristic tendency in the Lithuanian harbour is the reduction of timber and ro-ro handling volume.

In the opinion of Arturas Grgungilas, Marketing Director in the Klaipeda port, the forecasts for the port’s activity this year should be done thoroughly and not earlier than February-March 2009. Nowadays, the port specialists consider cargo flows will fall by 10%.

Analysts say that there are two ways in which the situation could develop over the next two years. According to the pessimistic one, throughput will fall by 10-15% in 2009, while the optimistic forecast is that it will shrink by 5-7%. Specialists at Klaipeda port do not fear the temporary cargo volume decline because the port’s throughput has increased by 8.5% for nine years running. Moreover, this year the port authorities are going to invest USD 65-69 million into harbour development – the same as in 2008.

The experts of the Lithuanian railway are cautious in their forecasts: they say that cargo transportation volumes may fall by 20%. In the words of Vladas Ambrozyavichus, head of the railway’s Marketing Department, transportation of the basic cargoes – oil products, construction materials and metals – may drop. Staff numbers will be also cut: up to 66 specialists will be made redundant during the company’s reorganisation.

Riga, Ventspils And Liepaja Are Losing Boxes

The Riga port is second among the Baltic ports according to throughput: in 2008, it handled 29.57 million tons of cargo, 14% up year-on-year. The growth was caused by an increasing handling volume of oil products and coal. The port of Ventspils occupies second place among Latvian ports – it serviced 28.569 million tons of cargo, 8% down year-on-year. The reason for the decline was a reduction in handling of mineral fertilisers and oil products. Liepaja is in third position with 4,138 million tons (+3.7% year-on-year).

In Q4 of 2008, Latvia’s traditional oil products throughput grew in Riga, was uneven in Ventspils and fell in Liepaja.

A special tendency in the Riga port is the declining throughput of boxes from China: 210,900 TEU, 0.4% down year-on-year. This negative dynamic took place in other Latvian ports also: the Ventspils port serviced 14,068 TEU (-16.5% year-on-year) and the Liepaja port handled 4,227 TEU (-44.9%).

According to preliminary data, the basic cargoes carried from Russia (oil products and coal) will continue to form the biggest share of volumes serviced by the ports as well as Latvian railways. Ainars Slesers, Latvian Minster of Communication, believes that the volume transported by the national railway company will remain almost the same (in 2008, the railway carried 56 million tons of cargo, 7.5% more compared with 2007). Nevertheless, specialists at Latvian railway are now elaborating new schemes and possible corridors to transport goods from the West to the East so that they can be sold in Russia, Kazakhstan, China and the Far East.

Estonia Got Used to the Crisis

Throughput reduction started on Estonia’s railway and at the port of Tallinn long before the economic crisis – the decline happened soon after the political events of spring 2007. Last year, the Estonian railway carried 26 million tons of freight (in 2007, the figure was 36 million tons). Both railway and port managed to keep up their handling volumes due to Russian oil products. The share of this cargo in the port amounts to 70.6%.

Last year, the throughput of almost all cargoes in the port and on the railway continued to fall: coal (-91.6% year-on-year, 314,100 tons was handled), oil products (-8.3%, 20.49 million tons), mineral fertilisers (-66.2%, 624,800 tons), and grain (-55.2%, 468,000 tons).

According to unofficial data, this year transportation of black oil via Estonia may decrease by 5-5.5 million tons. On the other hand, the port serviced more coal last year and the same amount of containerised freight. The flow of Russian mineral fertilisers may come back to Estonia.
Due to the decrease of cargo flows, the companies cut their personnel – the railway discharged 500 of its 2,300 employees and the port released 34 employees out of 400. Nevertheless, the companies continue to invest in their development: the railway invests USD 54.8 million into infrastructure on the lines Tallinn-Tartu and Tartu-Valga.

According to Urmas Glaze, press secretary of the Estonian railway, the company forecasts a throughput of 23-26 million tons, 10 million of which will be new cargoes for the railroad.

by Natalia Don

viewpoint

Georg LansmanisGeorg Lansmanis,
Advisor to the Minister of Transport and Communications of the Republic of Latvia:

– According to our forecasts, throughput in Riga will fall by 5-7% and Liepaja and Ventspils will suffer 10-20% and 10% drops respectively. These figures are based on the tendencies of the world economy in the Baltic region, the transportation volume of OAO RZD and the Latvian transport sector. I believe that during the economic crisis the country’s transport structures and sectors should consolidate to be able to compete in the market. Everyone is looking for new opportunities for business development. I think the state must support our ports more actively and companies should invest in the transport sector. The Latvian railway will invest approximately USD 200 million this year.

Vladimir Makarovs,
Head of Strategic Planning Department, the port of Riga:

– My forecast is not positive, the crisis becomes worse and impacts the economies of all the states, on whose cargo-producing potential we are dependent. So it is difficult to forecast the future.
Our stevedoring companies, which usually handle 5-8 million tons, are ready for future difficulties, in particular long-term contracts will help. The position of companies whose throughput is less than 0.5 million tons is not simple – they are looking for a way out. On the whole, stevedores are optimistic. One of the reasons for this is the constantly growing volume of oil bulk and coal, handled by the largest stevedores in the port.
In their opinion, in 2009 throughput will decline by not more than 4-6% (the forecast is based on the contracts concluded for the current year).
We are ready to do everything we can to keep old contracts and attract new cargoes. Moreover, we must be ready to handle any freight. New “atypical” cargoes in containers may appear in Riga.

Arvidas VaitkusArvidas Vaitkus,
Secretary of the Lithuanian Ministry of Transport and Communication:

– The situation in the country is not simple, although there are no reasons for a panic. Nowadays, it is necessary to invest in the Republic’s economy, into the infrastructure of the port, the railway and the motorways. This year we plan to complete the port deepening, construct a ro-pax terminal, to continue the development of a container terminal south of the port and build a terminal to service refcargoes.
The Lithuanian Ministry of Transport and Communication is going to launch a Coordinating Council, where representatives of all transport sectors will be able to discuss current transport and transit policy and make optimal decisions for the further development of the sector. We plan to meet colleagues from Belarus, Kazakhstan, Russia and other states regularly.

 

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Results of 2008: Still Positive

The echo of the world economic crisis, and its influence on the transport and logistics sector of the Baltic states appeared in the region stage-by-stage. Last May, Latvian hauliers faced the problem of irregular freight deliveries to ports for the first time. Russian clients began to refuse transportation more and more often because of a lack of money to pay for the goods. Then Lithuanian hauliers officially announced the bankruptcy of dozens of haulage companies. The traditional queues on the border of Russia practically disappeared overnight.

Portmen and railwaymen felt the economic slowdown later – in the middle of autumn and at the end of the year. Meanwhile, the results of most Baltic companies were not worse than in 2007 but possible prerequisites for volume reduction in 2009 were recorded.

Statistics shows that the dynamics of Baltic ports and railways are mainly positive. Among harbours the exceptions are the Latvian port of Ventspils (-8% year-on-year) and the Estonian port of Tallinn (-19.3% year-on-year). The only railway in the region, the dynamics of which were negative, was the Estonian railway – it transported 27.7% less freight than in 2007.

Some experts consider that, in 2009, the crisis will hit all Baltic ports, with their annual throughput falling by an average of 10% for the next year or two.

Lithuania: No Trucks for Ferries in Klaipeda

Last year, the Klaipeda sea port set a new record with a throughput of 29.876 million tons (+9.2% year-on-year) and became the leader among the Baltic ports. The growth was based on constantly increasing handling volumes of oil products, containers, and mineral fertilisers. But if we compare the throughput in Q4 in 2008 with 2007, there is a decline in handling volume of almost all cargoes.

A characteristic tendency in the Lithuanian harbour is the reduction of timber and ro-ro handling volume.

In the opinion of Arturas Grgungilas, Marketing Director in the Klaipeda port, the forecasts for the port’s activity this year should be done thoroughly and not earlier than February-March 2009. Nowadays, the port specialists consider cargo flows will fall by 10%.

Analysts say that there are two ways in which the situation could develop over the next two years. According to the pessimistic one, throughput will fall by 10-15% in 2009, while the optimistic forecast is that it will shrink by 5-7%. Specialists at Klaipeda port do not fear the temporary cargo volume decline because the port’s throughput has increased by 8.5% for nine years running. Moreover, this year the port authorities are going to invest USD 65-69 million into harbour development – the same as in 2008.

The experts of the Lithuanian railway are cautious in their forecasts: they say that cargo transportation volumes may fall by 20%. In the words of Vladas Ambrozyavichus, head of the railway’s Marketing Department, transportation of the basic cargoes – oil products, construction materials and metals – may drop. Staff numbers will be also cut: up to 66 specialists will be made redundant during the company’s reorganisation.

Riga, Ventspils And Liepaja Are Losing Boxes

The Riga port is second among the Baltic ports according to throughput: in 2008, it handled 29.57 million tons of cargo, 14% up year-on-year. The growth was caused by an increasing handling volume of oil products and coal. The port of Ventspils occupies second place among Latvian ports – it serviced 28.569 million tons of cargo, 8% down year-on-year. The reason for the decline was a reduction in handling of mineral fertilisers and oil products. Liepaja is in third position with 4,138 million tons (+3.7% year-on-year).

In Q4 of 2008, Latvia’s traditional oil products throughput grew in Riga, was uneven in Ventspils and fell in Liepaja.

A special tendency in the Riga port is the declining throughput of boxes from China: 210,900 TEU, 0.4% down year-on-year. This negative dynamic took place in other Latvian ports also: the Ventspils port serviced 14,068 TEU (-16.5% year-on-year) and the Liepaja port handled 4,227 TEU (-44.9%).

According to preliminary data, the basic cargoes carried from Russia (oil products and coal) will continue to form the biggest share of volumes serviced by the ports as well as Latvian railways. Ainars Slesers, Latvian Minster of Communication, believes that the volume transported by the national railway company will remain almost the same (in 2008, the railway carried 56 million tons of cargo, 7.5% more compared with 2007). Nevertheless, specialists at Latvian railway are now elaborating new schemes and possible corridors to transport goods from the West to the East so that they can be sold in Russia, Kazakhstan, China and the Far East.

Estonia Got Used to the Crisis

Throughput reduction started on Estonia’s railway and at the port of Tallinn long before the economic crisis – the decline happened soon after the political events of spring 2007. Last year, the Estonian railway carried 26 million tons of freight (in 2007, the figure was 36 million tons). Both railway and port managed to keep up their handling volumes due to Russian oil products. The share of this cargo in the port amounts to 70.6%.

Last year, the throughput of almost all cargoes in the port and on the railway continued to fall: coal (-91.6% year-on-year, 314,100 tons was handled), oil products (-8.3%, 20.49 million tons), mineral fertilisers (-66.2%, 624,800 tons), and grain (-55.2%, 468,000 tons).

According to unofficial data, this year transportation of black oil via Estonia may decrease by 5-5.5 million tons. On the other hand, the port serviced more coal last year and the same amount of containerised freight. The flow of Russian mineral fertilisers may come back to Estonia.
Due to the decrease of cargo flows, the companies cut their personnel – the railway discharged 500 of its 2,300 employees and the port released 34 employees out of 400. Nevertheless, the companies continue to invest in their development: the railway invests USD 54.8 million into infrastructure on the lines Tallinn-Tartu and Tartu-Valga.

According to Urmas Glaze, press secretary of the Estonian railway, the company forecasts a throughput of 23-26 million tons, 10 million of which will be new cargoes for the railroad.

by Natalia Don

viewpoint

Georg LansmanisGeorg Lansmanis,
Advisor to the Minister of Transport and Communications of the Republic of Latvia:

– According to our forecasts, throughput in Riga will fall by 5-7% and Liepaja and Ventspils will suffer 10-20% and 10% drops respectively. These figures are based on the tendencies of the world economy in the Baltic region, the transportation volume of OAO RZD and the Latvian transport sector. I believe that during the economic crisis the country’s transport structures and sectors should consolidate to be able to compete in the market. Everyone is looking for new opportunities for business development. I think the state must support our ports more actively and companies should invest in the transport sector. The Latvian railway will invest approximately USD 200 million this year.

Vladimir Makarovs,
Head of Strategic Planning Department, the port of Riga:

– My forecast is not positive, the crisis becomes worse and impacts the economies of all the states, on whose cargo-producing potential we are dependent. So it is difficult to forecast the future.
Our stevedoring companies, which usually handle 5-8 million tons, are ready for future difficulties, in particular long-term contracts will help. The position of companies whose throughput is less than 0.5 million tons is not simple – they are looking for a way out. On the whole, stevedores are optimistic. One of the reasons for this is the constantly growing volume of oil bulk and coal, handled by the largest stevedores in the port.
In their opinion, in 2009 throughput will decline by not more than 4-6% (the forecast is based on the contracts concluded for the current year).
We are ready to do everything we can to keep old contracts and attract new cargoes. Moreover, we must be ready to handle any freight. New “atypical” cargoes in containers may appear in Riga.

Arvidas VaitkusArvidas Vaitkus,
Secretary of the Lithuanian Ministry of Transport and Communication:

– The situation in the country is not simple, although there are no reasons for a panic. Nowadays, it is necessary to invest in the Republic’s economy, into the infrastructure of the port, the railway and the motorways. This year we plan to complete the port deepening, construct a ro-pax terminal, to continue the development of a container terminal south of the port and build a terminal to service refcargoes.
The Lithuanian Ministry of Transport and Communication is going to launch a Coordinating Council, where representatives of all transport sectors will be able to discuss current transport and transit policy and make optimal decisions for the further development of the sector. We plan to meet colleagues from Belarus, Kazakhstan, Russia and other states regularly.

 

[~DETAIL_TEXT] =>

Results of 2008: Still Positive

The echo of the world economic crisis, and its influence on the transport and logistics sector of the Baltic states appeared in the region stage-by-stage. Last May, Latvian hauliers faced the problem of irregular freight deliveries to ports for the first time. Russian clients began to refuse transportation more and more often because of a lack of money to pay for the goods. Then Lithuanian hauliers officially announced the bankruptcy of dozens of haulage companies. The traditional queues on the border of Russia practically disappeared overnight.

Portmen and railwaymen felt the economic slowdown later – in the middle of autumn and at the end of the year. Meanwhile, the results of most Baltic companies were not worse than in 2007 but possible prerequisites for volume reduction in 2009 were recorded.

Statistics shows that the dynamics of Baltic ports and railways are mainly positive. Among harbours the exceptions are the Latvian port of Ventspils (-8% year-on-year) and the Estonian port of Tallinn (-19.3% year-on-year). The only railway in the region, the dynamics of which were negative, was the Estonian railway – it transported 27.7% less freight than in 2007.

Some experts consider that, in 2009, the crisis will hit all Baltic ports, with their annual throughput falling by an average of 10% for the next year or two.

Lithuania: No Trucks for Ferries in Klaipeda

Last year, the Klaipeda sea port set a new record with a throughput of 29.876 million tons (+9.2% year-on-year) and became the leader among the Baltic ports. The growth was based on constantly increasing handling volumes of oil products, containers, and mineral fertilisers. But if we compare the throughput in Q4 in 2008 with 2007, there is a decline in handling volume of almost all cargoes.

A characteristic tendency in the Lithuanian harbour is the reduction of timber and ro-ro handling volume.

In the opinion of Arturas Grgungilas, Marketing Director in the Klaipeda port, the forecasts for the port’s activity this year should be done thoroughly and not earlier than February-March 2009. Nowadays, the port specialists consider cargo flows will fall by 10%.

Analysts say that there are two ways in which the situation could develop over the next two years. According to the pessimistic one, throughput will fall by 10-15% in 2009, while the optimistic forecast is that it will shrink by 5-7%. Specialists at Klaipeda port do not fear the temporary cargo volume decline because the port’s throughput has increased by 8.5% for nine years running. Moreover, this year the port authorities are going to invest USD 65-69 million into harbour development – the same as in 2008.

The experts of the Lithuanian railway are cautious in their forecasts: they say that cargo transportation volumes may fall by 20%. In the words of Vladas Ambrozyavichus, head of the railway’s Marketing Department, transportation of the basic cargoes – oil products, construction materials and metals – may drop. Staff numbers will be also cut: up to 66 specialists will be made redundant during the company’s reorganisation.

