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Getting united
An agreement on creating united custom territory and forming custom union was signed between three countries in 2007. Two years later the documentary basis was created and the exact date of startup was announced – January 1, 2010. But practically the CUBKR set to work on July 1, when common Custom Code came into force.
Parties also reconciled the tariffs on more than 11000 goods. In 90% cases Russian tariffs were taken as an example. By the way, they are much higher than in other member countries. In addition to this, custom registration of the goods transported inside this alliance, was annulled. Transport, sanitary-quarantine, veterinary and fytosanitory control on borders were also cancelled.
Until recently Belorussia was hesitating, hampering the whole process of creating union. It is obvious that each country tried to protect its domestic market, and Minsk was insisting that Russia shouldn’t charge duties on all exporting oil to Belarus. But Dmitry Medvedev decided not to drag out a business and claimed that the CUBKR will start its work without Belarus. Surprisingly few days later during his meeting with Igor Shuvalov, aide to the president of the Russian Federation, Alexander Lukashenko said that Belarus was going to make a compromise with Russia, even if it would be difficult for the first period. Then Belarus formally confirmed its participation.
The disagreement between Russia and Belarus was caused by the fact that Russia wanted to receipt 93% of all duties collected from members of the CUBKR. Finally this sum was reduced to 87.97%, and all the parties reached the compromise. This autumn Kyrgyzstan entered the CUBKR. According to projections, other countries from the Eurasian Economic Community may also come soon. 
According to Prime Minister Vladimir Putin the CUBKR was going to set up a dialogue with EU in future, so he claimed that the Ukraine and Moldova could help to do it.
As to Ukraine, Kiev made it clear that setting out the free trade zone with European Union was more important than entering the CUBKR. Despite the fact that experts claimed that Ukraine can derive benefit from getting into the CUBKR, negotiations were failed. Analytics say that establishing the same custom policy as in the EU will cause USD 6-8 billion beatings. Despite the fact that Ukrainian President Victor Yanukovich agreed that Russian and Ukrainian economies “are tied to each other closely that the creation of a common economic space will be a benefit”, he denied offer came from Vladimir Putin.
The Ukraine is already the member of the WTO, therefore this country is searching for different mechanisms of cooperation with Russia, but also is afraid that it may affect its world obligations to this world organization.
At the end of October the Republic of Moldova started considering the possibilities and advantages of entering the alliance. But the EU put obstacles at the way of it, threatening that it would stop preferential treatment with the republic. However ex-president of Moldova Vladimir Voronin noticed that the EU was experiencing great problems, and Moldova was not so welcome there. In addition he claimed that “bold political decision should be taken.”
Last year Syria got interested in joining the union. Syrian President Bashar al-Assad said that creating the free trade zone with transport corridor between Damask and Minsk would favor the development of economic contribution in Eurasia Region. Recently New Zealand and Vietnam also took a great interest in the CUBKR.

Defects of the system
During the first half of 2011, the turnover between Russia, Belarus and Kazakhstan increased by 41%, from USD 28.8 billion to 29.3 billion.
However the defect of standard acts became visible. The decision on establishing the union was made in a hurry; therefore member countries are still tied by domestic laws. To avoid further problems the unification of whole jus has to be made soon.
After launching the CUBKR, Vladimir Putin wrote: “We are creating a huge market that will include 165 million consumers, with common legislation and the free flow of capital.” But it didn’t take a long time to realize that the weakest point of alliance is its legislation, which is still not unified.
According to the research made by RBC Daily and Kelly Services the majority of logistic experts agree that the law basis of the CUBKR requires an improvement. 56% said that there were many weak spots in custom law, and 69% claimed that the CUBKR didn’t simplify the work. Among the disadvantages of such alliance is the impossibility to be in control of importing illegal cargoes, which may lead to the increase of drug smugglings.
According to respondents most of the problems are connected with passing through the borders. Companies are complaining about numerous check-ins, huge queues and lack of information. Also a problem of VAT appeared. Till today technical regulations aren’t unified. For example, taxes in Kazakhstan are lower than in other member countries, therefore companies are afraid that it may result into the situation when Kazakhstan’s enterprises will be gaining on advantage over Russian ones.
All the member countries need to be modernized quickly. It means that modern infrastructure, manufacturing capabilities and renewal of human capital are required. It can be achieved by intensifying import, investment and also by adopting the international experience.
Like any other union connected with international goods turnover, the CUBKR is based on protectionism principles. It is both good and bad. But the disadvantages are clearly seen.
The CUBKR managed to ruin more than half of wholesale dealers in Kyrgyzstan. The restriction of custom rules, one person now can take no more than 50 kg, led to the considerable decrease of flow of cheap goods to Kazakhstan.
This autumn Alexander Lukashenko subjected the CUBKR work to sharp criticism. As an example he gave the situation with import duties on cars. He claimed that the duties were set out to please Russian lobbyists, who were afraid of competition with more qualitative and cheap cars from other countries. And these stakeholders work to the prejudice of Russian consumers.
Many times Putin was accused of trying to establish a new version of the USSR, but the Prime Minister denied all the suspicions and said that the CUBKR was “not the revival of the Soviet Union.” However he agreed that member countries “have a great inheritance” from their soviet past.

One step forward
Establishment of the CUBKR was the victory for Moscow, because Russia has always been a leader in regional trade. But mass media claims that such union may delay its entering to the WTO. 
Speaking about the CUBKR, the EU foreign policy chief Catherine Ashton said that in future such union would have a badly influence on the whole international trade system. Moreover, she said that it would push Russia out of entering the WTO. But later during his interview Dmitry Medvedev allayed apprehensions. Chancellor of Germany Angela Merkel also said that Germany wanted to see Russia in the WTO, and she hoped that the CUBKR would not somehow affect the situation.
About 98% of world turnover is being made by water routes, because it is much cheaper than using any type of surface transport. But nowadays such factors as speed and safety in connection with low prime cost are getting more sense. Experts counted, that the total use of the CUBKR resources can help to decrease the terms required for transferring cargoes from China to Europe in more than four times.
