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Scenarios for the Future 
The Target Model is a market map for a certain period. It is a document in which the authorities define roles for each participant and the desired results in the sector. 
It is good to remember that the Target Model was presented to market participants in November 2009. Representatives of RZD, the Ministry of Economic Development, Ministry of Transport, Federal Antimonopoly Service, Federal Tariff Service and operating companies have met many times since then, in order to discuss the main points of their disagreement. There were differences in opinions on such matters as tariff policy, RZD’s status, the extent of state regulation, and several other issues. At the same time, experts think that the main advantage of the drafted document is that the scenario it suggests has multiple options.  
The issue is that the structure of the sector is described to 2015 only. In this sense, this model can be called transitional. When answering the question of what the market will be after the defined period, one can say that it depends on how successful the proposed solutions will be in terms of competition, tariffs, growing operator business, and the communication of carriers and operators with RZD as an infrastructure company, etc. 
So, the near future will afford an opportunity to try different regulatory practices and to examine which are most effective. ‘This model is quite well-balanced. It reflects both the achievements of the reform and the directions to move in. It is important to note that these directions are not outlined firmly. It is expected to move to a new market structure stage by stage, assessing the effectiveness of different approaches, choosing the right ones and refraining from what appears wrong,’ says Andrey Gorenko, Corporate Finances Director at Transport Asset Management. 
It is expected to focus on three common goals: to finalise the formation of a competitive market in operating freight wagons; to establish an institute of local carriers to foster competition between them and RZD; and to improve the state regulatory system. Later, these tasks will be transformed into more concrete solutions. First of all, it is about the preservation of unity in the RZD freight transport network and its integration with public infrastructure. 
The authors of the model believe that this measure will have a beneficial effect because of its large scale. Also, it will minimise operating costs; maintain network integrity; allow the effective use of limited infrastructure bandwidth via a centralised transport dispatch system, etc. 
‘There are practically no other opportunities to transport cargoes. Otherwise, the tariff burden on shippers will grow drastically. Also, neither RZD nor anyone else is technologically ready today to separate such two processes as traffic management and infrastructure maintenance,’ says Valeriy Reshetnikov, Senior Vice President of RZD. 
This brings us to the idea that, firstly, RZD stays a network-wide carrier for all cargoes carried via public infrastructure; secondly, that state regulation continues to be implemented for those RZD tariffs associated with this natural monopoly; and thirdly, that the carrier keeps its locomotive fleet. 

Initiatives and Doubts 
Creating the conditions for private investments in locomotives is expected to be implemented gradually, trying various options, and all within the institution of local carriers. In fact, there are two options: the competition ‘on route’ and ‘for the route.’ The first option assumes that several local carriers will carry out activities on some network routes on a public basis, alongside RZD. 
The second one means that one company will win an exclusive right to carry all cargoes for a period of time from five to ten years, as a result of public tenders. The most important issue in the course of setting out this initiative was that private carriers should make fair payment for infrastructure. This kind of problem was suggested to FTS to solve. Vladimir Reshetnikov is sure that ‘it is important to avoid optima on local basis, thus there should not be a situation where some carriers receive preferential treatment, allowing them to organise their work with much greater profitability than others.’ 
There are some doubts regarding the ‘on route’ competition model. ‘It is clear that there will be competition for a particular sector, for a particular product, for certain types of transport cargoes, for the most profitable ones, of course. Finally, the share of RZD in these sectors will decline, and the end result of its work will become worse. This is the reason why it is necessary to compensate RZD either by means of tariffs or through subsidies,’ says Yermolai Solzhenitsyn, Managing Partner and Head of McKinsey consulting company’s Moscow office. 
Also, this competition will be based on price, and the one who offers lower prices will win, therefore the question will arise about the sources of investment in locomotives. In fact, this was one of the key aspects when this initiative was put forward. This was confirmed as well by Vitaly Yevdokimenko, General Director of Freight Two (Second Cargo Company). ‘First of all, tariff conditions should be established. This will provide investment attractiveness in purchasing locomotives.’ 
A few problems became worse in Russia in recent years, such as unacceptably poor wagon performance, increased empty runs and a crowd of rolling stock owners. Such problems are leading to chaos on the network, and the Target Model proposes to solve them by reducing the universal rolling stock delivery market to three or four network-wide operators. Two of them will be the first and second cargo companies (Freight One and Freight Two), by virtue of their large scale. At the same time, private companies do not want to voluntarily merge, or to unite in any other way, and administrative instruments are limited, so, a number of small players will probably still remain. 
In addition, a complex of regulatory measures is set forward. For example, tariffs on empty runs are to be unified. Viktor Kvitko, Head of FTS Transport Regulation Management, recognises that certain achievements have been made by this service in this respect. However, it is also open to cooperation and is ready to consider any proposals from wagon owners. And another important innovation was expected - the adoption of Rules to Transport Empty Rolling Stock. Originally, it was expected that this would be a separate document, but  it was decided later to supply the basic regulation document, Rules for Cargo Transportation by Rail, with new provisions. It will happen in the first quarter of 2011. 
The latest important initiative within the Target Model discussions is a network contract. The idea is to create a system of agreements between the state and the infrastructure owner, which would consider such subjects as what this infrastructure should look like; what its main maintenance features should be, what problems lie in this sector, and how it is financed and developed. In principle, this approach is to develop the ideology of  economically justified tariff levels. Here the infrastructure owner will be able to say in the framework of a constructive dialogue: ‘Yes, I can do this, this and this, due to good tariffs. And, as regards this, I shall have to either close or reduce it if you do not finance me.’
Thus, we can say that although the Target Model highlights the most notable trends of the modern rail freight market, however, it has left a lot of questions which will be answered by the market itself. Only after that can we finally evaluate the results of the entire structural reform and move on. What remains to be added is whether it is decided to extend the activities of the Railway Transport Structural Reform Program until 2015. 
By Elena Ushkova

viewpoint
Valeriy Reshetnikov, 
Senior Vice President of RZD: 
– The introduction of the institution of local carriers is regarded as an experiment, which should be focused, in principle, on technological and economic viability, and on continuous evaluation of the results. Therefore, if we evaluate this experiment purely critically, considering everything will be bad, there will not be any effect. Nevertheless, the decision has been made. And I think it is correct. 

Anatoly Golomolzin, 
Deputy Head of Federal Antimonopoly Service: 
– We have a situation where a carrier without wagons will work in Russia in 2011. At the same time, most railway rolling stock (60%) remains with a group of people from RZD, and only 40% is owned by independent companies. It is too early to put the question of consolidating the fleet. First, it is necessary to reach conclusions regarding privatisation of Freight One, and then, to look at the issue of how effectively Freight Two is working. 
It  is not the operators’ fault that the necessary technology has not been prepared to manage private parks. So, we should not talk yet about optimising the number of operators or about setting a target to enlarge them. We would rather consider the optimisation of technology and market rules. And, as regards the question of how many operators will be in the market, it depends on a favorable economic environment. In any case, competitive conditions should be observed. 

Yuri Shcherbanin, 
Head of the Laboratory of Transport and Logistics Systems, Institute of Economic Forecasting, Russian Academy of Sciences: 
– The Target Model is the most suitable of all reform concepts discussed today for the Russian railway sector, or, speaking more precisely, it has a minimal negative impact on the industry. Judging by nine criteria chosen by our institutions, the implementation of the model brings considerable improvements in such areas as “service quality for cargo owners”, “investment in wagons”, “technological stability and safety in railway transport” and “manageability levels of transportation process units”. 
As regards such criteria as “cargo owners’ freight costs”, “the amount of state regulation in the sector” and “subsidies from the state budget”, here the picture is the opposite. Such parameters as “infrastructure investments” and “investments in locomotives” do not herald any changes.
    [~DETAIL_TEXT] => 
Scenarios for the Future 
The Target Model is a market map for a certain period. It is a document in which the authorities define roles for each participant and the desired results in the sector. 
It is good to remember that the Target Model was presented to market participants in November 2009. Representatives of RZD, the Ministry of Economic Development, Ministry of Transport, Federal Antimonopoly Service, Federal Tariff Service and operating companies have met many times since then, in order to discuss the main points of their disagreement. There were differences in opinions on such matters as tariff policy, RZD’s status, the extent of state regulation, and several other issues. At the same time, experts think that the main advantage of the drafted document is that the scenario it suggests has multiple options.  
The issue is that the structure of the sector is described to 2015 only. In this sense, this model can be called transitional. When answering the question of what the market will be after the defined period, one can say that it depends on how successful the proposed solutions will be in terms of competition, tariffs, growing operator business, and the communication of carriers and operators with RZD as an infrastructure company, etc. 
So, the near future will afford an opportunity to try different regulatory practices and to examine which are most effective. ‘This model is quite well-balanced. It reflects both the achievements of the reform and the directions to move in. It is important to note that these directions are not outlined firmly. It is expected to move to a new market structure stage by stage, assessing the effectiveness of different approaches, choosing the right ones and refraining from what appears wrong,’ says Andrey Gorenko, Corporate Finances Director at Transport Asset Management. 
It is expected to focus on three common goals: to finalise the formation of a competitive market in operating freight wagons; to establish an institute of local carriers to foster competition between them and RZD; and to improve the state regulatory system. Later, these tasks will be transformed into more concrete solutions. First of all, it is about the preservation of unity in the RZD freight transport network and its integration with public infrastructure. 
The authors of the model believe that this measure will have a beneficial effect because of its large scale. Also, it will minimise operating costs; maintain network integrity; allow the effective use of limited infrastructure bandwidth via a centralised transport dispatch system, etc. 
‘There are practically no other opportunities to transport cargoes. Otherwise, the tariff burden on shippers will grow drastically. Also, neither RZD nor anyone else is technologically ready today to separate such two processes as traffic management and infrastructure maintenance,’ says Valeriy Reshetnikov, Senior Vice President of RZD. 
This brings us to the idea that, firstly, RZD stays a network-wide carrier for all cargoes carried via public infrastructure; secondly, that state regulation continues to be implemented for those RZD tariffs associated with this natural monopoly; and thirdly, that the carrier keeps its locomotive fleet. 

Initiatives and Doubts 
Creating the conditions for private investments in locomotives is expected to be implemented gradually, trying various options, and all within the institution of local carriers. In fact, there are two options: the competition ‘on route’ and ‘for the route.’ The first option assumes that several local carriers will carry out activities on some network routes on a public basis, alongside RZD. 
The second one means that one company will win an exclusive right to carry all cargoes for a period of time from five to ten years, as a result of public tenders. The most important issue in the course of setting out this initiative was that private carriers should make fair payment for infrastructure. This kind of problem was suggested to FTS to solve. Vladimir Reshetnikov is sure that ‘it is important to avoid optima on local basis, thus there should not be a situation where some carriers receive preferential treatment, allowing them to organise their work with much greater profitability than others.’ 
There are some doubts regarding the ‘on route’ competition model. ‘It is clear that there will be competition for a particular sector, for a particular product, for certain types of transport cargoes, for the most profitable ones, of course. Finally, the share of RZD in these sectors will decline, and the end result of its work will become worse. This is the reason why it is necessary to compensate RZD either by means of tariffs or through subsidies,’ says Yermolai Solzhenitsyn, Managing Partner and Head of McKinsey consulting company’s Moscow office. 
Also, this competition will be based on price, and the one who offers lower prices will win, therefore the question will arise about the sources of investment in locomotives. In fact, this was one of the key aspects when this initiative was put forward. This was confirmed as well by Vitaly Yevdokimenko, General Director of Freight Two (Second Cargo Company). ‘First of all, tariff conditions should be established. This will provide investment attractiveness in purchasing locomotives.’ 
A few problems became worse in Russia in recent years, such as unacceptably poor wagon performance, increased empty runs and a crowd of rolling stock owners. Such problems are leading to chaos on the network, and the Target Model proposes to solve them by reducing the universal rolling stock delivery market to three or four network-wide operators. Two of them will be the first and second cargo companies (Freight One and Freight Two), by virtue of their large scale. At the same time, private companies do not want to voluntarily merge, or to unite in any other way, and administrative instruments are limited, so, a number of small players will probably still remain. 
In addition, a complex of regulatory measures is set forward. For example, tariffs on empty runs are to be unified. Viktor Kvitko, Head of FTS Transport Regulation Management, recognises that certain achievements have been made by this service in this respect. However, it is also open to cooperation and is ready to consider any proposals from wagon owners. And another important innovation was expected - the adoption of Rules to Transport Empty Rolling Stock. Originally, it was expected that this would be a separate document, but  it was decided later to supply the basic regulation document, Rules for Cargo Transportation by Rail, with new provisions. It will happen in the first quarter of 2011. 
The latest important initiative within the Target Model discussions is a network contract. The idea is to create a system of agreements between the state and the infrastructure owner, which would consider such subjects as what this infrastructure should look like; what its main maintenance features should be, what problems lie in this sector, and how it is financed and developed. In principle, this approach is to develop the ideology of  economically justified tariff levels. Here the infrastructure owner will be able to say in the framework of a constructive dialogue: ‘Yes, I can do this, this and this, due to good tariffs. And, as regards this, I shall have to either close or reduce it if you do not finance me.’
Thus, we can say that although the Target Model highlights the most notable trends of the modern rail freight market, however, it has left a lot of questions which will be answered by the market itself. Only after that can we finally evaluate the results of the entire structural reform and move on. What remains to be added is whether it is decided to extend the activities of the Railway Transport Structural Reform Program until 2015. 
By Elena Ushkova

viewpoint
Valeriy Reshetnikov, 
Senior Vice President of RZD: 
– The introduction of the institution of local carriers is regarded as an experiment, which should be focused, in principle, on technological and economic viability, and on continuous evaluation of the results. Therefore, if we evaluate this experiment purely critically, considering everything will be bad, there will not be any effect. Nevertheless, the decision has been made. And I think it is correct. 

Anatoly Golomolzin, 
Deputy Head of Federal Antimonopoly Service: 
– We have a situation where a carrier without wagons will work in Russia in 2011. At the same time, most railway rolling stock (60%) remains with a group of people from RZD, and only 40% is owned by independent companies. It is too early to put the question of consolidating the fleet. First, it is necessary to reach conclusions regarding privatisation of Freight One, and then, to look at the issue of how effectively Freight Two is working. 
It  is not the operators’ fault that the necessary technology has not been prepared to manage private parks. So, we should not talk yet about optimising the number of operators or about setting a target to enlarge them. We would rather consider the optimisation of technology and market rules. And, as regards the question of how many operators will be in the market, it depends on a favorable economic environment. In any case, competitive conditions should be observed. 

Yuri Shcherbanin, 
Head of the Laboratory of Transport and Logistics Systems, Institute of Economic Forecasting, Russian Academy of Sciences: 
– The Target Model is the most suitable of all reform concepts discussed today for the Russian railway sector, or, speaking more precisely, it has a minimal negative impact on the industry. Judging by nine criteria chosen by our institutions, the implementation of the model brings considerable improvements in such areas as “service quality for cargo owners”, “investment in wagons”, “technological stability and safety in railway transport” and “manageability levels of transportation process units”. 
As regards such criteria as “cargo owners’ freight costs”, “the amount of state regulation in the sector” and “subsidies from the state budget”, here the picture is the opposite. Such parameters as “infrastructure investments” and “investments in locomotives” do not herald any changes.
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    [~PREVIEW_TEXT] => An active discussion was going on throughout 2010 about the Russian Rail Freight Target Market Model until 2015, which had been ordered by RZD and developed by McKinsey. Market participants achieved understanding on several key issues, so the government approved the draft. It sets a new structure for the industry sector with an emphasis on promoting competition and attracting private investment.
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Scenarios for the Future 
The Target Model is a market map for a certain period. It is a document in which the authorities define roles for each participant and the desired results in the sector. 
It is good to remember that the Target Model was presented to market participants in November 2009. Representatives of RZD, the Ministry of Economic Development, Ministry of Transport, Federal Antimonopoly Service, Federal Tariff Service and operating companies have met many times since then, in order to discuss the main points of their disagreement. There were differences in opinions on such matters as tariff policy, RZD’s status, the extent of state regulation, and several other issues. At the same time, experts think that the main advantage of the drafted document is that the scenario it suggests has multiple options.  
The issue is that the structure of the sector is described to 2015 only. In this sense, this model can be called transitional. When answering the question of what the market will be after the defined period, one can say that it depends on how successful the proposed solutions will be in terms of competition, tariffs, growing operator business, and the communication of carriers and operators with RZD as an infrastructure company, etc. 
So, the near future will afford an opportunity to try different regulatory practices and to examine which are most effective. ‘This model is quite well-balanced. It reflects both the achievements of the reform and the directions to move in. It is important to note that these directions are not outlined firmly. It is expected to move to a new market structure stage by stage, assessing the effectiveness of different approaches, choosing the right ones and refraining from what appears wrong,’ says Andrey Gorenko, Corporate Finances Director at Transport Asset Management. 
It is expected to focus on three common goals: to finalise the formation of a competitive market in operating freight wagons; to establish an institute of local carriers to foster competition between them and RZD; and to improve the state regulatory system. Later, these tasks will be transformed into more concrete solutions. First of all, it is about the preservation of unity in the RZD freight transport network and its integration with public infrastructure. 
The authors of the model believe that this measure will have a beneficial effect because of its large scale. Also, it will minimise operating costs; maintain network integrity; allow the effective use of limited infrastructure bandwidth via a centralised transport dispatch system, etc. 
‘There are practically no other opportunities to transport cargoes. Otherwise, the tariff burden on shippers will grow drastically. Also, neither RZD nor anyone else is technologically ready today to separate such two processes as traffic management and infrastructure maintenance,’ says Valeriy Reshetnikov, Senior Vice President of RZD. 
This brings us to the idea that, firstly, RZD stays a network-wide carrier for all cargoes carried via public infrastructure; secondly, that state regulation continues to be implemented for those RZD tariffs associated with this natural monopoly; and thirdly, that the carrier keeps its locomotive fleet. 

Initiatives and Doubts 
Creating the conditions for private investments in locomotives is expected to be implemented gradually, trying various options, and all within the institution of local carriers. In fact, there are two options: the competition ‘on route’ and ‘for the route.’ The first option assumes that several local carriers will carry out activities on some network routes on a public basis, alongside RZD. 
The second one means that one company will win an exclusive right to carry all cargoes for a period of time from five to ten years, as a result of public tenders. The most important issue in the course of setting out this initiative was that private carriers should make fair payment for infrastructure. This kind of problem was suggested to FTS to solve. Vladimir Reshetnikov is sure that ‘it is important to avoid optima on local basis, thus there should not be a situation where some carriers receive preferential treatment, allowing them to organise their work with much greater profitability than others.’ 
There are some doubts regarding the ‘on route’ competition model. ‘It is clear that there will be competition for a particular sector, for a particular product, for certain types of transport cargoes, for the most profitable ones, of course. Finally, the share of RZD in these sectors will decline, and the end result of its work will become worse. This is the reason why it is necessary to compensate RZD either by means of tariffs or through subsidies,’ says Yermolai Solzhenitsyn, Managing Partner and Head of McKinsey consulting company’s Moscow office. 
Also, this competition will be based on price, and the one who offers lower prices will win, therefore the question will arise about the sources of investment in locomotives. In fact, this was one of the key aspects when this initiative was put forward. This was confirmed as well by Vitaly Yevdokimenko, General Director of Freight Two (Second Cargo Company). ‘First of all, tariff conditions should be established. This will provide investment attractiveness in purchasing locomotives.’ 
A few problems became worse in Russia in recent years, such as unacceptably poor wagon performance, increased empty runs and a crowd of rolling stock owners. Such problems are leading to chaos on the network, and the Target Model proposes to solve them by reducing the universal rolling stock delivery market to three or four network-wide operators. Two of them will be the first and second cargo companies (Freight One and Freight Two), by virtue of their large scale. At the same time, private companies do not want to voluntarily merge, or to unite in any other way, and administrative instruments are limited, so, a number of small players will probably still remain. 
In addition, a complex of regulatory measures is set forward. For example, tariffs on empty runs are to be unified. Viktor Kvitko, Head of FTS Transport Regulation Management, recognises that certain achievements have been made by this service in this respect. However, it is also open to cooperation and is ready to consider any proposals from wagon owners. And another important innovation was expected - the adoption of Rules to Transport Empty Rolling Stock. Originally, it was expected that this would be a separate document, but  it was decided later to supply the basic regulation document, Rules for Cargo Transportation by Rail, with new provisions. It will happen in the first quarter of 2011. 
The latest important initiative within the Target Model discussions is a network contract. The idea is to create a system of agreements between the state and the infrastructure owner, which would consider such subjects as what this infrastructure should look like; what its main maintenance features should be, what problems lie in this sector, and how it is financed and developed. In principle, this approach is to develop the ideology of  economically justified tariff levels. Here the infrastructure owner will be able to say in the framework of a constructive dialogue: ‘Yes, I can do this, this and this, due to good tariffs. And, as regards this, I shall have to either close or reduce it if you do not finance me.’
Thus, we can say that although the Target Model highlights the most notable trends of the modern rail freight market, however, it has left a lot of questions which will be answered by the market itself. Only after that can we finally evaluate the results of the entire structural reform and move on. What remains to be added is whether it is decided to extend the activities of the Railway Transport Structural Reform Program until 2015. 
By Elena Ushkova

viewpoint
Valeriy Reshetnikov, 
Senior Vice President of RZD: 
– The introduction of the institution of local carriers is regarded as an experiment, which should be focused, in principle, on technological and economic viability, and on continuous evaluation of the results. Therefore, if we evaluate this experiment purely critically, considering everything will be bad, there will not be any effect. Nevertheless, the decision has been made. And I think it is correct. 

Anatoly Golomolzin, 
Deputy Head of Federal Antimonopoly Service: 
– We have a situation where a carrier without wagons will work in Russia in 2011. At the same time, most railway rolling stock (60%) remains with a group of people from RZD, and only 40% is owned by independent companies. It is too early to put the question of consolidating the fleet. First, it is necessary to reach conclusions regarding privatisation of Freight One, and then, to look at the issue of how effectively Freight Two is working. 
It  is not the operators’ fault that the necessary technology has not been prepared to manage private parks. So, we should not talk yet about optimising the number of operators or about setting a target to enlarge them. We would rather consider the optimisation of technology and market rules. And, as regards the question of how many operators will be in the market, it depends on a favorable economic environment. In any case, competitive conditions should be observed. 

Yuri Shcherbanin, 
Head of the Laboratory of Transport and Logistics Systems, Institute of Economic Forecasting, Russian Academy of Sciences: 
– The Target Model is the most suitable of all reform concepts discussed today for the Russian railway sector, or, speaking more precisely, it has a minimal negative impact on the industry. Judging by nine criteria chosen by our institutions, the implementation of the model brings considerable improvements in such areas as “service quality for cargo owners”, “investment in wagons”, “technological stability and safety in railway transport” and “manageability levels of transportation process units”. 
As regards such criteria as “cargo owners’ freight costs”, “the amount of state regulation in the sector” and “subsidies from the state budget”, here the picture is the opposite. Such parameters as “infrastructure investments” and “investments in locomotives” do not herald any changes.
    [~DETAIL_TEXT] => 
Scenarios for the Future 
The Target Model is a market map for a certain period. It is a document in which the authorities define roles for each participant and the desired results in the sector. 
It is good to remember that the Target Model was presented to market participants in November 2009. Representatives of RZD, the Ministry of Economic Development, Ministry of Transport, Federal Antimonopoly Service, Federal Tariff Service and operating companies have met many times since then, in order to discuss the main points of their disagreement. There were differences in opinions on such matters as tariff policy, RZD’s status, the extent of state regulation, and several other issues. At the same time, experts think that the main advantage of the drafted document is that the scenario it suggests has multiple options.  
The issue is that the structure of the sector is described to 2015 only. In this sense, this model can be called transitional. When answering the question of what the market will be after the defined period, one can say that it depends on how successful the proposed solutions will be in terms of competition, tariffs, growing operator business, and the communication of carriers and operators with RZD as an infrastructure company, etc. 
So, the near future will afford an opportunity to try different regulatory practices and to examine which are most effective. ‘This model is quite well-balanced. It reflects both the achievements of the reform and the directions to move in. It is important to note that these directions are not outlined firmly. It is expected to move to a new market structure stage by stage, assessing the effectiveness of different approaches, choosing the right ones and refraining from what appears wrong,’ says Andrey Gorenko, Corporate Finances Director at Transport Asset Management. 
It is expected to focus on three common goals: to finalise the formation of a competitive market in operating freight wagons; to establish an institute of local carriers to foster competition between them and RZD; and to improve the state regulatory system. Later, these tasks will be transformed into more concrete solutions. First of all, it is about the preservation of unity in the RZD freight transport network and its integration with public infrastructure. 
The authors of the model believe that this measure will have a beneficial effect because of its large scale. Also, it will minimise operating costs; maintain network integrity; allow the effective use of limited infrastructure bandwidth via a centralised transport dispatch system, etc. 
‘There are practically no other opportunities to transport cargoes. Otherwise, the tariff burden on shippers will grow drastically. Also, neither RZD nor anyone else is technologically ready today to separate such two processes as traffic management and infrastructure maintenance,’ says Valeriy Reshetnikov, Senior Vice President of RZD. 
This brings us to the idea that, firstly, RZD stays a network-wide carrier for all cargoes carried via public infrastructure; secondly, that state regulation continues to be implemented for those RZD tariffs associated with this natural monopoly; and thirdly, that the carrier keeps its locomotive fleet. 