Riga, Ventspils And Liepaja Are Losing Boxes

The Riga port is second among the Baltic ports according to throughput: in 2008, it handled 29.57 million tons of cargo, 14% up year-on-year. The growth was caused by an increasing handling volume of oil products and coal. The port of Ventspils occupies second place among Latvian ports – it serviced 28.569 million tons of cargo, 8% down year-on-year. The reason for the decline was a reduction in handling of mineral fertilisers and oil products. Liepaja is in third position with 4,138 million tons (+3.7% year-on-year).

In Q4 of 2008, Latvia’s traditional oil products throughput grew in Riga, was uneven in Ventspils and fell in Liepaja.

A special tendency in the Riga port is the declining throughput of boxes from China: 210,900 TEU, 0.4% down year-on-year. This negative dynamic took place in other Latvian ports also: the Ventspils port serviced 14,068 TEU (-16.5% year-on-year) and the Liepaja port handled 4,227 TEU (-44.9%).

According to preliminary data, the basic cargoes carried from Russia (oil products and coal) will continue to form the biggest share of volumes serviced by the ports as well as Latvian railways. Ainars Slesers, Latvian Minster of Communication, believes that the volume transported by the national railway company will remain almost the same (in 2008, the railway carried 56 million tons of cargo, 7.5% more compared with 2007). Nevertheless, specialists at Latvian railway are now elaborating new schemes and possible corridors to transport goods from the West to the East so that they can be sold in Russia, Kazakhstan, China and the Far East.

Estonia Got Used to the Crisis

Throughput reduction started on Estonia’s railway and at the port of Tallinn long before the economic crisis – the decline happened soon after the political events of spring 2007. Last year, the Estonian railway carried 26 million tons of freight (in 2007, the figure was 36 million tons). Both railway and port managed to keep up their handling volumes due to Russian oil products. The share of this cargo in the port amounts to 70.6%.

Last year, the throughput of almost all cargoes in the port and on the railway continued to fall: coal (-91.6% year-on-year, 314,100 tons was handled), oil products (-8.3%, 20.49 million tons), mineral fertilisers (-66.2%, 624,800 tons), and grain (-55.2%, 468,000 tons).

According to unofficial data, this year transportation of black oil via Estonia may decrease by 5-5.5 million tons. On the other hand, the port serviced more coal last year and the same amount of containerised freight. The flow of Russian mineral fertilisers may come back to Estonia.
Due to the decrease of cargo flows, the companies cut their personnel – the railway discharged 500 of its 2,300 employees and the port released 34 employees out of 400. Nevertheless, the companies continue to invest in their development: the railway invests USD 54.8 million into infrastructure on the lines Tallinn-Tartu and Tartu-Valga.

According to Urmas Glaze, press secretary of the Estonian railway, the company forecasts a throughput of 23-26 million tons, 10 million of which will be new cargoes for the railroad.

by Natalia Don

viewpoint

Georg LansmanisGeorg Lansmanis,
Advisor to the Minister of Transport and Communications of the Republic of Latvia:

– According to our forecasts, throughput in Riga will fall by 5-7% and Liepaja and Ventspils will suffer 10-20% and 10% drops respectively. These figures are based on the tendencies of the world economy in the Baltic region, the transportation volume of OAO RZD and the Latvian transport sector. I believe that during the economic crisis the country’s transport structures and sectors should consolidate to be able to compete in the market. Everyone is looking for new opportunities for business development. I think the state must support our ports more actively and companies should invest in the transport sector. The Latvian railway will invest approximately USD 200 million this year.

Vladimir Makarovs,
Head of Strategic Planning Department, the port of Riga:

– My forecast is not positive, the crisis becomes worse and impacts the economies of all the states, on whose cargo-producing potential we are dependent. So it is difficult to forecast the future.
Our stevedoring companies, which usually handle 5-8 million tons, are ready for future difficulties, in particular long-term contracts will help. The position of companies whose throughput is less than 0.5 million tons is not simple – they are looking for a way out. On the whole, stevedores are optimistic. One of the reasons for this is the constantly growing volume of oil bulk and coal, handled by the largest stevedores in the port.
In their opinion, in 2009 throughput will decline by not more than 4-6% (the forecast is based on the contracts concluded for the current year).
We are ready to do everything we can to keep old contracts and attract new cargoes. Moreover, we must be ready to handle any freight. New “atypical” cargoes in containers may appear in Riga.

Arvidas VaitkusArvidas Vaitkus,
Secretary of the Lithuanian Ministry of Transport and Communication:

– The situation in the country is not simple, although there are no reasons for a panic. Nowadays, it is necessary to invest in the Republic’s economy, into the infrastructure of the port, the railway and the motorways. This year we plan to complete the port deepening, construct a ro-pax terminal, to continue the development of a container terminal south of the port and build a terminal to service refcargoes.
The Lithuanian Ministry of Transport and Communication is going to launch a Coordinating Council, where representatives of all transport sectors will be able to discuss current transport and transit policy and make optimal decisions for the further development of the sector. We plan to meet colleagues from Belarus, Kazakhstan, Russia and other states regularly.

 

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РЖД-Партнер

Downward Spiral

 The fall of the Russian transport sector into a global financial hole was rapid: the first signs of a change appeared last September; a sharp reduction in industrial production in the country started at the beginning of October; in November, the volume of rail transportation decreased by 20% compared to the same period in 2007; and in December it fell by almost 30%. The results for the whole year made it obvious that, even for complete optimists, the position of the industrial sector in Russia, transport included, was unenviable to put it mildly…
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A RECORD IN MINUS FIGURES

First of all, it makes sense to mention that, in Russia, certain losses in loading volumes, estimated at about 20 million tons in January – October 2008, could be seen even before all the negative changes in the world market took place because they were connected purely with the sector’s internal systematic problems. It was a question of the legal distinction in the opportunity to use either private or inventory-listed wagons. During the first half of the year, an excessive demand for OAO RZD’s rolling stock was created. Then, in conditions of a decrease in transportation volumes, a return process started – granting discounts by withdrawing wagon costs from prices led to a rapid growth in the number of private wagons in overall cargo turnover. As a result, from October to November, loading volume on RZD’s rolling stock decreased by 35%. At the same time, in the private rolling stock sector there was an increase of 22%. If the country had not fallen into the abyss of economic crisis, the management of Russian Railways would have probably found a way to solve this problem by the end of the year. But the world collapse imposed its own way, and the yearly results were as they had never been before – not just an absence of growth in loading but, on the contrary, loading fell by 3% for the first time in OAO RZD history!

We should like to mention that, at the beginning of last autumn many analysts were already warning of the possible negative consequences of the world financial crisis for Russia and predicted a possible rate of decrease in the volume of metallurgical product transportations. This is a sector known to be the first affected by a toughening of market conditions but analysts were speaking about a 20% or 30% reduction. And very few people could guess that, in November 2008 alone, the volume of ferrous metals transportation would shrink by almost 40% and that the industrial output of ready-made rolled ferrous metal would plunge by 44.3%. As regards raw materials (iron ores), output from mines last November was 42% less than during the same period the previous year. The volume of iron ore loading also decreased: in November 2008, scrap metal and ore dropped 74.4% and 50.4% respectively and, in the first ten days of this year, compared with the similar period of 2008, the fall was 47.7% and 81.2%.

Because of the world financial crisis the fall in transportation volumes was seen practically in all significant items on the industrial production order books. In addition, last November’s figures for cement transportation fell by 32.6%, construction cargoes by 23.4% and metal unit constructions by 16.7%. The network has also lost 45 % of its previous load of fertilisers.

It was no wonder that, in December, the collapse of rail transportation continued. Iron ore mining had fallen by 45.6% compared to 2007 and industrial output of ready-made rolled ferrous metals by 40.7%, which immediately affected the work of the whole transport industry.
However certain items – coal, oil and containers – held their positions. Transportation of coal for November 2008, in comparison with the same month in 2007, even increased by 1.2%, and though the parameters for oil and its products fell, the fall was only 0.7%. Containers have remained one of the few growing sectors. In Great Port of St. Petersburg, for January to November 2008, against a background of a mass reduction in transhipping (scrap metal down 37%, wood down 52%), container cargoes showed a 13% growth.

To be fair, we should mention that, for the previous nine months, this figure had been 21%. Probably soon there will be no more good news here either, because, judging by the general number of loaded containers transhipped in 2008, the picture is not too joyful – the Russian Sea Commercial Ports Association has worked out that the general transhipping volume figure fell by 17%; in export it fell by 57 %; in transit by 38 % but imports increased by 14.9%. If you look at all categories of cargoes processed in ports, so far a large fall cannot be detected, although there is no particular growth either. The turnover of goods, compared with 2007, grew only by 1.1%. It was hampered a little by slow-moving exports, where volume decreased by 2%. But import streams have grown by 14.7%.

Experts in the stevedore service market are not deceiving themselves – their forecasts are that the turnover of goods in Russian ports in 2009 will not be more than 427-428 million tons, in other words, it will be reduced by 4-4.5%. The forecasts concern metals, scrap metal, cellulose, sawn timber, car imports, special equipment and other general cargoes. Russian Ports Management is already considering reducing service prices with a view to keeping the turnover of goods to at least 2008 levels.

BACK TO THE FUTURE

It is no secret that the decrease in the turnover of goods on standard lists can be explained by the falling output of Russian industry. And the media continue to report a worsening situation in metallurgy – at the Magnitogorsk and Novolipetsk plants of the Evraz Group at “Severstal” and also at their suppliers.

Rosstat (Russian Federal Statistics Service) is reporting that, from January to October 2008, the industry grew by 4.9% compared with the same period in 2007. But in October it was only 0.6% and in November its graph moved down to -8.7 % in comparison with November 2007. Very few analysts predicted recession on such a scale in such a short time.

In the processing sectors, according to Rosstat’s figures, the fall has passed the 10% mark; in the manufacture and distribution of energy, gas and water - more than 9%; and in mining – 0.6%. In November 2008, compared with November 2007, there was a fall of more than 30% in the production of ready-made rolled ferrous metal, mineral fertilisers, coke, cellulose, and also in some mechanical engineering sectors (and manufacturers’ price indexes have actually broken all negative records, having fallen 5% in September and 8.4% in November).

Let us remind ourselves that the last such fall in Russian industry was in the fourth quarter of 1998. At that time the State Statistic Committee of the Russian Federation stated that an 8.9% drop compared to the same period in 1997 took place. In general, industrial production in 1998 reduced by 5.2 % in comparison with the previous year. Coming back to 2008, we shall note that there was nevertheless some growth - at a level of 2%.But the truth is that it had been predicted at 4.7%, so now there is nothing to be particularly pleased with.
Gross national product also followed the general pattern of negative growth: comparing the first quarter of 2008 with the same period in 2007 it fell 8.7%, in the second quarter it fell 7.5%, in the third it was down 6.2%, and in the fourth it had dropped 2.6%. Vice-Premier and Head of the Finance Ministry Alexey Kudrin stated that in 2009 it is possible to expect up to a 3% growth in the gross national product. So far it is hard to believe that.

THE YEAR OF UNREALISED HOPES

So, the collapse of Russian industry continues and is sucking the transport sector into its vortex. A shortage of wagons has turned into a surplus; players in the market state that 200,000 wagons sit unclaimed in the sidings of the Russian Federation’s railway network. The surplus of loading resources is sharply felt by operators, some of which are already starting to leave the market.

The non-payment crisis for transport by large Russian cargo owners grows as companies suffer a shortage of financial resources or, more likely, try to save their money.

That makes it particularly hard for those private transport companies whose park is partially in leasing because later it can lead to problems with bank payments.

If that happens, if it proves impossible to pay for the lease and these wagons will return to their proprietors - the leasing companies and actually be excluded from operation. This accounts for one fifth of private rolling stock – you can decide yourself whether that is a lot or a little.

In forecasting the situation for 2009, the majority of analysts share the opinion that the decrease in transportation volumes will continue. So, in the first quarter bulk cargoes can be expected to fall by more than 40% and general cargos by at least 20%. Railwaymen are ready to consider three negative, but in their own way, optimistic scenarios: -6 %, -12 % and -17 %.

However, at the end of 2008, at the expanded board meeting of OAO RZD the First Vice-President of the company Vadim Morozov said in 2009 the company plans to provide loading of not less than 1,055 million tons of cargo. That is already 19% below the previous year’s figures.

The crisis has placed all plans for further development in transport in doubt. We should like to remind you that last year two important documents were adopted - “Railway Transport Development Strategy to 2030” and “Transport Development Strategy to 2030”. Total financing was planned of up to 14 trillion roubles and 170 trillion roubles respectively.

Also, the program “Development of Transport System in 2010-2015” will be put into operation in 2010, with prospective financing of 13.9 trillion roubles. Now all previously good undertakings have a big question mark hanging over them. In fact, following the 2008 results, the expected profits of 16.2 billion roubles have turned into 2 billion. One can hardly expect to have a celebration with only this much in the purse.

The top management of the company states that each percentage point fall in loading on the network means a loss of 10-11 billion roubles for OAO RZD. Over the last quarter of last year, the company already lost 50 billion in income and 20 billion more has gone in advance payments for transportation. So it is not possible to expect that the New Year will end for OAO RZD with positive figures on the graphs.
As for private operators, they also will be affected by a further reduction in demand for their transportation services. Financial results may appear extremely negative, including bankruptcy in some companies, considering that the private park is generally used much less intensively than RZD’s, that transportation is focused mainly on the export market – which has also noticeably reduced – and also the cost of paying railway infrastructure owners for the time wagons are idling on ways of common use.

by Victoria Merkusheva

[~DETAIL_TEXT] =>

A RECORD IN MINUS FIGURES

First of all, it makes sense to mention that, in Russia, certain losses in loading volumes, estimated at about 20 million tons in January – October 2008, could be seen even before all the negative changes in the world market took place because they were connected purely with the sector’s internal systematic problems. It was a question of the legal distinction in the opportunity to use either private or inventory-listed wagons. During the first half of the year, an excessive demand for OAO RZD’s rolling stock was created. Then, in conditions of a decrease in transportation volumes, a return process started – granting discounts by withdrawing wagon costs from prices led to a rapid growth in the number of private wagons in overall cargo turnover. As a result, from October to November, loading volume on RZD’s rolling stock decreased by 35%. At the same time, in the private rolling stock sector there was an increase of 22%. If the country had not fallen into the abyss of economic crisis, the management of Russian Railways would have probably found a way to solve this problem by the end of the year. But the world collapse imposed its own way, and the yearly results were as they had never been before – not just an absence of growth in loading but, on the contrary, loading fell by 3% for the first time in OAO RZD history!

We should like to mention that, at the beginning of last autumn many analysts were already warning of the possible negative consequences of the world financial crisis for Russia and predicted a possible rate of decrease in the volume of metallurgical product transportations. This is a sector known to be the first affected by a toughening of market conditions but analysts were speaking about a 20% or 30% reduction. And very few people could guess that, in November 2008 alone, the volume of ferrous metals transportation would shrink by almost 40% and that the industrial output of ready-made rolled ferrous metal would plunge by 44.3%. As regards raw materials (iron ores), output from mines last November was 42% less than during the same period the previous year. The volume of iron ore loading also decreased: in November 2008, scrap metal and ore dropped 74.4% and 50.4% respectively and, in the first ten days of this year, compared with the similar period of 2008, the fall was 47.7% and 81.2%.

Because of the world financial crisis the fall in transportation volumes was seen practically in all significant items on the industrial production order books. In addition, last November’s figures for cement transportation fell by 32.6%, construction cargoes by 23.4% and metal unit constructions by 16.7%. The network has also lost 45 % of its previous load of fertilisers.

It was no wonder that, in December, the collapse of rail transportation continued. Iron ore mining had fallen by 45.6% compared to 2007 and industrial output of ready-made rolled ferrous metals by 40.7%, which immediately affected the work of the whole transport industry.
However certain items – coal, oil and containers – held their positions. Transportation of coal for November 2008, in comparison with the same month in 2007, even increased by 1.2%, and though the parameters for oil and its products fell, the fall was only 0.7%. Containers have remained one of the few growing sectors. In Great Port of St. Petersburg, for January to November 2008, against a background of a mass reduction in transhipping (scrap metal down 37%, wood down 52%), container cargoes showed a 13% growth.