In addition surface transport can be controlled all the time; therefore the safety of cargoes shouldn’t be worried about. It should be noted that Russian gauge (1520) is more efficient; therefore it is suitable for high-capacity trains. Such system is also safer, because it provides stability of vehicles.
As a transport corridor between the EU and the Pacific region, the union, first time after the collapse of the USSR, lets Belarus and Kazakhstan get a convenient means of transport with many important places for both countries. 
In a short space of time the advantages of the CUBKR became clear. One more example, Kazakhstan first time for 5 years raised its export indicators to Russia and Belarus. During the first year of the union existence, it averaged USD 7 billion. As a whole, commodity circulation also raised and reached USD 21.7 billion.
Among other advantages being discussed are the pooling of interests and consolidation of capitals which helps to bring sustainability in the development of business in the world trade conditions. Also the CUBKR favors the keeping of jobsites at the non-competitive enterprises.
It was already announced that since 1 January next year all member countries of the CUBKR are integrating into Common Economic Space, which significantly differs from free trade. It will allow to move without paying duties and without any other barriers not only cargoes, but people, capital and services. But officials haven’t discussed the importance of getting rid of migration cards yet. For sure policy was adopted, but still more than 100 agreements should be signed. But politicians claimed that the main contract would be confirmed this December. 
By Kristina AleXandrova
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Getting united
An agreement on creating united custom territory and forming custom union was signed between three countries in 2007. Two years later the documentary basis was created and the exact date of startup was announced – January 1, 2010. But practically the CUBKR set to work on July 1, when common Custom Code came into force.
Parties also reconciled the tariffs on more than 11000 goods. In 90% cases Russian tariffs were taken as an example. By the way, they are much higher than in other member countries. In addition to this, custom registration of the goods transported inside this alliance, was annulled. Transport, sanitary-quarantine, veterinary and fytosanitory control on borders were also cancelled.
Until recently Belorussia was hesitating, hampering the whole process of creating union. It is obvious that each country tried to protect its domestic market, and Minsk was insisting that Russia shouldn’t charge duties on all exporting oil to Belarus. But Dmitry Medvedev decided not to drag out a business and claimed that the CUBKR will start its work without Belarus. Surprisingly few days later during his meeting with Igor Shuvalov, aide to the president of the Russian Federation, Alexander Lukashenko said that Belarus was going to make a compromise with Russia, even if it would be difficult for the first period. Then Belarus formally confirmed its participation.
The disagreement between Russia and Belarus was caused by the fact that Russia wanted to receipt 93% of all duties collected from members of the CUBKR. Finally this sum was reduced to 87.97%, and all the parties reached the compromise. This autumn Kyrgyzstan entered the CUBKR. According to projections, other countries from the Eurasian Economic Community may also come soon. 
According to Prime Minister Vladimir Putin the CUBKR was going to set up a dialogue with EU in future, so he claimed that the Ukraine and Moldova could help to do it.
As to Ukraine, Kiev made it clear that setting out the free trade zone with European Union was more important than entering the CUBKR. Despite the fact that experts claimed that Ukraine can derive benefit from getting into the CUBKR, negotiations were failed. Analytics say that establishing the same custom policy as in the EU will cause USD 6-8 billion beatings. Despite the fact that Ukrainian President Victor Yanukovich agreed that Russian and Ukrainian economies “are tied to each other closely that the creation of a common economic space will be a benefit”, he denied offer came from Vladimir Putin.
The Ukraine is already the member of the WTO, therefore this country is searching for different mechanisms of cooperation with Russia, but also is afraid that it may affect its world obligations to this world organization.
At the end of October the Republic of Moldova started considering the possibilities and advantages of entering the alliance. But the EU put obstacles at the way of it, threatening that it would stop preferential treatment with the republic. However ex-president of Moldova Vladimir Voronin noticed that the EU was experiencing great problems, and Moldova was not so welcome there. In addition he claimed that “bold political decision should be taken.”
Last year Syria got interested in joining the union. Syrian President Bashar al-Assad said that creating the free trade zone with transport corridor between Damask and Minsk would favor the development of economic contribution in Eurasia Region. Recently New Zealand and Vietnam also took a great interest in the CUBKR.

Defects of the system
During the first half of 2011, the turnover between Russia, Belarus and Kazakhstan increased by 41%, from USD 28.8 billion to 29.3 billion.
However the defect of standard acts became visible. The decision on establishing the union was made in a hurry; therefore member countries are still tied by domestic laws. To avoid further problems the unification of whole jus has to be made soon.
After launching the CUBKR, Vladimir Putin wrote: “We are creating a huge market that will include 165 million consumers, with common legislation and the free flow of capital.” But it didn’t take a long time to realize that the weakest point of alliance is its legislation, which is still not unified.
According to the research made by RBC Daily and Kelly Services the majority of logistic experts agree that the law basis of the CUBKR requires an improvement. 56% said that there were many weak spots in custom law, and 69% claimed that the CUBKR didn’t simplify the work. Among the disadvantages of such alliance is the impossibility to be in control of importing illegal cargoes, which may lead to the increase of drug smugglings.
According to respondents most of the problems are connected with passing through the borders. Companies are complaining about numerous check-ins, huge queues and lack of information. Also a problem of VAT appeared. Till today technical regulations aren’t unified. For example, taxes in Kazakhstan are lower than in other member countries, therefore companies are afraid that it may result into the situation when Kazakhstan’s enterprises will be gaining on advantage over Russian ones.
All the member countries need to be modernized quickly. It means that modern infrastructure, manufacturing capabilities and renewal of human capital are required. It can be achieved by intensifying import, investment and also by adopting the international experience.
Like any other union connected with international goods turnover, the CUBKR is based on protectionism principles. It is both good and bad. But the disadvantages are clearly seen.