Initiatives and Doubts 
Creating the conditions for private investments in locomotives is expected to be implemented gradually, trying various options, and all within the institution of local carriers. In fact, there are two options: the competition ‘on route’ and ‘for the route.’ The first option assumes that several local carriers will carry out activities on some network routes on a public basis, alongside RZD. 
The second one means that one company will win an exclusive right to carry all cargoes for a period of time from five to ten years, as a result of public tenders. The most important issue in the course of setting out this initiative was that private carriers should make fair payment for infrastructure. This kind of problem was suggested to FTS to solve. Vladimir Reshetnikov is sure that ‘it is important to avoid optima on local basis, thus there should not be a situation where some carriers receive preferential treatment, allowing them to organise their work with much greater profitability than others.’ 
There are some doubts regarding the ‘on route’ competition model. ‘It is clear that there will be competition for a particular sector, for a particular product, for certain types of transport cargoes, for the most profitable ones, of course. Finally, the share of RZD in these sectors will decline, and the end result of its work will become worse. This is the reason why it is necessary to compensate RZD either by means of tariffs or through subsidies,’ says Yermolai Solzhenitsyn, Managing Partner and Head of McKinsey consulting company’s Moscow office. 
Also, this competition will be based on price, and the one who offers lower prices will win, therefore the question will arise about the sources of investment in locomotives. In fact, this was one of the key aspects when this initiative was put forward. This was confirmed as well by Vitaly Yevdokimenko, General Director of Freight Two (Second Cargo Company). ‘First of all, tariff conditions should be established. This will provide investment attractiveness in purchasing locomotives.’ 
A few problems became worse in Russia in recent years, such as unacceptably poor wagon performance, increased empty runs and a crowd of rolling stock owners. Such problems are leading to chaos on the network, and the Target Model proposes to solve them by reducing the universal rolling stock delivery market to three or four network-wide operators. Two of them will be the first and second cargo companies (Freight One and Freight Two), by virtue of their large scale. At the same time, private companies do not want to voluntarily merge, or to unite in any other way, and administrative instruments are limited, so, a number of small players will probably still remain. 
In addition, a complex of regulatory measures is set forward. For example, tariffs on empty runs are to be unified. Viktor Kvitko, Head of FTS Transport Regulation Management, recognises that certain achievements have been made by this service in this respect. However, it is also open to cooperation and is ready to consider any proposals from wagon owners. And another important innovation was expected - the adoption of Rules to Transport Empty Rolling Stock. Originally, it was expected that this would be a separate document, but  it was decided later to supply the basic regulation document, Rules for Cargo Transportation by Rail, with new provisions. It will happen in the first quarter of 2011. 
The latest important initiative within the Target Model discussions is a network contract. The idea is to create a system of agreements between the state and the infrastructure owner, which would consider such subjects as what this infrastructure should look like; what its main maintenance features should be, what problems lie in this sector, and how it is financed and developed. In principle, this approach is to develop the ideology of  economically justified tariff levels. Here the infrastructure owner will be able to say in the framework of a constructive dialogue: ‘Yes, I can do this, this and this, due to good tariffs. And, as regards this, I shall have to either close or reduce it if you do not finance me.’
Thus, we can say that although the Target Model highlights the most notable trends of the modern rail freight market, however, it has left a lot of questions which will be answered by the market itself. Only after that can we finally evaluate the results of the entire structural reform and move on. What remains to be added is whether it is decided to extend the activities of the Railway Transport Structural Reform Program until 2015. 
By Elena Ushkova

viewpoint
Valeriy Reshetnikov, 
Senior Vice President of RZD: 
– The introduction of the institution of local carriers is regarded as an experiment, which should be focused, in principle, on technological and economic viability, and on continuous evaluation of the results. Therefore, if we evaluate this experiment purely critically, considering everything will be bad, there will not be any effect. Nevertheless, the decision has been made. And I think it is correct. 

Anatoly Golomolzin, 
Deputy Head of Federal Antimonopoly Service: 
– We have a situation where a carrier without wagons will work in Russia in 2011. At the same time, most railway rolling stock (60%) remains with a group of people from RZD, and only 40% is owned by independent companies. It is too early to put the question of consolidating the fleet. First, it is necessary to reach conclusions regarding privatisation of Freight One, and then, to look at the issue of how effectively Freight Two is working. 
It  is not the operators’ fault that the necessary technology has not been prepared to manage private parks. So, we should not talk yet about optimising the number of operators or about setting a target to enlarge them. We would rather consider the optimisation of technology and market rules. And, as regards the question of how many operators will be in the market, it depends on a favorable economic environment. In any case, competitive conditions should be observed. 

Yuri Shcherbanin, 
Head of the Laboratory of Transport and Logistics Systems, Institute of Economic Forecasting, Russian Academy of Sciences: 
– The Target Model is the most suitable of all reform concepts discussed today for the Russian railway sector, or, speaking more precisely, it has a minimal negative impact on the industry. Judging by nine criteria chosen by our institutions, the implementation of the model brings considerable improvements in such areas as “service quality for cargo owners”, “investment in wagons”, “technological stability and safety in railway transport” and “manageability levels of transportation process units”. 
As regards such criteria as “cargo owners’ freight costs”, “the amount of state regulation in the sector” and “subsidies from the state budget”, here the picture is the opposite. Such parameters as “infrastructure investments” and “investments in locomotives” do not herald any changes.
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EBRD and RZD in energy efficiency cooperation tie-up 
The EBRD and Russian Railways (RZD) agreed to join forces in order to increase the energy efficiency of what is not only one of the world’s largest transport companies, but also one of Russia’s biggest energy users. 
On October 19, 2010, EBRD President Thomas Mirow and Russian Railways President Vladimir Yakunin signed a Memorandum of Understanding (MoU) in Moscow outlining how the Bank and Russian Railways plan to achieve this goal. The MoU provides for the establishment of a joint working group to coordinate energy efficient activities.
‘This MoU not only deepens our cooperation with such a high-profile company in an area that is at the core of the EBRD’s mandate but also demonstrates the benefits of energy efficiency to other Russian businesses and the rest of the national community,’ Mr Mirow said at the signing ceremony. 
In the MoU, RZD and the EBRD said they intended to cooperate on the development of long-term energy efficiency policies and investment programmes across RZD operations.
The two sides will also consider developing a pilot project focused on modernisation and implementing best-practice energy efficiency technologies, including renewable energy sources, at railway stations and other infrastructure in selected areas.
Both sides pledged to work on developing corporate policies and standards based on international best practice in the railway sector to promote energy efficiency and reduce RZD’s carbon footprint.
The EBRD has invested over $1.4 billion in 11 railways and associated projects in Russia since the government launched a structural reform of the sector in 2001.

Trillion of roubles needed to develop infrastructure of the BAM and Transsib in the next 10 years
In the next decade, about one trillion roubles must be attracted to develop the infrastructure of the Baikal-Amur mainline (the BAM) and the Transsib, the corporate TV channel of RZD reported, referring to the RF Transport Ministry. 
Infrastructure development is needed to fulfill the increasing demands of the mineral resource industry. In the opinion of the Ministry, RZD will be able to transport the necessary amount of ore and coal only if the capacity of the BAM and the Transsib is enlarged. RZD will not be able to provide RUR 1 trillion of investments, thus the Government will discuss an option at which will see the company get direct state subsides. Also, the funds may be received via temporary increase in tariffs on freight railway transportation on some sections of the railway network.

Ukraine waiting for Russia to open inner waterways to foreign vessels	
Ukraine and Russia discussed the issue of the mutual opening of inner waterways, said Konstantin Efimenko, Minister of Transport and Communication of Ukraine, at a briefing after the eighth meeting of the sub-committee for transport of the committee for economic cooperation between Russia and Ukraine, held in late October. 
Igor Levitin, Russian Transport Minister, said that nowadays Russia’s inner waterways are closed to vessels flying foreign flags. ‘The Government of Russia has not decided when this situation may change. At the moment, every vessel has to receive a one-time-only permission from the Cabinet of Ministers,’ he explained.
The concept of the RF inner water transport development envisages that Russian inner waterways are closed for vessels flying foreign flags and that all freight and passenger transportation is provided by vessels flying the Russian flag. Russia should remove this ban, and make agreements on free navigation, to join the World Trade Organisation. According to specialists’ forecasts, due to development of the international water corridor, Russia will get $1 billion in transit revenue per annum.

cost of Moscow-St Petersburg high-speed railway line estimated at RUR 1.2 trillion
The construction of Moscow-St Petersburg high-speed railway line is estimated at RUR 1.2 trillion, said RZD quoting Denis Muratov, CEO of Skorostnye Magistrali (RZD’s subsidiary developing the project). 
‘According to the justification of investments, the project is estimated at 1.2 trillion roubles,’ he said and explained that this cost had been calculated based on the use of Russian construction methods and standards.
In the words of the Head of Skorostnye Magistrali, this cost may fall by 20-40% during the process of the project’s development and the tender on construction. ‘Harmonisation of European standards and usage of modern financial instruments, particularly the life-cycle contract mechanism, will allow reduction of the construction cost by 20-40%,’ Mr Muratov said. 
‘We plan to begin preparing the tender to construct this high-speed line in March 2011 and announce the tender itself in December 2011,’ said Mr Muratov.
He explained that by December 2011, it is planned to complete the necessary commercial and financial calculations, harmonise European and Russian standards and prepare for the reservation and purchase of the land across which the line will run.
On behalf of Russian Railways, the company Skorostny Magistrali is now finalising the draft concept of the High-Speed Rail Link-1. 
According to Mr Muratov, the optimal scheme for constructing High-Speed Rail Link-1 is a contract for the whole life cycle of the project, an approach which has already shown its worth elsewhere.

Belarus intends to enlarge revenue from transit by 60% in 2015
Belarus plans that in 2015 its revenue from transit via all transport modes will amount to $2.4 billion., i.e. a 60% growth in comparison with planned revenue in 2010. 
Ivan Scherbo, Minister of Transport and Communication of Belarus, said that the total cost of the state programme of the Byelorussian transit potential development was estimated at $ 4.4 billion. Of that, $ 1.5 billion is supposed to be invested in researches into transport development sector.
Mr Scherbo noted that the draft state programme had been developed on the basis of the Strategy of Byelorussian transport potential development in 2011-2015, which had been approved by the government. The draft state programme envisages implementation of a raft of measures to improve the transit attractiveness of Belarus and increase revenue from this economic activity.
According to Mr Scherbo, the list of measures includes improvement of technologies of all types of border and customs control, construction of trade and logistic centres, reconstruction and modernisation of transport infrastructure, and enlargement of electric communication opportunities. 
Also, the Minister pointed to the need to reconstruct and upgrade mainline pipelines crossing the territory of Byelorussia. He also paid special attention to the importance of Belarus joining EU the transport projects.

Slovakia-Austria Broad-Gauge Rail Extension is Feasible
A proposed 450-kilometre extension of a broad-gauge freight rail line to the Vienna-Bratislava region has the potential to create new jobs and provide economic benefits to four countries, a study commissioned by railways has said.
The proposal to extend a rail line which currently terminates at Kosice in Eastern Slovakia to the Vienna-Bratislava area was examined by Roland Berger Strategy Consultants in a study for Breitspur Planungsgesellschaft mbH - a joint venture of four equal partners - OeBB, RZD, UZ and ŽSR, the national railways of Austria, Russia, Ukraine and Slovakia. ‘Extension of the 1,520 mm broad-gauge network from Kosice in Eastern Slovakia to Vienna is technically and legally feasible,’ the study said.
‘By creating an uninterrupted and efficient transport chain from Russia, China and other Asian countries to central Europe a new dimension of time-competitive and environmentally sustainable rail transport in Eurasia will be offered.’ Construction would result in 21,000 new jobs through direct and indirect employment on average. Once the project is operating, an average 8,100 jobs would be created to operate the trains, and another 3,100 to operate terminals and other infrastructure, the study said.
The cost of the new railway to be constructed parallel to an existing narrower gauge line is projected to be €6.3 billion. Another €240 million will be required for terminals and €130 million for rolling stock, the study said. These costs are in line with other European rail projects. ‘This feasibility study opens the way to take the next step forward. The four railroads, as well as respected state bodies of participating countries, will analyse the results over the next few weeks.
After that, we can consider beginning design work, conducting a detailed environmental impact assessment, choosing an optimal financing model and completing the business plan,’ Breitspur Management Board said in a statement. Most railroads in Western Europe run on 1435 mm rails apart, while those in Russia and some Eastern European countries use 1520 mm gauge. Extending the broad-gauge rail toward Vienna will permit electrified and thus environmental friendly transport.
The new route could help cut the time taken to ship high-value goods from Asia to Western Europe to as little as 15 days. Broad-gauge rail can handle heavier goods on each axle and heavier trainloads than narrower gauges, leading to cost savings and more efficient transport.
The study found the broad-gauge extension was likely to attract 16 million tons of new freight traffic annually by 2050, with potential for 24 million tons in a best-case scenario. More than 30 countries in Western and Central Europe, Central Asia, Russia and the Far East could benefit economically from the extension.

The Government of Ukraine approved Transport Strategy to 2020
The Cabinet of Ministers of Ukraine approved a key document for transport sector development – the Transport Strategy to 2020. The document was developed by the Ministry of Transport and Communication. 
‘Realisation of the strategy will improve the quality, availability, comfortable and safety of passenger transportation, and increase the capacity and speed of transportation,’ Nikolay Azarov, the Ukrainian Prime Minister, said commenting on the document.

Toll roads, toll road sections	
The Federation Council of Russia approved a law which allows not only a whole road, but also certain sections to be tolled. 
On October 27, 2010, the Federation Council approved the Federal Law ‘On Amendments to the Federal Law ‘On Motorways and Road Activities in the Russian Federation and Amendments to Some of the Legislative Documents of the Russian federation’.
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The decision on using a road section on a paid basis may be applied only to those roads, the design documentation of which was approved after November 14, 2007; i.e. after the law on motorways and road activities came into force.
In the opinion of lawmakers, these amendments will make for the harmonisation of different aspects of acting federal law.
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EBRD and RZD in energy efficiency cooperation tie-up 
The EBRD and Russian Railways (RZD) agreed to join forces in order to increase the energy efficiency of what is not only one of the world’s largest transport companies, but also one of Russia’s biggest energy users. 
On October 19, 2010, EBRD President Thomas Mirow and Russian Railways President Vladimir Yakunin signed a Memorandum of Understanding (MoU) in Moscow outlining how the Bank and Russian Railways plan to achieve this goal. The MoU provides for the establishment of a joint working group to coordinate energy efficient activities.
‘This MoU not only deepens our cooperation with such a high-profile company in an area that is at the core of the EBRD’s mandate but also demonstrates the benefits of energy efficiency to other Russian businesses and the rest of the national community,’ Mr Mirow said at the signing ceremony. 
In the MoU, RZD and the EBRD said they intended to cooperate on the development of long-term energy efficiency policies and investment programmes across RZD operations.
The two sides will also consider developing a pilot project focused on modernisation and implementing best-practice energy efficiency technologies, including renewable energy sources, at railway stations and other infrastructure in selected areas.
Both sides pledged to work on developing corporate policies and standards based on international best practice in the railway sector to promote energy efficiency and reduce RZD’s carbon footprint.
The EBRD has invested over $1.4 billion in 11 railways and associated projects in Russia since the government launched a structural reform of the sector in 2001.

Trillion of roubles needed to develop infrastructure of the BAM and Transsib in the next 10 years
In the next decade, about one trillion roubles must be attracted to develop the infrastructure of the Baikal-Amur mainline (the BAM) and the Transsib, the corporate TV channel of RZD reported, referring to the RF Transport Ministry. 
Infrastructure development is needed to fulfill the increasing demands of the mineral resource industry. In the opinion of the Ministry, RZD will be able to transport the necessary amount of ore and coal only if the capacity of the BAM and the Transsib is enlarged. RZD will not be able to provide RUR 1 trillion of investments, thus the Government will discuss an option at which will see the company get direct state subsides. Also, the funds may be received via temporary increase in tariffs on freight railway transportation on some sections of the railway network.

Ukraine waiting for Russia to open inner waterways to foreign vessels	
Ukraine and Russia discussed the issue of the mutual opening of inner waterways, said Konstantin Efimenko, Minister of Transport and Communication of Ukraine, at a briefing after the eighth meeting of the sub-committee for transport of the committee for economic cooperation between Russia and Ukraine, held in late October. 
Igor Levitin, Russian Transport Minister, said that nowadays Russia’s inner waterways are closed to vessels flying foreign flags. ‘The Government of Russia has not decided when this situation may change. At the moment, every vessel has to receive a one-time-only permission from the Cabinet of Ministers,’ he explained.
The concept of the RF inner water transport development envisages that Russian inner waterways are closed for vessels flying foreign flags and that all freight and passenger transportation is provided by vessels flying the Russian flag. Russia should remove this ban, and make agreements on free navigation, to join the World Trade Organisation. According to specialists’ forecasts, due to development of the international water corridor, Russia will get $1 billion in transit revenue per annum.

cost of Moscow-St Petersburg high-speed railway line estimated at RUR 1.2 trillion
The construction of Moscow-St Petersburg high-speed railway line is estimated at RUR 1.2 trillion, said RZD quoting Denis Muratov, CEO of Skorostnye Magistrali (RZD’s subsidiary developing the project). 
‘According to the justification of investments, the project is estimated at 1.2 trillion roubles,’ he said and explained that this cost had been calculated based on the use of Russian construction methods and standards.
In the words of the Head of Skorostnye Magistrali, this cost may fall by 20-40% during the process of the project’s development and the tender on construction. ‘Harmonisation of European standards and usage of modern financial instruments, particularly the life-cycle contract mechanism, will allow reduction of the construction cost by 20-40%,’ Mr Muratov said. 
‘We plan to begin preparing the tender to construct this high-speed line in March 2011 and announce the tender itself in December 2011,’ said Mr Muratov.
He explained that by December 2011, it is planned to complete the necessary commercial and financial calculations, harmonise European and Russian standards and prepare for the reservation and purchase of the land across which the line will run.
On behalf of Russian Railways, the company Skorostny Magistrali is now finalising the draft concept of the High-Speed Rail Link-1. 
According to Mr Muratov, the optimal scheme for constructing High-Speed Rail Link-1 is a contract for the whole life cycle of the project, an approach which has already shown its worth elsewhere.

Belarus intends to enlarge revenue from transit by 60% in 2015
Belarus plans that in 2015 its revenue from transit via all transport modes will amount to $2.4 billion., i.e. a 60% growth in comparison with planned revenue in 2010. 
Ivan Scherbo, Minister of Transport and Communication of Belarus, said that the total cost of the state programme of the Byelorussian transit potential development was estimated at $ 4.4 billion. Of that, $ 1.5 billion is supposed to be invested in researches into transport development sector.
Mr Scherbo noted that the draft state programme had been developed on the basis of the Strategy of Byelorussian transport potential development in 2011-2015, which had been approved by the government. The draft state programme envisages implementation of a raft of measures to improve the transit attractiveness of Belarus and increase revenue from this economic activity.
According to Mr Scherbo, the list of measures includes improvement of technologies of all types of border and customs control, construction of trade and logistic centres, reconstruction and modernisation of transport infrastructure, and enlargement of electric communication opportunities. 
Also, the Minister pointed to the need to reconstruct and upgrade mainline pipelines crossing the territory of Byelorussia. He also paid special attention to the importance of Belarus joining EU the transport projects.

Slovakia-Austria Broad-Gauge Rail Extension is Feasible
A proposed 450-kilometre extension of a broad-gauge freight rail line to the Vienna-Bratislava region has the potential to create new jobs and provide economic benefits to four countries, a study commissioned by railways has said.
The proposal to extend a rail line which currently terminates at Kosice in Eastern Slovakia to the Vienna-Bratislava area was examined by Roland Berger Strategy Consultants in a study for Breitspur Planungsgesellschaft mbH - a joint venture of four equal partners - OeBB, RZD, UZ and ŽSR, the national railways of Austria, Russia, Ukraine and Slovakia. ‘Extension of the 1,520 mm broad-gauge network from Kosice in Eastern Slovakia to Vienna is technically and legally feasible,’ the study said.
‘By creating an uninterrupted and efficient transport chain from Russia, China and other Asian countries to central Europe a new dimension of time-competitive and environmentally sustainable rail transport in Eurasia will be offered.’ Construction would result in 21,000 new jobs through direct and indirect employment on average. Once the project is operating, an average 8,100 jobs would be created to operate the trains, and another 3,100 to operate terminals and other infrastructure, the study said.
The cost of the new railway to be constructed parallel to an existing narrower gauge line is projected to be €6.3 billion. Another €240 million will be required for terminals and €130 million for rolling stock, the study said. These costs are in line with other European rail projects. ‘This feasibility study opens the way to take the next step forward. The four railroads, as well as respected state bodies of participating countries, will analyse the results over the next few weeks.
After that, we can consider beginning design work, conducting a detailed environmental impact assessment, choosing an optimal financing model and completing the business plan,’ Breitspur Management Board said in a statement. Most railroads in Western Europe run on 1435 mm rails apart, while those in Russia and some Eastern European countries use 1520 mm gauge. Extending the broad-gauge rail toward Vienna will permit electrified and thus environmental friendly transport.
The new route could help cut the time taken to ship high-value goods from Asia to Western Europe to as little as 15 days. Broad-gauge rail can handle heavier goods on each axle and heavier trainloads than narrower gauges, leading to cost savings and more efficient transport.
The study found the broad-gauge extension was likely to attract 16 million tons of new freight traffic annually by 2050, with potential for 24 million tons in a best-case scenario. More than 30 countries in Western and Central Europe, Central Asia, Russia and the Far East could benefit economically from the extension.

The Government of Ukraine approved Transport Strategy to 2020
The Cabinet of Ministers of Ukraine approved a key document for transport sector development – the Transport Strategy to 2020. The document was developed by the Ministry of Transport and Communication. 
‘Realisation of the strategy will improve the quality, availability, comfortable and safety of passenger transportation, and increase the capacity and speed of transportation,’ Nikolay Azarov, the Ukrainian Prime Minister, said commenting on the document.

Toll roads, toll road sections	
The Federation Council of Russia approved a law which allows not only a whole road, but also certain sections to be tolled. 
On October 27, 2010, the Federation Council approved the Federal Law ‘On Amendments to the Federal Law ‘On Motorways and Road Activities in the Russian Federation and Amendments to Some of the Legislative Documents of the Russian federation’.
According to the law, federal, regional, and local authorities may give the status of “toll road” to public roads as well as to their sections. Also, they have the power to define the method of calculation and the maximum size of the fee for motor vehicles. 
The decision on using a road section on a paid basis may be applied only to those roads, the design documentation of which was approved after November 14, 2007; i.e. after the law on motorways and road activities came into force.
In the opinion of lawmakers, these amendments will make for the harmonisation of different aspects of acting federal law.
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EBRD and RZD in energy efficiency cooperation tie-up 
The EBRD and Russian Railways (RZD) agreed to join forces in order to increase the energy efficiency of what is not only one of the world’s largest transport companies, but also one of Russia’s biggest energy users. 
On October 19, 2010, EBRD President Thomas Mirow and Russian Railways President Vladimir Yakunin signed a Memorandum of Understanding (MoU) in Moscow outlining how the Bank and Russian Railways plan to achieve this goal. The MoU provides for the establishment of a joint working group to coordinate energy efficient activities.
‘This MoU not only deepens our cooperation with such a high-profile company in an area that is at the core of the EBRD’s mandate but also demonstrates the benefits of energy efficiency to other Russian businesses and the rest of the national community,’ Mr Mirow said at the signing ceremony. 
In the MoU, RZD and the EBRD said they intended to cooperate on the development of long-term energy efficiency policies and investment programmes across RZD operations.
The two sides will also consider developing a pilot project focused on modernisation and implementing best-practice energy efficiency technologies, including renewable energy sources, at railway stations and other infrastructure in selected areas.
Both sides pledged to work on developing corporate policies and standards based on international best practice in the railway sector to promote energy efficiency and reduce RZD’s carbon footprint.
The EBRD has invested over $1.4 billion in 11 railways and associated projects in Russia since the government launched a structural reform of the sector in 2001.

Trillion of roubles needed to develop infrastructure of the BAM and Transsib in the next 10 years
In the next decade, about one trillion roubles must be attracted to develop the infrastructure of the Baikal-Amur mainline (the BAM) and the Transsib, the corporate TV channel of RZD reported, referring to the RF Transport Ministry. 
Infrastructure development is needed to fulfill the increasing demands of the mineral resource industry. In the opinion of the Ministry, RZD will be able to transport the necessary amount of ore and coal only if the capacity of the BAM and the Transsib is enlarged. RZD will not be able to provide RUR 1 trillion of investments, thus the Government will discuss an option at which will see the company get direct state subsides. Also, the funds may be received via temporary increase in tariffs on freight railway transportation on some sections of the railway network.

Ukraine waiting for Russia to open inner waterways to foreign vessels	
Ukraine and Russia discussed the issue of the mutual opening of inner waterways, said Konstantin Efimenko, Minister of Transport and Communication of Ukraine, at a briefing after the eighth meeting of the sub-committee for transport of the committee for economic cooperation between Russia and Ukraine, held in late October. 
Igor Levitin, Russian Transport Minister, said that nowadays Russia’s inner waterways are closed to vessels flying foreign flags. ‘The Government of Russia has not decided when this situation may change. At the moment, every vessel has to receive a one-time-only permission from the Cabinet of Ministers,’ he explained.
The concept of the RF inner water transport development envisages that Russian inner waterways are closed for vessels flying foreign flags and that all freight and passenger transportation is provided by vessels flying the Russian flag. Russia should remove this ban, and make agreements on free navigation, to join the World Trade Organisation. According to specialists’ forecasts, due to development of the international water corridor, Russia will get $1 billion in transit revenue per annum.

cost of Moscow-St Petersburg high-speed railway line estimated at RUR 1.2 trillion
The construction of Moscow-St Petersburg high-speed railway line is estimated at RUR 1.2 trillion, said RZD quoting Denis Muratov, CEO of Skorostnye Magistrali (RZD’s subsidiary developing the project). 
‘According to the justification of investments, the project is estimated at 1.2 trillion roubles,’ he said and explained that this cost had been calculated based on the use of Russian construction methods and standards.
In the words of the Head of Skorostnye Magistrali, this cost may fall by 20-40% during the process of the project’s development and the tender on construction. ‘Harmonisation of European standards and usage of modern financial instruments, particularly the life-cycle contract mechanism, will allow reduction of the construction cost by 20-40%,’ Mr Muratov said. 
‘We plan to begin preparing the tender to construct this high-speed line in March 2011 and announce the tender itself in December 2011,’ said Mr Muratov.
He explained that by December 2011, it is planned to complete the necessary commercial and financial calculations, harmonise European and Russian standards and prepare for the reservation and purchase of the land across which the line will run.
On behalf of Russian Railways, the company Skorostny Magistrali is now finalising the draft concept of the High-Speed Rail Link-1. 
According to Mr Muratov, the optimal scheme for constructing High-Speed Rail Link-1 is a contract for the whole life cycle of the project, an approach which has already shown its worth elsewhere.