To be fair, we should mention that, for the previous nine months, this figure had been 21%. Probably soon there will be no more good news here either, because, judging by the general number of loaded containers transhipped in 2008, the picture is not too joyful – the Russian Sea Commercial Ports Association has worked out that the general transhipping volume figure fell by 17%; in export it fell by 57 %; in transit by 38 % but imports increased by 14.9%. If you look at all categories of cargoes processed in ports, so far a large fall cannot be detected, although there is no particular growth either. The turnover of goods, compared with 2007, grew only by 1.1%. It was hampered a little by slow-moving exports, where volume decreased by 2%. But import streams have grown by 14.7%.

Experts in the stevedore service market are not deceiving themselves – their forecasts are that the turnover of goods in Russian ports in 2009 will not be more than 427-428 million tons, in other words, it will be reduced by 4-4.5%. The forecasts concern metals, scrap metal, cellulose, sawn timber, car imports, special equipment and other general cargoes. Russian Ports Management is already considering reducing service prices with a view to keeping the turnover of goods to at least 2008 levels.

BACK TO THE FUTURE

It is no secret that the decrease in the turnover of goods on standard lists can be explained by the falling output of Russian industry. And the media continue to report a worsening situation in metallurgy – at the Magnitogorsk and Novolipetsk plants of the Evraz Group at “Severstal” and also at their suppliers.

Rosstat (Russian Federal Statistics Service) is reporting that, from January to October 2008, the industry grew by 4.9% compared with the same period in 2007. But in October it was only 0.6% and in November its graph moved down to -8.7 % in comparison with November 2007. Very few analysts predicted recession on such a scale in such a short time.

In the processing sectors, according to Rosstat’s figures, the fall has passed the 10% mark; in the manufacture and distribution of energy, gas and water - more than 9%; and in mining – 0.6%. In November 2008, compared with November 2007, there was a fall of more than 30% in the production of ready-made rolled ferrous metal, mineral fertilisers, coke, cellulose, and also in some mechanical engineering sectors (and manufacturers’ price indexes have actually broken all negative records, having fallen 5% in September and 8.4% in November).

Let us remind ourselves that the last such fall in Russian industry was in the fourth quarter of 1998. At that time the State Statistic Committee of the Russian Federation stated that an 8.9% drop compared to the same period in 1997 took place. In general, industrial production in 1998 reduced by 5.2 % in comparison with the previous year. Coming back to 2008, we shall note that there was nevertheless some growth - at a level of 2%.But the truth is that it had been predicted at 4.7%, so now there is nothing to be particularly pleased with.
Gross national product also followed the general pattern of negative growth: comparing the first quarter of 2008 with the same period in 2007 it fell 8.7%, in the second quarter it fell 7.5%, in the third it was down 6.2%, and in the fourth it had dropped 2.6%. Vice-Premier and Head of the Finance Ministry Alexey Kudrin stated that in 2009 it is possible to expect up to a 3% growth in the gross national product. So far it is hard to believe that.

THE YEAR OF UNREALISED HOPES

So, the collapse of Russian industry continues and is sucking the transport sector into its vortex. A shortage of wagons has turned into a surplus; players in the market state that 200,000 wagons sit unclaimed in the sidings of the Russian Federation’s railway network. The surplus of loading resources is sharply felt by operators, some of which are already starting to leave the market.

The non-payment crisis for transport by large Russian cargo owners grows as companies suffer a shortage of financial resources or, more likely, try to save their money.

That makes it particularly hard for those private transport companies whose park is partially in leasing because later it can lead to problems with bank payments.

If that happens, if it proves impossible to pay for the lease and these wagons will return to their proprietors - the leasing companies and actually be excluded from operation. This accounts for one fifth of private rolling stock – you can decide yourself whether that is a lot or a little.

In forecasting the situation for 2009, the majority of analysts share the opinion that the decrease in transportation volumes will continue. So, in the first quarter bulk cargoes can be expected to fall by more than 40% and general cargos by at least 20%. Railwaymen are ready to consider three negative, but in their own way, optimistic scenarios: -6 %, -12 % and -17 %.

However, at the end of 2008, at the expanded board meeting of OAO RZD the First Vice-President of the company Vadim Morozov said in 2009 the company plans to provide loading of not less than 1,055 million tons of cargo. That is already 19% below the previous year’s figures.

The crisis has placed all plans for further development in transport in doubt. We should like to remind you that last year two important documents were adopted - “Railway Transport Development Strategy to 2030” and “Transport Development Strategy to 2030”. Total financing was planned of up to 14 trillion roubles and 170 trillion roubles respectively.

Also, the program “Development of Transport System in 2010-2015” will be put into operation in 2010, with prospective financing of 13.9 trillion roubles. Now all previously good undertakings have a big question mark hanging over them. In fact, following the 2008 results, the expected profits of 16.2 billion roubles have turned into 2 billion. One can hardly expect to have a celebration with only this much in the purse.

The top management of the company states that each percentage point fall in loading on the network means a loss of 10-11 billion roubles for OAO RZD. Over the last quarter of last year, the company already lost 50 billion in income and 20 billion more has gone in advance payments for transportation. So it is not possible to expect that the New Year will end for OAO RZD with positive figures on the graphs.
As for private operators, they also will be affected by a further reduction in demand for their transportation services. Financial results may appear extremely negative, including bankruptcy in some companies, considering that the private park is generally used much less intensively than RZD’s, that transportation is focused mainly on the export market – which has also noticeably reduced – and also the cost of paying railway infrastructure owners for the time wagons are idling on ways of common use.

by Victoria Merkusheva

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The results for the whole year made it obvious that, even for complete optimists, the position of the industrial sector in Russia, transport included, was unenviable to put it mildly… [~PREVIEW_TEXT] =>  The fall of the Russian transport sector into a global financial hole was rapid: the first signs of a change appeared last September; a sharp reduction in industrial production in the country started at the beginning of October; in November, the volume of rail transportation decreased by 20% compared to the same period in 2007; and in December it fell by almost 30%. 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A RECORD IN MINUS FIGURES

First of all, it makes sense to mention that, in Russia, certain losses in loading volumes, estimated at about 20 million tons in January – October 2008, could be seen even before all the negative changes in the world market took place because they were connected purely with the sector’s internal systematic problems. It was a question of the legal distinction in the opportunity to use either private or inventory-listed wagons. During the first half of the year, an excessive demand for OAO RZD’s rolling stock was created. Then, in conditions of a decrease in transportation volumes, a return process started – granting discounts by withdrawing wagon costs from prices led to a rapid growth in the number of private wagons in overall cargo turnover. As a result, from October to November, loading volume on RZD’s rolling stock decreased by 35%. At the same time, in the private rolling stock sector there was an increase of 22%. If the country had not fallen into the abyss of economic crisis, the management of Russian Railways would have probably found a way to solve this problem by the end of the year. But the world collapse imposed its own way, and the yearly results were as they had never been before – not just an absence of growth in loading but, on the contrary, loading fell by 3% for the first time in OAO RZD history!

We should like to mention that, at the beginning of last autumn many analysts were already warning of the possible negative consequences of the world financial crisis for Russia and predicted a possible rate of decrease in the volume of metallurgical product transportations. This is a sector known to be the first affected by a toughening of market conditions but analysts were speaking about a 20% or 30% reduction. And very few people could guess that, in November 2008 alone, the volume of ferrous metals transportation would shrink by almost 40% and that the industrial output of ready-made rolled ferrous metal would plunge by 44.3%. As regards raw materials (iron ores), output from mines last November was 42% less than during the same period the previous year. The volume of iron ore loading also decreased: in November 2008, scrap metal and ore dropped 74.4% and 50.4% respectively and, in the first ten days of this year, compared with the similar period of 2008, the fall was 47.7% and 81.2%.

Because of the world financial crisis the fall in transportation volumes was seen practically in all significant items on the industrial production order books. In addition, last November’s figures for cement transportation fell by 32.6%, construction cargoes by 23.4% and metal unit constructions by 16.7%. The network has also lost 45 % of its previous load of fertilisers.

It was no wonder that, in December, the collapse of rail transportation continued. Iron ore mining had fallen by 45.6% compared to 2007 and industrial output of ready-made rolled ferrous metals by 40.7%, which immediately affected the work of the whole transport industry.
However certain items – coal, oil and containers – held their positions. Transportation of coal for November 2008, in comparison with the same month in 2007, even increased by 1.2%, and though the parameters for oil and its products fell, the fall was only 0.7%. Containers have remained one of the few growing sectors. In Great Port of St. Petersburg, for January to November 2008, against a background of a mass reduction in transhipping (scrap metal down 37%, wood down 52%), container cargoes showed a 13% growth.

To be fair, we should mention that, for the previous nine months, this figure had been 21%. Probably soon there will be no more good news here either, because, judging by the general number of loaded containers transhipped in 2008, the picture is not too joyful – the Russian Sea Commercial Ports Association has worked out that the general transhipping volume figure fell by 17%; in export it fell by 57 %; in transit by 38 % but imports increased by 14.9%. If you look at all categories of cargoes processed in ports, so far a large fall cannot be detected, although there is no particular growth either. The turnover of goods, compared with 2007, grew only by 1.1%. It was hampered a little by slow-moving exports, where volume decreased by 2%. But import streams have grown by 14.7%.

Experts in the stevedore service market are not deceiving themselves – their forecasts are that the turnover of goods in Russian ports in 2009 will not be more than 427-428 million tons, in other words, it will be reduced by 4-4.5%. The forecasts concern metals, scrap metal, cellulose, sawn timber, car imports, special equipment and other general cargoes. Russian Ports Management is already considering reducing service prices with a view to keeping the turnover of goods to at least 2008 levels.

BACK TO THE FUTURE

It is no secret that the decrease in the turnover of goods on standard lists can be explained by the falling output of Russian industry. And the media continue to report a worsening situation in metallurgy – at the Magnitogorsk and Novolipetsk plants of the Evraz Group at “Severstal” and also at their suppliers.

Rosstat (Russian Federal Statistics Service) is reporting that, from January to October 2008, the industry grew by 4.9% compared with the same period in 2007. But in October it was only 0.6% and in November its graph moved down to -8.7 % in comparison with November 2007. Very few analysts predicted recession on such a scale in such a short time.

In the processing sectors, according to Rosstat’s figures, the fall has passed the 10% mark; in the manufacture and distribution of energy, gas and water - more than 9%; and in mining – 0.6%. In November 2008, compared with November 2007, there was a fall of more than 30% in the production of ready-made rolled ferrous metal, mineral fertilisers, coke, cellulose, and also in some mechanical engineering sectors (and manufacturers’ price indexes have actually broken all negative records, having fallen 5% in September and 8.4% in November).

Let us remind ourselves that the last such fall in Russian industry was in the fourth quarter of 1998. At that time the State Statistic Committee of the Russian Federation stated that an 8.9% drop compared to the same period in 1997 took place. In general, industrial production in 1998 reduced by 5.2 % in comparison with the previous year. Coming back to 2008, we shall note that there was nevertheless some growth - at a level of 2%.But the truth is that it had been predicted at 4.7%, so now there is nothing to be particularly pleased with.
Gross national product also followed the general pattern of negative growth: comparing the first quarter of 2008 with the same period in 2007 it fell 8.7%, in the second quarter it fell 7.5%, in the third it was down 6.2%, and in the fourth it had dropped 2.6%. Vice-Premier and Head of the Finance Ministry Alexey Kudrin stated that in 2009 it is possible to expect up to a 3% growth in the gross national product. So far it is hard to believe that.

THE YEAR OF UNREALISED HOPES

So, the collapse of Russian industry continues and is sucking the transport sector into its vortex. A shortage of wagons has turned into a surplus; players in the market state that 200,000 wagons sit unclaimed in the sidings of the Russian Federation’s railway network. The surplus of loading resources is sharply felt by operators, some of which are already starting to leave the market.

The non-payment crisis for transport by large Russian cargo owners grows as companies suffer a shortage of financial resources or, more likely, try to save their money.

That makes it particularly hard for those private transport companies whose park is partially in leasing because later it can lead to problems with bank payments.

If that happens, if it proves impossible to pay for the lease and these wagons will return to their proprietors - the leasing companies and actually be excluded from operation. This accounts for one fifth of private rolling stock – you can decide yourself whether that is a lot or a little.

In forecasting the situation for 2009, the majority of analysts share the opinion that the decrease in transportation volumes will continue. So, in the first quarter bulk cargoes can be expected to fall by more than 40% and general cargos by at least 20%. Railwaymen are ready to consider three negative, but in their own way, optimistic scenarios: -6 %, -12 % and -17 %.

However, at the end of 2008, at the expanded board meeting of OAO RZD the First Vice-President of the company Vadim Morozov said in 2009 the company plans to provide loading of not less than 1,055 million tons of cargo. That is already 19% below the previous year’s figures.

The crisis has placed all plans for further development in transport in doubt. We should like to remind you that last year two important documents were adopted - “Railway Transport Development Strategy to 2030” and “Transport Development Strategy to 2030”. Total financing was planned of up to 14 trillion roubles and 170 trillion roubles respectively.

Also, the program “Development of Transport System in 2010-2015” will be put into operation in 2010, with prospective financing of 13.9 trillion roubles. Now all previously good undertakings have a big question mark hanging over them. In fact, following the 2008 results, the expected profits of 16.2 billion roubles have turned into 2 billion. One can hardly expect to have a celebration with only this much in the purse.

The top management of the company states that each percentage point fall in loading on the network means a loss of 10-11 billion roubles for OAO RZD. Over the last quarter of last year, the company already lost 50 billion in income and 20 billion more has gone in advance payments for transportation. So it is not possible to expect that the New Year will end for OAO RZD with positive figures on the graphs.
As for private operators, they also will be affected by a further reduction in demand for their transportation services. Financial results may appear extremely negative, including bankruptcy in some companies, considering that the private park is generally used much less intensively than RZD’s, that transportation is focused mainly on the export market – which has also noticeably reduced – and also the cost of paying railway infrastructure owners for the time wagons are idling on ways of common use.

by Victoria Merkusheva

[~DETAIL_TEXT] =>

A RECORD IN MINUS FIGURES

First of all, it makes sense to mention that, in Russia, certain losses in loading volumes, estimated at about 20 million tons in January – October 2008, could be seen even before all the negative changes in the world market took place because they were connected purely with the sector’s internal systematic problems. It was a question of the legal distinction in the opportunity to use either private or inventory-listed wagons. During the first half of the year, an excessive demand for OAO RZD’s rolling stock was created. Then, in conditions of a decrease in transportation volumes, a return process started – granting discounts by withdrawing wagon costs from prices led to a rapid growth in the number of private wagons in overall cargo turnover. As a result, from October to November, loading volume on RZD’s rolling stock decreased by 35%. At the same time, in the private rolling stock sector there was an increase of 22%. If the country had not fallen into the abyss of economic crisis, the management of Russian Railways would have probably found a way to solve this problem by the end of the year. But the world collapse imposed its own way, and the yearly results were as they had never been before – not just an absence of growth in loading but, on the contrary, loading fell by 3% for the first time in OAO RZD history!

We should like to mention that, at the beginning of last autumn many analysts were already warning of the possible negative consequences of the world financial crisis for Russia and predicted a possible rate of decrease in the volume of metallurgical product transportations. This is a sector known to be the first affected by a toughening of market conditions but analysts were speaking about a 20% or 30% reduction. And very few people could guess that, in November 2008 alone, the volume of ferrous metals transportation would shrink by almost 40% and that the industrial output of ready-made rolled ferrous metal would plunge by 44.3%. As regards raw materials (iron ores), output from mines last November was 42% less than during the same period the previous year. The volume of iron ore loading also decreased: in November 2008, scrap metal and ore dropped 74.4% and 50.4% respectively and, in the first ten days of this year, compared with the similar period of 2008, the fall was 47.7% and 81.2%.