The CUBKR managed to ruin more than half of wholesale dealers in Kyrgyzstan. The restriction of custom rules, one person now can take no more than 50 kg, led to the considerable decrease of flow of cheap goods to Kazakhstan.
This autumn Alexander Lukashenko subjected the CUBKR work to sharp criticism. As an example he gave the situation with import duties on cars. He claimed that the duties were set out to please Russian lobbyists, who were afraid of competition with more qualitative and cheap cars from other countries. And these stakeholders work to the prejudice of Russian consumers.
Many times Putin was accused of trying to establish a new version of the USSR, but the Prime Minister denied all the suspicions and said that the CUBKR was “not the revival of the Soviet Union.” However he agreed that member countries “have a great inheritance” from their soviet past.

One step forward
Establishment of the CUBKR was the victory for Moscow, because Russia has always been a leader in regional trade. But mass media claims that such union may delay its entering to the WTO. 
Speaking about the CUBKR, the EU foreign policy chief Catherine Ashton said that in future such union would have a badly influence on the whole international trade system. Moreover, she said that it would push Russia out of entering the WTO. But later during his interview Dmitry Medvedev allayed apprehensions. Chancellor of Germany Angela Merkel also said that Germany wanted to see Russia in the WTO, and she hoped that the CUBKR would not somehow affect the situation.
About 98% of world turnover is being made by water routes, because it is much cheaper than using any type of surface transport. But nowadays such factors as speed and safety in connection with low prime cost are getting more sense. Experts counted, that the total use of the CUBKR resources can help to decrease the terms required for transferring cargoes from China to Europe in more than four times.
In addition surface transport can be controlled all the time; therefore the safety of cargoes shouldn’t be worried about. It should be noted that Russian gauge (1520) is more efficient; therefore it is suitable for high-capacity trains. Such system is also safer, because it provides stability of vehicles.
As a transport corridor between the EU and the Pacific region, the union, first time after the collapse of the USSR, lets Belarus and Kazakhstan get a convenient means of transport with many important places for both countries. 
In a short space of time the advantages of the CUBKR became clear. One more example, Kazakhstan first time for 5 years raised its export indicators to Russia and Belarus. During the first year of the union existence, it averaged USD 7 billion. As a whole, commodity circulation also raised and reached USD 21.7 billion.
Among other advantages being discussed are the pooling of interests and consolidation of capitals which helps to bring sustainability in the development of business in the world trade conditions. Also the CUBKR favors the keeping of jobsites at the non-competitive enterprises.
It was already announced that since 1 January next year all member countries of the CUBKR are integrating into Common Economic Space, which significantly differs from free trade. It will allow to move without paying duties and without any other barriers not only cargoes, but people, capital and services. But officials haven’t discussed the importance of getting rid of migration cards yet. For sure policy was adopted, but still more than 100 agreements should be signed. But politicians claimed that the main contract would be confirmed this December. 
By Kristina AleXandrova
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/4/25.jpg" border="1" alt=" " hspace="5" width="300" height="201" align="left" />Founding the Customs Union (CUBKR), Russia, Kazakhstan and Belarus took the first step into creating Common Economic Space. According to President of Kazakhstan Nursultan Nazarbaev, elimination of custom duties and establishment of common internal tariffs will let each member increase their GDP to 15% by 2015 year. Russian benefit from creating the CUBKR is estimated at USD 400 billion, Belarus and Kazakhstan –<br />USD 16 billion each. But despite the fact that the CUBKR is going to run at a great profit, experts are still arguing about appropriateness of such integration.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/4/25.jpg" border="1" alt=" " hspace="5" width="300" height="201" align="left" />Founding the Customs Union (CUBKR), Russia, Kazakhstan and Belarus took the first step into creating Common Economic Space. According to President of Kazakhstan Nursultan Nazarbaev, elimination of custom duties and establishment of common internal tariffs will let each member increase their GDP to 15% by 2015 year. Russian benefit from creating the CUBKR is estimated at USD 400 billion, Belarus and Kazakhstan –<br />USD 16 billion each. But despite the fact that the CUBKR is going to run at a great profit, experts are still arguing about appropriateness of such integration.
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Getting united
An agreement on creating united custom territory and forming custom union was signed between three countries in 2007. Two years later the documentary basis was created and the exact date of startup was announced – January 1, 2010. But practically the CUBKR set to work on July 1, when common Custom Code came into force.
Parties also reconciled the tariffs on more than 11000 goods. In 90% cases Russian tariffs were taken as an example. By the way, they are much higher than in other member countries. In addition to this, custom registration of the goods transported inside this alliance, was annulled. Transport, sanitary-quarantine, veterinary and fytosanitory control on borders were also cancelled.
Until recently Belorussia was hesitating, hampering the whole process of creating union. It is obvious that each country tried to protect its domestic market, and Minsk was insisting that Russia shouldn’t charge duties on all exporting oil to Belarus. But Dmitry Medvedev decided not to drag out a business and claimed that the CUBKR will start its work without Belarus. Surprisingly few days later during his meeting with Igor Shuvalov, aide to the president of the Russian Federation, Alexander Lukashenko said that Belarus was going to make a compromise with Russia, even if it would be difficult for the first period. Then Belarus formally confirmed its participation.
The disagreement between Russia and Belarus was caused by the fact that Russia wanted to receipt 93% of all duties collected from members of the CUBKR. Finally this sum was reduced to 87.97%, and all the parties reached the compromise. This autumn Kyrgyzstan entered the CUBKR. According to projections, other countries from the Eurasian Economic Community may also come soon. 
According to Prime Minister Vladimir Putin the CUBKR was going to set up a dialogue with EU in future, so he claimed that the Ukraine and Moldova could help to do it.