Belarus intends to enlarge revenue from transit by 60% in 2015
Belarus plans that in 2015 its revenue from transit via all transport modes will amount to $2.4 billion., i.e. a 60% growth in comparison with planned revenue in 2010. 
Ivan Scherbo, Minister of Transport and Communication of Belarus, said that the total cost of the state programme of the Byelorussian transit potential development was estimated at $ 4.4 billion. Of that, $ 1.5 billion is supposed to be invested in researches into transport development sector.
Mr Scherbo noted that the draft state programme had been developed on the basis of the Strategy of Byelorussian transport potential development in 2011-2015, which had been approved by the government. The draft state programme envisages implementation of a raft of measures to improve the transit attractiveness of Belarus and increase revenue from this economic activity.
According to Mr Scherbo, the list of measures includes improvement of technologies of all types of border and customs control, construction of trade and logistic centres, reconstruction and modernisation of transport infrastructure, and enlargement of electric communication opportunities. 
Also, the Minister pointed to the need to reconstruct and upgrade mainline pipelines crossing the territory of Byelorussia. He also paid special attention to the importance of Belarus joining EU the transport projects.

Slovakia-Austria Broad-Gauge Rail Extension is Feasible
A proposed 450-kilometre extension of a broad-gauge freight rail line to the Vienna-Bratislava region has the potential to create new jobs and provide economic benefits to four countries, a study commissioned by railways has said.
The proposal to extend a rail line which currently terminates at Kosice in Eastern Slovakia to the Vienna-Bratislava area was examined by Roland Berger Strategy Consultants in a study for Breitspur Planungsgesellschaft mbH - a joint venture of four equal partners - OeBB, RZD, UZ and ŽSR, the national railways of Austria, Russia, Ukraine and Slovakia. ‘Extension of the 1,520 mm broad-gauge network from Kosice in Eastern Slovakia to Vienna is technically and legally feasible,’ the study said.
‘By creating an uninterrupted and efficient transport chain from Russia, China and other Asian countries to central Europe a new dimension of time-competitive and environmentally sustainable rail transport in Eurasia will be offered.’ Construction would result in 21,000 new jobs through direct and indirect employment on average. Once the project is operating, an average 8,100 jobs would be created to operate the trains, and another 3,100 to operate terminals and other infrastructure, the study said.
The cost of the new railway to be constructed parallel to an existing narrower gauge line is projected to be €6.3 billion. Another €240 million will be required for terminals and €130 million for rolling stock, the study said. These costs are in line with other European rail projects. ‘This feasibility study opens the way to take the next step forward. The four railroads, as well as respected state bodies of participating countries, will analyse the results over the next few weeks.
After that, we can consider beginning design work, conducting a detailed environmental impact assessment, choosing an optimal financing model and completing the business plan,’ Breitspur Management Board said in a statement. Most railroads in Western Europe run on 1435 mm rails apart, while those in Russia and some Eastern European countries use 1520 mm gauge. Extending the broad-gauge rail toward Vienna will permit electrified and thus environmental friendly transport.
The new route could help cut the time taken to ship high-value goods from Asia to Western Europe to as little as 15 days. Broad-gauge rail can handle heavier goods on each axle and heavier trainloads than narrower gauges, leading to cost savings and more efficient transport.
The study found the broad-gauge extension was likely to attract 16 million tons of new freight traffic annually by 2050, with potential for 24 million tons in a best-case scenario. More than 30 countries in Western and Central Europe, Central Asia, Russia and the Far East could benefit economically from the extension.

The Government of Ukraine approved Transport Strategy to 2020
The Cabinet of Ministers of Ukraine approved a key document for transport sector development – the Transport Strategy to 2020. The document was developed by the Ministry of Transport and Communication. 
‘Realisation of the strategy will improve the quality, availability, comfortable and safety of passenger transportation, and increase the capacity and speed of transportation,’ Nikolay Azarov, the Ukrainian Prime Minister, said commenting on the document.

Toll roads, toll road sections	
The Federation Council of Russia approved a law which allows not only a whole road, but also certain sections to be tolled. 
On October 27, 2010, the Federation Council approved the Federal Law ‘On Amendments to the Federal Law ‘On Motorways and Road Activities in the Russian Federation and Amendments to Some of the Legislative Documents of the Russian federation’.
According to the law, federal, regional, and local authorities may give the status of “toll road” to public roads as well as to their sections. Also, they have the power to define the method of calculation and the maximum size of the fee for motor vehicles. 
The decision on using a road section on a paid basis may be applied only to those roads, the design documentation of which was approved after November 14, 2007; i.e. after the law on motorways and road activities came into force.
In the opinion of lawmakers, these amendments will make for the harmonisation of different aspects of acting federal law.
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EBRD and RZD in energy efficiency cooperation tie-up 
The EBRD and Russian Railways (RZD) agreed to join forces in order to increase the energy efficiency of what is not only one of the world’s largest transport companies, but also one of Russia’s biggest energy users. 
On October 19, 2010, EBRD President Thomas Mirow and Russian Railways President Vladimir Yakunin signed a Memorandum of Understanding (MoU) in Moscow outlining how the Bank and Russian Railways plan to achieve this goal. The MoU provides for the establishment of a joint working group to coordinate energy efficient activities.
‘This MoU not only deepens our cooperation with such a high-profile company in an area that is at the core of the EBRD’s mandate but also demonstrates the benefits of energy efficiency to other Russian businesses and the rest of the national community,’ Mr Mirow said at the signing ceremony. 
In the MoU, RZD and the EBRD said they intended to cooperate on the development of long-term energy efficiency policies and investment programmes across RZD operations.
The two sides will also consider developing a pilot project focused on modernisation and implementing best-practice energy efficiency technologies, including renewable energy sources, at railway stations and other infrastructure in selected areas.
Both sides pledged to work on developing corporate policies and standards based on international best practice in the railway sector to promote energy efficiency and reduce RZD’s carbon footprint.
The EBRD has invested over $1.4 billion in 11 railways and associated projects in Russia since the government launched a structural reform of the sector in 2001.

Trillion of roubles needed to develop infrastructure of the BAM and Transsib in the next 10 years
In the next decade, about one trillion roubles must be attracted to develop the infrastructure of the Baikal-Amur mainline (the BAM) and the Transsib, the corporate TV channel of RZD reported, referring to the RF Transport Ministry. 
Infrastructure development is needed to fulfill the increasing demands of the mineral resource industry. In the opinion of the Ministry, RZD will be able to transport the necessary amount of ore and coal only if the capacity of the BAM and the Transsib is enlarged. RZD will not be able to provide RUR 1 trillion of investments, thus the Government will discuss an option at which will see the company get direct state subsides. Also, the funds may be received via temporary increase in tariffs on freight railway transportation on some sections of the railway network.

Ukraine waiting for Russia to open inner waterways to foreign vessels	
Ukraine and Russia discussed the issue of the mutual opening of inner waterways, said Konstantin Efimenko, Minister of Transport and Communication of Ukraine, at a briefing after the eighth meeting of the sub-committee for transport of the committee for economic cooperation between Russia and Ukraine, held in late October. 
Igor Levitin, Russian Transport Minister, said that nowadays Russia’s inner waterways are closed to vessels flying foreign flags. ‘The Government of Russia has not decided when this situation may change. At the moment, every vessel has to receive a one-time-only permission from the Cabinet of Ministers,’ he explained.
The concept of the RF inner water transport development envisages that Russian inner waterways are closed for vessels flying foreign flags and that all freight and passenger transportation is provided by vessels flying the Russian flag. Russia should remove this ban, and make agreements on free navigation, to join the World Trade Organisation. According to specialists’ forecasts, due to development of the international water corridor, Russia will get $1 billion in transit revenue per annum.

cost of Moscow-St Petersburg high-speed railway line estimated at RUR 1.2 trillion
The construction of Moscow-St Petersburg high-speed railway line is estimated at RUR 1.2 trillion, said RZD quoting Denis Muratov, CEO of Skorostnye Magistrali (RZD’s subsidiary developing the project). 
‘According to the justification of investments, the project is estimated at 1.2 trillion roubles,’ he said and explained that this cost had been calculated based on the use of Russian construction methods and standards.
In the words of the Head of Skorostnye Magistrali, this cost may fall by 20-40% during the process of the project’s development and the tender on construction. ‘Harmonisation of European standards and usage of modern financial instruments, particularly the life-cycle contract mechanism, will allow reduction of the construction cost by 20-40%,’ Mr Muratov said. 
‘We plan to begin preparing the tender to construct this high-speed line in March 2011 and announce the tender itself in December 2011,’ said Mr Muratov.
He explained that by December 2011, it is planned to complete the necessary commercial and financial calculations, harmonise European and Russian standards and prepare for the reservation and purchase of the land across which the line will run.
On behalf of Russian Railways, the company Skorostny Magistrali is now finalising the draft concept of the High-Speed Rail Link-1. 
According to Mr Muratov, the optimal scheme for constructing High-Speed Rail Link-1 is a contract for the whole life cycle of the project, an approach which has already shown its worth elsewhere.

Belarus intends to enlarge revenue from transit by 60% in 2015
Belarus plans that in 2015 its revenue from transit via all transport modes will amount to $2.4 billion., i.e. a 60% growth in comparison with planned revenue in 2010. 
Ivan Scherbo, Minister of Transport and Communication of Belarus, said that the total cost of the state programme of the Byelorussian transit potential development was estimated at $ 4.4 billion. Of that, $ 1.5 billion is supposed to be invested in researches into transport development sector.
Mr Scherbo noted that the draft state programme had been developed on the basis of the Strategy of Byelorussian transport potential development in 2011-2015, which had been approved by the government. The draft state programme envisages implementation of a raft of measures to improve the transit attractiveness of Belarus and increase revenue from this economic activity.
According to Mr Scherbo, the list of measures includes improvement of technologies of all types of border and customs control, construction of trade and logistic centres, reconstruction and modernisation of transport infrastructure, and enlargement of electric communication opportunities. 
Also, the Minister pointed to the need to reconstruct and upgrade mainline pipelines crossing the territory of Byelorussia. He also paid special attention to the importance of Belarus joining EU the transport projects.

Slovakia-Austria Broad-Gauge Rail Extension is Feasible
A proposed 450-kilometre extension of a broad-gauge freight rail line to the Vienna-Bratislava region has the potential to create new jobs and provide economic benefits to four countries, a study commissioned by railways has said.
The proposal to extend a rail line which currently terminates at Kosice in Eastern Slovakia to the Vienna-Bratislava area was examined by Roland Berger Strategy Consultants in a study for Breitspur Planungsgesellschaft mbH - a joint venture of four equal partners - OeBB, RZD, UZ and ŽSR, the national railways of Austria, Russia, Ukraine and Slovakia. ‘Extension of the 1,520 mm broad-gauge network from Kosice in Eastern Slovakia to Vienna is technically and legally feasible,’ the study said.
‘By creating an uninterrupted and efficient transport chain from Russia, China and other Asian countries to central Europe a new dimension of time-competitive and environmentally sustainable rail transport in Eurasia will be offered.’ Construction would result in 21,000 new jobs through direct and indirect employment on average. Once the project is operating, an average 8,100 jobs would be created to operate the trains, and another 3,100 to operate terminals and other infrastructure, the study said.
The cost of the new railway to be constructed parallel to an existing narrower gauge line is projected to be €6.3 billion. Another €240 million will be required for terminals and €130 million for rolling stock, the study said. These costs are in line with other European rail projects. ‘This feasibility study opens the way to take the next step forward. The four railroads, as well as respected state bodies of participating countries, will analyse the results over the next few weeks.
After that, we can consider beginning design work, conducting a detailed environmental impact assessment, choosing an optimal financing model and completing the business plan,’ Breitspur Management Board said in a statement. Most railroads in Western Europe run on 1435 mm rails apart, while those in Russia and some Eastern European countries use 1520 mm gauge. Extending the broad-gauge rail toward Vienna will permit electrified and thus environmental friendly transport.
The new route could help cut the time taken to ship high-value goods from Asia to Western Europe to as little as 15 days. Broad-gauge rail can handle heavier goods on each axle and heavier trainloads than narrower gauges, leading to cost savings and more efficient transport.
The study found the broad-gauge extension was likely to attract 16 million tons of new freight traffic annually by 2050, with potential for 24 million tons in a best-case scenario. More than 30 countries in Western and Central Europe, Central Asia, Russia and the Far East could benefit economically from the extension.

The Government of Ukraine approved Transport Strategy to 2020
The Cabinet of Ministers of Ukraine approved a key document for transport sector development – the Transport Strategy to 2020. The document was developed by the Ministry of Transport and Communication. 
‘Realisation of the strategy will improve the quality, availability, comfortable and safety of passenger transportation, and increase the capacity and speed of transportation,’ Nikolay Azarov, the Ukrainian Prime Minister, said commenting on the document.

Toll roads, toll road sections	
The Federation Council of Russia approved a law which allows not only a whole road, but also certain sections to be tolled. 
On October 27, 2010, the Federation Council approved the Federal Law ‘On Amendments to the Federal Law ‘On Motorways and Road Activities in the Russian Federation and Amendments to Some of the Legislative Documents of the Russian federation’.
According to the law, federal, regional, and local authorities may give the status of “toll road” to public roads as well as to their sections. Also, they have the power to define the method of calculation and the maximum size of the fee for motor vehicles. 
The decision on using a road section on a paid basis may be applied only to those roads, the design documentation of which was approved after November 14, 2007; i.e. after the law on motorways and road activities came into force.
In the opinion of lawmakers, these amendments will make for the harmonisation of different aspects of acting federal law.
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Negative Experience
Piggybacking hasn’t become habitual in Russia, but attempts to implement it in Russian conditions have been made several times before. The first experiments began in the Soviet period in 1960. There were some relevant pilot projects in the 1980s and in the 90s. But they were all forgotten quite quickly.
When we talk about the prospects of this type of transportation in Russia, its supporters usually give examples of European experience. As it is quite successful there, it could be profitable in Russia from the point of view of market players. Semen Rezer, President of the Guild of Freight Forwarders, is sure that it is necessary to develop piggyback transportation. Alexander Donkin, Director of the Moscow branch of the Freight One JSC (First Cargo Company), who once did a lot to implement a raft of relevant projects, agrees with Mr Rezer. But it is not usually taken into the account that the conditions in which rail and road transport operates in the EU are very much different from Russian conditions.
Firstly, there is the long and very active struggle for improving environmental conditions in the countries of the EU, and that is, in particular, reflected in the fact that motor vehicle taxes are regularly increased. That naturally affects the cost of transportation. Secondly, EU countries impose different restrictions on commercial vehicles - such as their entry into cities. There are also certain days on which it is forbidden to move along some roads (usually at weekends) for such transport in principle. Together, these measures lead to 1) higher prices for road transportation, and 2), moreover, quite significantly longer time of goods delivery by road.
In addition, there are some natural factors affecting the speed and price in some cases - we know that piggybacking is heavily used in the delivery of goods across the Alps and the Pyrenees. There are also several additional factors, apart from those described above, that make contrailers interesting for business. First of all, it’s the high price of insurance (especially for difficult and dangerous stretches of road), and the limited capacity of mountain roads. 
Obviously, there are as many natural barriers in Russia as in the Alps or the Pyrenees for trucks (like for any other vehicle). But at this point any analogy ends. Restrictions on the passage of trucks, which exist in the EU, don’t exist in Russia. Similarly, there is no European system of subsidies (direct and indirect) for those types of transport that are considered environmentally friendly.
The next important aspect in which Russian realities are fundamentally different from European ones is safety. The carrier, according to Evgeny Popov, a Member of the Association of International Automobile Carriers, is interested very much in ‘the safety of cargo and equipment, and the conditions that will be created for the driver.’ Unfortunately, road transporters aren’t yet certain that contrailers would be a better option than an ordinary van.
In general, the dissimilarity of the realities of the Russian Federation and the European Union are so objectively obvious that the drawing of any parallels is hardly possible. The development of piggyback transportation in Russia will probably be carried out according to a slightly different scenario than in Europe.

Options for Russia
Summing up the results of the meetings of the Scientific and Technical Council, Vladimir Yakunin, President of RZD said: “RZD is not ready for large-scale developments in the field of piggy-backing, but the elaboration of pilot projects in this area is possible”. For which areas could it be promising? There are different opinions on this score.
Some interest, no doubt, is seen on the Moscow - St Petersburg - Helsinki direction. A corresponding contrailer train is expected to be put into operation in 2012 (commercial operation to begin somewhere in the second quarter of 2013).
Mr Rezer is optimistic of the chances of the project’s success. Mr Popov also considers the project realistic. The chances of success in this case are connected with problems which truckers face at the border of Finland (at the end of last year they had to stand in line for two days on the Finnish side of the border). A contrailer train makes it possible (at least in theory) to pass through customs much more quickly. That, of course, can strongly motivate a potential customer. As for the other routes, there is no consensus. Thus, Mr Popov believes that today this is irrelevant for other directions (especially in Russia), except for regions which are difficult to access. And this option is quite interesting. 
Indeed, there are regions in Russia where it is easier to deliver big volumes of goods by rail, and then to deliver them on to many far-flung settlements by road. The format of piggybacking turned out to be quite interesting in situations like this (not always, perhaps). But at the moment this is just an assumption, and we need to take a long and serious look at it to develop the idea into a fully-fledged concept. Moreover, not everyone agrees that this trend is promising in the near future. According to Mr Rezer, piggy-back trains should come to regions which are difficult to access only after they become a familiar sight in central Russia.

The Decisive Role Belongs to the State
We know we can extract some benefit from experience, including negative ones. But according to Mr Donkin, the experience of piggyback development is not exclusively negative. According to his words, some of the technologies had been tried, and there are some known ways to avoid past mistakes, and if the monetary cost of launching piggyback trains isn’t very small then at least it will be acceptable.
However, it is also clear that the present conjuncture of the Russian transport market has very weak premise for such project. And, according to Mr Rezer and Mr Donkin, a comprehensive approach and the active participation of the state in the development of piggyback are needed.
Firstly, legal insurance for the implementation of the project is needed. According to Mr Rezer, at the moment there is a need to adopt a series of laws in Russia, similar to European ones that will regulate vehicular traffic. In particular, truck traffic should be severely restricted in large cities. Certainly, the development of piggybacking needs to be subsidized in one form or another. Perhaps it is necessary to use some other form of encouragement for those cargo owners which will use contrailers.
In this regard, the experience of Ukraine is noticeable, where piggybacking has started to be developed, although not immediately and not without problems. At one point, the Ukrainian authorities were giving various privileges (if you wish, “bonuses”) related to customs clearance, etc. and this attracted cargo to contrailers. At the moment, RZD is working on projects to draw up normative legal documents that will regulate piggyback transportation. It is planned to be completed on October 1, 2011.
But, of course, the tariff questions were and still remain fundamental. The current tariff schemes, as practice has shown, are not suitable for cargo owners. According to 
Mr Rezer, active work in this direction is being carried out. If successful, RZD could offer the market acceptable tariffs - and most of the problems will be removed (though not all). 
But it is too early to make any forecast yet.

Let’s Wait Until the Autumn
In summary, we have to recognize that at the moment there are no market conditions for the development of piggybacking in Russia. However, apart from the economic benefits, there are some other reasons (environmental security, creating conditions for technological progress, etc.). In the end, everything depends on what stance the state will take. A set of legislative measures similar to European ones is needed (see above), the implementation of which will make contrailers interesting for the transport business.
By the autumn of this year, the work on the relevant normative legal documents project is going to be completed. Probably, then it could be said what the future will hold for this type of transportation in Russia. 
By Dmitry Savvin

viewpoint
Alexander Donkin, 
Director of the Moscow branch of the Freight One JSC:
– At the moment, there is practically no technical basis for the development of piggy-backing in Russia. After a series of experiments, this direction has been forgotten, and this is mainly, in my opinion, because it is a modern and very promising way of transportation. As we know, contrailers are widely used in Europe (in particular, and also in Ukraine).
In Russia we have legal basis that is necessary for the development of piggy-backing. The main issue is the tariffs. If we want to succeed, we should provide for the competitiveness of this type of transport. And, of course, in order to make this possible, the active involvement of the state is needed.

Semen Rezer, 
President of the Guild of Freight Forwarders:
– Piggyback is, certainly, a new direction for us and I believe that it is promising, and it needs to be developed. In Europe it has been used for the past 30 years and its usage is very successful. I believe that we should follow the European example in this case. All the more so because this type of transport is very important - it is environmentally friendly and it can significantly reduce tension on the roads (currently often overloaded). At the moment, a pilot project is being realized. That is the launch of piggy-back trains on the Moscow - St Petersburg - Helsinki route. I believe that it will be profitable both for railroads and for road haulage. 
In the EU this transport method is subsidized by the state. I believe that such measures are also required in Russia, especially at the initial stage.
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Negative Experience
Piggybacking hasn’t become habitual in Russia, but attempts to implement it in Russian conditions have been made several times before. The first experiments began in the Soviet period in 1960. There were some relevant pilot projects in the 1980s and in the 90s. But they were all forgotten quite quickly.
When we talk about the prospects of this type of transportation in Russia, its supporters usually give examples of European experience. As it is quite successful there, it could be profitable in Russia from the point of view of market players. Semen Rezer, President of the Guild of Freight Forwarders, is sure that it is necessary to develop piggyback transportation. Alexander Donkin, Director of the Moscow branch of the Freight One JSC (First Cargo Company), who once did a lot to implement a raft of relevant projects, agrees with Mr Rezer. But it is not usually taken into the account that the conditions in which rail and road transport operates in the EU are very much different from Russian conditions.
Firstly, there is the long and very active struggle for improving environmental conditions in the countries of the EU, and that is, in particular, reflected in the fact that motor vehicle taxes are regularly increased. That naturally affects the cost of transportation. Secondly, EU countries impose different restrictions on commercial vehicles - such as their entry into cities. There are also certain days on which it is forbidden to move along some roads (usually at weekends) for such transport in principle. Together, these measures lead to 1) higher prices for road transportation, and 2), moreover, quite significantly longer time of goods delivery by road.
In addition, there are some natural factors affecting the speed and price in some cases - we know that piggybacking is heavily used in the delivery of goods across the Alps and the Pyrenees. There are also several additional factors, apart from those described above, that make contrailers interesting for business. First of all, it’s the high price of insurance (especially for difficult and dangerous stretches of road), and the limited capacity of mountain roads. 
Obviously, there are as many natural barriers in Russia as in the Alps or the Pyrenees for trucks (like for any other vehicle). But at this point any analogy ends. Restrictions on the passage of trucks, which exist in the EU, don’t exist in Russia. Similarly, there is no European system of subsidies (direct and indirect) for those types of transport that are considered environmentally friendly.
The next important aspect in which Russian realities are fundamentally different from European ones is safety. The carrier, according to Evgeny Popov, a Member of the Association of International Automobile Carriers, is interested very much in ‘the safety of cargo and equipment, and the conditions that will be created for the driver.’ Unfortunately, road transporters aren’t yet certain that contrailers would be a better option than an ordinary van.
In general, the dissimilarity of the realities of the Russian Federation and the European Union are so objectively obvious that the drawing of any parallels is hardly possible. The development of piggyback transportation in Russia will probably be carried out according to a slightly different scenario than in Europe.

Options for Russia
Summing up the results of the meetings of the Scientific and Technical Council, Vladimir Yakunin, President of RZD said: “RZD is not ready for large-scale developments in the field of piggy-backing, but the elaboration of pilot projects in this area is possible”. For which areas could it be promising? There are different opinions on this score.
Some interest, no doubt, is seen on the Moscow - St Petersburg - Helsinki direction. A corresponding contrailer train is expected to be put into operation in 2012 (commercial operation to begin somewhere in the second quarter of 2013).
Mr Rezer is optimistic of the chances of the project’s success. Mr Popov also considers the project realistic. The chances of success in this case are connected with problems which truckers face at the border of Finland (at the end of last year they had to stand in line for two days on the Finnish side of the border). A contrailer train makes it possible (at least in theory) to pass through customs much more quickly. That, of course, can strongly motivate a potential customer. As for the other routes, there is no consensus. Thus, Mr Popov believes that today this is irrelevant for other directions (especially in Russia), except for regions which are difficult to access. And this option is quite interesting. 
Indeed, there are regions in Russia where it is easier to deliver big volumes of goods by rail, and then to deliver them on to many far-flung settlements by road. The format of piggybacking turned out to be quite interesting in situations like this (not always, perhaps). But at the moment this is just an assumption, and we need to take a long and serious look at it to develop the idea into a fully-fledged concept. Moreover, not everyone agrees that this trend is promising in the near future. According to Mr Rezer, piggy-back trains should come to regions which are difficult to access only after they become a familiar sight in central Russia.

The Decisive Role Belongs to the State
We know we can extract some benefit from experience, including negative ones. But according to Mr Donkin, the experience of piggyback development is not exclusively negative. According to his words, some of the technologies had been tried, and there are some known ways to avoid past mistakes, and if the monetary cost of launching piggyback trains isn’t very small then at least it will be acceptable.
However, it is also clear that the present conjuncture of the Russian transport market has very weak premise for such project. And, according to Mr Rezer and Mr Donkin, a comprehensive approach and the active participation of the state in the development of piggyback are needed.
Firstly, legal insurance for the implementation of the project is needed. According to Mr Rezer, at the moment there is a need to adopt a series of laws in Russia, similar to European ones that will regulate vehicular traffic. In particular, truck traffic should be severely restricted in large cities. Certainly, the development of piggybacking needs to be subsidized in one form or another. Perhaps it is necessary to use some other form of encouragement for those cargo owners which will use contrailers.
In this regard, the experience of Ukraine is noticeable, where piggybacking has started to be developed, although not immediately and not without problems. At one point, the Ukrainian authorities were giving various privileges (if you wish, “bonuses”) related to customs clearance, etc. and this attracted cargo to contrailers. At the moment, RZD is working on projects to draw up normative legal documents that will regulate piggyback transportation. It is planned to be completed on October 1, 2011.
But, of course, the tariff questions were and still remain fundamental. The current tariff schemes, as practice has shown, are not suitable for cargo owners. According to 
Mr Rezer, active work in this direction is being carried out. If successful, RZD could offer the market acceptable tariffs - and most of the problems will be removed (though not all). 
But it is too early to make any forecast yet.