Because of the world financial crisis the fall in transportation volumes was seen practically in all significant items on the industrial production order books. In addition, last November’s figures for cement transportation fell by 32.6%, construction cargoes by 23.4% and metal unit constructions by 16.7%. The network has also lost 45 % of its previous load of fertilisers.

It was no wonder that, in December, the collapse of rail transportation continued. Iron ore mining had fallen by 45.6% compared to 2007 and industrial output of ready-made rolled ferrous metals by 40.7%, which immediately affected the work of the whole transport industry.
However certain items – coal, oil and containers – held their positions. Transportation of coal for November 2008, in comparison with the same month in 2007, even increased by 1.2%, and though the parameters for oil and its products fell, the fall was only 0.7%. Containers have remained one of the few growing sectors. In Great Port of St. Petersburg, for January to November 2008, against a background of a mass reduction in transhipping (scrap metal down 37%, wood down 52%), container cargoes showed a 13% growth.

To be fair, we should mention that, for the previous nine months, this figure had been 21%. Probably soon there will be no more good news here either, because, judging by the general number of loaded containers transhipped in 2008, the picture is not too joyful – the Russian Sea Commercial Ports Association has worked out that the general transhipping volume figure fell by 17%; in export it fell by 57 %; in transit by 38 % but imports increased by 14.9%. If you look at all categories of cargoes processed in ports, so far a large fall cannot be detected, although there is no particular growth either. The turnover of goods, compared with 2007, grew only by 1.1%. It was hampered a little by slow-moving exports, where volume decreased by 2%. But import streams have grown by 14.7%.

Experts in the stevedore service market are not deceiving themselves – their forecasts are that the turnover of goods in Russian ports in 2009 will not be more than 427-428 million tons, in other words, it will be reduced by 4-4.5%. The forecasts concern metals, scrap metal, cellulose, sawn timber, car imports, special equipment and other general cargoes. Russian Ports Management is already considering reducing service prices with a view to keeping the turnover of goods to at least 2008 levels.

BACK TO THE FUTURE

It is no secret that the decrease in the turnover of goods on standard lists can be explained by the falling output of Russian industry. And the media continue to report a worsening situation in metallurgy – at the Magnitogorsk and Novolipetsk plants of the Evraz Group at “Severstal” and also at their suppliers.

Rosstat (Russian Federal Statistics Service) is reporting that, from January to October 2008, the industry grew by 4.9% compared with the same period in 2007. But in October it was only 0.6% and in November its graph moved down to -8.7 % in comparison with November 2007. Very few analysts predicted recession on such a scale in such a short time.

In the processing sectors, according to Rosstat’s figures, the fall has passed the 10% mark; in the manufacture and distribution of energy, gas and water - more than 9%; and in mining – 0.6%. In November 2008, compared with November 2007, there was a fall of more than 30% in the production of ready-made rolled ferrous metal, mineral fertilisers, coke, cellulose, and also in some mechanical engineering sectors (and manufacturers’ price indexes have actually broken all negative records, having fallen 5% in September and 8.4% in November).

Let us remind ourselves that the last such fall in Russian industry was in the fourth quarter of 1998. At that time the State Statistic Committee of the Russian Federation stated that an 8.9% drop compared to the same period in 1997 took place. In general, industrial production in 1998 reduced by 5.2 % in comparison with the previous year. Coming back to 2008, we shall note that there was nevertheless some growth - at a level of 2%.But the truth is that it had been predicted at 4.7%, so now there is nothing to be particularly pleased with.
Gross national product also followed the general pattern of negative growth: comparing the first quarter of 2008 with the same period in 2007 it fell 8.7%, in the second quarter it fell 7.5%, in the third it was down 6.2%, and in the fourth it had dropped 2.6%. Vice-Premier and Head of the Finance Ministry Alexey Kudrin stated that in 2009 it is possible to expect up to a 3% growth in the gross national product. So far it is hard to believe that.

THE YEAR OF UNREALISED HOPES

So, the collapse of Russian industry continues and is sucking the transport sector into its vortex. A shortage of wagons has turned into a surplus; players in the market state that 200,000 wagons sit unclaimed in the sidings of the Russian Federation’s railway network. The surplus of loading resources is sharply felt by operators, some of which are already starting to leave the market.

The non-payment crisis for transport by large Russian cargo owners grows as companies suffer a shortage of financial resources or, more likely, try to save their money.

That makes it particularly hard for those private transport companies whose park is partially in leasing because later it can lead to problems with bank payments.

If that happens, if it proves impossible to pay for the lease and these wagons will return to their proprietors - the leasing companies and actually be excluded from operation. This accounts for one fifth of private rolling stock – you can decide yourself whether that is a lot or a little.

In forecasting the situation for 2009, the majority of analysts share the opinion that the decrease in transportation volumes will continue. So, in the first quarter bulk cargoes can be expected to fall by more than 40% and general cargos by at least 20%. Railwaymen are ready to consider three negative, but in their own way, optimistic scenarios: -6 %, -12 % and -17 %.

However, at the end of 2008, at the expanded board meeting of OAO RZD the First Vice-President of the company Vadim Morozov said in 2009 the company plans to provide loading of not less than 1,055 million tons of cargo. That is already 19% below the previous year’s figures.

The crisis has placed all plans for further development in transport in doubt. We should like to remind you that last year two important documents were adopted - “Railway Transport Development Strategy to 2030” and “Transport Development Strategy to 2030”. Total financing was planned of up to 14 trillion roubles and 170 trillion roubles respectively.

Also, the program “Development of Transport System in 2010-2015” will be put into operation in 2010, with prospective financing of 13.9 trillion roubles. Now all previously good undertakings have a big question mark hanging over them. In fact, following the 2008 results, the expected profits of 16.2 billion roubles have turned into 2 billion. One can hardly expect to have a celebration with only this much in the purse.

The top management of the company states that each percentage point fall in loading on the network means a loss of 10-11 billion roubles for OAO RZD. Over the last quarter of last year, the company already lost 50 billion in income and 20 billion more has gone in advance payments for transportation. So it is not possible to expect that the New Year will end for OAO RZD with positive figures on the graphs.
As for private operators, they also will be affected by a further reduction in demand for their transportation services. Financial results may appear extremely negative, including bankruptcy in some companies, considering that the private park is generally used much less intensively than RZD’s, that transportation is focused mainly on the export market – which has also noticeably reduced – and also the cost of paying railway infrastructure owners for the time wagons are idling on ways of common use.

by Victoria Merkusheva

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РЖД-Партнер

Passenger Reform on the Home Straight

 The “Russian Railways” Board of Directors has made a decision to create an affiliated company OAO “Federal Passenger Company” by 2010, which will take over the entire long-distance passenger portfolio from the holding and play the role of national carrier. The creation of OAO FPC within the RZD structure has been approved by the Government of the Russian Federation.
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Uneasy Decision on an Old Problem

OAO RZD provides practically all long-distance passenger services in Russia within the everyday railway public transport system. Its share is a quarter of all passenger turnover in the country. There are also private rolling stock operators in the market, working exclusively in a highly remunerative sector which uses extra comfort and “Lux” class carriages. State tariff regulations cover socially significant transport in “Platscart” (3rd class open-plan sleeper-based) and “General” (seating only) carriages. OAO RZD has recorded that today about 30% of its passenger turnover, which brings in 56% of its income, is in an uncontrolled sector. The rest of passenger transportation is not just unprofitable but creates losses for the company of about $1 billion annually.

It is thought that the newly created Federal Passenger Company (FPC) will focus its activity on long-distance transport in standard class carriages created especially for long-distance journeys, providing food, luggage and postal services during trips and on rolling stock repairs and transport services for foreign companies using trains of their own. The company will acquire rights to dispose of its own assets; it will also receive the whole carriage park, carriage-repair depots and have administrative and office buildings and other real estate at its disposal. By 2015, the passenger locomotive park, all assigned crews and separate passenger locomotive depots will be transferred to FPC as well. The creation of a passenger “daughter” company within OAO RZD is an important move in the process of railway transport reform. Originally, the FPC prototype was supposed to be created in 2006, during the second stage of the reform but the existing normative base was insufficient at that time. The Russian Government therefore altered the timescale to 2008-2009.

Throughout this period, OAO RZD was preparing the ground to allow the passenger transport sector to develop in its own independent way. The prototype of FPC started work on July 1st, 2006, in the form of the Federal Passenger Directorate (FPD), a specialised company to which the necessary property had been transferred. All mechanisms of interaction in transport were tried out with FPD, including the subtleties of using infrastructure services.

During discussion about who should own the Federal Passenger Company, the Russian Federation Ministry of Transport did not share OAO RZD’s viewpoint and suggested the creation of a federal company 100% owned by the Russian Federation. The question is what difference does this make, when in fact OAO RZD is 100% owned by the state anyway?

The railway industry’s main argument is that there are high risks caused by the infringement of the organisational principles of managing train movement on Russian railways. Experts note that the separation of one or more passenger companies from OAO RZD would create a situation where these companies would inevitably be burdened with superfluous functions, such as management, passenger transport organisation and many other functions.

The conclusion that FPC should be created as an affiliated OAO RZD company is based on an all-round efficiency analysis made with the consultancy support of experts from McKinsey. This conclusion is supported by the Public Chamber of the Russian Federation, which held hearings about the course of Russian railway transport reform.

In future, in order to develop internal competition, the opportunity for further division of FPC into several carriers is not excluded.

COMPENSATION FOR THE “THE MINIMAL ROUTE”

It is supposed that, with the separation of the long-distance branch of OAO RZD, the cross-subsidising of passenger transport will cease and the FPC will receive the necessary compensation from the Federal Budget.

But for this purpose it is necessary to clarify the cost of services. Development of the new price list № 10-02-16 “Tariffs for Passenger, Luggage and Cargo Luggage Transportations, And Infrastructure Services Which Are Carried Out by Railway Transport of General Use in Russian Federation on Internal Routes” is now in its closing stages. It will define the burden of carriage, railway station, infrastructure and locomotive components in transport costs.

In 2006, the Government took the decision to compensate the missed income of those carriers that provided long-distance passenger transport with regulated tariffs. Therefore, 10.9 billion roubles were assigned to the 2007 Federal Budget for this purpose, 19.4 billion roubles in 2008, 32.6 billion roubles in 2009, and 28 billion roubles in 2010, thus fully providing the economic basis for FPC’s creation.

Among long-distance transport reform goals is the transition to state order practices. OAO RZD together with McKinsey, have developed a model of “the minimal route” which will make it possible to define the optimum state regulation methods for socially significant transport services.

Developers’ thinking is that “the minimal route” is formed by government authorities from either expected, or targeted migration streams and the regional population income level. The frequency of trains within a certain weekly or monthly cycle, the number of seats and the level of comfort in a regulated sector should be defined depending on direction. All this, in turn, should have a direct influence on the subsidy offered.

Certainly the non-regulated sector, where tariffs are established by carriers independently (“Coupe” 2nd class compartments and “SV” type 1st class compartments), is more attractive because it turns a real profit. It is obvious that FPC will be responsible for most socially significant transport subsidised by the state. However, expert opinion holds that it is possible to develop competition in this sector, too. The state will give preference to those carriers that maintain the social order.

But the reality is that the tendency of the past five years has been a decrease in 2nd class “Cupe” compartment turnover in favour of “Platscart” carriages, showing that a future rise in prices in the non-regulated sector in an increasingly competitive transport market will be rather difficult to achieve.

RESUME

Nevertheless, experts are sure that the creation of FPC will enable OAO RZD to raise its passenger complex investment appeal, and therefore modernise its material base and reduce the deterioration of its fixed assets.

How the world financial crisis will affect plans to create the FPC is as yet unclear. There is an opinion that, by reducing general costs, the company will try to force the process of the separation of its passenger “daughter” and the creation of a compensation mechanism.

by Mikhail Kuzminov

viewpoint

MICHAEL AKULOVMICHAEL AKULOV,
Vice-President of OAO RZD:

– The creation of the Federal Passenger Company as a national, integrated carrier will provide the necessary level of financial and operational transparency; management with an emerging motivational stimulus and will exclude cross-subsidising risks and create the conditions for a mechanism of state subsidy. It will also allow us to make best use of the network and benefit from the positive effect of large-scale transportation, to guarantee their full geographical availability, to minimise the risk of failure and the disorganisation of long-distance passenger transport as a whole.

 

 

 

VICTOR KVITKOVICTOR KVITKO,
Head of Department for Transport Regulation, Federal Tariff Service:

– As a result of putting the new Railway Passenger Transport Price List into operation we shall implement the task given us by the country leaders in 2006, when the FPC creation concept was discussed. Users of the new company’s services in the regulated passenger transport sector will not feel any detrimental change and passenger fare levels will remain the same as before.

 

 

 

[~DETAIL_TEXT] =>

Uneasy Decision on an Old Problem

OAO RZD provides practically all long-distance passenger services in Russia within the everyday railway public transport system. Its share is a quarter of all passenger turnover in the country. There are also private rolling stock operators in the market, working exclusively in a highly remunerative sector which uses extra comfort and “Lux” class carriages. State tariff regulations cover socially significant transport in “Platscart” (3rd class open-plan sleeper-based) and “General” (seating only) carriages. OAO RZD has recorded that today about 30% of its passenger turnover, which brings in 56% of its income, is in an uncontrolled sector. The rest of passenger transportation is not just unprofitable but creates losses for the company of about $1 billion annually.

It is thought that the newly created Federal Passenger Company (FPC) will focus its activity on long-distance transport in standard class carriages created especially for long-distance journeys, providing food, luggage and postal services during trips and on rolling stock repairs and transport services for foreign companies using trains of their own. The company will acquire rights to dispose of its own assets; it will also receive the whole carriage park, carriage-repair depots and have administrative and office buildings and other real estate at its disposal. By 2015, the passenger locomotive park, all assigned crews and separate passenger locomotive depots will be transferred to FPC as well. The creation of a passenger “daughter” company within OAO RZD is an important move in the process of railway transport reform. Originally, the FPC prototype was supposed to be created in 2006, during the second stage of the reform but the existing normative base was insufficient at that time. The Russian Government therefore altered the timescale to 2008-2009.

Throughout this period, OAO RZD was preparing the ground to allow the passenger transport sector to develop in its own independent way. The prototype of FPC started work on July 1st, 2006, in the form of the Federal Passenger Directorate (FPD), a specialised company to which the necessary property had been transferred. All mechanisms of interaction in transport were tried out with FPD, including the subtleties of using infrastructure services.

During discussion about who should own the Federal Passenger Company, the Russian Federation Ministry of Transport did not share OAO RZD’s viewpoint and suggested the creation of a federal company 100% owned by the Russian Federation. The question is what difference does this make, when in fact OAO RZD is 100% owned by the state anyway?

The railway industry’s main argument is that there are high risks caused by the infringement of the organisational principles of managing train movement on Russian railways. Experts note that the separation of one or more passenger companies from OAO RZD would create a situation where these companies would inevitably be burdened with superfluous functions, such as management, passenger transport organisation and many other functions.

The conclusion that FPC should be created as an affiliated OAO RZD company is based on an all-round efficiency analysis made with the consultancy support of experts from McKinsey. This conclusion is supported by the Public Chamber of the Russian Federation, which held hearings about the course of Russian railway transport reform.

In future, in order to develop internal competition, the opportunity for further division of FPC into several carriers is not excluded.

COMPENSATION FOR THE “THE MINIMAL ROUTE”

It is supposed that, with the separation of the long-distance branch of OAO RZD, the cross-subsidising of passenger transport will cease and the FPC will receive the necessary compensation from the Federal Budget.

But for this purpose it is necessary to clarify the cost of services. Development of the new price list № 10-02-16 “Tariffs for Passenger, Luggage and Cargo Luggage Transportations, And Infrastructure Services Which Are Carried Out by Railway Transport of General Use in Russian Federation on Internal Routes” is now in its closing stages. It will define the burden of carriage, railway station, infrastructure and locomotive components in transport costs.

In 2006, the Government took the decision to compensate the missed income of those carriers that provided long-distance passenger transport with regulated tariffs. Therefore, 10.9 billion roubles were assigned to the 2007 Federal Budget for this purpose, 19.4 billion roubles in 2008, 32.6 billion roubles in 2009, and 28 billion roubles in 2010, thus fully providing the economic basis for FPC’s creation.