As to Ukraine, Kiev made it clear that setting out the free trade zone with European Union was more important than entering the CUBKR. Despite the fact that experts claimed that Ukraine can derive benefit from getting into the CUBKR, negotiations were failed. Analytics say that establishing the same custom policy as in the EU will cause USD 6-8 billion beatings. Despite the fact that Ukrainian President Victor Yanukovich agreed that Russian and Ukrainian economies “are tied to each other closely that the creation of a common economic space will be a benefit”, he denied offer came from Vladimir Putin.
The Ukraine is already the member of the WTO, therefore this country is searching for different mechanisms of cooperation with Russia, but also is afraid that it may affect its world obligations to this world organization.
At the end of October the Republic of Moldova started considering the possibilities and advantages of entering the alliance. But the EU put obstacles at the way of it, threatening that it would stop preferential treatment with the republic. However ex-president of Moldova Vladimir Voronin noticed that the EU was experiencing great problems, and Moldova was not so welcome there. In addition he claimed that “bold political decision should be taken.”
Last year Syria got interested in joining the union. Syrian President Bashar al-Assad said that creating the free trade zone with transport corridor between Damask and Minsk would favor the development of economic contribution in Eurasia Region. Recently New Zealand and Vietnam also took a great interest in the CUBKR.

Defects of the system
During the first half of 2011, the turnover between Russia, Belarus and Kazakhstan increased by 41%, from USD 28.8 billion to 29.3 billion.
However the defect of standard acts became visible. The decision on establishing the union was made in a hurry; therefore member countries are still tied by domestic laws. To avoid further problems the unification of whole jus has to be made soon.
After launching the CUBKR, Vladimir Putin wrote: “We are creating a huge market that will include 165 million consumers, with common legislation and the free flow of capital.” But it didn’t take a long time to realize that the weakest point of alliance is its legislation, which is still not unified.
According to the research made by RBC Daily and Kelly Services the majority of logistic experts agree that the law basis of the CUBKR requires an improvement. 56% said that there were many weak spots in custom law, and 69% claimed that the CUBKR didn’t simplify the work. Among the disadvantages of such alliance is the impossibility to be in control of importing illegal cargoes, which may lead to the increase of drug smugglings.
According to respondents most of the problems are connected with passing through the borders. Companies are complaining about numerous check-ins, huge queues and lack of information. Also a problem of VAT appeared. Till today technical regulations aren’t unified. For example, taxes in Kazakhstan are lower than in other member countries, therefore companies are afraid that it may result into the situation when Kazakhstan’s enterprises will be gaining on advantage over Russian ones.
All the member countries need to be modernized quickly. It means that modern infrastructure, manufacturing capabilities and renewal of human capital are required. It can be achieved by intensifying import, investment and also by adopting the international experience.
Like any other union connected with international goods turnover, the CUBKR is based on protectionism principles. It is both good and bad. But the disadvantages are clearly seen.
The CUBKR managed to ruin more than half of wholesale dealers in Kyrgyzstan. The restriction of custom rules, one person now can take no more than 50 kg, led to the considerable decrease of flow of cheap goods to Kazakhstan.
This autumn Alexander Lukashenko subjected the CUBKR work to sharp criticism. As an example he gave the situation with import duties on cars. He claimed that the duties were set out to please Russian lobbyists, who were afraid of competition with more qualitative and cheap cars from other countries. And these stakeholders work to the prejudice of Russian consumers.
Many times Putin was accused of trying to establish a new version of the USSR, but the Prime Minister denied all the suspicions and said that the CUBKR was “not the revival of the Soviet Union.” However he agreed that member countries “have a great inheritance” from their soviet past.

One step forward
Establishment of the CUBKR was the victory for Moscow, because Russia has always been a leader in regional trade. But mass media claims that such union may delay its entering to the WTO. 
Speaking about the CUBKR, the EU foreign policy chief Catherine Ashton said that in future such union would have a badly influence on the whole international trade system. Moreover, she said that it would push Russia out of entering the WTO. But later during his interview Dmitry Medvedev allayed apprehensions. Chancellor of Germany Angela Merkel also said that Germany wanted to see Russia in the WTO, and she hoped that the CUBKR would not somehow affect the situation.
About 98% of world turnover is being made by water routes, because it is much cheaper than using any type of surface transport. But nowadays such factors as speed and safety in connection with low prime cost are getting more sense. Experts counted, that the total use of the CUBKR resources can help to decrease the terms required for transferring cargoes from China to Europe in more than four times.
In addition surface transport can be controlled all the time; therefore the safety of cargoes shouldn’t be worried about. It should be noted that Russian gauge (1520) is more efficient; therefore it is suitable for high-capacity trains. Such system is also safer, because it provides stability of vehicles.
As a transport corridor between the EU and the Pacific region, the union, first time after the collapse of the USSR, lets Belarus and Kazakhstan get a convenient means of transport with many important places for both countries. 
In a short space of time the advantages of the CUBKR became clear. One more example, Kazakhstan first time for 5 years raised its export indicators to Russia and Belarus. During the first year of the union existence, it averaged USD 7 billion. As a whole, commodity circulation also raised and reached USD 21.7 billion.
Among other advantages being discussed are the pooling of interests and consolidation of capitals which helps to bring sustainability in the development of business in the world trade conditions. Also the CUBKR favors the keeping of jobsites at the non-competitive enterprises.
It was already announced that since 1 January next year all member countries of the CUBKR are integrating into Common Economic Space, which significantly differs from free trade. It will allow to move without paying duties and without any other barriers not only cargoes, but people, capital and services. But officials haven’t discussed the importance of getting rid of migration cards yet. For sure policy was adopted, but still more than 100 agreements should be signed. But politicians claimed that the main contract would be confirmed this December. 
By Kristina AleXandrova
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Getting united
An agreement on creating united custom territory and forming custom union was signed between three countries in 2007. Two years later the documentary basis was created and the exact date of startup was announced – January 1, 2010. But practically the CUBKR set to work on July 1, when common Custom Code came into force.