Let’s Wait Until the Autumn
In summary, we have to recognize that at the moment there are no market conditions for the development of piggybacking in Russia. However, apart from the economic benefits, there are some other reasons (environmental security, creating conditions for technological progress, etc.). In the end, everything depends on what stance the state will take. A set of legislative measures similar to European ones is needed (see above), the implementation of which will make contrailers interesting for the transport business.
By the autumn of this year, the work on the relevant normative legal documents project is going to be completed. Probably, then it could be said what the future will hold for this type of transportation in Russia. 
By Dmitry Savvin

viewpoint
Alexander Donkin, 
Director of the Moscow branch of the Freight One JSC:
– At the moment, there is practically no technical basis for the development of piggy-backing in Russia. After a series of experiments, this direction has been forgotten, and this is mainly, in my opinion, because it is a modern and very promising way of transportation. As we know, contrailers are widely used in Europe (in particular, and also in Ukraine).
In Russia we have legal basis that is necessary for the development of piggy-backing. The main issue is the tariffs. If we want to succeed, we should provide for the competitiveness of this type of transport. And, of course, in order to make this possible, the active involvement of the state is needed.

Semen Rezer, 
President of the Guild of Freight Forwarders:
– Piggyback is, certainly, a new direction for us and I believe that it is promising, and it needs to be developed. In Europe it has been used for the past 30 years and its usage is very successful. I believe that we should follow the European example in this case. All the more so because this type of transport is very important - it is environmentally friendly and it can significantly reduce tension on the roads (currently often overloaded). At the moment, a pilot project is being realized. That is the launch of piggy-back trains on the Moscow - St Petersburg - Helsinki route. I believe that it will be profitable both for railroads and for road haulage. 
In the EU this transport method is subsidized by the state. I believe that such measures are also required in Russia, especially at the initial stage.
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/1/5.jpg" border="1" alt=" " hspace="5" width="300" height="201" align="left" />Piggyback transportation has occupied a place in the European Union’s transport business for a long time, but there are no such transportations in Russia, except for a few experimental and already half-forgotten projects. However, at the end of last year, the Scientific and Technical Council of RZD decided to start introducing contrailers in Russia. There is no doubt that this initiative, like any big project, provoked certain questions and, in particular, quite lot of skepticism.
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Negative Experience
Piggybacking hasn’t become habitual in Russia, but attempts to implement it in Russian conditions have been made several times before. The first experiments began in the Soviet period in 1960. There were some relevant pilot projects in the 1980s and in the 90s. But they were all forgotten quite quickly.
When we talk about the prospects of this type of transportation in Russia, its supporters usually give examples of European experience. As it is quite successful there, it could be profitable in Russia from the point of view of market players. Semen Rezer, President of the Guild of Freight Forwarders, is sure that it is necessary to develop piggyback transportation. Alexander Donkin, Director of the Moscow branch of the Freight One JSC (First Cargo Company), who once did a lot to implement a raft of relevant projects, agrees with Mr Rezer. But it is not usually taken into the account that the conditions in which rail and road transport operates in the EU are very much different from Russian conditions.
Firstly, there is the long and very active struggle for improving environmental conditions in the countries of the EU, and that is, in particular, reflected in the fact that motor vehicle taxes are regularly increased. That naturally affects the cost of transportation. Secondly, EU countries impose different restrictions on commercial vehicles - such as their entry into cities. There are also certain days on which it is forbidden to move along some roads (usually at weekends) for such transport in principle. Together, these measures lead to 1) higher prices for road transportation, and 2), moreover, quite significantly longer time of goods delivery by road.
In addition, there are some natural factors affecting the speed and price in some cases - we know that piggybacking is heavily used in the delivery of goods across the Alps and the Pyrenees. There are also several additional factors, apart from those described above, that make contrailers interesting for business. First of all, it’s the high price of insurance (especially for difficult and dangerous stretches of road), and the limited capacity of mountain roads. 
Obviously, there are as many natural barriers in Russia as in the Alps or the Pyrenees for trucks (like for any other vehicle). But at this point any analogy ends. Restrictions on the passage of trucks, which exist in the EU, don’t exist in Russia. Similarly, there is no European system of subsidies (direct and indirect) for those types of transport that are considered environmentally friendly.
The next important aspect in which Russian realities are fundamentally different from European ones is safety. The carrier, according to Evgeny Popov, a Member of the Association of International Automobile Carriers, is interested very much in ‘the safety of cargo and equipment, and the conditions that will be created for the driver.’ Unfortunately, road transporters aren’t yet certain that contrailers would be a better option than an ordinary van.
In general, the dissimilarity of the realities of the Russian Federation and the European Union are so objectively obvious that the drawing of any parallels is hardly possible. The development of piggyback transportation in Russia will probably be carried out according to a slightly different scenario than in Europe.

Options for Russia
Summing up the results of the meetings of the Scientific and Technical Council, Vladimir Yakunin, President of RZD said: “RZD is not ready for large-scale developments in the field of piggy-backing, but the elaboration of pilot projects in this area is possible”. For which areas could it be promising? There are different opinions on this score.
Some interest, no doubt, is seen on the Moscow - St Petersburg - Helsinki direction. A corresponding contrailer train is expected to be put into operation in 2012 (commercial operation to begin somewhere in the second quarter of 2013).
Mr Rezer is optimistic of the chances of the project’s success. Mr Popov also considers the project realistic. The chances of success in this case are connected with problems which truckers face at the border of Finland (at the end of last year they had to stand in line for two days on the Finnish side of the border). A contrailer train makes it possible (at least in theory) to pass through customs much more quickly. That, of course, can strongly motivate a potential customer. As for the other routes, there is no consensus. Thus, Mr Popov believes that today this is irrelevant for other directions (especially in Russia), except for regions which are difficult to access. And this option is quite interesting. 
Indeed, there are regions in Russia where it is easier to deliver big volumes of goods by rail, and then to deliver them on to many far-flung settlements by road. The format of piggybacking turned out to be quite interesting in situations like this (not always, perhaps). But at the moment this is just an assumption, and we need to take a long and serious look at it to develop the idea into a fully-fledged concept. Moreover, not everyone agrees that this trend is promising in the near future. According to Mr Rezer, piggy-back trains should come to regions which are difficult to access only after they become a familiar sight in central Russia.

The Decisive Role Belongs to the State
We know we can extract some benefit from experience, including negative ones. But according to Mr Donkin, the experience of piggyback development is not exclusively negative. According to his words, some of the technologies had been tried, and there are some known ways to avoid past mistakes, and if the monetary cost of launching piggyback trains isn’t very small then at least it will be acceptable.
However, it is also clear that the present conjuncture of the Russian transport market has very weak premise for such project. And, according to Mr Rezer and Mr Donkin, a comprehensive approach and the active participation of the state in the development of piggyback are needed.
Firstly, legal insurance for the implementation of the project is needed. According to Mr Rezer, at the moment there is a need to adopt a series of laws in Russia, similar to European ones that will regulate vehicular traffic. In particular, truck traffic should be severely restricted in large cities. Certainly, the development of piggybacking needs to be subsidized in one form or another. Perhaps it is necessary to use some other form of encouragement for those cargo owners which will use contrailers.
In this regard, the experience of Ukraine is noticeable, where piggybacking has started to be developed, although not immediately and not without problems. At one point, the Ukrainian authorities were giving various privileges (if you wish, “bonuses”) related to customs clearance, etc. and this attracted cargo to contrailers. At the moment, RZD is working on projects to draw up normative legal documents that will regulate piggyback transportation. It is planned to be completed on October 1, 2011.
But, of course, the tariff questions were and still remain fundamental. The current tariff schemes, as practice has shown, are not suitable for cargo owners. According to 
Mr Rezer, active work in this direction is being carried out. If successful, RZD could offer the market acceptable tariffs - and most of the problems will be removed (though not all). 
But it is too early to make any forecast yet.

Let’s Wait Until the Autumn
In summary, we have to recognize that at the moment there are no market conditions for the development of piggybacking in Russia. However, apart from the economic benefits, there are some other reasons (environmental security, creating conditions for technological progress, etc.). In the end, everything depends on what stance the state will take. A set of legislative measures similar to European ones is needed (see above), the implementation of which will make contrailers interesting for the transport business.
By the autumn of this year, the work on the relevant normative legal documents project is going to be completed. Probably, then it could be said what the future will hold for this type of transportation in Russia. 
By Dmitry Savvin

viewpoint
Alexander Donkin, 
Director of the Moscow branch of the Freight One JSC:
– At the moment, there is practically no technical basis for the development of piggy-backing in Russia. After a series of experiments, this direction has been forgotten, and this is mainly, in my opinion, because it is a modern and very promising way of transportation. As we know, contrailers are widely used in Europe (in particular, and also in Ukraine).
In Russia we have legal basis that is necessary for the development of piggy-backing. The main issue is the tariffs. If we want to succeed, we should provide for the competitiveness of this type of transport. And, of course, in order to make this possible, the active involvement of the state is needed.

Semen Rezer, 
President of the Guild of Freight Forwarders:
– Piggyback is, certainly, a new direction for us and I believe that it is promising, and it needs to be developed. In Europe it has been used for the past 30 years and its usage is very successful. I believe that we should follow the European example in this case. All the more so because this type of transport is very important - it is environmentally friendly and it can significantly reduce tension on the roads (currently often overloaded). At the moment, a pilot project is being realized. That is the launch of piggy-back trains on the Moscow - St Petersburg - Helsinki route. I believe that it will be profitable both for railroads and for road haulage. 
In the EU this transport method is subsidized by the state. I believe that such measures are also required in Russia, especially at the initial stage.
    [~DETAIL_TEXT] => 
Negative Experience
Piggybacking hasn’t become habitual in Russia, but attempts to implement it in Russian conditions have been made several times before. The first experiments began in the Soviet period in 1960. There were some relevant pilot projects in the 1980s and in the 90s. But they were all forgotten quite quickly.
When we talk about the prospects of this type of transportation in Russia, its supporters usually give examples of European experience. As it is quite successful there, it could be profitable in Russia from the point of view of market players. Semen Rezer, President of the Guild of Freight Forwarders, is sure that it is necessary to develop piggyback transportation. Alexander Donkin, Director of the Moscow branch of the Freight One JSC (First Cargo Company), who once did a lot to implement a raft of relevant projects, agrees with Mr Rezer. But it is not usually taken into the account that the conditions in which rail and road transport operates in the EU are very much different from Russian conditions.
Firstly, there is the long and very active struggle for improving environmental conditions in the countries of the EU, and that is, in particular, reflected in the fact that motor vehicle taxes are regularly increased. That naturally affects the cost of transportation. Secondly, EU countries impose different restrictions on commercial vehicles - such as their entry into cities. There are also certain days on which it is forbidden to move along some roads (usually at weekends) for such transport in principle. Together, these measures lead to 1) higher prices for road transportation, and 2), moreover, quite significantly longer time of goods delivery by road.
In addition, there are some natural factors affecting the speed and price in some cases - we know that piggybacking is heavily used in the delivery of goods across the Alps and the Pyrenees. There are also several additional factors, apart from those described above, that make contrailers interesting for business. First of all, it’s the high price of insurance (especially for difficult and dangerous stretches of road), and the limited capacity of mountain roads. 
Obviously, there are as many natural barriers in Russia as in the Alps or the Pyrenees for trucks (like for any other vehicle). But at this point any analogy ends. Restrictions on the passage of trucks, which exist in the EU, don’t exist in Russia. Similarly, there is no European system of subsidies (direct and indirect) for those types of transport that are considered environmentally friendly.
The next important aspect in which Russian realities are fundamentally different from European ones is safety. The carrier, according to Evgeny Popov, a Member of the Association of International Automobile Carriers, is interested very much in ‘the safety of cargo and equipment, and the conditions that will be created for the driver.’ Unfortunately, road transporters aren’t yet certain that contrailers would be a better option than an ordinary van.
In general, the dissimilarity of the realities of the Russian Federation and the European Union are so objectively obvious that the drawing of any parallels is hardly possible. The development of piggyback transportation in Russia will probably be carried out according to a slightly different scenario than in Europe.

Options for Russia
Summing up the results of the meetings of the Scientific and Technical Council, Vladimir Yakunin, President of RZD said: “RZD is not ready for large-scale developments in the field of piggy-backing, but the elaboration of pilot projects in this area is possible”. For which areas could it be promising? There are different opinions on this score.
Some interest, no doubt, is seen on the Moscow - St Petersburg - Helsinki direction. A corresponding contrailer train is expected to be put into operation in 2012 (commercial operation to begin somewhere in the second quarter of 2013).
Mr Rezer is optimistic of the chances of the project’s success. Mr Popov also considers the project realistic. The chances of success in this case are connected with problems which truckers face at the border of Finland (at the end of last year they had to stand in line for two days on the Finnish side of the border). A contrailer train makes it possible (at least in theory) to pass through customs much more quickly. That, of course, can strongly motivate a potential customer. As for the other routes, there is no consensus. Thus, Mr Popov believes that today this is irrelevant for other directions (especially in Russia), except for regions which are difficult to access. And this option is quite interesting. 
Indeed, there are regions in Russia where it is easier to deliver big volumes of goods by rail, and then to deliver them on to many far-flung settlements by road. The format of piggybacking turned out to be quite interesting in situations like this (not always, perhaps). But at the moment this is just an assumption, and we need to take a long and serious look at it to develop the idea into a fully-fledged concept. Moreover, not everyone agrees that this trend is promising in the near future. According to Mr Rezer, piggy-back trains should come to regions which are difficult to access only after they become a familiar sight in central Russia.

The Decisive Role Belongs to the State
We know we can extract some benefit from experience, including negative ones. But according to Mr Donkin, the experience of piggyback development is not exclusively negative. According to his words, some of the technologies had been tried, and there are some known ways to avoid past mistakes, and if the monetary cost of launching piggyback trains isn’t very small then at least it will be acceptable.
However, it is also clear that the present conjuncture of the Russian transport market has very weak premise for such project. And, according to Mr Rezer and Mr Donkin, a comprehensive approach and the active participation of the state in the development of piggyback are needed.
Firstly, legal insurance for the implementation of the project is needed. According to Mr Rezer, at the moment there is a need to adopt a series of laws in Russia, similar to European ones that will regulate vehicular traffic. In particular, truck traffic should be severely restricted in large cities. Certainly, the development of piggybacking needs to be subsidized in one form or another. Perhaps it is necessary to use some other form of encouragement for those cargo owners which will use contrailers.
In this regard, the experience of Ukraine is noticeable, where piggybacking has started to be developed, although not immediately and not without problems. At one point, the Ukrainian authorities were giving various privileges (if you wish, “bonuses”) related to customs clearance, etc. and this attracted cargo to contrailers. At the moment, RZD is working on projects to draw up normative legal documents that will regulate piggyback transportation. It is planned to be completed on October 1, 2011.
But, of course, the tariff questions were and still remain fundamental. The current tariff schemes, as practice has shown, are not suitable for cargo owners. According to 
Mr Rezer, active work in this direction is being carried out. If successful, RZD could offer the market acceptable tariffs - and most of the problems will be removed (though not all). 
But it is too early to make any forecast yet.

Let’s Wait Until the Autumn
In summary, we have to recognize that at the moment there are no market conditions for the development of piggybacking in Russia. However, apart from the economic benefits, there are some other reasons (environmental security, creating conditions for technological progress, etc.). In the end, everything depends on what stance the state will take. A set of legislative measures similar to European ones is needed (see above), the implementation of which will make contrailers interesting for the transport business.
By the autumn of this year, the work on the relevant normative legal documents project is going to be completed. Probably, then it could be said what the future will hold for this type of transportation in Russia. 
By Dmitry Savvin

viewpoint
Alexander Donkin, 
Director of the Moscow branch of the Freight One JSC:
– At the moment, there is practically no technical basis for the development of piggy-backing in Russia. After a series of experiments, this direction has been forgotten, and this is mainly, in my opinion, because it is a modern and very promising way of transportation. As we know, contrailers are widely used in Europe (in particular, and also in Ukraine).
In Russia we have legal basis that is necessary for the development of piggy-backing. The main issue is the tariffs. If we want to succeed, we should provide for the competitiveness of this type of transport. And, of course, in order to make this possible, the active involvement of the state is needed.

Semen Rezer, 
President of the Guild of Freight Forwarders:
– Piggyback is, certainly, a new direction for us and I believe that it is promising, and it needs to be developed. In Europe it has been used for the past 30 years and its usage is very successful. I believe that we should follow the European example in this case. All the more so because this type of transport is very important - it is environmentally friendly and it can significantly reduce tension on the roads (currently often overloaded). At the moment, a pilot project is being realized. That is the launch of piggy-back trains on the Moscow - St Petersburg - Helsinki route. I believe that it will be profitable both for railroads and for road haulage. 
In the EU this transport method is subsidized by the state. I believe that such measures are also required in Russia, especially at the initial stage.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/1/5.jpg" border="1" alt=" " hspace="5" width="300" height="201" align="left" />Piggyback transportation has occupied a place in the European Union’s transport business for a long time, but there are no such transportations in Russia, except for a few experimental and already half-forgotten projects. However, at the end of last year, the Scientific and Technical Council of RZD decided to start introducing contrailers in Russia. There is no doubt that this initiative, like any big project, provoked certain questions and, in particular, quite lot of skepticism.
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    [DETAIL_TEXT] => 
Total monitoring
– Mr Cherkasov, how is the ecological situation controlled at Russian Railways JSC? Is there monitoring?

– RZD pays much attention to the question of environmental protection and conducts ongoing monitoring of infrastructure and locomotives. This includes usage of environmental laboratories. Controls on the emission of pollutants into the atmosphere and water bodies as well as soil pollution control are exercised by 56 stationary environmental laboratories, 9 laboratory wagons and 55 road-based laboratories.
A high-tech 21st century laboratory train, which can solve complex issues, has been put together. Tasks include monitoring of the environment in the construction zone of Olympic venues in Sochi. An important function of the train traffic is control over execution of International environmental agreements, which are the basis for the quotas on greenhouse gases.
Together with the Institute of Atmospheric Physics at the Russian Academy of Sciences a complex study of air pollution in cities and industrial regions was held. The influence of different sectors and areas of economic activity on nature was evaluated, including the influence of railroad transport operations. Local sources of air pollution were detected as well as the pollution of cities and industrial centres. The size of the zone could be several hundred kilometres.
RZD monitors the environment with the help of satellite technologies, based on global satellite navigation systems GLONASS/GPS and satellite remote sensing systems. 
The usage of such technical means is aimed at monitoring potentially dangerous natural and man-made processes, which can have a negative impact on the railway tracks and other infrastructure and lead to serious environmental consequences. This is the real way to change from reaction and taking action to eliminate the effects of adverse events - natural or man-made – that are already happening and to organise their permanent monitoring as well as forecasting their development. As a result, there is the transition to implementation of preventative measures on a scheduled basis, which provides a significant reduction of the risks and costs in comparison with traditional methods.
RZD continues to conduct an environmental audit of the railways and other branches in the sphere of environmental management and environmental protection in order to assess compliance with the environmental legislation of the Russian Federation and the international standards of environmental management system GOST R ISO 14001. An independent audit company’s assessment of RZD and the implementation of appropriate recommendations developed by the auditors will make it possible to certify the environmental management system of RZD in compliance with international standard GOST R ISO 14001.
An important component of the company’s environmental safety system is also the monitoring of transportation of special and dangerous cargo, based on the GLONASS satellite system and a digital communication system. In case of emergencies during dangerous goods transportation, action will be taken and means provided to eliminate the risks and to minimise environmental damage.

– How is the struggle for reducing rail transport waste emission going?

– Nowadays, RZD’s share in the emissions of harmful substances into the atmosphere, waste water discharged into water bodies and waste generation does not exceed 1%. I think that the rate of reduction of anthropogenic impact and its qualitative component are clearly not inadequate for the company at the moment.
State environmental policy and the actual environmental protection situation require the development and introduction of new innovative solutions in this area as well as energy-saving technologies and increasing energy efficiency, which guarantee the ecological safety of the company. The company has developed ‘The program of implementation of Russian Railways JSC environmental strategy’. Investment for its realisation exceed 1.4 billion rubles, while operating costs are 459 million rubles.
In 2010, completion of some of the tasks in the program made it possible to neutralise about 110 tons of harmful production and consumption products and to reduce greenhouse gas emissions by 346,000 tons. Some 62 hectares of new protective plantation were also created and 93,000 trees and bushes were planted along railway tracks. 
In 2011, it is planned to reduce harmful emissions by 1,500 tons, to reduce the discharge of polluted wastewater into the environment by 3.4 million cubic metres, and to reduce greenhouse gas emissions by 106 tons. 
At the expense of technical re-equipment of the company, 141 new locomotives with improved environmental performance were built. And with the repair of locomotives, 110 out-of-date diesel engines were replaced with modern Russian-made D-49 engines. They reduce fuel consumption by 15% and improve the environmental performance by 30%. 3,200 km of track with wooden sleepers, polluting the environment, were replaced with the concrete sleepers. For low-density areas, 5 million wooden sleepers impregnated with environmentally friendly antiseptics were purchased.
According to the investment program of the Federal Passenger JSC, it is supposed to purchase 501 passenger cars with ecologically sound closed-type toilets with storage tanks. And, with the repair of passenger cars, it is planned to equip another 60 cars with such ecologically clean toilets, which prevent bacterial contamination of the railroad tracks and surrounding territory.

– Such concepts as ‘green investments’, ‘green technology’, ‘green economy’, ‘green energetics’ and ‘green logistics’ have come into our daily life in recent years. Are these real programs or an attempt to follow the fashion?

– The peculiarities of railroad transport determine its role in ‘green logistics’, while the share of RZD in environmental pollution is less than 1%.
The economic and environmental development objectives of the company are interrelated.
The ecological strategy of RZD to 2015 and on to 2030 provides the reduction of negative environmental impact by 35% and 70%, respectively. This strategy has been hailed by the Ministry of Natural Resources and Environment of Russia as the best environmental project.
In 2010, more than $ 40 million has been allotted for these purposes. The parameters, defined by the strategy will be achieved by 2015. In fact, in 2008-2010, RZD achieved figures which outstrip in two to three-fold the figures that were forecasted on a number of parameters.

Alternative fuel
– Are alternative fuel sources used in RZD?

– Russian Railways JSC is one of the largest energy consumers. It accounts for 5-6% of the electricity produced each year in Russia and up to 6% of diesel fuel. In accordance with the Energy strategy of Russia, the company is tasked with the replacement of 30% of diesel fuel, used for autonomous locomotives, with natural gas by 2030. 
As part of realising the Strategy the world’s first main cargo locomotive with gas turbine, GT1-001, running on a liquefied natural gas with a capacity of 8,300 kW has been developed. The high-performance characteristics of this locomotive made it possible to drag a 15,000-ton train, which is a world record for autonomous locomotives with one power plant. 
In this case, the emissions of the gas turbine plant are less than a fifth of its permitted amount, according to regulatory requirements for diesel engines of the EU Directive of 2012. And its external noise level meets national standars requirements. The life cycle cost of such a locomotive is about 20% lower in comparison with main diesel locomotive. Cryogenic technology that has been used in its creation can also be used for other transport modes.
Testing of an experimental shunter with an electronic system of gas supply to the engine (Czechoslovak Shunter with electric transmission) and the replacement of diesel fuel up to 60% has been continued. This is a prototype diesel locomotive designed for use on the Sochi-Adler line from 2013. Reduction of exhaust fumes is up to 30%, and reduction of emissions in general is up to 50%.

– How is the adoption of energy-saving technologies going? Can it be considered part of the environmental program?

– In 2010, 311 million kWh of electricity and 23,800 tons of diesel fuel has been saved on traction and 128.2 million kWh of electricity and 8,700 tons of diesel fuel on other purposes.
In general, energy used for freight transportation from the beginning of 2004 decreased by 4.2% (from 7.78 tons to 7.46 tons of fuel per 1 million kilometers). 1,3 billion kWh of electricity and more than 100,000 tons of diesel fuel has been saved. This means that, during this period, Russian railways reduced greenhouse gas emissions by more than 625,000 tons each year.

To the question Recipes for saving energy
As concerns the energy saving question, a unique project to create an automated system for commercial metering of electrical energy (ASCME) has been developed at RZD. It will make it  to reduce the technological losses of electricity by controlling the balances over the objects and to reduce the cost of electricity purchasing on the wholesale market. Almost 20,000 metering points at traction substations and more than 115,000 metering points at transformer substations are included in the net. 
Another promising project - an automated system of complex accounting of energy resources, based on systems that collect and process information from energy metering devices. As a result of using these systems, annual energy savings of more than one percent per year have been achieved.
As part of the energy saving program, passenger trains have been transferred to an optimal schedule. This could happen due to the  possibilities of system of automatic control. Schedules were adopted on all major passenger lines that made it possible to save an additional 50 million kWh and to reduce greenhouse gas emissions by 135,000 tons in 2010.
There are a number of pilot projects to implement LED lighting systems at various facilities and others to implement optical systems in railway automation. As a result, power consumption at a number of facilities decreased by 60%. In 2010, investment in the implementation of LED technology grew five-fold. There is considerable potential for fuel economy in the sphere of execution of shunting operations at stations. This is a separate area of energy-saving policy at RZD.
Taking into account global experience, an experimental locomotive prototype with a double-diesel power plant based on the serial Czechoslovak Shunter with electric transmission has been developed. It can provide fuel savings (in comparison with serial Shunter) of at least 10%.
There is also the development of an energy-efficient shunting locomotive with a hybrid power plant for usage in light shunting at RZD. Usage of one of such locomotive instead of a Czechoslovak Shunter will reduce fuel consumption and emissions of harmful substances by a third.
Other innovative energy-saving projects include replicating automated catalytic cogeneration plants. The first automated catalytic cogeneration plant (3,5 MW) in Russia is working successfully at Artyshta station on the West-Siberian railway. The scientific achievements of the Institute of Catalysis of the Siberian Branch of RAS formed the basis of its development. An important advantage of the plant is its ability to burn effectively solid fuels of low quality and different types of waste containing combustible components. Efficiency of the plant is up to 95% and this provides a low level of emissions into the atmosphere.
Alternative energy sources are also being implemented in the transportation process. The first Russian power plant to run on hydrogen fuel has operated for more than a year. It is used as a reserve power supply device for railway automatics and communication facilities. Fuel capacity is 300 cubic metres of gaseous hydrogen at high pressure monoblocks. The maximum power of the plant is 15 kW. A combined solar water-heating plant is used for heating and hot water supply of industrial buildings and it has been adopted on five roads. Its usage made it possible to reduce emissions of greenhouse gases by more than 1,000 tons. Greenhouse gas reductions will hit 2.7 million tons by 2015.
As you can see, strategic purposes of Russian Railways JSC involve multi-faceted work on the reduction of man’s impact on the environment. 
Interviewed By Andrey Lazarev 
    [~DETAIL_TEXT] => 
Total monitoring
– Mr Cherkasov, how is the ecological situation controlled at Russian Railways JSC? Is there monitoring?