Among long-distance transport reform goals is the transition to state order practices. OAO RZD together with McKinsey, have developed a model of “the minimal route” which will make it possible to define the optimum state regulation methods for socially significant transport services.

Developers’ thinking is that “the minimal route” is formed by government authorities from either expected, or targeted migration streams and the regional population income level. The frequency of trains within a certain weekly or monthly cycle, the number of seats and the level of comfort in a regulated sector should be defined depending on direction. All this, in turn, should have a direct influence on the subsidy offered.

Certainly the non-regulated sector, where tariffs are established by carriers independently (“Coupe” 2nd class compartments and “SV” type 1st class compartments), is more attractive because it turns a real profit. It is obvious that FPC will be responsible for most socially significant transport subsidised by the state. However, expert opinion holds that it is possible to develop competition in this sector, too. The state will give preference to those carriers that maintain the social order.

But the reality is that the tendency of the past five years has been a decrease in 2nd class “Cupe” compartment turnover in favour of “Platscart” carriages, showing that a future rise in prices in the non-regulated sector in an increasingly competitive transport market will be rather difficult to achieve.

RESUME

Nevertheless, experts are sure that the creation of FPC will enable OAO RZD to raise its passenger complex investment appeal, and therefore modernise its material base and reduce the deterioration of its fixed assets.

How the world financial crisis will affect plans to create the FPC is as yet unclear. There is an opinion that, by reducing general costs, the company will try to force the process of the separation of its passenger “daughter” and the creation of a compensation mechanism.

by Mikhail Kuzminov

viewpoint

MICHAEL AKULOVMICHAEL AKULOV,
Vice-President of OAO RZD:

– The creation of the Federal Passenger Company as a national, integrated carrier will provide the necessary level of financial and operational transparency; management with an emerging motivational stimulus and will exclude cross-subsidising risks and create the conditions for a mechanism of state subsidy. It will also allow us to make best use of the network and benefit from the positive effect of large-scale transportation, to guarantee their full geographical availability, to minimise the risk of failure and the disorganisation of long-distance passenger transport as a whole.

 

 

 

VICTOR KVITKOVICTOR KVITKO,
Head of Department for Transport Regulation, Federal Tariff Service:

– As a result of putting the new Railway Passenger Transport Price List into operation we shall implement the task given us by the country leaders in 2006, when the FPC creation concept was discussed. Users of the new company’s services in the regulated passenger transport sector will not feel any detrimental change and passenger fare levels will remain the same as before.

 

 

 

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border="1" alt=" " hspace="5" width="120" height="150" align="left" />The “Russian Railways” Board of Directors has made a decision to create an affiliated company OAO “Federal Passenger Company” by 2010, which will take over the entire long-distance passenger portfolio from the holding and play the role of national carrier. 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Uneasy Decision on an Old Problem

OAO RZD provides practically all long-distance passenger services in Russia within the everyday railway public transport system. Its share is a quarter of all passenger turnover in the country. There are also private rolling stock operators in the market, working exclusively in a highly remunerative sector which uses extra comfort and “Lux” class carriages. State tariff regulations cover socially significant transport in “Platscart” (3rd class open-plan sleeper-based) and “General” (seating only) carriages. OAO RZD has recorded that today about 30% of its passenger turnover, which brings in 56% of its income, is in an uncontrolled sector. The rest of passenger transportation is not just unprofitable but creates losses for the company of about $1 billion annually.

It is thought that the newly created Federal Passenger Company (FPC) will focus its activity on long-distance transport in standard class carriages created especially for long-distance journeys, providing food, luggage and postal services during trips and on rolling stock repairs and transport services for foreign companies using trains of their own. The company will acquire rights to dispose of its own assets; it will also receive the whole carriage park, carriage-repair depots and have administrative and office buildings and other real estate at its disposal. By 2015, the passenger locomotive park, all assigned crews and separate passenger locomotive depots will be transferred to FPC as well. The creation of a passenger “daughter” company within OAO RZD is an important move in the process of railway transport reform. Originally, the FPC prototype was supposed to be created in 2006, during the second stage of the reform but the existing normative base was insufficient at that time. The Russian Government therefore altered the timescale to 2008-2009.

Throughout this period, OAO RZD was preparing the ground to allow the passenger transport sector to develop in its own independent way. The prototype of FPC started work on July 1st, 2006, in the form of the Federal Passenger Directorate (FPD), a specialised company to which the necessary property had been transferred. All mechanisms of interaction in transport were tried out with FPD, including the subtleties of using infrastructure services.

During discussion about who should own the Federal Passenger Company, the Russian Federation Ministry of Transport did not share OAO RZD’s viewpoint and suggested the creation of a federal company 100% owned by the Russian Federation. The question is what difference does this make, when in fact OAO RZD is 100% owned by the state anyway?

The railway industry’s main argument is that there are high risks caused by the infringement of the organisational principles of managing train movement on Russian railways. Experts note that the separation of one or more passenger companies from OAO RZD would create a situation where these companies would inevitably be burdened with superfluous functions, such as management, passenger transport organisation and many other functions.

The conclusion that FPC should be created as an affiliated OAO RZD company is based on an all-round efficiency analysis made with the consultancy support of experts from McKinsey. This conclusion is supported by the Public Chamber of the Russian Federation, which held hearings about the course of Russian railway transport reform.

In future, in order to develop internal competition, the opportunity for further division of FPC into several carriers is not excluded.

COMPENSATION FOR THE “THE MINIMAL ROUTE”

It is supposed that, with the separation of the long-distance branch of OAO RZD, the cross-subsidising of passenger transport will cease and the FPC will receive the necessary compensation from the Federal Budget.

But for this purpose it is necessary to clarify the cost of services. Development of the new price list № 10-02-16 “Tariffs for Passenger, Luggage and Cargo Luggage Transportations, And Infrastructure Services Which Are Carried Out by Railway Transport of General Use in Russian Federation on Internal Routes” is now in its closing stages. It will define the burden of carriage, railway station, infrastructure and locomotive components in transport costs.

In 2006, the Government took the decision to compensate the missed income of those carriers that provided long-distance passenger transport with regulated tariffs. Therefore, 10.9 billion roubles were assigned to the 2007 Federal Budget for this purpose, 19.4 billion roubles in 2008, 32.6 billion roubles in 2009, and 28 billion roubles in 2010, thus fully providing the economic basis for FPC’s creation.

Among long-distance transport reform goals is the transition to state order practices. OAO RZD together with McKinsey, have developed a model of “the minimal route” which will make it possible to define the optimum state regulation methods for socially significant transport services.

Developers’ thinking is that “the minimal route” is formed by government authorities from either expected, or targeted migration streams and the regional population income level. The frequency of trains within a certain weekly or monthly cycle, the number of seats and the level of comfort in a regulated sector should be defined depending on direction. All this, in turn, should have a direct influence on the subsidy offered.

Certainly the non-regulated sector, where tariffs are established by carriers independently (“Coupe” 2nd class compartments and “SV” type 1st class compartments), is more attractive because it turns a real profit. It is obvious that FPC will be responsible for most socially significant transport subsidised by the state. However, expert opinion holds that it is possible to develop competition in this sector, too. The state will give preference to those carriers that maintain the social order.

But the reality is that the tendency of the past five years has been a decrease in 2nd class “Cupe” compartment turnover in favour of “Platscart” carriages, showing that a future rise in prices in the non-regulated sector in an increasingly competitive transport market will be rather difficult to achieve.

RESUME

Nevertheless, experts are sure that the creation of FPC will enable OAO RZD to raise its passenger complex investment appeal, and therefore modernise its material base and reduce the deterioration of its fixed assets.

How the world financial crisis will affect plans to create the FPC is as yet unclear. There is an opinion that, by reducing general costs, the company will try to force the process of the separation of its passenger “daughter” and the creation of a compensation mechanism.

by Mikhail Kuzminov

viewpoint

MICHAEL AKULOVMICHAEL AKULOV,
Vice-President of OAO RZD:

– The creation of the Federal Passenger Company as a national, integrated carrier will provide the necessary level of financial and operational transparency; management with an emerging motivational stimulus and will exclude cross-subsidising risks and create the conditions for a mechanism of state subsidy. It will also allow us to make best use of the network and benefit from the positive effect of large-scale transportation, to guarantee their full geographical availability, to minimise the risk of failure and the disorganisation of long-distance passenger transport as a whole.

 

 

 

VICTOR KVITKOVICTOR KVITKO,
Head of Department for Transport Regulation, Federal Tariff Service:

– As a result of putting the new Railway Passenger Transport Price List into operation we shall implement the task given us by the country leaders in 2006, when the FPC creation concept was discussed. Users of the new company’s services in the regulated passenger transport sector will not feel any detrimental change and passenger fare levels will remain the same as before.

 

 

 

[~DETAIL_TEXT] =>

Uneasy Decision on an Old Problem

OAO RZD provides practically all long-distance passenger services in Russia within the everyday railway public transport system. Its share is a quarter of all passenger turnover in the country. There are also private rolling stock operators in the market, working exclusively in a highly remunerative sector which uses extra comfort and “Lux” class carriages. State tariff regulations cover socially significant transport in “Platscart” (3rd class open-plan sleeper-based) and “General” (seating only) carriages. OAO RZD has recorded that today about 30% of its passenger turnover, which brings in 56% of its income, is in an uncontrolled sector. The rest of passenger transportation is not just unprofitable but creates losses for the company of about $1 billion annually.

It is thought that the newly created Federal Passenger Company (FPC) will focus its activity on long-distance transport in standard class carriages created especially for long-distance journeys, providing food, luggage and postal services during trips and on rolling stock repairs and transport services for foreign companies using trains of their own. The company will acquire rights to dispose of its own assets; it will also receive the whole carriage park, carriage-repair depots and have administrative and office buildings and other real estate at its disposal. By 2015, the passenger locomotive park, all assigned crews and separate passenger locomotive depots will be transferred to FPC as well. The creation of a passenger “daughter” company within OAO RZD is an important move in the process of railway transport reform. Originally, the FPC prototype was supposed to be created in 2006, during the second stage of the reform but the existing normative base was insufficient at that time. The Russian Government therefore altered the timescale to 2008-2009.

Throughout this period, OAO RZD was preparing the ground to allow the passenger transport sector to develop in its own independent way. The prototype of FPC started work on July 1st, 2006, in the form of the Federal Passenger Directorate (FPD), a specialised company to which the necessary property had been transferred. All mechanisms of interaction in transport were tried out with FPD, including the subtleties of using infrastructure services.

During discussion about who should own the Federal Passenger Company, the Russian Federation Ministry of Transport did not share OAO RZD’s viewpoint and suggested the creation of a federal company 100% owned by the Russian Federation. The question is what difference does this make, when in fact OAO RZD is 100% owned by the state anyway?

The railway industry’s main argument is that there are high risks caused by the infringement of the organisational principles of managing train movement on Russian railways. Experts note that the separation of one or more passenger companies from OAO RZD would create a situation where these companies would inevitably be burdened with superfluous functions, such as management, passenger transport organisation and many other functions.

The conclusion that FPC should be created as an affiliated OAO RZD company is based on an all-round efficiency analysis made with the consultancy support of experts from McKinsey. This conclusion is supported by the Public Chamber of the Russian Federation, which held hearings about the course of Russian railway transport reform.

In future, in order to develop internal competition, the opportunity for further division of FPC into several carriers is not excluded.

COMPENSATION FOR THE “THE MINIMAL ROUTE”

It is supposed that, with the separation of the long-distance branch of OAO RZD, the cross-subsidising of passenger transport will cease and the FPC will receive the necessary compensation from the Federal Budget.

But for this purpose it is necessary to clarify the cost of services. Development of the new price list № 10-02-16 “Tariffs for Passenger, Luggage and Cargo Luggage Transportations, And Infrastructure Services Which Are Carried Out by Railway Transport of General Use in Russian Federation on Internal Routes” is now in its closing stages. It will define the burden of carriage, railway station, infrastructure and locomotive components in transport costs.

In 2006, the Government took the decision to compensate the missed income of those carriers that provided long-distance passenger transport with regulated tariffs. Therefore, 10.9 billion roubles were assigned to the 2007 Federal Budget for this purpose, 19.4 billion roubles in 2008, 32.6 billion roubles in 2009, and 28 billion roubles in 2010, thus fully providing the economic basis for FPC’s creation.

Among long-distance transport reform goals is the transition to state order practices. OAO RZD together with McKinsey, have developed a model of “the minimal route” which will make it possible to define the optimum state regulation methods for socially significant transport services.

Developers’ thinking is that “the minimal route” is formed by government authorities from either expected, or targeted migration streams and the regional population income level. The frequency of trains within a certain weekly or monthly cycle, the number of seats and the level of comfort in a regulated sector should be defined depending on direction. All this, in turn, should have a direct influence on the subsidy offered.

Certainly the non-regulated sector, where tariffs are established by carriers independently (“Coupe” 2nd class compartments and “SV” type 1st class compartments), is more attractive because it turns a real profit. It is obvious that FPC will be responsible for most socially significant transport subsidised by the state. However, expert opinion holds that it is possible to develop competition in this sector, too. The state will give preference to those carriers that maintain the social order.

But the reality is that the tendency of the past five years has been a decrease in 2nd class “Cupe” compartment turnover in favour of “Platscart” carriages, showing that a future rise in prices in the non-regulated sector in an increasingly competitive transport market will be rather difficult to achieve.

RESUME

Nevertheless, experts are sure that the creation of FPC will enable OAO RZD to raise its passenger complex investment appeal, and therefore modernise its material base and reduce the deterioration of its fixed assets.

How the world financial crisis will affect plans to create the FPC is as yet unclear. There is an opinion that, by reducing general costs, the company will try to force the process of the separation of its passenger “daughter” and the creation of a compensation mechanism.

by Mikhail Kuzminov

viewpoint

MICHAEL AKULOVMICHAEL AKULOV,
Vice-President of OAO RZD:

– The creation of the Federal Passenger Company as a national, integrated carrier will provide the necessary level of financial and operational transparency; management with an emerging motivational stimulus and will exclude cross-subsidising risks and create the conditions for a mechanism of state subsidy. It will also allow us to make best use of the network and benefit from the positive effect of large-scale transportation, to guarantee their full geographical availability, to minimise the risk of failure and the disorganisation of long-distance passenger transport as a whole.

 

 

 

VICTOR KVITKOVICTOR KVITKO,
Head of Department for Transport Regulation, Federal Tariff Service:

– As a result of putting the new Railway Passenger Transport Price List into operation we shall implement the task given us by the country leaders in 2006, when the FPC creation concept was discussed. Users of the new company’s services in the regulated passenger transport sector will not feel any detrimental change and passenger fare levels will remain the same as before.

 

 

 

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border="1" alt=" " hspace="5" width="120" height="150" align="left" />The “Russian Railways” Board of Directors has made a decision to create an affiliated company OAO “Federal Passenger Company” by 2010, which will take over the entire long-distance passenger portfolio from the holding and play the role of national carrier. 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РЖД-Партнер

Panorama. Economics

On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line. The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged.
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OAO RZD Participates in Electrification of Iranian Railways

On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line.
The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged.
The 46km railway branch line located on the outskirts of Tabriz due for electrification has an alternating current with a voltage of 25 kV and an industrial frequency of 50 Hz. The line serves the local community and the university in the town of Azarshahr and links the passenger terminals in Tabriz with the university. It also joins the line between Djulfa and Tabriz, which was electrified in 1979 under a project carried out by the Soviet Union.
The contact network on the line between Tebriz and the Pedagogical University which is envisaged by the contract takes into account the further electrification of the railway line towards Teheran with regard to its electrical characteristics.
According to the contract, the works are to be completed in nine months. The warranty period is 18 months.
Works are fulfilled by the Russian party (OAO Zarubezhstroytechnology – a daughter company of OAO RZD) and the services of an Iranian subcontractor are also being used. Most materials and equipment used for the electrification were made in Russia.
If the project is a success, Iranian authorities will discuss the possibility of asking OAO RZD to electrify the Tehran – Mashhad railway line.