Parties also reconciled the tariffs on more than 11000 goods. In 90% cases Russian tariffs were taken as an example. By the way, they are much higher than in other member countries. In addition to this, custom registration of the goods transported inside this alliance, was annulled. Transport, sanitary-quarantine, veterinary and fytosanitory control on borders were also cancelled.
Until recently Belorussia was hesitating, hampering the whole process of creating union. It is obvious that each country tried to protect its domestic market, and Minsk was insisting that Russia shouldn’t charge duties on all exporting oil to Belarus. But Dmitry Medvedev decided not to drag out a business and claimed that the CUBKR will start its work without Belarus. Surprisingly few days later during his meeting with Igor Shuvalov, aide to the president of the Russian Federation, Alexander Lukashenko said that Belarus was going to make a compromise with Russia, even if it would be difficult for the first period. Then Belarus formally confirmed its participation.
The disagreement between Russia and Belarus was caused by the fact that Russia wanted to receipt 93% of all duties collected from members of the CUBKR. Finally this sum was reduced to 87.97%, and all the parties reached the compromise. This autumn Kyrgyzstan entered the CUBKR. According to projections, other countries from the Eurasian Economic Community may also come soon. 
According to Prime Minister Vladimir Putin the CUBKR was going to set up a dialogue with EU in future, so he claimed that the Ukraine and Moldova could help to do it.
As to Ukraine, Kiev made it clear that setting out the free trade zone with European Union was more important than entering the CUBKR. Despite the fact that experts claimed that Ukraine can derive benefit from getting into the CUBKR, negotiations were failed. Analytics say that establishing the same custom policy as in the EU will cause USD 6-8 billion beatings. Despite the fact that Ukrainian President Victor Yanukovich agreed that Russian and Ukrainian economies “are tied to each other closely that the creation of a common economic space will be a benefit”, he denied offer came from Vladimir Putin.
The Ukraine is already the member of the WTO, therefore this country is searching for different mechanisms of cooperation with Russia, but also is afraid that it may affect its world obligations to this world organization.
At the end of October the Republic of Moldova started considering the possibilities and advantages of entering the alliance. But the EU put obstacles at the way of it, threatening that it would stop preferential treatment with the republic. However ex-president of Moldova Vladimir Voronin noticed that the EU was experiencing great problems, and Moldova was not so welcome there. In addition he claimed that “bold political decision should be taken.”
Last year Syria got interested in joining the union. Syrian President Bashar al-Assad said that creating the free trade zone with transport corridor between Damask and Minsk would favor the development of economic contribution in Eurasia Region. Recently New Zealand and Vietnam also took a great interest in the CUBKR.

Defects of the system
During the first half of 2011, the turnover between Russia, Belarus and Kazakhstan increased by 41%, from USD 28.8 billion to 29.3 billion.
However the defect of standard acts became visible. The decision on establishing the union was made in a hurry; therefore member countries are still tied by domestic laws. To avoid further problems the unification of whole jus has to be made soon.
After launching the CUBKR, Vladimir Putin wrote: “We are creating a huge market that will include 165 million consumers, with common legislation and the free flow of capital.” But it didn’t take a long time to realize that the weakest point of alliance is its legislation, which is still not unified.
According to the research made by RBC Daily and Kelly Services the majority of logistic experts agree that the law basis of the CUBKR requires an improvement. 56% said that there were many weak spots in custom law, and 69% claimed that the CUBKR didn’t simplify the work. Among the disadvantages of such alliance is the impossibility to be in control of importing illegal cargoes, which may lead to the increase of drug smugglings.
According to respondents most of the problems are connected with passing through the borders. Companies are complaining about numerous check-ins, huge queues and lack of information. Also a problem of VAT appeared. Till today technical regulations aren’t unified. For example, taxes in Kazakhstan are lower than in other member countries, therefore companies are afraid that it may result into the situation when Kazakhstan’s enterprises will be gaining on advantage over Russian ones.
All the member countries need to be modernized quickly. It means that modern infrastructure, manufacturing capabilities and renewal of human capital are required. It can be achieved by intensifying import, investment and also by adopting the international experience.
Like any other union connected with international goods turnover, the CUBKR is based on protectionism principles. It is both good and bad. But the disadvantages are clearly seen.
The CUBKR managed to ruin more than half of wholesale dealers in Kyrgyzstan. The restriction of custom rules, one person now can take no more than 50 kg, led to the considerable decrease of flow of cheap goods to Kazakhstan.
This autumn Alexander Lukashenko subjected the CUBKR work to sharp criticism. As an example he gave the situation with import duties on cars. He claimed that the duties were set out to please Russian lobbyists, who were afraid of competition with more qualitative and cheap cars from other countries. And these stakeholders work to the prejudice of Russian consumers.
Many times Putin was accused of trying to establish a new version of the USSR, but the Prime Minister denied all the suspicions and said that the CUBKR was “not the revival of the Soviet Union.” However he agreed that member countries “have a great inheritance” from their soviet past.

One step forward
Establishment of the CUBKR was the victory for Moscow, because Russia has always been a leader in regional trade. But mass media claims that such union may delay its entering to the WTO. 
Speaking about the CUBKR, the EU foreign policy chief Catherine Ashton said that in future such union would have a badly influence on the whole international trade system. Moreover, she said that it would push Russia out of entering the WTO. But later during his interview Dmitry Medvedev allayed apprehensions. Chancellor of Germany Angela Merkel also said that Germany wanted to see Russia in the WTO, and she hoped that the CUBKR would not somehow affect the situation.
About 98% of world turnover is being made by water routes, because it is much cheaper than using any type of surface transport. But nowadays such factors as speed and safety in connection with low prime cost are getting more sense. Experts counted, that the total use of the CUBKR resources can help to decrease the terms required for transferring cargoes from China to Europe in more than four times.
In addition surface transport can be controlled all the time; therefore the safety of cargoes shouldn’t be worried about. It should be noted that Russian gauge (1520) is more efficient; therefore it is suitable for high-capacity trains. Such system is also safer, because it provides stability of vehicles.