– RZD pays much attention to the question of environmental protection and conducts ongoing monitoring of infrastructure and locomotives. This includes usage of environmental laboratories. Controls on the emission of pollutants into the atmosphere and water bodies as well as soil pollution control are exercised by 56 stationary environmental laboratories, 9 laboratory wagons and 55 road-based laboratories.
A high-tech 21st century laboratory train, which can solve complex issues, has been put together. Tasks include monitoring of the environment in the construction zone of Olympic venues in Sochi. An important function of the train traffic is control over execution of International environmental agreements, which are the basis for the quotas on greenhouse gases.
Together with the Institute of Atmospheric Physics at the Russian Academy of Sciences a complex study of air pollution in cities and industrial regions was held. The influence of different sectors and areas of economic activity on nature was evaluated, including the influence of railroad transport operations. Local sources of air pollution were detected as well as the pollution of cities and industrial centres. The size of the zone could be several hundred kilometres.
RZD monitors the environment with the help of satellite technologies, based on global satellite navigation systems GLONASS/GPS and satellite remote sensing systems. 
The usage of such technical means is aimed at monitoring potentially dangerous natural and man-made processes, which can have a negative impact on the railway tracks and other infrastructure and lead to serious environmental consequences. This is the real way to change from reaction and taking action to eliminate the effects of adverse events - natural or man-made – that are already happening and to organise their permanent monitoring as well as forecasting their development. As a result, there is the transition to implementation of preventative measures on a scheduled basis, which provides a significant reduction of the risks and costs in comparison with traditional methods.
RZD continues to conduct an environmental audit of the railways and other branches in the sphere of environmental management and environmental protection in order to assess compliance with the environmental legislation of the Russian Federation and the international standards of environmental management system GOST R ISO 14001. An independent audit company’s assessment of RZD and the implementation of appropriate recommendations developed by the auditors will make it possible to certify the environmental management system of RZD in compliance with international standard GOST R ISO 14001.
An important component of the company’s environmental safety system is also the monitoring of transportation of special and dangerous cargo, based on the GLONASS satellite system and a digital communication system. In case of emergencies during dangerous goods transportation, action will be taken and means provided to eliminate the risks and to minimise environmental damage.

– How is the struggle for reducing rail transport waste emission going?

– Nowadays, RZD’s share in the emissions of harmful substances into the atmosphere, waste water discharged into water bodies and waste generation does not exceed 1%. I think that the rate of reduction of anthropogenic impact and its qualitative component are clearly not inadequate for the company at the moment.
State environmental policy and the actual environmental protection situation require the development and introduction of new innovative solutions in this area as well as energy-saving technologies and increasing energy efficiency, which guarantee the ecological safety of the company. The company has developed ‘The program of implementation of Russian Railways JSC environmental strategy’. Investment for its realisation exceed 1.4 billion rubles, while operating costs are 459 million rubles.
In 2010, completion of some of the tasks in the program made it possible to neutralise about 110 tons of harmful production and consumption products and to reduce greenhouse gas emissions by 346,000 tons. Some 62 hectares of new protective plantation were also created and 93,000 trees and bushes were planted along railway tracks. 
In 2011, it is planned to reduce harmful emissions by 1,500 tons, to reduce the discharge of polluted wastewater into the environment by 3.4 million cubic metres, and to reduce greenhouse gas emissions by 106 tons. 
At the expense of technical re-equipment of the company, 141 new locomotives with improved environmental performance were built. And with the repair of locomotives, 110 out-of-date diesel engines were replaced with modern Russian-made D-49 engines. They reduce fuel consumption by 15% and improve the environmental performance by 30%. 3,200 km of track with wooden sleepers, polluting the environment, were replaced with the concrete sleepers. For low-density areas, 5 million wooden sleepers impregnated with environmentally friendly antiseptics were purchased.
According to the investment program of the Federal Passenger JSC, it is supposed to purchase 501 passenger cars with ecologically sound closed-type toilets with storage tanks. And, with the repair of passenger cars, it is planned to equip another 60 cars with such ecologically clean toilets, which prevent bacterial contamination of the railroad tracks and surrounding territory.

– Such concepts as ‘green investments’, ‘green technology’, ‘green economy’, ‘green energetics’ and ‘green logistics’ have come into our daily life in recent years. Are these real programs or an attempt to follow the fashion?

– The peculiarities of railroad transport determine its role in ‘green logistics’, while the share of RZD in environmental pollution is less than 1%.
The economic and environmental development objectives of the company are interrelated.
The ecological strategy of RZD to 2015 and on to 2030 provides the reduction of negative environmental impact by 35% and 70%, respectively. This strategy has been hailed by the Ministry of Natural Resources and Environment of Russia as the best environmental project.
In 2010, more than $ 40 million has been allotted for these purposes. The parameters, defined by the strategy will be achieved by 2015. In fact, in 2008-2010, RZD achieved figures which outstrip in two to three-fold the figures that were forecasted on a number of parameters.

Alternative fuel
– Are alternative fuel sources used in RZD?

– Russian Railways JSC is one of the largest energy consumers. It accounts for 5-6% of the electricity produced each year in Russia and up to 6% of diesel fuel. In accordance with the Energy strategy of Russia, the company is tasked with the replacement of 30% of diesel fuel, used for autonomous locomotives, with natural gas by 2030. 
As part of realising the Strategy the world’s first main cargo locomotive with gas turbine, GT1-001, running on a liquefied natural gas with a capacity of 8,300 kW has been developed. The high-performance characteristics of this locomotive made it possible to drag a 15,000-ton train, which is a world record for autonomous locomotives with one power plant. 
In this case, the emissions of the gas turbine plant are less than a fifth of its permitted amount, according to regulatory requirements for diesel engines of the EU Directive of 2012. And its external noise level meets national standars requirements. The life cycle cost of such a locomotive is about 20% lower in comparison with main diesel locomotive. Cryogenic technology that has been used in its creation can also be used for other transport modes.
Testing of an experimental shunter with an electronic system of gas supply to the engine (Czechoslovak Shunter with electric transmission) and the replacement of diesel fuel up to 60% has been continued. This is a prototype diesel locomotive designed for use on the Sochi-Adler line from 2013. Reduction of exhaust fumes is up to 30%, and reduction of emissions in general is up to 50%.

– How is the adoption of energy-saving technologies going? Can it be considered part of the environmental program?

– In 2010, 311 million kWh of electricity and 23,800 tons of diesel fuel has been saved on traction and 128.2 million kWh of electricity and 8,700 tons of diesel fuel on other purposes.
In general, energy used for freight transportation from the beginning of 2004 decreased by 4.2% (from 7.78 tons to 7.46 tons of fuel per 1 million kilometers). 1,3 billion kWh of electricity and more than 100,000 tons of diesel fuel has been saved. This means that, during this period, Russian railways reduced greenhouse gas emissions by more than 625,000 tons each year.

To the question Recipes for saving energy
As concerns the energy saving question, a unique project to create an automated system for commercial metering of electrical energy (ASCME) has been developed at RZD. It will make it  to reduce the technological losses of electricity by controlling the balances over the objects and to reduce the cost of electricity purchasing on the wholesale market. Almost 20,000 metering points at traction substations and more than 115,000 metering points at transformer substations are included in the net. 
Another promising project - an automated system of complex accounting of energy resources, based on systems that collect and process information from energy metering devices. As a result of using these systems, annual energy savings of more than one percent per year have been achieved.
As part of the energy saving program, passenger trains have been transferred to an optimal schedule. This could happen due to the  possibilities of system of automatic control. Schedules were adopted on all major passenger lines that made it possible to save an additional 50 million kWh and to reduce greenhouse gas emissions by 135,000 tons in 2010.
There are a number of pilot projects to implement LED lighting systems at various facilities and others to implement optical systems in railway automation. As a result, power consumption at a number of facilities decreased by 60%. In 2010, investment in the implementation of LED technology grew five-fold. There is considerable potential for fuel economy in the sphere of execution of shunting operations at stations. This is a separate area of energy-saving policy at RZD.
Taking into account global experience, an experimental locomotive prototype with a double-diesel power plant based on the serial Czechoslovak Shunter with electric transmission has been developed. It can provide fuel savings (in comparison with serial Shunter) of at least 10%.
There is also the development of an energy-efficient shunting locomotive with a hybrid power plant for usage in light shunting at RZD. Usage of one of such locomotive instead of a Czechoslovak Shunter will reduce fuel consumption and emissions of harmful substances by a third.
Other innovative energy-saving projects include replicating automated catalytic cogeneration plants. The first automated catalytic cogeneration plant (3,5 MW) in Russia is working successfully at Artyshta station on the West-Siberian railway. The scientific achievements of the Institute of Catalysis of the Siberian Branch of RAS formed the basis of its development. An important advantage of the plant is its ability to burn effectively solid fuels of low quality and different types of waste containing combustible components. Efficiency of the plant is up to 95% and this provides a low level of emissions into the atmosphere.
Alternative energy sources are also being implemented in the transportation process. The first Russian power plant to run on hydrogen fuel has operated for more than a year. It is used as a reserve power supply device for railway automatics and communication facilities. Fuel capacity is 300 cubic metres of gaseous hydrogen at high pressure monoblocks. The maximum power of the plant is 15 kW. A combined solar water-heating plant is used for heating and hot water supply of industrial buildings and it has been adopted on five roads. Its usage made it possible to reduce emissions of greenhouse gases by more than 1,000 tons. Greenhouse gas reductions will hit 2.7 million tons by 2015.
As you can see, strategic purposes of Russian Railways JSC involve multi-faceted work on the reduction of man’s impact on the environment. 
Interviewed By Andrey Lazarev 
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Total monitoring
– Mr Cherkasov, how is the ecological situation controlled at Russian Railways JSC? Is there monitoring?

– RZD pays much attention to the question of environmental protection and conducts ongoing monitoring of infrastructure and locomotives. This includes usage of environmental laboratories. Controls on the emission of pollutants into the atmosphere and water bodies as well as soil pollution control are exercised by 56 stationary environmental laboratories, 9 laboratory wagons and 55 road-based laboratories.
A high-tech 21st century laboratory train, which can solve complex issues, has been put together. Tasks include monitoring of the environment in the construction zone of Olympic venues in Sochi. An important function of the train traffic is control over execution of International environmental agreements, which are the basis for the quotas on greenhouse gases.
Together with the Institute of Atmospheric Physics at the Russian Academy of Sciences a complex study of air pollution in cities and industrial regions was held. The influence of different sectors and areas of economic activity on nature was evaluated, including the influence of railroad transport operations. Local sources of air pollution were detected as well as the pollution of cities and industrial centres. The size of the zone could be several hundred kilometres.
RZD monitors the environment with the help of satellite technologies, based on global satellite navigation systems GLONASS/GPS and satellite remote sensing systems. 
The usage of such technical means is aimed at monitoring potentially dangerous natural and man-made processes, which can have a negative impact on the railway tracks and other infrastructure and lead to serious environmental consequences. This is the real way to change from reaction and taking action to eliminate the effects of adverse events - natural or man-made – that are already happening and to organise their permanent monitoring as well as forecasting their development. As a result, there is the transition to implementation of preventative measures on a scheduled basis, which provides a significant reduction of the risks and costs in comparison with traditional methods.
RZD continues to conduct an environmental audit of the railways and other branches in the sphere of environmental management and environmental protection in order to assess compliance with the environmental legislation of the Russian Federation and the international standards of environmental management system GOST R ISO 14001. An independent audit company’s assessment of RZD and the implementation of appropriate recommendations developed by the auditors will make it possible to certify the environmental management system of RZD in compliance with international standard GOST R ISO 14001.
An important component of the company’s environmental safety system is also the monitoring of transportation of special and dangerous cargo, based on the GLONASS satellite system and a digital communication system. In case of emergencies during dangerous goods transportation, action will be taken and means provided to eliminate the risks and to minimise environmental damage.

– How is the struggle for reducing rail transport waste emission going?

– Nowadays, RZD’s share in the emissions of harmful substances into the atmosphere, waste water discharged into water bodies and waste generation does not exceed 1%. I think that the rate of reduction of anthropogenic impact and its qualitative component are clearly not inadequate for the company at the moment.
State environmental policy and the actual environmental protection situation require the development and introduction of new innovative solutions in this area as well as energy-saving technologies and increasing energy efficiency, which guarantee the ecological safety of the company. The company has developed ‘The program of implementation of Russian Railways JSC environmental strategy’. Investment for its realisation exceed 1.4 billion rubles, while operating costs are 459 million rubles.
In 2010, completion of some of the tasks in the program made it possible to neutralise about 110 tons of harmful production and consumption products and to reduce greenhouse gas emissions by 346,000 tons. Some 62 hectares of new protective plantation were also created and 93,000 trees and bushes were planted along railway tracks. 
In 2011, it is planned to reduce harmful emissions by 1,500 tons, to reduce the discharge of polluted wastewater into the environment by 3.4 million cubic metres, and to reduce greenhouse gas emissions by 106 tons. 
At the expense of technical re-equipment of the company, 141 new locomotives with improved environmental performance were built. And with the repair of locomotives, 110 out-of-date diesel engines were replaced with modern Russian-made D-49 engines. They reduce fuel consumption by 15% and improve the environmental performance by 30%. 3,200 km of track with wooden sleepers, polluting the environment, were replaced with the concrete sleepers. For low-density areas, 5 million wooden sleepers impregnated with environmentally friendly antiseptics were purchased.
According to the investment program of the Federal Passenger JSC, it is supposed to purchase 501 passenger cars with ecologically sound closed-type toilets with storage tanks. And, with the repair of passenger cars, it is planned to equip another 60 cars with such ecologically clean toilets, which prevent bacterial contamination of the railroad tracks and surrounding territory.

– Such concepts as ‘green investments’, ‘green technology’, ‘green economy’, ‘green energetics’ and ‘green logistics’ have come into our daily life in recent years. Are these real programs or an attempt to follow the fashion?

– The peculiarities of railroad transport determine its role in ‘green logistics’, while the share of RZD in environmental pollution is less than 1%.
The economic and environmental development objectives of the company are interrelated.
The ecological strategy of RZD to 2015 and on to 2030 provides the reduction of negative environmental impact by 35% and 70%, respectively. This strategy has been hailed by the Ministry of Natural Resources and Environment of Russia as the best environmental project.
In 2010, more than $ 40 million has been allotted for these purposes. The parameters, defined by the strategy will be achieved by 2015. In fact, in 2008-2010, RZD achieved figures which outstrip in two to three-fold the figures that were forecasted on a number of parameters.

Alternative fuel
– Are alternative fuel sources used in RZD?

– Russian Railways JSC is one of the largest energy consumers. It accounts for 5-6% of the electricity produced each year in Russia and up to 6% of diesel fuel. In accordance with the Energy strategy of Russia, the company is tasked with the replacement of 30% of diesel fuel, used for autonomous locomotives, with natural gas by 2030. 
As part of realising the Strategy the world’s first main cargo locomotive with gas turbine, GT1-001, running on a liquefied natural gas with a capacity of 8,300 kW has been developed. The high-performance characteristics of this locomotive made it possible to drag a 15,000-ton train, which is a world record for autonomous locomotives with one power plant. 
In this case, the emissions of the gas turbine plant are less than a fifth of its permitted amount, according to regulatory requirements for diesel engines of the EU Directive of 2012. And its external noise level meets national standars requirements. The life cycle cost of such a locomotive is about 20% lower in comparison with main diesel locomotive. Cryogenic technology that has been used in its creation can also be used for other transport modes.
Testing of an experimental shunter with an electronic system of gas supply to the engine (Czechoslovak Shunter with electric transmission) and the replacement of diesel fuel up to 60% has been continued. This is a prototype diesel locomotive designed for use on the Sochi-Adler line from 2013. Reduction of exhaust fumes is up to 30%, and reduction of emissions in general is up to 50%.

– How is the adoption of energy-saving technologies going? Can it be considered part of the environmental program?

– In 2010, 311 million kWh of electricity and 23,800 tons of diesel fuel has been saved on traction and 128.2 million kWh of electricity and 8,700 tons of diesel fuel on other purposes.
In general, energy used for freight transportation from the beginning of 2004 decreased by 4.2% (from 7.78 tons to 7.46 tons of fuel per 1 million kilometers). 1,3 billion kWh of electricity and more than 100,000 tons of diesel fuel has been saved. This means that, during this period, Russian railways reduced greenhouse gas emissions by more than 625,000 tons each year.

To the question Recipes for saving energy
As concerns the energy saving question, a unique project to create an automated system for commercial metering of electrical energy (ASCME) has been developed at RZD. It will make it  to reduce the technological losses of electricity by controlling the balances over the objects and to reduce the cost of electricity purchasing on the wholesale market. Almost 20,000 metering points at traction substations and more than 115,000 metering points at transformer substations are included in the net. 
Another promising project - an automated system of complex accounting of energy resources, based on systems that collect and process information from energy metering devices. As a result of using these systems, annual energy savings of more than one percent per year have been achieved.
As part of the energy saving program, passenger trains have been transferred to an optimal schedule. This could happen due to the  possibilities of system of automatic control. Schedules were adopted on all major passenger lines that made it possible to save an additional 50 million kWh and to reduce greenhouse gas emissions by 135,000 tons in 2010.
There are a number of pilot projects to implement LED lighting systems at various facilities and others to implement optical systems in railway automation. As a result, power consumption at a number of facilities decreased by 60%. In 2010, investment in the implementation of LED technology grew five-fold. There is considerable potential for fuel economy in the sphere of execution of shunting operations at stations. This is a separate area of energy-saving policy at RZD.
Taking into account global experience, an experimental locomotive prototype with a double-diesel power plant based on the serial Czechoslovak Shunter with electric transmission has been developed. It can provide fuel savings (in comparison with serial Shunter) of at least 10%.
There is also the development of an energy-efficient shunting locomotive with a hybrid power plant for usage in light shunting at RZD. Usage of one of such locomotive instead of a Czechoslovak Shunter will reduce fuel consumption and emissions of harmful substances by a third.
Other innovative energy-saving projects include replicating automated catalytic cogeneration plants. The first automated catalytic cogeneration plant (3,5 MW) in Russia is working successfully at Artyshta station on the West-Siberian railway. The scientific achievements of the Institute of Catalysis of the Siberian Branch of RAS formed the basis of its development. An important advantage of the plant is its ability to burn effectively solid fuels of low quality and different types of waste containing combustible components. Efficiency of the plant is up to 95% and this provides a low level of emissions into the atmosphere.
Alternative energy sources are also being implemented in the transportation process. The first Russian power plant to run on hydrogen fuel has operated for more than a year. It is used as a reserve power supply device for railway automatics and communication facilities. Fuel capacity is 300 cubic metres of gaseous hydrogen at high pressure monoblocks. The maximum power of the plant is 15 kW. A combined solar water-heating plant is used for heating and hot water supply of industrial buildings and it has been adopted on five roads. Its usage made it possible to reduce emissions of greenhouse gases by more than 1,000 tons. Greenhouse gas reductions will hit 2.7 million tons by 2015.
As you can see, strategic purposes of Russian Railways JSC involve multi-faceted work on the reduction of man’s impact on the environment. 
Interviewed By Andrey Lazarev 
    [~DETAIL_TEXT] => 
Total monitoring
– Mr Cherkasov, how is the ecological situation controlled at Russian Railways JSC? Is there monitoring?

– RZD pays much attention to the question of environmental protection and conducts ongoing monitoring of infrastructure and locomotives. This includes usage of environmental laboratories. Controls on the emission of pollutants into the atmosphere and water bodies as well as soil pollution control are exercised by 56 stationary environmental laboratories, 9 laboratory wagons and 55 road-based laboratories.
A high-tech 21st century laboratory train, which can solve complex issues, has been put together. Tasks include monitoring of the environment in the construction zone of Olympic venues in Sochi. An important function of the train traffic is control over execution of International environmental agreements, which are the basis for the quotas on greenhouse gases.
Together with the Institute of Atmospheric Physics at the Russian Academy of Sciences a complex study of air pollution in cities and industrial regions was held. The influence of different sectors and areas of economic activity on nature was evaluated, including the influence of railroad transport operations. Local sources of air pollution were detected as well as the pollution of cities and industrial centres. The size of the zone could be several hundred kilometres.
RZD monitors the environment with the help of satellite technologies, based on global satellite navigation systems GLONASS/GPS and satellite remote sensing systems. 
The usage of such technical means is aimed at monitoring potentially dangerous natural and man-made processes, which can have a negative impact on the railway tracks and other infrastructure and lead to serious environmental consequences. This is the real way to change from reaction and taking action to eliminate the effects of adverse events - natural or man-made – that are already happening and to organise their permanent monitoring as well as forecasting their development. As a result, there is the transition to implementation of preventative measures on a scheduled basis, which provides a significant reduction of the risks and costs in comparison with traditional methods.
RZD continues to conduct an environmental audit of the railways and other branches in the sphere of environmental management and environmental protection in order to assess compliance with the environmental legislation of the Russian Federation and the international standards of environmental management system GOST R ISO 14001. An independent audit company’s assessment of RZD and the implementation of appropriate recommendations developed by the auditors will make it possible to certify the environmental management system of RZD in compliance with international standard GOST R ISO 14001.
An important component of the company’s environmental safety system is also the monitoring of transportation of special and dangerous cargo, based on the GLONASS satellite system and a digital communication system. In case of emergencies during dangerous goods transportation, action will be taken and means provided to eliminate the risks and to minimise environmental damage.

– How is the struggle for reducing rail transport waste emission going?

– Nowadays, RZD’s share in the emissions of harmful substances into the atmosphere, waste water discharged into water bodies and waste generation does not exceed 1%. I think that the rate of reduction of anthropogenic impact and its qualitative component are clearly not inadequate for the company at the moment.
State environmental policy and the actual environmental protection situation require the development and introduction of new innovative solutions in this area as well as energy-saving technologies and increasing energy efficiency, which guarantee the ecological safety of the company. The company has developed ‘The program of implementation of Russian Railways JSC environmental strategy’. Investment for its realisation exceed 1.4 billion rubles, while operating costs are 459 million rubles.
In 2010, completion of some of the tasks in the program made it possible to neutralise about 110 tons of harmful production and consumption products and to reduce greenhouse gas emissions by 346,000 tons. Some 62 hectares of new protective plantation were also created and 93,000 trees and bushes were planted along railway tracks. 
In 2011, it is planned to reduce harmful emissions by 1,500 tons, to reduce the discharge of polluted wastewater into the environment by 3.4 million cubic metres, and to reduce greenhouse gas emissions by 106 tons. 
At the expense of technical re-equipment of the company, 141 new locomotives with improved environmental performance were built. And with the repair of locomotives, 110 out-of-date diesel engines were replaced with modern Russian-made D-49 engines. They reduce fuel consumption by 15% and improve the environmental performance by 30%. 3,200 km of track with wooden sleepers, polluting the environment, were replaced with the concrete sleepers. For low-density areas, 5 million wooden sleepers impregnated with environmentally friendly antiseptics were purchased.
According to the investment program of the Federal Passenger JSC, it is supposed to purchase 501 passenger cars with ecologically sound closed-type toilets with storage tanks. And, with the repair of passenger cars, it is planned to equip another 60 cars with such ecologically clean toilets, which prevent bacterial contamination of the railroad tracks and surrounding territory.

– Such concepts as ‘green investments’, ‘green technology’, ‘green economy’, ‘green energetics’ and ‘green logistics’ have come into our daily life in recent years. Are these real programs or an attempt to follow the fashion?

– The peculiarities of railroad transport determine its role in ‘green logistics’, while the share of RZD in environmental pollution is less than 1%.
The economic and environmental development objectives of the company are interrelated.
The ecological strategy of RZD to 2015 and on to 2030 provides the reduction of negative environmental impact by 35% and 70%, respectively. This strategy has been hailed by the Ministry of Natural Resources and Environment of Russia as the best environmental project.
In 2010, more than $ 40 million has been allotted for these purposes. The parameters, defined by the strategy will be achieved by 2015. In fact, in 2008-2010, RZD achieved figures which outstrip in two to three-fold the figures that were forecasted on a number of parameters.

Alternative fuel
– Are alternative fuel sources used in RZD?

– Russian Railways JSC is one of the largest energy consumers. It accounts for 5-6% of the electricity produced each year in Russia and up to 6% of diesel fuel. In accordance with the Energy strategy of Russia, the company is tasked with the replacement of 30% of diesel fuel, used for autonomous locomotives, with natural gas by 2030. 
As part of realising the Strategy the world’s first main cargo locomotive with gas turbine, GT1-001, running on a liquefied natural gas with a capacity of 8,300 kW has been developed. The high-performance characteristics of this locomotive made it possible to drag a 15,000-ton train, which is a world record for autonomous locomotives with one power plant. 
In this case, the emissions of the gas turbine plant are less than a fifth of its permitted amount, according to regulatory requirements for diesel engines of the EU Directive of 2012. And its external noise level meets national standars requirements. The life cycle cost of such a locomotive is about 20% lower in comparison with main diesel locomotive. Cryogenic technology that has been used in its creation can also be used for other transport modes.
Testing of an experimental shunter with an electronic system of gas supply to the engine (Czechoslovak Shunter with electric transmission) and the replacement of diesel fuel up to 60% has been continued. This is a prototype diesel locomotive designed for use on the Sochi-Adler line from 2013. Reduction of exhaust fumes is up to 30%, and reduction of emissions in general is up to 50%.

– How is the adoption of energy-saving technologies going? Can it be considered part of the environmental program?

– In 2010, 311 million kWh of electricity and 23,800 tons of diesel fuel has been saved on traction and 128.2 million kWh of electricity and 8,700 tons of diesel fuel on other purposes.
In general, energy used for freight transportation from the beginning of 2004 decreased by 4.2% (from 7.78 tons to 7.46 tons of fuel per 1 million kilometers). 1,3 billion kWh of electricity and more than 100,000 tons of diesel fuel has been saved. This means that, during this period, Russian railways reduced greenhouse gas emissions by more than 625,000 tons each year.