Outside Investors into Russian Railway Infrastructure

Last year, Russian Railways continued to attract outside investors to develop rail infrastructure and the company succeeded in attracting RUR 1.2 billion in outside investment to implement infrastructure projects in 2008. In particular, infrastructure projects costing RUR 261.63 million were carried out using funding from regional and municipal budgets.
In addition, in 2008 the Russian Government and Russian Railways adopted decisions on the joint implementation of two major investment projects to develop railway infrastructure using money from Russia’s Investment Fund.
As a result, the company will be introducing high-speed passenger trains between St. Petersburg and Helsinki and reconstructing the line between Oune – Vysokogornaya - and the associated construction of a new tunnel at Kuznetsovsk on the line between Komsomolsk-on-Amur and Sovetskaya Gavan.
The total cost for the high-speed project between St. Petersburg and Helsinki based on the actual prices for the relevant years is RUR 79.7 billion (including VAT), with 35% of the cost coming from the Investment Fund (RUR 28 billion) and 65% (RUR 51.7 billion) from Russian Railways. The project began in 2007 and has invested more than RUR 14.8 billion so far.
Total investment into reconstruction of the Oune – Vysokogornaya line and the new Kuznetsovsk tunnel will amount to RUR 59.9 billion (including VAT).
The Investment Fund contributed 30% of the total project costs (RUR 17.6 billion), with Russian Railways providing the remaining 70% (RUR 42.3 billion).
The Kuznetsovsk tunnel is to be commissioned in 2013, with work on the reconstruction of the line between Komsomolsk-on-Amur and Sovetskaya Gavan to continue until 2016.
The construction of the new Kuznetsovsk tunnel and the reconstruction of the Komsomolsk-on-Amur - Sovetskaya Gavan line will ensure uninterrupted railway communication between the European part of Russia and its Far East region, as well as to the ports Sovetskaya Gavan and Vanino. This will in turn facilitate the development of mining and processing enterprises in Eastern Siberia and the Far East.

VTB reinforces cooperation with Russian Railways

In cooperation with OAO RZD, VTB Bank has extended its credit limit to the major Russian transporter to RUR 80 billion.
The facility gives the company access to the bank’s financing capacity and a whole range of globally accepted financial tools. In particular, the limit includes lending transactions such as financing of acquisition, maintenance and modernisation of fixed assets; transactions with OAO RZD promissory notes and hedging of currency and interest risks arising from the company’s operations.
Transactions under the facility are to amount to RUR 65 billion with OAO RZD and up to RUR 15 billion with its subsidiaries.
The bank regards OAO Russian Railways as one of its strategic customers and has been enhancing its relations with the company since its foundation. The documentary credit line set by the bank for Russian Railways has gradually increased over time, reflecting the scale of cooperation. The total volume of resources provided by VTB to OAO RZD since 2003 has exceeded RUB 100 billion. 

Belarus Asks Russia to Carry Out Transport Projects Estimated at RUR 100 Billion   

Belarus has asked Russia to realise several infrastructure projects, requiring investment of approximately RUR 100 billion, said Vladimir Sosnovsky, the republic’s Transport and Communications Minister.
In his words, it may take five or six years to carry out these projects.
The minister said that, in the transport sector, there are a lot of global as well as local projects which may be interesting for both parties. “Byelorussian transport is connected with Russian export and import freight transportation,” emphasized Mr Sosnovsky.
“The second transport corridor M1/E30 is one of the infrastructure projects. Simultaneously, we are developing a project to carry freight by railway along this corridor,” said the Byelorussian minister.
“We ask the Russian party to start modernisation of the railway line in this direction to improve the maximum available train speed from the current 140kph to 160kph. It is a rather expensive project because new signaling, communication and safety systems are to be put into operation and reconstruction is needed,” noted Mr Sosnovsky.
He considers an infrastructure project envisaging the development of the Ninth transport corridor Odessa – Kiev – Gomel – Vitebsk – Pskov – St. Petersburg to be very promising. “We think this project is of strategic importance. It includes two infrastructure projects: M-8 motorway Gomel – Mogilev – Vitebsk and a railway line to St. Petersburg. This line is underdeveloped at the moment, it has a lot of single tracks and the train speed is too slow there,” he said.

Russian Government Approved RUR 50 Billion Support for Russian Railways 

A commission of the Russian government approved a RUR 50 billion allocation to support Russian Railways, Transport Minister Igor Levitin said after a meeting of the commission on December 23, 2008.
“Due to a decrease in fares, Russian Railways came up with a proposal to provide RUR 50 billion of compensation. The commission [on increasing stable economic development] considered this issue and backed the proposal,” Mr Levitin said.
The decrease in the volume of cargo transportation by rail may be more pronounced than previously planned, he added.
“In November, the government considered the investment program of Russian Railways, which forecasted a 6 percent decrease in the level of transportation in 2009, but the board of directors revised the forecast,” the transport minister said, adding that it expects the volume of “transportation to plunge by 19 percent” in 2009. 

Transfer to “Euro-3” Standard Postponed

The Russian Government approved the “Euro-3” standard for fuel coming into force on January 1, 2011.
The new edition of the Decree envisages that motor petrol meeting “Euro-2”standard can be produced for sale until December 31, 2010, fuel meeting “Euro-3” standard until December 31, 2001, and that of “Euro-4” standard until December 31, 2014.
Diesel fuel of “Euro-2” and “Euro-3” standard may be sold until December 31, 2011, and that of “Euro-4” standard until December 31, 2014.  
Production of fuel meeting “Euro-5” standard is not limited.

Leasing Support

To stay competitive, private operators will be supported by means of leasing companies, claimed Igor Levitin, Russia’s Transport Minister, at the end of December.
In his words, finance will be given via leasing companies for purchasing new rolling stock. “The state will support private operators so that they could loan up the money they have already invested into wagons,” said the minister.
Mr Levitin added that in the last five years private operators invested approximately USD 15 billion into rolling stock. 

Tariffs on Freight Transportation Increased by 41% in Russia Last Year

On average in 2008, tariffs on freight transportation via all transport modes grew by 41.4% year-on-year. These data were mentioned in a report of Russian Federal Statistics Service.
Tariffs on transportation by railway grew by 22.1%; those on transportation by road haulage and pipelines increased by 18.8% and 66.1% respectively.
According to the Russian Federal Statistics Service, in Q4 2008 tariffs rose by 4% in comparison with Q3 on average. In October-December 2008, tariffs on railway transport services did not change, those on road transportation fell by 0.2% and those on transportation by pipelines leapt by 7.9%.

“Belkomur” Approved    

The complex investment project “Belkomur” was approved for state support from the RF Investment Fund. The initiator of the application was inter-regional investment company Severozapad-Prikamye.
The decision was made at a meeting of the Expert Council for Public-Private Partnership at the RF Transport Ministry. Participants at the meeting discussed the project “Complex Programme of Infrastructure Development in the Republic of Komi, Permsky Krai and Arkhangelsk region (“Belkomur” project)”.

[~DETAIL_TEXT] =>

OAO RZD Participates in Electrification of Iranian Railways

On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line.
The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged.
The 46km railway branch line located on the outskirts of Tabriz due for electrification has an alternating current with a voltage of 25 kV and an industrial frequency of 50 Hz. The line serves the local community and the university in the town of Azarshahr and links the passenger terminals in Tabriz with the university. It also joins the line between Djulfa and Tabriz, which was electrified in 1979 under a project carried out by the Soviet Union.
The contact network on the line between Tebriz and the Pedagogical University which is envisaged by the contract takes into account the further electrification of the railway line towards Teheran with regard to its electrical characteristics.
According to the contract, the works are to be completed in nine months. The warranty period is 18 months.
Works are fulfilled by the Russian party (OAO Zarubezhstroytechnology – a daughter company of OAO RZD) and the services of an Iranian subcontractor are also being used. Most materials and equipment used for the electrification were made in Russia.
If the project is a success, Iranian authorities will discuss the possibility of asking OAO RZD to electrify the Tehran – Mashhad railway line.

Outside Investors into Russian Railway Infrastructure

Last year, Russian Railways continued to attract outside investors to develop rail infrastructure and the company succeeded in attracting RUR 1.2 billion in outside investment to implement infrastructure projects in 2008. In particular, infrastructure projects costing RUR 261.63 million were carried out using funding from regional and municipal budgets.
In addition, in 2008 the Russian Government and Russian Railways adopted decisions on the joint implementation of two major investment projects to develop railway infrastructure using money from Russia’s Investment Fund.
As a result, the company will be introducing high-speed passenger trains between St. Petersburg and Helsinki and reconstructing the line between Oune – Vysokogornaya - and the associated construction of a new tunnel at Kuznetsovsk on the line between Komsomolsk-on-Amur and Sovetskaya Gavan.
The total cost for the high-speed project between St. Petersburg and Helsinki based on the actual prices for the relevant years is RUR 79.7 billion (including VAT), with 35% of the cost coming from the Investment Fund (RUR 28 billion) and 65% (RUR 51.7 billion) from Russian Railways. The project began in 2007 and has invested more than RUR 14.8 billion so far.
Total investment into reconstruction of the Oune – Vysokogornaya line and the new Kuznetsovsk tunnel will amount to RUR 59.9 billion (including VAT).
The Investment Fund contributed 30% of the total project costs (RUR 17.6 billion), with Russian Railways providing the remaining 70% (RUR 42.3 billion).
The Kuznetsovsk tunnel is to be commissioned in 2013, with work on the reconstruction of the line between Komsomolsk-on-Amur and Sovetskaya Gavan to continue until 2016.
The construction of the new Kuznetsovsk tunnel and the reconstruction of the Komsomolsk-on-Amur - Sovetskaya Gavan line will ensure uninterrupted railway communication between the European part of Russia and its Far East region, as well as to the ports Sovetskaya Gavan and Vanino. This will in turn facilitate the development of mining and processing enterprises in Eastern Siberia and the Far East.

VTB reinforces cooperation with Russian Railways

In cooperation with OAO RZD, VTB Bank has extended its credit limit to the major Russian transporter to RUR 80 billion.
The facility gives the company access to the bank’s financing capacity and a whole range of globally accepted financial tools. In particular, the limit includes lending transactions such as financing of acquisition, maintenance and modernisation of fixed assets; transactions with OAO RZD promissory notes and hedging of currency and interest risks arising from the company’s operations.
Transactions under the facility are to amount to RUR 65 billion with OAO RZD and up to RUR 15 billion with its subsidiaries.
The bank regards OAO Russian Railways as one of its strategic customers and has been enhancing its relations with the company since its foundation. The documentary credit line set by the bank for Russian Railways has gradually increased over time, reflecting the scale of cooperation. The total volume of resources provided by VTB to OAO RZD since 2003 has exceeded RUB 100 billion. 

Belarus Asks Russia to Carry Out Transport Projects Estimated at RUR 100 Billion   

Belarus has asked Russia to realise several infrastructure projects, requiring investment of approximately RUR 100 billion, said Vladimir Sosnovsky, the republic’s Transport and Communications Minister.
In his words, it may take five or six years to carry out these projects.
The minister said that, in the transport sector, there are a lot of global as well as local projects which may be interesting for both parties. “Byelorussian transport is connected with Russian export and import freight transportation,” emphasized Mr Sosnovsky.
“The second transport corridor M1/E30 is one of the infrastructure projects. Simultaneously, we are developing a project to carry freight by railway along this corridor,” said the Byelorussian minister.
“We ask the Russian party to start modernisation of the railway line in this direction to improve the maximum available train speed from the current 140kph to 160kph. It is a rather expensive project because new signaling, communication and safety systems are to be put into operation and reconstruction is needed,” noted Mr Sosnovsky.
He considers an infrastructure project envisaging the development of the Ninth transport corridor Odessa – Kiev – Gomel – Vitebsk – Pskov – St. Petersburg to be very promising. “We think this project is of strategic importance. It includes two infrastructure projects: M-8 motorway Gomel – Mogilev – Vitebsk and a railway line to St. Petersburg. This line is underdeveloped at the moment, it has a lot of single tracks and the train speed is too slow there,” he said.

Russian Government Approved RUR 50 Billion Support for Russian Railways 

A commission of the Russian government approved a RUR 50 billion allocation to support Russian Railways, Transport Minister Igor Levitin said after a meeting of the commission on December 23, 2008.
“Due to a decrease in fares, Russian Railways came up with a proposal to provide RUR 50 billion of compensation. The commission [on increasing stable economic development] considered this issue and backed the proposal,” Mr Levitin said.
The decrease in the volume of cargo transportation by rail may be more pronounced than previously planned, he added.
“In November, the government considered the investment program of Russian Railways, which forecasted a 6 percent decrease in the level of transportation in 2009, but the board of directors revised the forecast,” the transport minister said, adding that it expects the volume of “transportation to plunge by 19 percent” in 2009. 

Transfer to “Euro-3” Standard Postponed

The Russian Government approved the “Euro-3” standard for fuel coming into force on January 1, 2011.
The new edition of the Decree envisages that motor petrol meeting “Euro-2”standard can be produced for sale until December 31, 2010, fuel meeting “Euro-3” standard until December 31, 2001, and that of “Euro-4” standard until December 31, 2014.
Diesel fuel of “Euro-2” and “Euro-3” standard may be sold until December 31, 2011, and that of “Euro-4” standard until December 31, 2014.  
Production of fuel meeting “Euro-5” standard is not limited.

Leasing Support

To stay competitive, private operators will be supported by means of leasing companies, claimed Igor Levitin, Russia’s Transport Minister, at the end of December.
In his words, finance will be given via leasing companies for purchasing new rolling stock. “The state will support private operators so that they could loan up the money they have already invested into wagons,” said the minister.
Mr Levitin added that in the last five years private operators invested approximately USD 15 billion into rolling stock. 

Tariffs on Freight Transportation Increased by 41% in Russia Last Year

On average in 2008, tariffs on freight transportation via all transport modes grew by 41.4% year-on-year. These data were mentioned in a report of Russian Federal Statistics Service.
Tariffs on transportation by railway grew by 22.1%; those on transportation by road haulage and pipelines increased by 18.8% and 66.1% respectively.
According to the Russian Federal Statistics Service, in Q4 2008 tariffs rose by 4% in comparison with Q3 on average. In October-December 2008, tariffs on railway transport services did not change, those on road transportation fell by 0.2% and those on transportation by pipelines leapt by 7.9%.

“Belkomur” Approved    

The complex investment project “Belkomur” was approved for state support from the RF Investment Fund. The initiator of the application was inter-regional investment company Severozapad-Prikamye.
The decision was made at a meeting of the Expert Council for Public-Private Partnership at the RF Transport Ministry. Participants at the meeting discussed the project “Complex Programme of Infrastructure Development in the Republic of Komi, Permsky Krai and Arkhangelsk region (“Belkomur” project)”.

[DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line. The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged. [~PREVIEW_TEXT] => On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line. The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged. 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Economics [SECTION_META_KEYWORDS] => panorama. economics [SECTION_META_DESCRIPTION] => On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line. The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged. [ELEMENT_META_TITLE] => Panorama. Economics [ELEMENT_META_KEYWORDS] => panorama. economics [ELEMENT_META_DESCRIPTION] => On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line. The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged. [SECTION_PICTURE_FILE_ALT] => Panorama. Economics [SECTION_PICTURE_FILE_TITLE] => Panorama. Economics [SECTION_DETAIL_PICTURE_FILE_ALT] => Panorama. Economics [SECTION_DETAIL_PICTURE_FILE_TITLE] => Panorama. Economics [ELEMENT_PREVIEW_PICTURE_FILE_ALT] => Panorama. Economics [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => Panorama. Economics [ELEMENT_DETAIL_PICTURE_FILE_ALT] => Panorama. Economics [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => Panorama. Economics ) )

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OAO RZD Participates in Electrification of Iranian Railways

On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line.
The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged.
The 46km railway branch line located on the outskirts of Tabriz due for electrification has an alternating current with a voltage of 25 kV and an industrial frequency of 50 Hz. The line serves the local community and the university in the town of Azarshahr and links the passenger terminals in Tabriz with the university. It also joins the line between Djulfa and Tabriz, which was electrified in 1979 under a project carried out by the Soviet Union.
The contact network on the line between Tebriz and the Pedagogical University which is envisaged by the contract takes into account the further electrification of the railway line towards Teheran with regard to its electrical characteristics.
According to the contract, the works are to be completed in nine months. The warranty period is 18 months.
Works are fulfilled by the Russian party (OAO Zarubezhstroytechnology – a daughter company of OAO RZD) and the services of an Iranian subcontractor are also being used. Most materials and equipment used for the electrification were made in Russia.
If the project is a success, Iranian authorities will discuss the possibility of asking OAO RZD to electrify the Tehran – Mashhad railway line.