As a transport corridor between the EU and the Pacific region, the union, first time after the collapse of the USSR, lets Belarus and Kazakhstan get a convenient means of transport with many important places for both countries. 
In a short space of time the advantages of the CUBKR became clear. One more example, Kazakhstan first time for 5 years raised its export indicators to Russia and Belarus. During the first year of the union existence, it averaged USD 7 billion. As a whole, commodity circulation also raised and reached USD 21.7 billion.
Among other advantages being discussed are the pooling of interests and consolidation of capitals which helps to bring sustainability in the development of business in the world trade conditions. Also the CUBKR favors the keeping of jobsites at the non-competitive enterprises.
It was already announced that since 1 January next year all member countries of the CUBKR are integrating into Common Economic Space, which significantly differs from free trade. It will allow to move without paying duties and without any other barriers not only cargoes, but people, capital and services. But officials haven’t discussed the importance of getting rid of migration cards yet. For sure policy was adopted, but still more than 100 agreements should be signed. But politicians claimed that the main contract would be confirmed this December. 
By Kristina AleXandrova
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/4/25.jpg" border="1" alt=" " hspace="5" width="300" height="201" align="left" />Founding the Customs Union (CUBKR), Russia, Kazakhstan and Belarus took the first step into creating Common Economic Space. According to President of Kazakhstan Nursultan Nazarbaev, elimination of custom duties and establishment of common internal tariffs will let each member increase their GDP to 15% by 2015 year. Russian benefit from creating the CUBKR is estimated at USD 400 billion, Belarus and Kazakhstan –<br />USD 16 billion each. But despite the fact that the CUBKR is going to run at a great profit, experts are still arguing about appropriateness of such integration.
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Innovations in Business Processes
In the opinion of Ilya Massuh, Deputy Head of the Russian Ministry of Connections and Mass Communications (Minkomsvyaz), the IT service of RZD absorbed the best practices providing targeted control over expenditure and envisaging the opportunity of business scaling.
Experts say that such IT systems help make management more efficient, improve strategic planning and control over the fulfillment of decisions due to clear division of the personnel’s powers and responsibilities. As a result, as Vladimir Godin, Vice Rector of the State University of Management, noted, up-to-date digital technologies become the basis for creation of the new corporate culture based on the team of top managers with leadership skills and able to fulfill scaled tasks step-by-step.
RZD is a very large company. Its infrastructure has more than 85,000 km of track, over half of which is electrified, and over 380 enterprises servicing transportation. Also, there is an electric power supply network and 160 energy facilities enterprises. Automation and telemechanics service consist of another 200 enterprises. The wagon complex consists of the rolling-stock park (over one million units of freight rolling stock) and more than 390 maintenance depots.
In the words of Alexey Illarionov, Head of the IT and Corporate Process Management Department at RZD, without the IT technologies it would have been impossible to create the single centre of competence and responsibility for carrying capacity provision – the Central Directorate of Infrastructure. 
This allowed to optimise expenditure, to improve infrastructure management efficiency and the quality of services, and to put into operation the outsourcing mechanism. Due to all these, additional resources appeared.
Although, the same example reveals the reason for many problems: traditional control means are not efficient in such a large company. Time is needed to find the person who made a non-efficient decision. For example, a dispatcher directed a new batch of wagons for cleaning to the tracks, which are already occupied by other rolling stock. He thought this decision was correct. Instead, his action caused train idling at the station. 
Specialists at RZD think that a possible measure for avoiding such situations is implementation of e-document turnover with a digital e-signature. Nowadays, there are 50,000 users who have digital e-signatures in the company. The specific feature of this technology is that the document is not just signed; one can see the timestamp as well. Also, all amendments are automatically recorded by large computers. In other words, such documents cannot be backdated, as personnel do sometimes with paper documents at railway stations. 
The number of corporate users with e-signature at Russian railways is supposed to increase to 1.2 million in the near future. In a year, there will be 280 million e-documents in the headquarters and at railways, and they will cover all key production and financial operations. 
For it, pilot projects using tablet devices and pocket PCs are being carried out. The former are used by managers to coordinate management decisions, and the latter – by the operating personnel (for example, electricians). The main difficulty is that the innovations are to simplify the work of the personnel and suggest optimal chains of action. And business technologies must be changed for that. Otherwise, people will have no stimuli to use all the opportunities afforded by the electronics. It will be considered as the top management’s urge to find that an employee’s actions mismatch the rules and regulations and cut the size of the bonus. 

Mainframes Will Provide Records and Control   
An up-to-date hardware platform is needed to provide business processes and put into operation different types of network devices. Valery Vishnyakov, Head of RZD’s Main Computer Centre,  said in his speech at the XVI international conference “Information Technologies at the Railway Transport” that the company is carrying basic information tasks of the network level to three data processing centres – in Moscow, St Petersburg, and Yekaterinburg. Why are such reforms needed?
“Plenty of automated work places and information systems are used in RZD. Usually, such systems, which serviced railways, were located in Information and Computer Centres at railway affiliates of RZD. Nowadays, the technical level of server equipment and data network allows to cut the number of used computing complexes. This will help to optimise maintenance costs and investments into its development. Computing consolidation is a usual process in the world allowing the use of available IT resources more efficiently,” emphasised Mr Vishnyakov.
In practice it will look like this: company’s basic information and computing complexes are accumulated in three computer centres. They provide the functioning of the company’s basic information systems such as ASU Express (Russian Railways ticketing system), ASU of cargo transportation, and automated systems for financial and labour resources control.
The work of ASU Express is already provided by two computing centres in Moscow and St Petersburg. Each of the centres supports its own sector for the load to be equal. The Information and Computer Centre in Moscow also maintains an analytical database. Regional centres continue to work with information systems, and all supercomputers supporting ASU Express are in Moscow and St Petersburg. 
Labour resources control system is supported by mainframes in St Petersburg and Yekaterinburg. 