To the question Recipes for saving energy
As concerns the energy saving question, a unique project to create an automated system for commercial metering of electrical energy (ASCME) has been developed at RZD. It will make it  to reduce the technological losses of electricity by controlling the balances over the objects and to reduce the cost of electricity purchasing on the wholesale market. Almost 20,000 metering points at traction substations and more than 115,000 metering points at transformer substations are included in the net. 
Another promising project - an automated system of complex accounting of energy resources, based on systems that collect and process information from energy metering devices. As a result of using these systems, annual energy savings of more than one percent per year have been achieved.
As part of the energy saving program, passenger trains have been transferred to an optimal schedule. This could happen due to the  possibilities of system of automatic control. Schedules were adopted on all major passenger lines that made it possible to save an additional 50 million kWh and to reduce greenhouse gas emissions by 135,000 tons in 2010.
There are a number of pilot projects to implement LED lighting systems at various facilities and others to implement optical systems in railway automation. As a result, power consumption at a number of facilities decreased by 60%. In 2010, investment in the implementation of LED technology grew five-fold. There is considerable potential for fuel economy in the sphere of execution of shunting operations at stations. This is a separate area of energy-saving policy at RZD.
Taking into account global experience, an experimental locomotive prototype with a double-diesel power plant based on the serial Czechoslovak Shunter with electric transmission has been developed. It can provide fuel savings (in comparison with serial Shunter) of at least 10%.
There is also the development of an energy-efficient shunting locomotive with a hybrid power plant for usage in light shunting at RZD. Usage of one of such locomotive instead of a Czechoslovak Shunter will reduce fuel consumption and emissions of harmful substances by a third.
Other innovative energy-saving projects include replicating automated catalytic cogeneration plants. The first automated catalytic cogeneration plant (3,5 MW) in Russia is working successfully at Artyshta station on the West-Siberian railway. The scientific achievements of the Institute of Catalysis of the Siberian Branch of RAS formed the basis of its development. An important advantage of the plant is its ability to burn effectively solid fuels of low quality and different types of waste containing combustible components. Efficiency of the plant is up to 95% and this provides a low level of emissions into the atmosphere.
Alternative energy sources are also being implemented in the transportation process. The first Russian power plant to run on hydrogen fuel has operated for more than a year. It is used as a reserve power supply device for railway automatics and communication facilities. Fuel capacity is 300 cubic metres of gaseous hydrogen at high pressure monoblocks. The maximum power of the plant is 15 kW. A combined solar water-heating plant is used for heating and hot water supply of industrial buildings and it has been adopted on five roads. Its usage made it possible to reduce emissions of greenhouse gases by more than 1,000 tons. Greenhouse gas reductions will hit 2.7 million tons by 2015.
As you can see, strategic purposes of Russian Railways JSC involve multi-faceted work on the reduction of man’s impact on the environment. 
Interviewed By Andrey Lazarev 
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Learning from experienced colleagues 
The transport and logistics companies of developed countries invest a great deal in green technologies. So they reduce costs and at the same time improve their image. To buy vehicles with low fuel consumption, change to alternative sources of energy, control toxic materials and suggest to customers to invest in “clean” decisions are the trends now. Such concern for the environment isn’t very popular in Russia yet, but its influence is being felt. 
The key differences between logistics development in Russian markets and those in Western Europe or in  North America are a pretty large space for new market players, low level of competition penetration, weak geographical capture and a very short list of assignable services. Today the main business of logistics companies in Russia and other CIS countries is banal cargo forwarding, in other words it consists of looking for partners in transport companies and cargo-owners and acting as an intermediary between these categories. 
The use of such industry practices as logistics outsourcing, supply chain management, logistics auditing and adoption of modern IT methods is not very popular now. In this sense there is a space for Russian business to advance. It learns to use the new technologies. And caring for environment isn’t first on the list of main goals.
In developed countries, companies realise their green ideas systematically. Every day they work on these ideas, develop and put into practice their industrial, financial, human resources and other strategies. The implementation of new clean technologies is for them as routine as production and service selling. And it’s also a very effective marketing tool. These are all cardinal differences between the young Russian branch of the well-established global tree.

Russia joins the club too 
Environmental issues with reference to transport in Russia emerge often. At a corporate level, when a company has a concrete ecological initiative without any commercial interest which becomes part of its marketing strategy, we can speak here about initial stages. We don’t have collective cleaning days, collection of waste paper and press releases about trees being planted in a solemn atmosphere. So we can speak about only one deserving initiative. At the beginning of the autumn, DHL started up GOGREEN service. 
The whole point is that the company becomes from the customer 3% more for its service , what DHL counts off the CO2 volumes of transportation of each cargo (from the moment it is received until delivery). Then the company compensates for this with investment into eco friendly programs all over the world. Such projects include alternative fuel development, use of solar energy and reforestation. It was explained in DHL that GOGREEN is starting in Russia now and results would take several months. But we can suppose now that some customers will use this service at least for PR reasons.
Every participant in this program gets a certificate every year with information about the volume of carbonic acid gas that was neutralized thanks to them. It’s not a bad document from the point of view of reputation. According to Pavel Volkov, the Administrative Director of DHL Express in Russia, the program of climate protection is a key priority for Deutsche Post DHL. 
The GOGREEN service, which was suggested three years ago, was paid in 2009 by customers on more than 700 million trips. “Russian customers take an interest in eco friendly logistic decisions and we are hastening to introduce foreign experience,” notes Volkov. “The world is changing, and if the company does not change too, we risk losing the competitive fight.”
According to the Director of multimodal direction STS\RLS Logistics Alexey Dorokhov, the ecological aspects of activities are actually for those logistics companies that work or plan to work with foreign customers. 
In tender agreements for logistics services, the clients are to specify how the company takes part in social life, how it cares about the social community of the company’s workers and about the environment. And you should specify your practice in this sphere not just with formal tick boxes. “For example we always note, that we try to load our trucks as much as possible on the way back, which reduces mileage and the volume of exhaust emissions. The same goal is aimed for by the use of vehicles with engine no older than a fixed age,’ notes the expert.
Konstantin Piskun, press attaché of the Expert Council at the State Duma Committee for budget and taxes, has many years’ experience in transport. He said, for domestic companies the actual questions are ones of economic efficiency. “I’ve never met customers who note the need to follow eco standards in a supply chain project. My colleagues have also not heard about such requirements,” notes Mr Piskun. 
In his opinion the main criteria, by which logistics operators on the domestic market are guided are time and price of cargo, and the correlation depends on the customer’s priority. Even in the 21st century, questions about environmental protection are still exotic things in Russia. “The reason is underdeveloped eco awareness, and as a consequence low economic stimulus for the observance of prescribed eco standards,” said Mr Piskun.

Reputation is the engine of eco awareness 
But according to Alexey Dorokhov, sooner or later, as the market develops, ecological problems will enter into the practice of Russian logistics operators.
“In developed countries the transport and logistics companies have approximately similar services and prices, the sector participants are rather alike. But it’s necessary to be notable for something, that’s why care for the environment is emphasised,’ he said. ‘And it works, because reputation and the social responsibility of company play an important role in business. Now in Russia you can compete thanks to service, price, rate and other aspects, but the market will be saturated with high-quality options in time, and that means eco PR will become important.”
The Vice President of the Europe-Asian transport Union Yuriy Shcherbanin remembers a story about restrictions on aviation engine noise, which were instituted by European countries. Our aviation companies decided at that time, they could decide this problem without any technical measures to reduce the noise. But it was found that the European requirements should have been implemented because traditional Russian methods to achieve the agreement didn’t work. 
“Taking into account that logistics companies in Russia service for the most part foreign trade, and that this trade is linked to the EU, it is important to accept the western standards of business. They include the search for and adoption of new technologies, which reduce the impact on the environment. This is the reality of tomorrow, and domestic companies should get ready for it,” thinks Mr Shcherbanin.
One of the main areas for bringing Russian logistics up to international standard will be the further reduction of vehicle emissions. There is already some impetus in this sphere: the Russian government is making tougher demands on vehicle standards. Trucks with engines lower than Euro-3 standard are restricted in their transportation. Also, implementation of taxes on trucks with a weight of over 12 tons is being considered. 
By Ivan Stupachenko
    [~DETAIL_TEXT] => 
Learning from experienced colleagues 
The transport and logistics companies of developed countries invest a great deal in green technologies. So they reduce costs and at the same time improve their image. To buy vehicles with low fuel consumption, change to alternative sources of energy, control toxic materials and suggest to customers to invest in “clean” decisions are the trends now. Such concern for the environment isn’t very popular in Russia yet, but its influence is being felt. 
The key differences between logistics development in Russian markets and those in Western Europe or in  North America are a pretty large space for new market players, low level of competition penetration, weak geographical capture and a very short list of assignable services. Today the main business of logistics companies in Russia and other CIS countries is banal cargo forwarding, in other words it consists of looking for partners in transport companies and cargo-owners and acting as an intermediary between these categories. 
The use of such industry practices as logistics outsourcing, supply chain management, logistics auditing and adoption of modern IT methods is not very popular now. In this sense there is a space for Russian business to advance. It learns to use the new technologies. And caring for environment isn’t first on the list of main goals.
In developed countries, companies realise their green ideas systematically. Every day they work on these ideas, develop and put into practice their industrial, financial, human resources and other strategies. The implementation of new clean technologies is for them as routine as production and service selling. And it’s also a very effective marketing tool. These are all cardinal differences between the young Russian branch of the well-established global tree.

Russia joins the club too 
Environmental issues with reference to transport in Russia emerge often. At a corporate level, when a company has a concrete ecological initiative without any commercial interest which becomes part of its marketing strategy, we can speak here about initial stages. We don’t have collective cleaning days, collection of waste paper and press releases about trees being planted in a solemn atmosphere. So we can speak about only one deserving initiative. At the beginning of the autumn, DHL started up GOGREEN service. 
The whole point is that the company becomes from the customer 3% more for its service , what DHL counts off the CO2 volumes of transportation of each cargo (from the moment it is received until delivery). Then the company compensates for this with investment into eco friendly programs all over the world. Such projects include alternative fuel development, use of solar energy and reforestation. It was explained in DHL that GOGREEN is starting in Russia now and results would take several months. But we can suppose now that some customers will use this service at least for PR reasons.
Every participant in this program gets a certificate every year with information about the volume of carbonic acid gas that was neutralized thanks to them. It’s not a bad document from the point of view of reputation. According to Pavel Volkov, the Administrative Director of DHL Express in Russia, the program of climate protection is a key priority for Deutsche Post DHL. 
The GOGREEN service, which was suggested three years ago, was paid in 2009 by customers on more than 700 million trips. “Russian customers take an interest in eco friendly logistic decisions and we are hastening to introduce foreign experience,” notes Volkov. “The world is changing, and if the company does not change too, we risk losing the competitive fight.”
According to the Director of multimodal direction STS\RLS Logistics Alexey Dorokhov, the ecological aspects of activities are actually for those logistics companies that work or plan to work with foreign customers. 
In tender agreements for logistics services, the clients are to specify how the company takes part in social life, how it cares about the social community of the company’s workers and about the environment. And you should specify your practice in this sphere not just with formal tick boxes. “For example we always note, that we try to load our trucks as much as possible on the way back, which reduces mileage and the volume of exhaust emissions. The same goal is aimed for by the use of vehicles with engine no older than a fixed age,’ notes the expert.
Konstantin Piskun, press attaché of the Expert Council at the State Duma Committee for budget and taxes, has many years’ experience in transport. He said, for domestic companies the actual questions are ones of economic efficiency. “I’ve never met customers who note the need to follow eco standards in a supply chain project. My colleagues have also not heard about such requirements,” notes Mr Piskun. 
In his opinion the main criteria, by which logistics operators on the domestic market are guided are time and price of cargo, and the correlation depends on the customer’s priority. Even in the 21st century, questions about environmental protection are still exotic things in Russia. “The reason is underdeveloped eco awareness, and as a consequence low economic stimulus for the observance of prescribed eco standards,” said Mr Piskun.

Reputation is the engine of eco awareness 
But according to Alexey Dorokhov, sooner or later, as the market develops, ecological problems will enter into the practice of Russian logistics operators.
“In developed countries the transport and logistics companies have approximately similar services and prices, the sector participants are rather alike. But it’s necessary to be notable for something, that’s why care for the environment is emphasised,’ he said. ‘And it works, because reputation and the social responsibility of company play an important role in business. Now in Russia you can compete thanks to service, price, rate and other aspects, but the market will be saturated with high-quality options in time, and that means eco PR will become important.”
The Vice President of the Europe-Asian transport Union Yuriy Shcherbanin remembers a story about restrictions on aviation engine noise, which were instituted by European countries. Our aviation companies decided at that time, they could decide this problem without any technical measures to reduce the noise. But it was found that the European requirements should have been implemented because traditional Russian methods to achieve the agreement didn’t work. 
“Taking into account that logistics companies in Russia service for the most part foreign trade, and that this trade is linked to the EU, it is important to accept the western standards of business. They include the search for and adoption of new technologies, which reduce the impact on the environment. This is the reality of tomorrow, and domestic companies should get ready for it,” thinks Mr Shcherbanin.
One of the main areas for bringing Russian logistics up to international standard will be the further reduction of vehicle emissions. There is already some impetus in this sphere: the Russian government is making tougher demands on vehicle standards. Trucks with engines lower than Euro-3 standard are restricted in their transportation. Also, implementation of taxes on trucks with a weight of over 12 tons is being considered. 
By Ivan Stupachenko
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Learning from experienced colleagues 
The transport and logistics companies of developed countries invest a great deal in green technologies. So they reduce costs and at the same time improve their image. To buy vehicles with low fuel consumption, change to alternative sources of energy, control toxic materials and suggest to customers to invest in “clean” decisions are the trends now. Such concern for the environment isn’t very popular in Russia yet, but its influence is being felt. 
The key differences between logistics development in Russian markets and those in Western Europe or in  North America are a pretty large space for new market players, low level of competition penetration, weak geographical capture and a very short list of assignable services. Today the main business of logistics companies in Russia and other CIS countries is banal cargo forwarding, in other words it consists of looking for partners in transport companies and cargo-owners and acting as an intermediary between these categories. 
The use of such industry practices as logistics outsourcing, supply chain management, logistics auditing and adoption of modern IT methods is not very popular now. In this sense there is a space for Russian business to advance. It learns to use the new technologies. And caring for environment isn’t first on the list of main goals.
In developed countries, companies realise their green ideas systematically. Every day they work on these ideas, develop and put into practice their industrial, financial, human resources and other strategies. The implementation of new clean technologies is for them as routine as production and service selling. And it’s also a very effective marketing tool. These are all cardinal differences between the young Russian branch of the well-established global tree.

Russia joins the club too 
Environmental issues with reference to transport in Russia emerge often. At a corporate level, when a company has a concrete ecological initiative without any commercial interest which becomes part of its marketing strategy, we can speak here about initial stages. We don’t have collective cleaning days, collection of waste paper and press releases about trees being planted in a solemn atmosphere. So we can speak about only one deserving initiative. At the beginning of the autumn, DHL started up GOGREEN service. 
The whole point is that the company becomes from the customer 3% more for its service , what DHL counts off the CO2 volumes of transportation of each cargo (from the moment it is received until delivery). Then the company compensates for this with investment into eco friendly programs all over the world. Such projects include alternative fuel development, use of solar energy and reforestation. It was explained in DHL that GOGREEN is starting in Russia now and results would take several months. But we can suppose now that some customers will use this service at least for PR reasons.
Every participant in this program gets a certificate every year with information about the volume of carbonic acid gas that was neutralized thanks to them. It’s not a bad document from the point of view of reputation. According to Pavel Volkov, the Administrative Director of DHL Express in Russia, the program of climate protection is a key priority for Deutsche Post DHL. 
The GOGREEN service, which was suggested three years ago, was paid in 2009 by customers on more than 700 million trips. “Russian customers take an interest in eco friendly logistic decisions and we are hastening to introduce foreign experience,” notes Volkov. “The world is changing, and if the company does not change too, we risk losing the competitive fight.”
According to the Director of multimodal direction STS\RLS Logistics Alexey Dorokhov, the ecological aspects of activities are actually for those logistics companies that work or plan to work with foreign customers. 
In tender agreements for logistics services, the clients are to specify how the company takes part in social life, how it cares about the social community of the company’s workers and about the environment. And you should specify your practice in this sphere not just with formal tick boxes. “For example we always note, that we try to load our trucks as much as possible on the way back, which reduces mileage and the volume of exhaust emissions. The same goal is aimed for by the use of vehicles with engine no older than a fixed age,’ notes the expert.
Konstantin Piskun, press attaché of the Expert Council at the State Duma Committee for budget and taxes, has many years’ experience in transport. He said, for domestic companies the actual questions are ones of economic efficiency. “I’ve never met customers who note the need to follow eco standards in a supply chain project. My colleagues have also not heard about such requirements,” notes Mr Piskun. 
In his opinion the main criteria, by which logistics operators on the domestic market are guided are time and price of cargo, and the correlation depends on the customer’s priority. Even in the 21st century, questions about environmental protection are still exotic things in Russia. “The reason is underdeveloped eco awareness, and as a consequence low economic stimulus for the observance of prescribed eco standards,” said Mr Piskun.

Reputation is the engine of eco awareness 
But according to Alexey Dorokhov, sooner or later, as the market develops, ecological problems will enter into the practice of Russian logistics operators.
“In developed countries the transport and logistics companies have approximately similar services and prices, the sector participants are rather alike. But it’s necessary to be notable for something, that’s why care for the environment is emphasised,’ he said. ‘And it works, because reputation and the social responsibility of company play an important role in business. Now in Russia you can compete thanks to service, price, rate and other aspects, but the market will be saturated with high-quality options in time, and that means eco PR will become important.”
The Vice President of the Europe-Asian transport Union Yuriy Shcherbanin remembers a story about restrictions on aviation engine noise, which were instituted by European countries. Our aviation companies decided at that time, they could decide this problem without any technical measures to reduce the noise. But it was found that the European requirements should have been implemented because traditional Russian methods to achieve the agreement didn’t work. 
“Taking into account that logistics companies in Russia service for the most part foreign trade, and that this trade is linked to the EU, it is important to accept the western standards of business. They include the search for and adoption of new technologies, which reduce the impact on the environment. This is the reality of tomorrow, and domestic companies should get ready for it,” thinks Mr Shcherbanin.
One of the main areas for bringing Russian logistics up to international standard will be the further reduction of vehicle emissions. There is already some impetus in this sphere: the Russian government is making tougher demands on vehicle standards. Trucks with engines lower than Euro-3 standard are restricted in their transportation. Also, implementation of taxes on trucks with a weight of over 12 tons is being considered. 
By Ivan Stupachenko
    [~DETAIL_TEXT] => 
Learning from experienced colleagues 
The transport and logistics companies of developed countries invest a great deal in green technologies. So they reduce costs and at the same time improve their image. To buy vehicles with low fuel consumption, change to alternative sources of energy, control toxic materials and suggest to customers to invest in “clean” decisions are the trends now. Such concern for the environment isn’t very popular in Russia yet, but its influence is being felt. 
The key differences between logistics development in Russian markets and those in Western Europe or in  North America are a pretty large space for new market players, low level of competition penetration, weak geographical capture and a very short list of assignable services. Today the main business of logistics companies in Russia and other CIS countries is banal cargo forwarding, in other words it consists of looking for partners in transport companies and cargo-owners and acting as an intermediary between these categories. 
The use of such industry practices as logistics outsourcing, supply chain management, logistics auditing and adoption of modern IT methods is not very popular now. In this sense there is a space for Russian business to advance. It learns to use the new technologies. And caring for environment isn’t first on the list of main goals.
In developed countries, companies realise their green ideas systematically. Every day they work on these ideas, develop and put into practice their industrial, financial, human resources and other strategies. The implementation of new clean technologies is for them as routine as production and service selling. And it’s also a very effective marketing tool. These are all cardinal differences between the young Russian branch of the well-established global tree.

Russia joins the club too 
Environmental issues with reference to transport in Russia emerge often. At a corporate level, when a company has a concrete ecological initiative without any commercial interest which becomes part of its marketing strategy, we can speak here about initial stages. We don’t have collective cleaning days, collection of waste paper and press releases about trees being planted in a solemn atmosphere. So we can speak about only one deserving initiative. At the beginning of the autumn, DHL started up GOGREEN service. 
The whole point is that the company becomes from the customer 3% more for its service , what DHL counts off the CO2 volumes of transportation of each cargo (from the moment it is received until delivery). Then the company compensates for this with investment into eco friendly programs all over the world. Such projects include alternative fuel development, use of solar energy and reforestation. It was explained in DHL that GOGREEN is starting in Russia now and results would take several months. But we can suppose now that some customers will use this service at least for PR reasons.
Every participant in this program gets a certificate every year with information about the volume of carbonic acid gas that was neutralized thanks to them. It’s not a bad document from the point of view of reputation. According to Pavel Volkov, the Administrative Director of DHL Express in Russia, the program of climate protection is a key priority for Deutsche Post DHL. 
The GOGREEN service, which was suggested three years ago, was paid in 2009 by customers on more than 700 million trips. “Russian customers take an interest in eco friendly logistic decisions and we are hastening to introduce foreign experience,” notes Volkov. “The world is changing, and if the company does not change too, we risk losing the competitive fight.”
According to the Director of multimodal direction STS\RLS Logistics Alexey Dorokhov, the ecological aspects of activities are actually for those logistics companies that work or plan to work with foreign customers. 
In tender agreements for logistics services, the clients are to specify how the company takes part in social life, how it cares about the social community of the company’s workers and about the environment. And you should specify your practice in this sphere not just with formal tick boxes. “For example we always note, that we try to load our trucks as much as possible on the way back, which reduces mileage and the volume of exhaust emissions. The same goal is aimed for by the use of vehicles with engine no older than a fixed age,’ notes the expert.
Konstantin Piskun, press attaché of the Expert Council at the State Duma Committee for budget and taxes, has many years’ experience in transport. He said, for domestic companies the actual questions are ones of economic efficiency. “I’ve never met customers who note the need to follow eco standards in a supply chain project. My colleagues have also not heard about such requirements,” notes Mr Piskun. 
In his opinion the main criteria, by which logistics operators on the domestic market are guided are time and price of cargo, and the correlation depends on the customer’s priority. Even in the 21st century, questions about environmental protection are still exotic things in Russia. “The reason is underdeveloped eco awareness, and as a consequence low economic stimulus for the observance of prescribed eco standards,” said Mr Piskun.

Reputation is the engine of eco awareness 
But according to Alexey Dorokhov, sooner or later, as the market develops, ecological problems will enter into the practice of Russian logistics operators.
“In developed countries the transport and logistics companies have approximately similar services and prices, the sector participants are rather alike. But it’s necessary to be notable for something, that’s why care for the environment is emphasised,’ he said. ‘And it works, because reputation and the social responsibility of company play an important role in business. Now in Russia you can compete thanks to service, price, rate and other aspects, but the market will be saturated with high-quality options in time, and that means eco PR will become important.”
The Vice President of the Europe-Asian transport Union Yuriy Shcherbanin remembers a story about restrictions on aviation engine noise, which were instituted by European countries. Our aviation companies decided at that time, they could decide this problem without any technical measures to reduce the noise. But it was found that the European requirements should have been implemented because traditional Russian methods to achieve the agreement didn’t work. 
“Taking into account that logistics companies in Russia service for the most part foreign trade, and that this trade is linked to the EU, it is important to accept the western standards of business. They include the search for and adoption of new technologies, which reduce the impact on the environment. This is the reality of tomorrow, and domestic companies should get ready for it,” thinks Mr Shcherbanin.
One of the main areas for bringing Russian logistics up to international standard will be the further reduction of vehicle emissions. There is already some impetus in this sphere: the Russian government is making tougher demands on vehicle standards. Trucks with engines lower than Euro-3 standard are restricted in their transportation. Also, implementation of taxes on trucks with a weight of over 12 tons is being considered. 
By Ivan Stupachenko
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On the Most Important Things
– Mr Yakunin, could you please estimate the company’s main results in 2010 from the viewpoint of RZD’s work efficiency and the sector’s development?

– I consider the last year the stabilisation period. In 2009, loading volume fell by 15%, and in 2010 it grew by 8.8%. Neither our industry nor the railways have reached the pre-crisis level yet, but the growth rates were higher than we planned. It allowed us to spend additional money on our investment programme. Also, I would like to name the following results, which characterise our work. Revenue from transportation grew by 13%, and exploitation expenditure increased by 8% only. 
At the same time, the transportation cost price rose by 5.7%, which was below inflation. Now I would like to stop discussing the statistics, which have been already published, and speak about the most important, from my viewpoint, things. I think that the strategy and tactics we chose to work under crisis and post-crisis conditions have justified its correctness. And the results of the company’s activity prove it. 
We fulfilled and overfulfilled production plans, provided stable and profitable work, carried out basic investment projects, realised a number of system measures in the framework of the railway structural reform in 2010. RZD is a natural part of our society and works for people’s benefit. At the same time, the condition if the Russian economy depends on the state of this infrastructure company. We are striving to become a real client-oriented company and every year we improve both passenger and freight transportation services. 
Also, we justifiably name RZD a socially-oriented company. Despite some drawbacks, there is every reason to say that our work was a success last year, in other words, we have increased the loading volume, got through all difficulties and are moving forward. Simultaneously, we see how large the volume is of the tasks we are to complete. 

– Is there any problem or target which comes to the fore and requires a lot of attention?

– Naturally. It is the prospects for infrastructure development, to be more exact, insufficient finance for our infrastructure business. As you know, in the post-Soviet period, the prices for industrial production have been growing faster than railway tariffs. Considering the current tariff system, RZD’s own means are enough to fulfill just half of its needs in terms of investment programmes. 
Is there a way out? As usual, it is a complex solution to the problem, or rather a ‘clever solution’. Let’s take the tariff policy. Last year, the state regulators adopted new methods to define economically reasonable tariff levels. We had been waiting for it for a long time. And the calculations made in accordance with the methods showed that, to compensate the company’s expenditure, for it to be able to develop properly, tariff indexation in 2012 is to amount to 23% in comparison with 2011. 
You see, these are not our price ambitions, these are calculations made in accordance with the empirically-based RAB methods adopted by the Federal Tariff Service, and similar methods are widely used in international practice. Although, we say, if the government does not consider such indexation possible for macro-economic reasons, the missed sum may be given as direct finance for specific infrastructure projects. 
Also, in the framework of the Target model of the cargo railway transportation market, the notion of a ‘network contract’ was implemented. On the basis of the contract, the state pays a part of the expenditure on railway infrastructure maintenance and development. This practice should be applied and developed. To adjust the conditions for the competition of railway and road transport, in our opinion, it is worth taking a fee for heavy vehicles running on the motorways (in fact, it should be done regardless of the relation between the railway and the road transport.) 
Also, there is such an investment instrument as infrastructure obligations. It is rather popular around the world. Nowadays, we are preparing to issue them, but we insist they be not corporate securities, but either state  or state-guaranteed securities. Also, as everyone knows, today there is a pressing need for a radical overhaul of the entire railway tariff regulation system. 
From this viewpoint, there are some tasks in governmental Decree №643, particularly price range allocation etc. We are preparing our offers actively and this year we will work together with the Federal Tariff Service and other departments. Naturally, all real opportunities for improving the investment climate in the railway sector must be used. Our company often faces normative limitations in doing business, from private investment attraction to a more reasonable usage of the company’s own assets in market turnover. 
I.e. the problem of financing RZD is to be solved by combining all available instruments properly. On the whole, I must admit (and I said this in my report at the company’s board meeting at the end of the year) that we have not gained enough understanding from the state regulators and society of how important transport infrastructure development is for the national economy. Obviously, we should work more actively in this direction. The development of a long-term model of stable finance provision for RZD’s investment programmes is to become one of our most important targets this year.   