Outside Investors into Russian Railway Infrastructure

Last year, Russian Railways continued to attract outside investors to develop rail infrastructure and the company succeeded in attracting RUR 1.2 billion in outside investment to implement infrastructure projects in 2008. In particular, infrastructure projects costing RUR 261.63 million were carried out using funding from regional and municipal budgets.
In addition, in 2008 the Russian Government and Russian Railways adopted decisions on the joint implementation of two major investment projects to develop railway infrastructure using money from Russia’s Investment Fund.
As a result, the company will be introducing high-speed passenger trains between St. Petersburg and Helsinki and reconstructing the line between Oune – Vysokogornaya - and the associated construction of a new tunnel at Kuznetsovsk on the line between Komsomolsk-on-Amur and Sovetskaya Gavan.
The total cost for the high-speed project between St. Petersburg and Helsinki based on the actual prices for the relevant years is RUR 79.7 billion (including VAT), with 35% of the cost coming from the Investment Fund (RUR 28 billion) and 65% (RUR 51.7 billion) from Russian Railways. The project began in 2007 and has invested more than RUR 14.8 billion so far.
Total investment into reconstruction of the Oune – Vysokogornaya line and the new Kuznetsovsk tunnel will amount to RUR 59.9 billion (including VAT).
The Investment Fund contributed 30% of the total project costs (RUR 17.6 billion), with Russian Railways providing the remaining 70% (RUR 42.3 billion).
The Kuznetsovsk tunnel is to be commissioned in 2013, with work on the reconstruction of the line between Komsomolsk-on-Amur and Sovetskaya Gavan to continue until 2016.
The construction of the new Kuznetsovsk tunnel and the reconstruction of the Komsomolsk-on-Amur - Sovetskaya Gavan line will ensure uninterrupted railway communication between the European part of Russia and its Far East region, as well as to the ports Sovetskaya Gavan and Vanino. This will in turn facilitate the development of mining and processing enterprises in Eastern Siberia and the Far East.

VTB reinforces cooperation with Russian Railways

In cooperation with OAO RZD, VTB Bank has extended its credit limit to the major Russian transporter to RUR 80 billion.
The facility gives the company access to the bank’s financing capacity and a whole range of globally accepted financial tools. In particular, the limit includes lending transactions such as financing of acquisition, maintenance and modernisation of fixed assets; transactions with OAO RZD promissory notes and hedging of currency and interest risks arising from the company’s operations.
Transactions under the facility are to amount to RUR 65 billion with OAO RZD and up to RUR 15 billion with its subsidiaries.
The bank regards OAO Russian Railways as one of its strategic customers and has been enhancing its relations with the company since its foundation. The documentary credit line set by the bank for Russian Railways has gradually increased over time, reflecting the scale of cooperation. The total volume of resources provided by VTB to OAO RZD since 2003 has exceeded RUB 100 billion. 

Belarus Asks Russia to Carry Out Transport Projects Estimated at RUR 100 Billion   

Belarus has asked Russia to realise several infrastructure projects, requiring investment of approximately RUR 100 billion, said Vladimir Sosnovsky, the republic’s Transport and Communications Minister.
In his words, it may take five or six years to carry out these projects.
The minister said that, in the transport sector, there are a lot of global as well as local projects which may be interesting for both parties. “Byelorussian transport is connected with Russian export and import freight transportation,” emphasized Mr Sosnovsky.
“The second transport corridor M1/E30 is one of the infrastructure projects. Simultaneously, we are developing a project to carry freight by railway along this corridor,” said the Byelorussian minister.
“We ask the Russian party to start modernisation of the railway line in this direction to improve the maximum available train speed from the current 140kph to 160kph. It is a rather expensive project because new signaling, communication and safety systems are to be put into operation and reconstruction is needed,” noted Mr Sosnovsky.
He considers an infrastructure project envisaging the development of the Ninth transport corridor Odessa – Kiev – Gomel – Vitebsk – Pskov – St. Petersburg to be very promising. “We think this project is of strategic importance. It includes two infrastructure projects: M-8 motorway Gomel – Mogilev – Vitebsk and a railway line to St. Petersburg. This line is underdeveloped at the moment, it has a lot of single tracks and the train speed is too slow there,” he said.

Russian Government Approved RUR 50 Billion Support for Russian Railways 

A commission of the Russian government approved a RUR 50 billion allocation to support Russian Railways, Transport Minister Igor Levitin said after a meeting of the commission on December 23, 2008.
“Due to a decrease in fares, Russian Railways came up with a proposal to provide RUR 50 billion of compensation. The commission [on increasing stable economic development] considered this issue and backed the proposal,” Mr Levitin said.
The decrease in the volume of cargo transportation by rail may be more pronounced than previously planned, he added.
“In November, the government considered the investment program of Russian Railways, which forecasted a 6 percent decrease in the level of transportation in 2009, but the board of directors revised the forecast,” the transport minister said, adding that it expects the volume of “transportation to plunge by 19 percent” in 2009. 

Transfer to “Euro-3” Standard Postponed

The Russian Government approved the “Euro-3” standard for fuel coming into force on January 1, 2011.
The new edition of the Decree envisages that motor petrol meeting “Euro-2”standard can be produced for sale until December 31, 2010, fuel meeting “Euro-3” standard until December 31, 2001, and that of “Euro-4” standard until December 31, 2014.
Diesel fuel of “Euro-2” and “Euro-3” standard may be sold until December 31, 2011, and that of “Euro-4” standard until December 31, 2014.  
Production of fuel meeting “Euro-5” standard is not limited.

Leasing Support

To stay competitive, private operators will be supported by means of leasing companies, claimed Igor Levitin, Russia’s Transport Minister, at the end of December.
In his words, finance will be given via leasing companies for purchasing new rolling stock. “The state will support private operators so that they could loan up the money they have already invested into wagons,” said the minister.
Mr Levitin added that in the last five years private operators invested approximately USD 15 billion into rolling stock. 

Tariffs on Freight Transportation Increased by 41% in Russia Last Year

On average in 2008, tariffs on freight transportation via all transport modes grew by 41.4% year-on-year. These data were mentioned in a report of Russian Federal Statistics Service.
Tariffs on transportation by railway grew by 22.1%; those on transportation by road haulage and pipelines increased by 18.8% and 66.1% respectively.
According to the Russian Federal Statistics Service, in Q4 2008 tariffs rose by 4% in comparison with Q3 on average. In October-December 2008, tariffs on railway transport services did not change, those on road transportation fell by 0.2% and those on transportation by pipelines leapt by 7.9%.

“Belkomur” Approved    

The complex investment project “Belkomur” was approved for state support from the RF Investment Fund. The initiator of the application was inter-regional investment company Severozapad-Prikamye.
The decision was made at a meeting of the Expert Council for Public-Private Partnership at the RF Transport Ministry. Participants at the meeting discussed the project “Complex Programme of Infrastructure Development in the Republic of Komi, Permsky Krai and Arkhangelsk region (“Belkomur” project)”.

[~DETAIL_TEXT] =>

OAO RZD Participates in Electrification of Iranian Railways

On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line.
The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged.
The 46km railway branch line located on the outskirts of Tabriz due for electrification has an alternating current with a voltage of 25 kV and an industrial frequency of 50 Hz. The line serves the local community and the university in the town of Azarshahr and links the passenger terminals in Tabriz with the university. It also joins the line between Djulfa and Tabriz, which was electrified in 1979 under a project carried out by the Soviet Union.
The contact network on the line between Tebriz and the Pedagogical University which is envisaged by the contract takes into account the further electrification of the railway line towards Teheran with regard to its electrical characteristics.
According to the contract, the works are to be completed in nine months. The warranty period is 18 months.
Works are fulfilled by the Russian party (OAO Zarubezhstroytechnology – a daughter company of OAO RZD) and the services of an Iranian subcontractor are also being used. Most materials and equipment used for the electrification were made in Russia.
If the project is a success, Iranian authorities will discuss the possibility of asking OAO RZD to electrify the Tehran – Mashhad railway line.

Outside Investors into Russian Railway Infrastructure

Last year, Russian Railways continued to attract outside investors to develop rail infrastructure and the company succeeded in attracting RUR 1.2 billion in outside investment to implement infrastructure projects in 2008. In particular, infrastructure projects costing RUR 261.63 million were carried out using funding from regional and municipal budgets.
In addition, in 2008 the Russian Government and Russian Railways adopted decisions on the joint implementation of two major investment projects to develop railway infrastructure using money from Russia’s Investment Fund.
As a result, the company will be introducing high-speed passenger trains between St. Petersburg and Helsinki and reconstructing the line between Oune – Vysokogornaya - and the associated construction of a new tunnel at Kuznetsovsk on the line between Komsomolsk-on-Amur and Sovetskaya Gavan.
The total cost for the high-speed project between St. Petersburg and Helsinki based on the actual prices for the relevant years is RUR 79.7 billion (including VAT), with 35% of the cost coming from the Investment Fund (RUR 28 billion) and 65% (RUR 51.7 billion) from Russian Railways. The project began in 2007 and has invested more than RUR 14.8 billion so far.
Total investment into reconstruction of the Oune – Vysokogornaya line and the new Kuznetsovsk tunnel will amount to RUR 59.9 billion (including VAT).
The Investment Fund contributed 30% of the total project costs (RUR 17.6 billion), with Russian Railways providing the remaining 70% (RUR 42.3 billion).
The Kuznetsovsk tunnel is to be commissioned in 2013, with work on the reconstruction of the line between Komsomolsk-on-Amur and Sovetskaya Gavan to continue until 2016.
The construction of the new Kuznetsovsk tunnel and the reconstruction of the Komsomolsk-on-Amur - Sovetskaya Gavan line will ensure uninterrupted railway communication between the European part of Russia and its Far East region, as well as to the ports Sovetskaya Gavan and Vanino. This will in turn facilitate the development of mining and processing enterprises in Eastern Siberia and the Far East.

VTB reinforces cooperation with Russian Railways

In cooperation with OAO RZD, VTB Bank has extended its credit limit to the major Russian transporter to RUR 80 billion.
The facility gives the company access to the bank’s financing capacity and a whole range of globally accepted financial tools. In particular, the limit includes lending transactions such as financing of acquisition, maintenance and modernisation of fixed assets; transactions with OAO RZD promissory notes and hedging of currency and interest risks arising from the company’s operations.
Transactions under the facility are to amount to RUR 65 billion with OAO RZD and up to RUR 15 billion with its subsidiaries.
The bank regards OAO Russian Railways as one of its strategic customers and has been enhancing its relations with the company since its foundation. The documentary credit line set by the bank for Russian Railways has gradually increased over time, reflecting the scale of cooperation. The total volume of resources provided by VTB to OAO RZD since 2003 has exceeded RUB 100 billion. 

Belarus Asks Russia to Carry Out Transport Projects Estimated at RUR 100 Billion   

Belarus has asked Russia to realise several infrastructure projects, requiring investment of approximately RUR 100 billion, said Vladimir Sosnovsky, the republic’s Transport and Communications Minister.
In his words, it may take five or six years to carry out these projects.
The minister said that, in the transport sector, there are a lot of global as well as local projects which may be interesting for both parties. “Byelorussian transport is connected with Russian export and import freight transportation,” emphasized Mr Sosnovsky.
“The second transport corridor M1/E30 is one of the infrastructure projects. Simultaneously, we are developing a project to carry freight by railway along this corridor,” said the Byelorussian minister.
“We ask the Russian party to start modernisation of the railway line in this direction to improve the maximum available train speed from the current 140kph to 160kph. It is a rather expensive project because new signaling, communication and safety systems are to be put into operation and reconstruction is needed,” noted Mr Sosnovsky.
He considers an infrastructure project envisaging the development of the Ninth transport corridor Odessa – Kiev – Gomel – Vitebsk – Pskov – St. Petersburg to be very promising. “We think this project is of strategic importance. It includes two infrastructure projects: M-8 motorway Gomel – Mogilev – Vitebsk and a railway line to St. Petersburg. This line is underdeveloped at the moment, it has a lot of single tracks and the train speed is too slow there,” he said.

Russian Government Approved RUR 50 Billion Support for Russian Railways 

A commission of the Russian government approved a RUR 50 billion allocation to support Russian Railways, Transport Minister Igor Levitin said after a meeting of the commission on December 23, 2008.
“Due to a decrease in fares, Russian Railways came up with a proposal to provide RUR 50 billion of compensation. The commission [on increasing stable economic development] considered this issue and backed the proposal,” Mr Levitin said.
The decrease in the volume of cargo transportation by rail may be more pronounced than previously planned, he added.
“In November, the government considered the investment program of Russian Railways, which forecasted a 6 percent decrease in the level of transportation in 2009, but the board of directors revised the forecast,” the transport minister said, adding that it expects the volume of “transportation to plunge by 19 percent” in 2009. 

Transfer to “Euro-3” Standard Postponed

The Russian Government approved the “Euro-3” standard for fuel coming into force on January 1, 2011.
The new edition of the Decree envisages that motor petrol meeting “Euro-2”standard can be produced for sale until December 31, 2010, fuel meeting “Euro-3” standard until December 31, 2001, and that of “Euro-4” standard until December 31, 2014.
Diesel fuel of “Euro-2” and “Euro-3” standard may be sold until December 31, 2011, and that of “Euro-4” standard until December 31, 2014.  
Production of fuel meeting “Euro-5” standard is not limited.

Leasing Support

To stay competitive, private operators will be supported by means of leasing companies, claimed Igor Levitin, Russia’s Transport Minister, at the end of December.
In his words, finance will be given via leasing companies for purchasing new rolling stock. “The state will support private operators so that they could loan up the money they have already invested into wagons,” said the minister.
Mr Levitin added that in the last five years private operators invested approximately USD 15 billion into rolling stock. 

Tariffs on Freight Transportation Increased by 41% in Russia Last Year

On average in 2008, tariffs on freight transportation via all transport modes grew by 41.4% year-on-year. These data were mentioned in a report of Russian Federal Statistics Service.
Tariffs on transportation by railway grew by 22.1%; those on transportation by road haulage and pipelines increased by 18.8% and 66.1% respectively.
According to the Russian Federal Statistics Service, in Q4 2008 tariffs rose by 4% in comparison with Q3 on average. In October-December 2008, tariffs on railway transport services did not change, those on road transportation fell by 0.2% and those on transportation by pipelines leapt by 7.9%.

“Belkomur” Approved    

The complex investment project “Belkomur” was approved for state support from the RF Investment Fund. The initiator of the application was inter-regional investment company Severozapad-Prikamye.
The decision was made at a meeting of the Expert Council for Public-Private Partnership at the RF Transport Ministry. Participants at the meeting discussed the project “Complex Programme of Infrastructure Development in the Republic of Komi, Permsky Krai and Arkhangelsk region (“Belkomur” project)”.

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The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged. 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Economics [SECTION_META_KEYWORDS] => panorama. economics [SECTION_META_DESCRIPTION] => On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line. The contract to electrify the Tebriz – Azarshahr (TARE) line was signed on 29 March, 2008, by Vladimir Yakunin, the President of Russian Railways, and Mr Hassan Ziyari, the President of Iranian Railways (RAI), as a direct result of agreements reached in Moscow on 13 December, 2007, during the seventh meeting of the Permanent Russian-Iranian Commission on Trade and Economic Cooperation. The cost of the contract was not divulged. [ELEMENT_META_TITLE] => Panorama. Economics [ELEMENT_META_KEYWORDS] => panorama. economics [ELEMENT_META_DESCRIPTION] => On February 9, 2009, OAO RZD started work on electrifying the Tebriz – Azarshahr railway line. 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РЖД-Партнер

Does a Chinese Wagon Have Any Chances in Russia?