As for freight transportation control system, the targets are even more scaled. That is why the network will be based on the server resources of all three centres – in Moscow, St Petersburg, and Yekaterinburg. In the near future, the project of transferring systems servicing the Kuibyshev Railway to the mainframes in St Petersburg is supposed to be completed. The next step is to transfer the systems of the Northern Railway.
Equipment reservation is an important issue for resources consolidation. Nowadays, railways cannot operate without information systems. Idling of a computer centre will make transportation impossible. Reserve data processing centres are needed to provide continuous calculations. The first reserve centre is to be built in Yekaterinburg. The building has been designed already, and its foundation is being laid. It is to be put into operation in several years. 
After the consolidation project is completed, the Information and Computer Centers of railways-affiliates of RZD will have the same responsibilities as before but for servicing the equipment of central computer complexes. This is technical and technological support for work places and for railway information systems. The major effect of consolidation comes from optimisation of equipment use, quality improvement, and reliability of information systems, but not from laying off staff. 
Similar measures are taken in a lot of large corporations all over the world. For example, VR-Group has done a lot in this sector. It created all necessary conditions to interact on paperless basis with RZD and customs at border stations. In the words of Jukka-Pekka Sounikko, IT Director of VR-Group, technologies for better operation of the agent network at the railway are being implemented nowadays. In future, the company plans to organise paperless monitoring of all equipment providing train traffic.  

E-Document Turnover Speed Up Train Traffic
Supercomputers are an ordinary thing in such large corporations as Russian Railways. The question is how to use them, what goals are to be set. RZD has ambitious plans in this field. And they are so complicated that specialists who took part in a similar conference two years ago doubted that such plans could be carried out. RZD is going not just to make transportation control paperless, but to record automatically all key managing decisions across the whole network. 
E-document turnover will allow expenditure to be cut, and to record all amendments to a document made while it passes through all the departments. In the words of Alexey Illarionov, Head of IT and Corporate Process Management Department at RZD, if railway executive officials use e-signature, it is easy to find out who made an amendment and when. Consequently, the order of the decision-making process may be restored easily. 
For example, a new batch of wagons was delivered for cleaning on the track occupied by other rolling stock. As a result, there appeared non-productive idling. The name of the executor may not be mentioned in the paper document, but it is very important to analyse the decision-making process and understand the motives. Perhaps, the person in charge at the station could have lacked the information that the track was occupied. For example, the railcars were to be removed for loading, but they stayed on the track because a car checker found defects and decided not to use the railcar. 
A shunting locomotive could have been busy. Data could have failed to be put into the report on time. If all events are recorded automatically, the efficiency of the railway station management can be easily evaluated. Thus, there appears the opportunity to find the risks of non-productive idling of railcars and to prevent them in future. 
The problem is that there are a lot of such key operations on RZD’s network. According to Sergey Vasilyev, Deputy Head of a department at the Main Computer Centre, engaged in development of infrastructure for intellectual management and safety systems at Russian Railways, there are about 280 million basic documents in circulation on the railways, and over 1.2 million users working with them. These are the users who need e-signatures. The target is scaled, but it can be reached due to the powerful computing equipment purchased by RZD. Later, the business processes will be re-arranged on the basis of data which can be received by means of the computer network. The computers may not just give a necessary sampling, but suggest possible solutions as well. 
The efficiency of IT systems may be estimated using the example of local products. For instance, the Novorossiysk transport junction has 12 stevedoring complexes. An automated system for controlling wagon traffic to the berths was put into operation at the railway port stations there. In the words of Roman Kruglyakov, CEO of Armada, it allowed to increase daily wagon turnover by 11% without enlarging the stations’ capacities. Due to combining information about train traffic and fleet arrival, stevedores managed to speed up cargo handling. 
Analysis of work of some railway junctions of the Oktyabrskaya Railway also revealed the opportunity to increase wagon turnover there by 10-30% (it depends on the measures taken). 
By Andrey Lazarev
viewpoint
Alexey Illarionov,
Head of IT and Corporate Process Management Department at RZD:
– Specialists at RZD aim to control online all 9 million infrastructure objects available to decrease the impact of the human factor by means of accounting automation, to have an opportunity to block unauthorised actions remotely, and to implement the automated monitoring of technological processes.

Vladimir Godin,
Vice Rector of the State University of Management:
– Large corporations became interested in IT systems when there appeared the opportunity to implement automated inspection systems enabling to optimise the work of personnel at distant facilities, when specialists cannot get fast to the place to find out the reason for failures. In this case it is very important to organise control over the key decisions made by personnel and to create remote control over the work of numerous network modules. 


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Innovations in Business Processes
In the opinion of Ilya Massuh, Deputy Head of the Russian Ministry of Connections and Mass Communications (Minkomsvyaz), the IT service of RZD absorbed the best practices providing targeted control over expenditure and envisaging the opportunity of business scaling.
Experts say that such IT systems help make management more efficient, improve strategic planning and control over the fulfillment of decisions due to clear division of the personnel’s powers and responsibilities. As a result, as Vladimir Godin, Vice Rector of the State University of Management, noted, up-to-date digital technologies become the basis for creation of the new corporate culture based on the team of top managers with leadership skills and able to fulfill scaled tasks step-by-step.
RZD is a very large company. Its infrastructure has more than 85,000 km of track, over half of which is electrified, and over 380 enterprises servicing transportation. Also, there is an electric power supply network and 160 energy facilities enterprises. Automation and telemechanics service consist of another 200 enterprises. The wagon complex consists of the rolling-stock park (over one million units of freight rolling stock) and more than 390 maintenance depots.
In the words of Alexey Illarionov, Head of the IT and Corporate Process Management Department at RZD, without the IT technologies it would have been impossible to create the single centre of competence and responsibility for carrying capacity provision – the Central Directorate of Infrastructure. 