About Remarkable Things
– The Government extended the period of railway transport structural reform until 2015. Did this decision come out of the blue for you?

– Last year, two variants were discussed: to extend the period either until the end of 2011 or until 2015. We were ready for either of them. In neither 2011 nor even 2015, will the sector’s reform, development and structural improvement be completed. Once plans are fulfilled, others are adopted, and there is an appropriate reaction to the new challenges of the time, etc. 
This is a constant process, and if it stops, there appears a period of stagnation, when problems accumulate, but are not solved. Simultaneously, formalisation of such and such a process is also very important. I think that the best comment on the reform term extension belongs to the Prime Minister. He made it at a meeting of the presidium of the government. In particular, he said that the reform was being carried out in accordance with the plan, practically without any serious failures, but it was far from being completed and a number of important decisions were still to be made. 
Naturally, the process of forming the Common Economic Space of Russia, Kazakhstan, and Belarus influenced the situation. It is planned to open up access to national infrastructure to transporters from these countries in 2015. It is a very serious process. It requires significant preparation in different fields – legal, tariffs, technical, technological, etc. Also, it will require the three countries’ legal environment to be harmonised, and this is a rather complicated task. Also, the Target model of the cargo transportation market is to be realised at the fourth stage of the reform. It will provide the answer to many questions about the further development of the sector.
– Which events concerning the reform were the most remarkable last year?
– I’d like to start not with the most important but instead a rather remarkable event. Last year we held the first public offering of a 35% shareholding of TransContainer. It was not the best time for such a step, but the company’s multiplier at the moment of placement, i.e. the ratio of its cost to EBITDA was 6.6, and that of Globaltrans was 6.4. So, our joint-stock company, owned by the state, showed better results than a private company. 
Another remarkable event was the attraction of the assets of one of the market’s technological leaders – the Canadian Bombardier’s – to ELTEZA. Speaking of the important events of the reform, I must mention the launch of the Federal Passenger Company and Freight Two. These are strategic measures defining the configuration of the railway market in the foreseeable future. Now we need to sell successfully the controlling stake in Freight One in 2011. 
And we are not interested in extending the term. This is because, until it happens, we are in a difficult situation when the Federal Antimonopoly Service demands that, if a cargo owner applies to RZD for transportation in the public park in accordance with Tariff Regulation №10-01, Russian Railways must do it even if it uses wagons of its daughter companies. I.e. we may have direct losses in this respect. The sense of these measures is to form business units according to type of activity, and to make the company’s work as efficient as possible from an economic viewpoint. 
Among the basic problems, I would mention the issue of finding the best mechanism to coordinate the activity of vertical directorates and subsidiaries of RZD at regional levels. The institute of the heads of railways must be reformed – we know the very core of the changes, but there are a lot of details to be clarified and we need to gain experience. It is impossible to spell out everything beforehand, just as it is impossible to make a precise plan of a person’s life when he or she is born. 
The heads of the railways got new functions for corporate coordination and management. Also, we have created an institute of regional deputy heads of railways. On the whole, the conditions for the launch of regional corporate centres on the basis of railways are being created.  

– What are the most problematic procedural issues at the third stage of the reform, in your opinion? 

– If we look at systems, one of the most important issues is the lack of a unified opinion on the necessary changes in the railway transport legislative base. We think, if there is a significant disagreement, we should realise those decisions on which we have agreed already. As soon as we understand that it is impossible to move forward without new decisions, we will take them considering our own practical experience.

The Mentality
– In your public speeches and in your private weblog, you pay a lot of attention to the organisation of suburban transportation as an independent business and other issues related to the problem.

– Yes, this question is rather difficult but very important for the railway transport economy as well as for the whole of society, and RZD’s image and reputation. The problem of suburban transportation includes a number of social questions, which cannot be solved quickly and efficiently, since they are connected with the mentality of many people, their vision of values, and their opinion of what is good and what is bad in certain situations. 
Even if this vision is irrational, wrong and archaic, the situation does not become more simple for railwaymen, local authorities and passengers. Meticulous and continuous work is needed, and it will be donkey work. In the previous period, only 15-20% of suburban transportation was covered by the travel fee, and the rest of it was donated from RZD’s other revenue, because most regions were not eager to use their budgets for that. From 2011, suburban transportation becomes an independent business, and regional authorities now act as the party that orders the transportation. Difficulties are connected with many aspects. 
Traditionally, the travel fee is low enough, and any price increase causes a negative reaction among passengers. On the other hand, the regional administrations have a lot of other social expenditures. That is why a compromise is to be found. It may include federal subsides, targeted support for certain social strata, etc. Another difficult problem concerns ticketless travel. There is an opinion that no one can get anything in a shop for free, but travelling in a suburban train without a ticket is a normal thing. Also, there are issues of legislation and corruption linked with ticket checking. 
Even after the suburban transportation was separated from RZD, the suburban trains will be associated not with suburban companies, but with Russian Railways. Passengers will think that we are responsible for the tariff increase, and for the cancellation of unprofitable trains, and for the attempts to gather more revenue, etc. So, we will have to participate in solving all these problems. Moreover, even if some mess takes place and it is our fault (failures in the schedule, broken rolling stock etc.), we are ready to take the responsibility for it. 

– Another business to be hived off in the future will make for the improvement of RZD’s image. I mean high-speed railway links…

– We are developing this business and we will pay a lot of attention to it in the near future. Exploitation of ‘Sapsans’ showed that there is high demand for high-speed transportation in Russia. Last year, ‘Allegro’ high-speed trains were launched on the St Petersburg – Helsinki line. In accordance with the order of the Russian Prime Minister, we are revising the programme of high-speed and fast railway communication development to intensify it. 
The football championship in 2018 is an excellent stimulus to step up the activity of all departments and companies in charge. I hope that in the first half of 2011 we will give the government the documents on organisation of the tender on Moscow – St Petersburg high-speed railway line construction.

About the Values  
– What drawbacks with RZD do you reject most of all?

– First of all, those which damage the company’s reputation. For example, we often face corporate red tape when our sub-divisions adjust different contracts. Sometimes, it took 6-8 months to approve some of the documents. That’s outrageous! I gave instructions to solve the problem and I am going to control how they are being fulfilled. Also, I consider it not acceptable when people start to manipulate the statistics in order to exaggerate the results of their division’s work or the whole company’s activity. I hate such ‘teachers’ who tell other employees how to evade this or that corporate rule of behaviour and make a good haul at the team’s or their friends’ expense. And I can’t but mention such cases as improper relations with a client, theft, bribery, etc. 

– There is information that, in 2011, competition procedures will be used to fill the vacancies of vice presidents and other top managers at the headquarters of RZD. Is this true?

– Last year, I made such an instruction, and this order will be applied to fill the vacancy of a head of RZD’s department and managers of higher level. I don’t think that this approach is something outstanding in our corporate staff policy, because it is targeted to select the most trained and talented employees, their continual training, stimulation to qualitative and efficient labour, career progression, qualification upgrades, etc. 
So-called repressive management is outdated, and it will help neither to improve the efficiency of work nor to create favourable labour conditions. We should motivate and train our employees instead of dismissing and punishing them. We have done a lot already, but we are still at the beginning of the road. A lot depends on the traditions and the mentality. 
For example, since the old days (when employers pretended that they pay, and employees pretended that they work) there has existed an expectation that a bonus is a regular and guaranteed part of the salary. But it should be paid only if some certain results have been achieved. Last year, we started to transfer to a new bonus system, and we consider this very important. 

– The project of extending the broad gauge westwards has been discussed for more than a decade. At what stage is the discussion now? What were the most important events in the sphere  of international cooperation last year?

– As for the broad gauge construction to Vienna, in 2010 we secured official support from the government of Slovakia, and this will make for the further development of the project. Also, I had a talk with Jose Barroso, Head of the European Commission, who said that he was ready to give the project political support. This is very important for us. 
Other remarkable events and directions in terms of international cooperation are RZD’s joining the International Committee of the Railway Transport (the CIT); work to carry out infrastructure projects in Libya, Iran, and Abkhazia; the decision on the launch of an engineering wagon building centre in cooperation with Slovak company Tatravagonka; development of the joint business of our daughter companies with enterprises in Kazakhstan, Ukraine, Finland, Germany, Spain, and China; management of the state shareholding in the Ulan-Bator railway and the concessionary management of the railway in Armenia, and the agreements reached in the framework of the launch of the Single Economic Area with Belarus and Kazakhstan.
Also, I must mention that in 2010 the draft Concept of Strategic Development of the Railway Transport of the CIS to 2020 was approved, the Concept of a Single System to Control and Manage Cargo Wagons of Different Types of Property was adopted. Nowadays, we work actively in the UIC, the OSJD, the Economic and Social Commission for Asia and the Pacific, and other international organisations, and this allows us to protect the company’s and the country’s interests on issues of transport corridor development, legislative harmonisation, etc.

About Plans   
– What targets in the freight transportation sector are priorities for the company?

– This year, the growth of the freight base is forecasted to slow, so we need to intensify efforts to attract cargoes to railway transport. These must be marketing measures as well as technological ones. We need to improve the quality of transportation – the speed, safety, punctuality, etc. We are going to continue to improve the work of the Corporate Service Centres, for example, to develop the practice of using the clients’ personal managers, a remote sales system, e-document turnover, etc. 
A lot of attention will be paid to transport and logistic services formation, when the work of several departments is to be integrated to provide a complex transport service. I.e. the general line of development is the improvement of the services we provide. Meanwhile, we will do a lot of things for the first time in 2011. For example, to transport cargo without the inventory park, to operate under the conditions of vertical sectoral directorates and without railway sub-divisions, to transfer passenger transportation to daughter companies, etc. Naturally, much needs to be done to improve the legal base and the technology of transportation.
At the end of our talk, I would like to mention one rule: The business run like an engine-less car (or a wagon in our case) can move only down the hill. And we must move up the hill, i.e. develop, learn new approaches and models, increase the depth and scale of our activity. As for medium-term plans,  by 2015, we are going to reduce the transportation cost price by 15% in comparison with 2008, to increase labour efficiency by 30% and that of rolling stock by 15%. I think we have everything necessary for that. 
Interviewed by Andrey Guryev 
    [~DETAIL_TEXT] => 
On the Most Important Things
– Mr Yakunin, could you please estimate the company’s main results in 2010 from the viewpoint of RZD’s work efficiency and the sector’s development?

– I consider the last year the stabilisation period. In 2009, loading volume fell by 15%, and in 2010 it grew by 8.8%. Neither our industry nor the railways have reached the pre-crisis level yet, but the growth rates were higher than we planned. It allowed us to spend additional money on our investment programme. Also, I would like to name the following results, which characterise our work. Revenue from transportation grew by 13%, and exploitation expenditure increased by 8% only. 
At the same time, the transportation cost price rose by 5.7%, which was below inflation. Now I would like to stop discussing the statistics, which have been already published, and speak about the most important, from my viewpoint, things. I think that the strategy and tactics we chose to work under crisis and post-crisis conditions have justified its correctness. And the results of the company’s activity prove it. 
We fulfilled and overfulfilled production plans, provided stable and profitable work, carried out basic investment projects, realised a number of system measures in the framework of the railway structural reform in 2010. RZD is a natural part of our society and works for people’s benefit. At the same time, the condition if the Russian economy depends on the state of this infrastructure company. We are striving to become a real client-oriented company and every year we improve both passenger and freight transportation services. 
Also, we justifiably name RZD a socially-oriented company. Despite some drawbacks, there is every reason to say that our work was a success last year, in other words, we have increased the loading volume, got through all difficulties and are moving forward. Simultaneously, we see how large the volume is of the tasks we are to complete. 

– Is there any problem or target which comes to the fore and requires a lot of attention?

– Naturally. It is the prospects for infrastructure development, to be more exact, insufficient finance for our infrastructure business. As you know, in the post-Soviet period, the prices for industrial production have been growing faster than railway tariffs. Considering the current tariff system, RZD’s own means are enough to fulfill just half of its needs in terms of investment programmes. 
Is there a way out? As usual, it is a complex solution to the problem, or rather a ‘clever solution’. Let’s take the tariff policy. Last year, the state regulators adopted new methods to define economically reasonable tariff levels. We had been waiting for it for a long time. And the calculations made in accordance with the methods showed that, to compensate the company’s expenditure, for it to be able to develop properly, tariff indexation in 2012 is to amount to 23% in comparison with 2011. 
You see, these are not our price ambitions, these are calculations made in accordance with the empirically-based RAB methods adopted by the Federal Tariff Service, and similar methods are widely used in international practice. Although, we say, if the government does not consider such indexation possible for macro-economic reasons, the missed sum may be given as direct finance for specific infrastructure projects. 
Also, in the framework of the Target model of the cargo railway transportation market, the notion of a ‘network contract’ was implemented. On the basis of the contract, the state pays a part of the expenditure on railway infrastructure maintenance and development. This practice should be applied and developed. To adjust the conditions for the competition of railway and road transport, in our opinion, it is worth taking a fee for heavy vehicles running on the motorways (in fact, it should be done regardless of the relation between the railway and the road transport.) 
Also, there is such an investment instrument as infrastructure obligations. It is rather popular around the world. Nowadays, we are preparing to issue them, but we insist they be not corporate securities, but either state  or state-guaranteed securities. Also, as everyone knows, today there is a pressing need for a radical overhaul of the entire railway tariff regulation system. 
From this viewpoint, there are some tasks in governmental Decree №643, particularly price range allocation etc. We are preparing our offers actively and this year we will work together with the Federal Tariff Service and other departments. Naturally, all real opportunities for improving the investment climate in the railway sector must be used. Our company often faces normative limitations in doing business, from private investment attraction to a more reasonable usage of the company’s own assets in market turnover. 
I.e. the problem of financing RZD is to be solved by combining all available instruments properly. On the whole, I must admit (and I said this in my report at the company’s board meeting at the end of the year) that we have not gained enough understanding from the state regulators and society of how important transport infrastructure development is for the national economy. Obviously, we should work more actively in this direction. The development of a long-term model of stable finance provision for RZD’s investment programmes is to become one of our most important targets this year.   

About Remarkable Things
– The Government extended the period of railway transport structural reform until 2015. Did this decision come out of the blue for you?

– Last year, two variants were discussed: to extend the period either until the end of 2011 or until 2015. We were ready for either of them. In neither 2011 nor even 2015, will the sector’s reform, development and structural improvement be completed. Once plans are fulfilled, others are adopted, and there is an appropriate reaction to the new challenges of the time, etc. 
This is a constant process, and if it stops, there appears a period of stagnation, when problems accumulate, but are not solved. Simultaneously, formalisation of such and such a process is also very important. I think that the best comment on the reform term extension belongs to the Prime Minister. He made it at a meeting of the presidium of the government. In particular, he said that the reform was being carried out in accordance with the plan, practically without any serious failures, but it was far from being completed and a number of important decisions were still to be made. 
Naturally, the process of forming the Common Economic Space of Russia, Kazakhstan, and Belarus influenced the situation. It is planned to open up access to national infrastructure to transporters from these countries in 2015. It is a very serious process. It requires significant preparation in different fields – legal, tariffs, technical, technological, etc. Also, it will require the three countries’ legal environment to be harmonised, and this is a rather complicated task. Also, the Target model of the cargo transportation market is to be realised at the fourth stage of the reform. It will provide the answer to many questions about the further development of the sector.
– Which events concerning the reform were the most remarkable last year?
– I’d like to start not with the most important but instead a rather remarkable event. Last year we held the first public offering of a 35% shareholding of TransContainer. It was not the best time for such a step, but the company’s multiplier at the moment of placement, i.e. the ratio of its cost to EBITDA was 6.6, and that of Globaltrans was 6.4. So, our joint-stock company, owned by the state, showed better results than a private company. 
Another remarkable event was the attraction of the assets of one of the market’s technological leaders – the Canadian Bombardier’s – to ELTEZA. Speaking of the important events of the reform, I must mention the launch of the Federal Passenger Company and Freight Two. These are strategic measures defining the configuration of the railway market in the foreseeable future. Now we need to sell successfully the controlling stake in Freight One in 2011. 
And we are not interested in extending the term. This is because, until it happens, we are in a difficult situation when the Federal Antimonopoly Service demands that, if a cargo owner applies to RZD for transportation in the public park in accordance with Tariff Regulation №10-01, Russian Railways must do it even if it uses wagons of its daughter companies. I.e. we may have direct losses in this respect. The sense of these measures is to form business units according to type of activity, and to make the company’s work as efficient as possible from an economic viewpoint. 
Among the basic problems, I would mention the issue of finding the best mechanism to coordinate the activity of vertical directorates and subsidiaries of RZD at regional levels. The institute of the heads of railways must be reformed – we know the very core of the changes, but there are a lot of details to be clarified and we need to gain experience. It is impossible to spell out everything beforehand, just as it is impossible to make a precise plan of a person’s life when he or she is born. 
The heads of the railways got new functions for corporate coordination and management. Also, we have created an institute of regional deputy heads of railways. On the whole, the conditions for the launch of regional corporate centres on the basis of railways are being created.  

– What are the most problematic procedural issues at the third stage of the reform, in your opinion? 

– If we look at systems, one of the most important issues is the lack of a unified opinion on the necessary changes in the railway transport legislative base. We think, if there is a significant disagreement, we should realise those decisions on which we have agreed already. As soon as we understand that it is impossible to move forward without new decisions, we will take them considering our own practical experience.

The Mentality
– In your public speeches and in your private weblog, you pay a lot of attention to the organisation of suburban transportation as an independent business and other issues related to the problem.

– Yes, this question is rather difficult but very important for the railway transport economy as well as for the whole of society, and RZD’s image and reputation. The problem of suburban transportation includes a number of social questions, which cannot be solved quickly and efficiently, since they are connected with the mentality of many people, their vision of values, and their opinion of what is good and what is bad in certain situations. 
Even if this vision is irrational, wrong and archaic, the situation does not become more simple for railwaymen, local authorities and passengers. Meticulous and continuous work is needed, and it will be donkey work. In the previous period, only 15-20% of suburban transportation was covered by the travel fee, and the rest of it was donated from RZD’s other revenue, because most regions were not eager to use their budgets for that. From 2011, suburban transportation becomes an independent business, and regional authorities now act as the party that orders the transportation. Difficulties are connected with many aspects. 
Traditionally, the travel fee is low enough, and any price increase causes a negative reaction among passengers. On the other hand, the regional administrations have a lot of other social expenditures. That is why a compromise is to be found. It may include federal subsides, targeted support for certain social strata, etc. Another difficult problem concerns ticketless travel. There is an opinion that no one can get anything in a shop for free, but travelling in a suburban train without a ticket is a normal thing. Also, there are issues of legislation and corruption linked with ticket checking. 
Even after the suburban transportation was separated from RZD, the suburban trains will be associated not with suburban companies, but with Russian Railways. Passengers will think that we are responsible for the tariff increase, and for the cancellation of unprofitable trains, and for the attempts to gather more revenue, etc. So, we will have to participate in solving all these problems. Moreover, even if some mess takes place and it is our fault (failures in the schedule, broken rolling stock etc.), we are ready to take the responsibility for it. 

– Another business to be hived off in the future will make for the improvement of RZD’s image. I mean high-speed railway links…

– We are developing this business and we will pay a lot of attention to it in the near future. Exploitation of ‘Sapsans’ showed that there is high demand for high-speed transportation in Russia. Last year, ‘Allegro’ high-speed trains were launched on the St Petersburg – Helsinki line. In accordance with the order of the Russian Prime Minister, we are revising the programme of high-speed and fast railway communication development to intensify it. 
The football championship in 2018 is an excellent stimulus to step up the activity of all departments and companies in charge. I hope that in the first half of 2011 we will give the government the documents on organisation of the tender on Moscow – St Petersburg high-speed railway line construction.

About the Values  
– What drawbacks with RZD do you reject most of all?

– First of all, those which damage the company’s reputation. For example, we often face corporate red tape when our sub-divisions adjust different contracts. Sometimes, it took 6-8 months to approve some of the documents. That’s outrageous! I gave instructions to solve the problem and I am going to control how they are being fulfilled. Also, I consider it not acceptable when people start to manipulate the statistics in order to exaggerate the results of their division’s work or the whole company’s activity. I hate such ‘teachers’ who tell other employees how to evade this or that corporate rule of behaviour and make a good haul at the team’s or their friends’ expense. And I can’t but mention such cases as improper relations with a client, theft, bribery, etc. 

– There is information that, in 2011, competition procedures will be used to fill the vacancies of vice presidents and other top managers at the headquarters of RZD. Is this true?

– Last year, I made such an instruction, and this order will be applied to fill the vacancy of a head of RZD’s department and managers of higher level. I don’t think that this approach is something outstanding in our corporate staff policy, because it is targeted to select the most trained and talented employees, their continual training, stimulation to qualitative and efficient labour, career progression, qualification upgrades, etc. 
So-called repressive management is outdated, and it will help neither to improve the efficiency of work nor to create favourable labour conditions. We should motivate and train our employees instead of dismissing and punishing them. We have done a lot already, but we are still at the beginning of the road. A lot depends on the traditions and the mentality. 
For example, since the old days (when employers pretended that they pay, and employees pretended that they work) there has existed an expectation that a bonus is a regular and guaranteed part of the salary. But it should be paid only if some certain results have been achieved. Last year, we started to transfer to a new bonus system, and we consider this very important. 

– The project of extending the broad gauge westwards has been discussed for more than a decade. At what stage is the discussion now? What were the most important events in the sphere  of international cooperation last year?

– As for the broad gauge construction to Vienna, in 2010 we secured official support from the government of Slovakia, and this will make for the further development of the project. Also, I had a talk with Jose Barroso, Head of the European Commission, who said that he was ready to give the project political support. This is very important for us. 
Other remarkable events and directions in terms of international cooperation are RZD’s joining the International Committee of the Railway Transport (the CIT); work to carry out infrastructure projects in Libya, Iran, and Abkhazia; the decision on the launch of an engineering wagon building centre in cooperation with Slovak company Tatravagonka; development of the joint business of our daughter companies with enterprises in Kazakhstan, Ukraine, Finland, Germany, Spain, and China; management of the state shareholding in the Ulan-Bator railway and the concessionary management of the railway in Armenia, and the agreements reached in the framework of the launch of the Single Economic Area with Belarus and Kazakhstan.
Also, I must mention that in 2010 the draft Concept of Strategic Development of the Railway Transport of the CIS to 2020 was approved, the Concept of a Single System to Control and Manage Cargo Wagons of Different Types of Property was adopted. Nowadays, we work actively in the UIC, the OSJD, the Economic and Social Commission for Asia and the Pacific, and other international organisations, and this allows us to protect the company’s and the country’s interests on issues of transport corridor development, legislative harmonisation, etc.

About Plans   
– What targets in the freight transportation sector are priorities for the company?

– This year, the growth of the freight base is forecasted to slow, so we need to intensify efforts to attract cargoes to railway transport. These must be marketing measures as well as technological ones. We need to improve the quality of transportation – the speed, safety, punctuality, etc. We are going to continue to improve the work of the Corporate Service Centres, for example, to develop the practice of using the clients’ personal managers, a remote sales system, e-document turnover, etc. 
A lot of attention will be paid to transport and logistic services formation, when the work of several departments is to be integrated to provide a complex transport service. I.e. the general line of development is the improvement of the services we provide. Meanwhile, we will do a lot of things for the first time in 2011. For example, to transport cargo without the inventory park, to operate under the conditions of vertical sectoral directorates and without railway sub-divisions, to transfer passenger transportation to daughter companies, etc. Naturally, much needs to be done to improve the legal base and the technology of transportation.
At the end of our talk, I would like to mention one rule: The business run like an engine-less car (or a wagon in our case) can move only down the hill. And we must move up the hill, i.e. develop, learn new approaches and models, increase the depth and scale of our activity. As for medium-term plans,  by 2015, we are going to reduce the transportation cost price by 15% in comparison with 2008, to increase labour efficiency by 30% and that of rolling stock by 15%. I think we have everything necessary for that. 
Interviewed by Andrey Guryev 
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/1/2.jpg" border="1" alt=" " hspace="5" width="300" height="199" align="left" />Vladimir Yakunin, President of RZD, speaks about the results of 2010, the problems and possible solutions to them, and the company’s main targets to be reached in the near future.
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On the Most Important Things
– Mr Yakunin, could you please estimate the company’s main results in 2010 from the viewpoint of RZD’s work efficiency and the sector’s development?

– I consider the last year the stabilisation period. In 2009, loading volume fell by 15%, and in 2010 it grew by 8.8%. Neither our industry nor the railways have reached the pre-crisis level yet, but the growth rates were higher than we planned. It allowed us to spend additional money on our investment programme. Also, I would like to name the following results, which characterise our work. Revenue from transportation grew by 13%, and exploitation expenditure increased by 8% only. 
At the same time, the transportation cost price rose by 5.7%, which was below inflation. Now I would like to stop discussing the statistics, which have been already published, and speak about the most important, from my viewpoint, things. I think that the strategy and tactics we chose to work under crisis and post-crisis conditions have justified its correctness. And the results of the company’s activity prove it. 
We fulfilled and overfulfilled production plans, provided stable and profitable work, carried out basic investment projects, realised a number of system measures in the framework of the railway structural reform in 2010. RZD is a natural part of our society and works for people’s benefit. At the same time, the condition if the Russian economy depends on the state of this infrastructure company. We are striving to become a real client-oriented company and every year we improve both passenger and freight transportation services. 
Also, we justifiably name RZD a socially-oriented company. Despite some drawbacks, there is every reason to say that our work was a success last year, in other words, we have increased the loading volume, got through all difficulties and are moving forward. Simultaneously, we see how large the volume is of the tasks we are to complete. 