 In autumn 2008 Russian transport media published a lot of information about the possible advent of freight railcars made in China on the Russian railway network. The second half of 2009 was named “the most probable period” for launching this project. Obviously, the crisis in the sector may prevent Chinese railway production from coming to Russia.
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Complicated Negotiations

The information about the possible purchase of railway rolling stock from Chinese and American producers appeared last September. At that time Russian Deputy Transport Minister Andrey Nedosekov stated it was planned to certify wagons and components for them in the near future. For that, in his words, railcars were to be delivered from a Chinese enterprise and the licensing documents were supposed to be received in the shortest time possible. Mr Nedosekov said that in case the Chinese railcars met Russian requirements, such rolling stock will appear in Russia in the second half of 2009. According to the most optimistic forecasts, OAO RZD could purchase 3,000-4,000 wagons in China in 2009, and since 2010 Chinese producers of rolling stock could fulfill the demands of Russian customers, which amount to 50,000 freight wagons annually.

In October, after the 12th meeting of Russian-Chinese Sub-Committee for Cooperation in the Transport Sphere, held in Saint Petersburg, this theme was mentioned once again. A colleague of Mr Nedosekov, Deputy Transport Minister Alexander Misharin claimed that Russia and China were going to develop a memorandum for cooperation in the wagon building sector before the end of 2008. This document was to compensate for the lack of rolling stock certification aspects coordinated by the two countries.

At the background of such forecasts, it was no wonder, when late November 2008, one of Chinese largest railway rolling stock manufacturers - Qiqihar Railway Rolling Stock Co. – gave to the RF Ministry of Transport an application for freight railcars and components certification in Russia. Nowadays the company is holding negotiations with OAO RZD and other potential customers. In their application for certification Chinese manufacturers offered their own design of cargo wagons developed to be used at a speed up to 120 kmh.

Some technical aspects are to be analysed thoroughly. Russian requirements to wagon running gears run that they are to work at -60°C, and this may cause difficulties. A possible way out is “wagon routing at some definite sections”. With their current characteristics the railcars could be exploited in the North Urals region, for example.

Why Does Russia Need Chinese Railcars?

Such attention to Chinese manufactures can be easily explained. The larger part of railway machinery produced in Russia was developed in the second half of the 20th century. It has become out-of-date long ago. In the words of Mr Nedosekov, a wagon with 90 tons carrying capacity and 35 tons axial loading have been used in the USA for a long time already. The carrying capacity of Russian rolling stock is small (the one of a gondola car is only 60 tons), its speed is low, and the time between repairs is short. So, it has worse quality, reliability and efficiency criteria, but the price is almost the same. Meanwhile, Chinese railcars will be 8-10% cheaper than the ones made in Russia. It is due to the cheaper labour force, the share of which in the production cost amounts to 13-18%.

It seemed that putting this rolling stock into operation at the Russian railway network was a matter of time. But the economic crisis changes the situation at the Russian rolling stock building market, having created prerequisites for 20% decline in prices for the production of Russian enterprises. Moreover, sources in the Ministry of Transport and the Certification Register at the Federal Railway Transport said that the tests of Chinese wagons have not started in Russia yet. “At the meetings of the Committee of Plenipotentiary Specialists for Rolling Stock at the Council for Railway Transport of the CIS discussed several times the issue of coordinating technical specifications to cargo wagon construction at the Chinese enterprises. Since the defects, mentioned at the meetings of the Committee, were not removed, the specifications were not adopted,” stated a specialist of the Committee. He said, however, that the issue of holding certification works in Russia may be discussed if there are adjusted specifications and an application from the manufacturer (in this case – a Chinese enterprise).

In the Certification Register at the Federal Railway Transport, they claim that no attempts to start certification of Chinese production took place in November 2008. “There were no applications registered in November. If a Chinese manufacturer or a company from another country had given an application for its production certification to the Register and attached all the necessary documents to it, the Register would not have the right to give a refusal. It is a law of the Russian Federation,” emphasized Vladimir Matyushin, a former Head of the Certification Register at the Federal Railway Transport. And in OAO RZD, the major customer of these wagons, they said non-officially that this production will hardly ever enter the Russian market. “Russia has its own manufacture capacities, and if Chinese production enters this market ever, we’ll never get rid of it,” commented a source in OAO RZD.

By Maria Shevchenko

[~DETAIL_TEXT] =>

Complicated Negotiations

The information about the possible purchase of railway rolling stock from Chinese and American producers appeared last September. At that time Russian Deputy Transport Minister Andrey Nedosekov stated it was planned to certify wagons and components for them in the near future. For that, in his words, railcars were to be delivered from a Chinese enterprise and the licensing documents were supposed to be received in the shortest time possible. Mr Nedosekov said that in case the Chinese railcars met Russian requirements, such rolling stock will appear in Russia in the second half of 2009. According to the most optimistic forecasts, OAO RZD could purchase 3,000-4,000 wagons in China in 2009, and since 2010 Chinese producers of rolling stock could fulfill the demands of Russian customers, which amount to 50,000 freight wagons annually.

In October, after the 12th meeting of Russian-Chinese Sub-Committee for Cooperation in the Transport Sphere, held in Saint Petersburg, this theme was mentioned once again. A colleague of Mr Nedosekov, Deputy Transport Minister Alexander Misharin claimed that Russia and China were going to develop a memorandum for cooperation in the wagon building sector before the end of 2008. This document was to compensate for the lack of rolling stock certification aspects coordinated by the two countries.

At the background of such forecasts, it was no wonder, when late November 2008, one of Chinese largest railway rolling stock manufacturers - Qiqihar Railway Rolling Stock Co. – gave to the RF Ministry of Transport an application for freight railcars and components certification in Russia. Nowadays the company is holding negotiations with OAO RZD and other potential customers. In their application for certification Chinese manufacturers offered their own design of cargo wagons developed to be used at a speed up to 120 kmh.

Some technical aspects are to be analysed thoroughly. Russian requirements to wagon running gears run that they are to work at -60°C, and this may cause difficulties. A possible way out is “wagon routing at some definite sections”. With their current characteristics the railcars could be exploited in the North Urals region, for example.

Why Does Russia Need Chinese Railcars?

Such attention to Chinese manufactures can be easily explained. The larger part of railway machinery produced in Russia was developed in the second half of the 20th century. It has become out-of-date long ago. In the words of Mr Nedosekov, a wagon with 90 tons carrying capacity and 35 tons axial loading have been used in the USA for a long time already. The carrying capacity of Russian rolling stock is small (the one of a gondola car is only 60 tons), its speed is low, and the time between repairs is short. So, it has worse quality, reliability and efficiency criteria, but the price is almost the same. Meanwhile, Chinese railcars will be 8-10% cheaper than the ones made in Russia. It is due to the cheaper labour force, the share of which in the production cost amounts to 13-18%.

It seemed that putting this rolling stock into operation at the Russian railway network was a matter of time. But the economic crisis changes the situation at the Russian rolling stock building market, having created prerequisites for 20% decline in prices for the production of Russian enterprises. Moreover, sources in the Ministry of Transport and the Certification Register at the Federal Railway Transport said that the tests of Chinese wagons have not started in Russia yet. “At the meetings of the Committee of Plenipotentiary Specialists for Rolling Stock at the Council for Railway Transport of the CIS discussed several times the issue of coordinating technical specifications to cargo wagon construction at the Chinese enterprises. Since the defects, mentioned at the meetings of the Committee, were not removed, the specifications were not adopted,” stated a specialist of the Committee. He said, however, that the issue of holding certification works in Russia may be discussed if there are adjusted specifications and an application from the manufacturer (in this case – a Chinese enterprise).

In the Certification Register at the Federal Railway Transport, they claim that no attempts to start certification of Chinese production took place in November 2008. “There were no applications registered in November. If a Chinese manufacturer or a company from another country had given an application for its production certification to the Register and attached all the necessary documents to it, the Register would not have the right to give a refusal. It is a law of the Russian Federation,” emphasized Vladimir Matyushin, a former Head of the Certification Register at the Federal Railway Transport. And in OAO RZD, the major customer of these wagons, they said non-officially that this production will hardly ever enter the Russian market. “Russia has its own manufacture capacities, and if Chinese production enters this market ever, we’ll never get rid of it,” commented a source in OAO RZD.

By Maria Shevchenko

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Complicated Negotiations

The information about the possible purchase of railway rolling stock from Chinese and American producers appeared last September. At that time Russian Deputy Transport Minister Andrey Nedosekov stated it was planned to certify wagons and components for them in the near future. For that, in his words, railcars were to be delivered from a Chinese enterprise and the licensing documents were supposed to be received in the shortest time possible. Mr Nedosekov said that in case the Chinese railcars met Russian requirements, such rolling stock will appear in Russia in the second half of 2009. According to the most optimistic forecasts, OAO RZD could purchase 3,000-4,000 wagons in China in 2009, and since 2010 Chinese producers of rolling stock could fulfill the demands of Russian customers, which amount to 50,000 freight wagons annually.

In October, after the 12th meeting of Russian-Chinese Sub-Committee for Cooperation in the Transport Sphere, held in Saint Petersburg, this theme was mentioned once again. A colleague of Mr Nedosekov, Deputy Transport Minister Alexander Misharin claimed that Russia and China were going to develop a memorandum for cooperation in the wagon building sector before the end of 2008. This document was to compensate for the lack of rolling stock certification aspects coordinated by the two countries.

At the background of such forecasts, it was no wonder, when late November 2008, one of Chinese largest railway rolling stock manufacturers - Qiqihar Railway Rolling Stock Co. – gave to the RF Ministry of Transport an application for freight railcars and components certification in Russia. Nowadays the company is holding negotiations with OAO RZD and other potential customers. In their application for certification Chinese manufacturers offered their own design of cargo wagons developed to be used at a speed up to 120 kmh.

Some technical aspects are to be analysed thoroughly. Russian requirements to wagon running gears run that they are to work at -60°C, and this may cause difficulties. A possible way out is “wagon routing at some definite sections”. With their current characteristics the railcars could be exploited in the North Urals region, for example.

Why Does Russia Need Chinese Railcars?

Such attention to Chinese manufactures can be easily explained. The larger part of railway machinery produced in Russia was developed in the second half of the 20th century. It has become out-of-date long ago. In the words of Mr Nedosekov, a wagon with 90 tons carrying capacity and 35 tons axial loading have been used in the USA for a long time already. The carrying capacity of Russian rolling stock is small (the one of a gondola car is only 60 tons), its speed is low, and the time between repairs is short. So, it has worse quality, reliability and efficiency criteria, but the price is almost the same. Meanwhile, Chinese railcars will be 8-10% cheaper than the ones made in Russia. It is due to the cheaper labour force, the share of which in the production cost amounts to 13-18%.

It seemed that putting this rolling stock into operation at the Russian railway network was a matter of time. But the economic crisis changes the situation at the Russian rolling stock building market, having created prerequisites for 20% decline in prices for the production of Russian enterprises. Moreover, sources in the Ministry of Transport and the Certification Register at the Federal Railway Transport said that the tests of Chinese wagons have not started in Russia yet. “At the meetings of the Committee of Plenipotentiary Specialists for Rolling Stock at the Council for Railway Transport of the CIS discussed several times the issue of coordinating technical specifications to cargo wagon construction at the Chinese enterprises. Since the defects, mentioned at the meetings of the Committee, were not removed, the specifications were not adopted,” stated a specialist of the Committee. He said, however, that the issue of holding certification works in Russia may be discussed if there are adjusted specifications and an application from the manufacturer (in this case – a Chinese enterprise).

In the Certification Register at the Federal Railway Transport, they claim that no attempts to start certification of Chinese production took place in November 2008. “There were no applications registered in November. If a Chinese manufacturer or a company from another country had given an application for its production certification to the Register and attached all the necessary documents to it, the Register would not have the right to give a refusal. It is a law of the Russian Federation,” emphasized Vladimir Matyushin, a former Head of the Certification Register at the Federal Railway Transport. And in OAO RZD, the major customer of these wagons, they said non-officially that this production will hardly ever enter the Russian market. “Russia has its own manufacture capacities, and if Chinese production enters this market ever, we’ll never get rid of it,” commented a source in OAO RZD.

By Maria Shevchenko

[~DETAIL_TEXT] =>

Complicated Negotiations

The information about the possible purchase of railway rolling stock from Chinese and American producers appeared last September. At that time Russian Deputy Transport Minister Andrey Nedosekov stated it was planned to certify wagons and components for them in the near future. For that, in his words, railcars were to be delivered from a Chinese enterprise and the licensing documents were supposed to be received in the shortest time possible. Mr Nedosekov said that in case the Chinese railcars met Russian requirements, such rolling stock will appear in Russia in the second half of 2009. According to the most optimistic forecasts, OAO RZD could purchase 3,000-4,000 wagons in China in 2009, and since 2010 Chinese producers of rolling stock could fulfill the demands of Russian customers, which amount to 50,000 freight wagons annually.

In October, after the 12th meeting of Russian-Chinese Sub-Committee for Cooperation in the Transport Sphere, held in Saint Petersburg, this theme was mentioned once again. A colleague of Mr Nedosekov, Deputy Transport Minister Alexander Misharin claimed that Russia and China were going to develop a memorandum for cooperation in the wagon building sector before the end of 2008. This document was to compensate for the lack of rolling stock certification aspects coordinated by the two countries.

At the background of such forecasts, it was no wonder, when late November 2008, one of Chinese largest railway rolling stock manufacturers - Qiqihar Railway Rolling Stock Co. – gave to the RF Ministry of Transport an application for freight railcars and components certification in Russia. Nowadays the company is holding negotiations with OAO RZD and other potential customers. In their application for certification Chinese manufacturers offered their own design of cargo wagons developed to be used at a speed up to 120 kmh.

Some technical aspects are to be analysed thoroughly. Russian requirements to wagon running gears run that they are to work at -60°C, and this may cause difficulties. A possible way out is “wagon routing at some definite sections”. With their current characteristics the railcars could be exploited in the North Urals region, for example.

Why Does Russia Need Chinese Railcars?

Such attention to Chinese manufactures can be easily explained. The larger part of railway machinery produced in Russia was developed in the second half of the 20th century. It has become out-of-date long ago. In the words of Mr Nedosekov, a wagon with 90 tons carrying capacity and 35 tons axial loading have been used in the USA for a long time already. The carrying capacity of Russian rolling stock is small (the one of a gondola car is only 60 tons), its speed is low, and the time between repairs is short. So, it has worse quality, reliability and efficiency criteria, but the price is almost the same. Meanwhile, Chinese railcars will be 8-10% cheaper than the ones made in Russia. It is due to the cheaper labour force, the share of which in the production cost amounts to 13-18%.

It seemed that putting this rolling stock into operation at the Russian railway network was a matter of time. But the economic crisis changes the situation at the Russian rolling stock building market, having created prerequisites for 20% decline in prices for the production of Russian enterprises. Moreover, sources in the Ministry of Transport and the Certification Register at the Federal Railway Transport said that the tests of Chinese wagons have not started in Russia yet. “At the meetings of the Committee of Plenipotentiary Specialists for Rolling Stock at the Council for Railway Transport of the CIS discussed several times the issue of coordinating technical specifications to cargo wagon construction at the Chinese enterprises. Since the defects, mentioned at the meetings of the Committee, were not removed, the specifications were not adopted,” stated a specialist of the Committee. He said, however, that the issue of holding certification works in Russia may be discussed if there are adjusted specifications and an application from the manufacturer (in this case – a Chinese enterprise).

In the Certification Register at the Federal Railway Transport, they claim that no attempts to start certification of Chinese production took place in November 2008. “There were no applications registered in November. If a Chinese manufacturer or a company from another country had given an application for its production certification to the Register and attached all the necessary documents to it, the Register would not have the right to give a refusal. It is a law of the Russian Federation,” emphasized Vladimir Matyushin, a former Head of the Certification Register at the Federal Railway Transport. And in OAO RZD, the major customer of these wagons, they said non-officially that this production will hardly ever enter the Russian market. “Russia has its own manufacture capacities, and if Chinese production enters this market ever, we’ll never get rid of it,” commented a source in OAO RZD.

By Maria Shevchenko

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