– Is there any problem or target which comes to the fore and requires a lot of attention?

– Naturally. It is the prospects for infrastructure development, to be more exact, insufficient finance for our infrastructure business. As you know, in the post-Soviet period, the prices for industrial production have been growing faster than railway tariffs. Considering the current tariff system, RZD’s own means are enough to fulfill just half of its needs in terms of investment programmes. 
Is there a way out? As usual, it is a complex solution to the problem, or rather a ‘clever solution’. Let’s take the tariff policy. Last year, the state regulators adopted new methods to define economically reasonable tariff levels. We had been waiting for it for a long time. And the calculations made in accordance with the methods showed that, to compensate the company’s expenditure, for it to be able to develop properly, tariff indexation in 2012 is to amount to 23% in comparison with 2011. 
You see, these are not our price ambitions, these are calculations made in accordance with the empirically-based RAB methods adopted by the Federal Tariff Service, and similar methods are widely used in international practice. Although, we say, if the government does not consider such indexation possible for macro-economic reasons, the missed sum may be given as direct finance for specific infrastructure projects. 
Also, in the framework of the Target model of the cargo railway transportation market, the notion of a ‘network contract’ was implemented. On the basis of the contract, the state pays a part of the expenditure on railway infrastructure maintenance and development. This practice should be applied and developed. To adjust the conditions for the competition of railway and road transport, in our opinion, it is worth taking a fee for heavy vehicles running on the motorways (in fact, it should be done regardless of the relation between the railway and the road transport.) 
Also, there is such an investment instrument as infrastructure obligations. It is rather popular around the world. Nowadays, we are preparing to issue them, but we insist they be not corporate securities, but either state  or state-guaranteed securities. Also, as everyone knows, today there is a pressing need for a radical overhaul of the entire railway tariff regulation system. 
From this viewpoint, there are some tasks in governmental Decree №643, particularly price range allocation etc. We are preparing our offers actively and this year we will work together with the Federal Tariff Service and other departments. Naturally, all real opportunities for improving the investment climate in the railway sector must be used. Our company often faces normative limitations in doing business, from private investment attraction to a more reasonable usage of the company’s own assets in market turnover. 
I.e. the problem of financing RZD is to be solved by combining all available instruments properly. On the whole, I must admit (and I said this in my report at the company’s board meeting at the end of the year) that we have not gained enough understanding from the state regulators and society of how important transport infrastructure development is for the national economy. Obviously, we should work more actively in this direction. The development of a long-term model of stable finance provision for RZD’s investment programmes is to become one of our most important targets this year.   

About Remarkable Things
– The Government extended the period of railway transport structural reform until 2015. Did this decision come out of the blue for you?

– Last year, two variants were discussed: to extend the period either until the end of 2011 or until 2015. We were ready for either of them. In neither 2011 nor even 2015, will the sector’s reform, development and structural improvement be completed. Once plans are fulfilled, others are adopted, and there is an appropriate reaction to the new challenges of the time, etc. 
This is a constant process, and if it stops, there appears a period of stagnation, when problems accumulate, but are not solved. Simultaneously, formalisation of such and such a process is also very important. I think that the best comment on the reform term extension belongs to the Prime Minister. He made it at a meeting of the presidium of the government. In particular, he said that the reform was being carried out in accordance with the plan, practically without any serious failures, but it was far from being completed and a number of important decisions were still to be made. 
Naturally, the process of forming the Common Economic Space of Russia, Kazakhstan, and Belarus influenced the situation. It is planned to open up access to national infrastructure to transporters from these countries in 2015. It is a very serious process. It requires significant preparation in different fields – legal, tariffs, technical, technological, etc. Also, it will require the three countries’ legal environment to be harmonised, and this is a rather complicated task. Also, the Target model of the cargo transportation market is to be realised at the fourth stage of the reform. It will provide the answer to many questions about the further development of the sector.
– Which events concerning the reform were the most remarkable last year?
– I’d like to start not with the most important but instead a rather remarkable event. Last year we held the first public offering of a 35% shareholding of TransContainer. It was not the best time for such a step, but the company’s multiplier at the moment of placement, i.e. the ratio of its cost to EBITDA was 6.6, and that of Globaltrans was 6.4. So, our joint-stock company, owned by the state, showed better results than a private company. 
Another remarkable event was the attraction of the assets of one of the market’s technological leaders – the Canadian Bombardier’s – to ELTEZA. Speaking of the important events of the reform, I must mention the launch of the Federal Passenger Company and Freight Two. These are strategic measures defining the configuration of the railway market in the foreseeable future. Now we need to sell successfully the controlling stake in Freight One in 2011. 
And we are not interested in extending the term. This is because, until it happens, we are in a difficult situation when the Federal Antimonopoly Service demands that, if a cargo owner applies to RZD for transportation in the public park in accordance with Tariff Regulation №10-01, Russian Railways must do it even if it uses wagons of its daughter companies. I.e. we may have direct losses in this respect. The sense of these measures is to form business units according to type of activity, and to make the company’s work as efficient as possible from an economic viewpoint. 
Among the basic problems, I would mention the issue of finding the best mechanism to coordinate the activity of vertical directorates and subsidiaries of RZD at regional levels. The institute of the heads of railways must be reformed – we know the very core of the changes, but there are a lot of details to be clarified and we need to gain experience. It is impossible to spell out everything beforehand, just as it is impossible to make a precise plan of a person’s life when he or she is born. 
The heads of the railways got new functions for corporate coordination and management. Also, we have created an institute of regional deputy heads of railways. On the whole, the conditions for the launch of regional corporate centres on the basis of railways are being created.  

– What are the most problematic procedural issues at the third stage of the reform, in your opinion? 

– If we look at systems, one of the most important issues is the lack of a unified opinion on the necessary changes in the railway transport legislative base. We think, if there is a significant disagreement, we should realise those decisions on which we have agreed already. As soon as we understand that it is impossible to move forward without new decisions, we will take them considering our own practical experience.

The Mentality
– In your public speeches and in your private weblog, you pay a lot of attention to the organisation of suburban transportation as an independent business and other issues related to the problem.

– Yes, this question is rather difficult but very important for the railway transport economy as well as for the whole of society, and RZD’s image and reputation. The problem of suburban transportation includes a number of social questions, which cannot be solved quickly and efficiently, since they are connected with the mentality of many people, their vision of values, and their opinion of what is good and what is bad in certain situations. 
Even if this vision is irrational, wrong and archaic, the situation does not become more simple for railwaymen, local authorities and passengers. Meticulous and continuous work is needed, and it will be donkey work. In the previous period, only 15-20% of suburban transportation was covered by the travel fee, and the rest of it was donated from RZD’s other revenue, because most regions were not eager to use their budgets for that. From 2011, suburban transportation becomes an independent business, and regional authorities now act as the party that orders the transportation. Difficulties are connected with many aspects. 
Traditionally, the travel fee is low enough, and any price increase causes a negative reaction among passengers. On the other hand, the regional administrations have a lot of other social expenditures. That is why a compromise is to be found. It may include federal subsides, targeted support for certain social strata, etc. Another difficult problem concerns ticketless travel. There is an opinion that no one can get anything in a shop for free, but travelling in a suburban train without a ticket is a normal thing. Also, there are issues of legislation and corruption linked with ticket checking. 
Even after the suburban transportation was separated from RZD, the suburban trains will be associated not with suburban companies, but with Russian Railways. Passengers will think that we are responsible for the tariff increase, and for the cancellation of unprofitable trains, and for the attempts to gather more revenue, etc. So, we will have to participate in solving all these problems. Moreover, even if some mess takes place and it is our fault (failures in the schedule, broken rolling stock etc.), we are ready to take the responsibility for it. 

– Another business to be hived off in the future will make for the improvement of RZD’s image. I mean high-speed railway links…

– We are developing this business and we will pay a lot of attention to it in the near future. Exploitation of ‘Sapsans’ showed that there is high demand for high-speed transportation in Russia. Last year, ‘Allegro’ high-speed trains were launched on the St Petersburg – Helsinki line. In accordance with the order of the Russian Prime Minister, we are revising the programme of high-speed and fast railway communication development to intensify it. 
The football championship in 2018 is an excellent stimulus to step up the activity of all departments and companies in charge. I hope that in the first half of 2011 we will give the government the documents on organisation of the tender on Moscow – St Petersburg high-speed railway line construction.

About the Values  
– What drawbacks with RZD do you reject most of all?

– First of all, those which damage the company’s reputation. For example, we often face corporate red tape when our sub-divisions adjust different contracts. Sometimes, it took 6-8 months to approve some of the documents. That’s outrageous! I gave instructions to solve the problem and I am going to control how they are being fulfilled. Also, I consider it not acceptable when people start to manipulate the statistics in order to exaggerate the results of their division’s work or the whole company’s activity. I hate such ‘teachers’ who tell other employees how to evade this or that corporate rule of behaviour and make a good haul at the team’s or their friends’ expense. And I can’t but mention such cases as improper relations with a client, theft, bribery, etc. 

– There is information that, in 2011, competition procedures will be used to fill the vacancies of vice presidents and other top managers at the headquarters of RZD. Is this true?

– Last year, I made such an instruction, and this order will be applied to fill the vacancy of a head of RZD’s department and managers of higher level. I don’t think that this approach is something outstanding in our corporate staff policy, because it is targeted to select the most trained and talented employees, their continual training, stimulation to qualitative and efficient labour, career progression, qualification upgrades, etc. 
So-called repressive management is outdated, and it will help neither to improve the efficiency of work nor to create favourable labour conditions. We should motivate and train our employees instead of dismissing and punishing them. We have done a lot already, but we are still at the beginning of the road. A lot depends on the traditions and the mentality. 
For example, since the old days (when employers pretended that they pay, and employees pretended that they work) there has existed an expectation that a bonus is a regular and guaranteed part of the salary. But it should be paid only if some certain results have been achieved. Last year, we started to transfer to a new bonus system, and we consider this very important. 

– The project of extending the broad gauge westwards has been discussed for more than a decade. At what stage is the discussion now? What were the most important events in the sphere  of international cooperation last year?

– As for the broad gauge construction to Vienna, in 2010 we secured official support from the government of Slovakia, and this will make for the further development of the project. Also, I had a talk with Jose Barroso, Head of the European Commission, who said that he was ready to give the project political support. This is very important for us. 
Other remarkable events and directions in terms of international cooperation are RZD’s joining the International Committee of the Railway Transport (the CIT); work to carry out infrastructure projects in Libya, Iran, and Abkhazia; the decision on the launch of an engineering wagon building centre in cooperation with Slovak company Tatravagonka; development of the joint business of our daughter companies with enterprises in Kazakhstan, Ukraine, Finland, Germany, Spain, and China; management of the state shareholding in the Ulan-Bator railway and the concessionary management of the railway in Armenia, and the agreements reached in the framework of the launch of the Single Economic Area with Belarus and Kazakhstan.
Also, I must mention that in 2010 the draft Concept of Strategic Development of the Railway Transport of the CIS to 2020 was approved, the Concept of a Single System to Control and Manage Cargo Wagons of Different Types of Property was adopted. Nowadays, we work actively in the UIC, the OSJD, the Economic and Social Commission for Asia and the Pacific, and other international organisations, and this allows us to protect the company’s and the country’s interests on issues of transport corridor development, legislative harmonisation, etc.

About Plans   
– What targets in the freight transportation sector are priorities for the company?

– This year, the growth of the freight base is forecasted to slow, so we need to intensify efforts to attract cargoes to railway transport. These must be marketing measures as well as technological ones. We need to improve the quality of transportation – the speed, safety, punctuality, etc. We are going to continue to improve the work of the Corporate Service Centres, for example, to develop the practice of using the clients’ personal managers, a remote sales system, e-document turnover, etc. 
A lot of attention will be paid to transport and logistic services formation, when the work of several departments is to be integrated to provide a complex transport service. I.e. the general line of development is the improvement of the services we provide. Meanwhile, we will do a lot of things for the first time in 2011. For example, to transport cargo without the inventory park, to operate under the conditions of vertical sectoral directorates and without railway sub-divisions, to transfer passenger transportation to daughter companies, etc. Naturally, much needs to be done to improve the legal base and the technology of transportation.
At the end of our talk, I would like to mention one rule: The business run like an engine-less car (or a wagon in our case) can move only down the hill. And we must move up the hill, i.e. develop, learn new approaches and models, increase the depth and scale of our activity. As for medium-term plans,  by 2015, we are going to reduce the transportation cost price by 15% in comparison with 2008, to increase labour efficiency by 30% and that of rolling stock by 15%. I think we have everything necessary for that. 
Interviewed by Andrey Guryev 
    [~DETAIL_TEXT] => 
On the Most Important Things
– Mr Yakunin, could you please estimate the company’s main results in 2010 from the viewpoint of RZD’s work efficiency and the sector’s development?

– I consider the last year the stabilisation period. In 2009, loading volume fell by 15%, and in 2010 it grew by 8.8%. Neither our industry nor the railways have reached the pre-crisis level yet, but the growth rates were higher than we planned. It allowed us to spend additional money on our investment programme. Also, I would like to name the following results, which characterise our work. Revenue from transportation grew by 13%, and exploitation expenditure increased by 8% only. 
At the same time, the transportation cost price rose by 5.7%, which was below inflation. Now I would like to stop discussing the statistics, which have been already published, and speak about the most important, from my viewpoint, things. I think that the strategy and tactics we chose to work under crisis and post-crisis conditions have justified its correctness. And the results of the company’s activity prove it. 
We fulfilled and overfulfilled production plans, provided stable and profitable work, carried out basic investment projects, realised a number of system measures in the framework of the railway structural reform in 2010. RZD is a natural part of our society and works for people’s benefit. At the same time, the condition if the Russian economy depends on the state of this infrastructure company. We are striving to become a real client-oriented company and every year we improve both passenger and freight transportation services. 
Also, we justifiably name RZD a socially-oriented company. Despite some drawbacks, there is every reason to say that our work was a success last year, in other words, we have increased the loading volume, got through all difficulties and are moving forward. Simultaneously, we see how large the volume is of the tasks we are to complete. 

– Is there any problem or target which comes to the fore and requires a lot of attention?

– Naturally. It is the prospects for infrastructure development, to be more exact, insufficient finance for our infrastructure business. As you know, in the post-Soviet period, the prices for industrial production have been growing faster than railway tariffs. Considering the current tariff system, RZD’s own means are enough to fulfill just half of its needs in terms of investment programmes. 
Is there a way out? As usual, it is a complex solution to the problem, or rather a ‘clever solution’. Let’s take the tariff policy. Last year, the state regulators adopted new methods to define economically reasonable tariff levels. We had been waiting for it for a long time. And the calculations made in accordance with the methods showed that, to compensate the company’s expenditure, for it to be able to develop properly, tariff indexation in 2012 is to amount to 23% in comparison with 2011. 
You see, these are not our price ambitions, these are calculations made in accordance with the empirically-based RAB methods adopted by the Federal Tariff Service, and similar methods are widely used in international practice. Although, we say, if the government does not consider such indexation possible for macro-economic reasons, the missed sum may be given as direct finance for specific infrastructure projects. 
Also, in the framework of the Target model of the cargo railway transportation market, the notion of a ‘network contract’ was implemented. On the basis of the contract, the state pays a part of the expenditure on railway infrastructure maintenance and development. This practice should be applied and developed. To adjust the conditions for the competition of railway and road transport, in our opinion, it is worth taking a fee for heavy vehicles running on the motorways (in fact, it should be done regardless of the relation between the railway and the road transport.) 
Also, there is such an investment instrument as infrastructure obligations. It is rather popular around the world. Nowadays, we are preparing to issue them, but we insist they be not corporate securities, but either state  or state-guaranteed securities. Also, as everyone knows, today there is a pressing need for a radical overhaul of the entire railway tariff regulation system. 
From this viewpoint, there are some tasks in governmental Decree №643, particularly price range allocation etc. We are preparing our offers actively and this year we will work together with the Federal Tariff Service and other departments. Naturally, all real opportunities for improving the investment climate in the railway sector must be used. Our company often faces normative limitations in doing business, from private investment attraction to a more reasonable usage of the company’s own assets in market turnover. 
I.e. the problem of financing RZD is to be solved by combining all available instruments properly. On the whole, I must admit (and I said this in my report at the company’s board meeting at the end of the year) that we have not gained enough understanding from the state regulators and society of how important transport infrastructure development is for the national economy. Obviously, we should work more actively in this direction. The development of a long-term model of stable finance provision for RZD’s investment programmes is to become one of our most important targets this year.   

About Remarkable Things
– The Government extended the period of railway transport structural reform until 2015. Did this decision come out of the blue for you?

– Last year, two variants were discussed: to extend the period either until the end of 2011 or until 2015. We were ready for either of them. In neither 2011 nor even 2015, will the sector’s reform, development and structural improvement be completed. Once plans are fulfilled, others are adopted, and there is an appropriate reaction to the new challenges of the time, etc. 
This is a constant process, and if it stops, there appears a period of stagnation, when problems accumulate, but are not solved. Simultaneously, formalisation of such and such a process is also very important. I think that the best comment on the reform term extension belongs to the Prime Minister. He made it at a meeting of the presidium of the government. In particular, he said that the reform was being carried out in accordance with the plan, practically without any serious failures, but it was far from being completed and a number of important decisions were still to be made. 
Naturally, the process of forming the Common Economic Space of Russia, Kazakhstan, and Belarus influenced the situation. It is planned to open up access to national infrastructure to transporters from these countries in 2015. It is a very serious process. It requires significant preparation in different fields – legal, tariffs, technical, technological, etc. Also, it will require the three countries’ legal environment to be harmonised, and this is a rather complicated task. Also, the Target model of the cargo transportation market is to be realised at the fourth stage of the reform. It will provide the answer to many questions about the further development of the sector.
– Which events concerning the reform were the most remarkable last year?
– I’d like to start not with the most important but instead a rather remarkable event. Last year we held the first public offering of a 35% shareholding of TransContainer. It was not the best time for such a step, but the company’s multiplier at the moment of placement, i.e. the ratio of its cost to EBITDA was 6.6, and that of Globaltrans was 6.4. So, our joint-stock company, owned by the state, showed better results than a private company. 
Another remarkable event was the attraction of the assets of one of the market’s technological leaders – the Canadian Bombardier’s – to ELTEZA. Speaking of the important events of the reform, I must mention the launch of the Federal Passenger Company and Freight Two. These are strategic measures defining the configuration of the railway market in the foreseeable future. Now we need to sell successfully the controlling stake in Freight One in 2011. 
And we are not interested in extending the term. This is because, until it happens, we are in a difficult situation when the Federal Antimonopoly Service demands that, if a cargo owner applies to RZD for transportation in the public park in accordance with Tariff Regulation №10-01, Russian Railways must do it even if it uses wagons of its daughter companies. I.e. we may have direct losses in this respect. The sense of these measures is to form business units according to type of activity, and to make the company’s work as efficient as possible from an economic viewpoint. 
Among the basic problems, I would mention the issue of finding the best mechanism to coordinate the activity of vertical directorates and subsidiaries of RZD at regional levels. The institute of the heads of railways must be reformed – we know the very core of the changes, but there are a lot of details to be clarified and we need to gain experience. It is impossible to spell out everything beforehand, just as it is impossible to make a precise plan of a person’s life when he or she is born. 
The heads of the railways got new functions for corporate coordination and management. Also, we have created an institute of regional deputy heads of railways. On the whole, the conditions for the launch of regional corporate centres on the basis of railways are being created.  

– What are the most problematic procedural issues at the third stage of the reform, in your opinion? 

– If we look at systems, one of the most important issues is the lack of a unified opinion on the necessary changes in the railway transport legislative base. We think, if there is a significant disagreement, we should realise those decisions on which we have agreed already. As soon as we understand that it is impossible to move forward without new decisions, we will take them considering our own practical experience.

The Mentality
– In your public speeches and in your private weblog, you pay a lot of attention to the organisation of suburban transportation as an independent business and other issues related to the problem.

– Yes, this question is rather difficult but very important for the railway transport economy as well as for the whole of society, and RZD’s image and reputation. The problem of suburban transportation includes a number of social questions, which cannot be solved quickly and efficiently, since they are connected with the mentality of many people, their vision of values, and their opinion of what is good and what is bad in certain situations. 
Even if this vision is irrational, wrong and archaic, the situation does not become more simple for railwaymen, local authorities and passengers. Meticulous and continuous work is needed, and it will be donkey work. In the previous period, only 15-20% of suburban transportation was covered by the travel fee, and the rest of it was donated from RZD’s other revenue, because most regions were not eager to use their budgets for that. From 2011, suburban transportation becomes an independent business, and regional authorities now act as the party that orders the transportation. Difficulties are connected with many aspects. 
Traditionally, the travel fee is low enough, and any price increase causes a negative reaction among passengers. On the other hand, the regional administrations have a lot of other social expenditures. That is why a compromise is to be found. It may include federal subsides, targeted support for certain social strata, etc. Another difficult problem concerns ticketless travel. There is an opinion that no one can get anything in a shop for free, but travelling in a suburban train without a ticket is a normal thing. Also, there are issues of legislation and corruption linked with ticket checking. 
Even after the suburban transportation was separated from RZD, the suburban trains will be associated not with suburban companies, but with Russian Railways. Passengers will think that we are responsible for the tariff increase, and for the cancellation of unprofitable trains, and for the attempts to gather more revenue, etc. So, we will have to participate in solving all these problems. Moreover, even if some mess takes place and it is our fault (failures in the schedule, broken rolling stock etc.), we are ready to take the responsibility for it. 

– Another business to be hived off in the future will make for the improvement of RZD’s image. I mean high-speed railway links…

– We are developing this business and we will pay a lot of attention to it in the near future. Exploitation of ‘Sapsans’ showed that there is high demand for high-speed transportation in Russia. Last year, ‘Allegro’ high-speed trains were launched on the St Petersburg – Helsinki line. In accordance with the order of the Russian Prime Minister, we are revising the programme of high-speed and fast railway communication development to intensify it. 
The football championship in 2018 is an excellent stimulus to step up the activity of all departments and companies in charge. I hope that in the first half of 2011 we will give the government the documents on organisation of the tender on Moscow – St Petersburg high-speed railway line construction.

About the Values  
– What drawbacks with RZD do you reject most of all?

– First of all, those which damage the company’s reputation. For example, we often face corporate red tape when our sub-divisions adjust different contracts. Sometimes, it took 6-8 months to approve some of the documents. That’s outrageous! I gave instructions to solve the problem and I am going to control how they are being fulfilled. Also, I consider it not acceptable when people start to manipulate the statistics in order to exaggerate the results of their division’s work or the whole company’s activity. I hate such ‘teachers’ who tell other employees how to evade this or that corporate rule of behaviour and make a good haul at the team’s or their friends’ expense. And I can’t but mention such cases as improper relations with a client, theft, bribery, etc. 

– There is information that, in 2011, competition procedures will be used to fill the vacancies of vice presidents and other top managers at the headquarters of RZD. Is this true?

– Last year, I made such an instruction, and this order will be applied to fill the vacancy of a head of RZD’s department and managers of higher level. I don’t think that this approach is something outstanding in our corporate staff policy, because it is targeted to select the most trained and talented employees, their continual training, stimulation to qualitative and efficient labour, career progression, qualification upgrades, etc. 
So-called repressive management is outdated, and it will help neither to improve the efficiency of work nor to create favourable labour conditions. We should motivate and train our employees instead of dismissing and punishing them. We have done a lot already, but we are still at the beginning of the road. A lot depends on the traditions and the mentality. 
For example, since the old days (when employers pretended that they pay, and employees pretended that they work) there has existed an expectation that a bonus is a regular and guaranteed part of the salary. But it should be paid only if some certain results have been achieved. Last year, we started to transfer to a new bonus system, and we consider this very important. 

– The project of extending the broad gauge westwards has been discussed for more than a decade. At what stage is the discussion now? What were the most important events in the sphere  of international cooperation last year?

– As for the broad gauge construction to Vienna, in 2010 we secured official support from the government of Slovakia, and this will make for the further development of the project. Also, I had a talk with Jose Barroso, Head of the European Commission, who said that he was ready to give the project political support. This is very important for us. 
Other remarkable events and directions in terms of international cooperation are RZD’s joining the International Committee of the Railway Transport (the CIT); work to carry out infrastructure projects in Libya, Iran, and Abkhazia; the decision on the launch of an engineering wagon building centre in cooperation with Slovak company Tatravagonka; development of the joint business of our daughter companies with enterprises in Kazakhstan, Ukraine, Finland, Germany, Spain, and China; management of the state shareholding in the Ulan-Bator railway and the concessionary management of the railway in Armenia, and the agreements reached in the framework of the launch of the Single Economic Area with Belarus and Kazakhstan.
Also, I must mention that in 2010 the draft Concept of Strategic Development of the Railway Transport of the CIS to 2020 was approved, the Concept of a Single System to Control and Manage Cargo Wagons of Different Types of Property was adopted. Nowadays, we work actively in the UIC, the OSJD, the Economic and Social Commission for Asia and the Pacific, and other international organisations, and this allows us to protect the company’s and the country’s interests on issues of transport corridor development, legislative harmonisation, etc.

About Plans   
– What targets in the freight transportation sector are priorities for the company?

– This year, the growth of the freight base is forecasted to slow, so we need to intensify efforts to attract cargoes to railway transport. These must be marketing measures as well as technological ones. We need to improve the quality of transportation – the speed, safety, punctuality, etc. We are going to continue to improve the work of the Corporate Service Centres, for example, to develop the practice of using the clients’ personal managers, a remote sales system, e-document turnover, etc. 
A lot of attention will be paid to transport and logistic services formation, when the work of several departments is to be integrated to provide a complex transport service. I.e. the general line of development is the improvement of the services we provide. Meanwhile, we will do a lot of things for the first time in 2011. For example, to transport cargo without the inventory park, to operate under the conditions of vertical sectoral directorates and without railway sub-divisions, to transfer passenger transportation to daughter companies, etc. Naturally, much needs to be done to improve the legal base and the technology of transportation.
At the end of our talk, I would like to mention one rule: The business run like an engine-less car (or a wagon in our case) can move only down the hill. And we must move up the hill, i.e. develop, learn new approaches and models, increase the depth and scale of our activity. As for medium-term plans,  by 2015, we are going to reduce the transportation cost price by 15% in comparison with 2008, to increase labour efficiency by 30% and that of rolling stock by 15%. I think we have everything necessary for that. 
Interviewed by Andrey Guryev 
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