This allowed to optimise expenditure, to improve infrastructure management efficiency and the quality of services, and to put into operation the outsourcing mechanism. Due to all these, additional resources appeared.
Although, the same example reveals the reason for many problems: traditional control means are not efficient in such a large company. Time is needed to find the person who made a non-efficient decision. For example, a dispatcher directed a new batch of wagons for cleaning to the tracks, which are already occupied by other rolling stock. He thought this decision was correct. Instead, his action caused train idling at the station. 
Specialists at RZD think that a possible measure for avoiding such situations is implementation of e-document turnover with a digital e-signature. Nowadays, there are 50,000 users who have digital e-signatures in the company. The specific feature of this technology is that the document is not just signed; one can see the timestamp as well. Also, all amendments are automatically recorded by large computers. In other words, such documents cannot be backdated, as personnel do sometimes with paper documents at railway stations. 
The number of corporate users with e-signature at Russian railways is supposed to increase to 1.2 million in the near future. In a year, there will be 280 million e-documents in the headquarters and at railways, and they will cover all key production and financial operations. 
For it, pilot projects using tablet devices and pocket PCs are being carried out. The former are used by managers to coordinate management decisions, and the latter – by the operating personnel (for example, electricians). The main difficulty is that the innovations are to simplify the work of the personnel and suggest optimal chains of action. And business technologies must be changed for that. Otherwise, people will have no stimuli to use all the opportunities afforded by the electronics. It will be considered as the top management’s urge to find that an employee’s actions mismatch the rules and regulations and cut the size of the bonus. 

Mainframes Will Provide Records and Control   
An up-to-date hardware platform is needed to provide business processes and put into operation different types of network devices. Valery Vishnyakov, Head of RZD’s Main Computer Centre,  said in his speech at the XVI international conference “Information Technologies at the Railway Transport” that the company is carrying basic information tasks of the network level to three data processing centres – in Moscow, St Petersburg, and Yekaterinburg. Why are such reforms needed?
“Plenty of automated work places and information systems are used in RZD. Usually, such systems, which serviced railways, were located in Information and Computer Centres at railway affiliates of RZD. Nowadays, the technical level of server equipment and data network allows to cut the number of used computing complexes. This will help to optimise maintenance costs and investments into its development. Computing consolidation is a usual process in the world allowing the use of available IT resources more efficiently,” emphasised Mr Vishnyakov.
In practice it will look like this: company’s basic information and computing complexes are accumulated in three computer centres. They provide the functioning of the company’s basic information systems such as ASU Express (Russian Railways ticketing system), ASU of cargo transportation, and automated systems for financial and labour resources control.
The work of ASU Express is already provided by two computing centres in Moscow and St Petersburg. Each of the centres supports its own sector for the load to be equal. The Information and Computer Centre in Moscow also maintains an analytical database. Regional centres continue to work with information systems, and all supercomputers supporting ASU Express are in Moscow and St Petersburg. 
Labour resources control system is supported by mainframes in St Petersburg and Yekaterinburg. 
As for freight transportation control system, the targets are even more scaled. That is why the network will be based on the server resources of all three centres – in Moscow, St Petersburg, and Yekaterinburg. In the near future, the project of transferring systems servicing the Kuibyshev Railway to the mainframes in St Petersburg is supposed to be completed. The next step is to transfer the systems of the Northern Railway.
Equipment reservation is an important issue for resources consolidation. Nowadays, railways cannot operate without information systems. Idling of a computer centre will make transportation impossible. Reserve data processing centres are needed to provide continuous calculations. The first reserve centre is to be built in Yekaterinburg. The building has been designed already, and its foundation is being laid. It is to be put into operation in several years. 
After the consolidation project is completed, the Information and Computer Centers of railways-affiliates of RZD will have the same responsibilities as before but for servicing the equipment of central computer complexes. This is technical and technological support for work places and for railway information systems. The major effect of consolidation comes from optimisation of equipment use, quality improvement, and reliability of information systems, but not from laying off staff. 
Similar measures are taken in a lot of large corporations all over the world. For example, VR-Group has done a lot in this sector. It created all necessary conditions to interact on paperless basis with RZD and customs at border stations. In the words of Jukka-Pekka Sounikko, IT Director of VR-Group, technologies for better operation of the agent network at the railway are being implemented nowadays. In future, the company plans to organise paperless monitoring of all equipment providing train traffic.  

E-Document Turnover Speed Up Train Traffic
Supercomputers are an ordinary thing in such large corporations as Russian Railways. The question is how to use them, what goals are to be set. RZD has ambitious plans in this field. And they are so complicated that specialists who took part in a similar conference two years ago doubted that such plans could be carried out. RZD is going not just to make transportation control paperless, but to record automatically all key managing decisions across the whole network. 
E-document turnover will allow expenditure to be cut, and to record all amendments to a document made while it passes through all the departments. In the words of Alexey Illarionov, Head of IT and Corporate Process Management Department at RZD, if railway executive officials use e-signature, it is easy to find out who made an amendment and when. Consequently, the order of the decision-making process may be restored easily. 
For example, a new batch of wagons was delivered for cleaning on the track occupied by other rolling stock. As a result, there appeared non-productive idling. The name of the executor may not be mentioned in the paper document, but it is very important to analyse the decision-making process and understand the motives. Perhaps, the person in charge at the station could have lacked the information that the track was occupied. For example, the railcars were to be removed for loading, but they stayed on the track because a car checker found defects and decided not to use the railcar. 
A shunting locomotive could have been busy. Data could have failed to be put into the report on time. If all events are recorded automatically, the efficiency of the railway station management can be easily evaluated. Thus, there appears the opportunity to find the risks of non-productive idling of railcars and to prevent them in future. 
The problem is that there are a lot of such key operations on RZD’s network. According to Sergey Vasilyev, Deputy Head of a department at the Main Computer Centre, engaged in development of infrastructure for intellectual management and safety systems at Russian Railways, there are about 280 million basic documents in circulation on the railways, and over 1.2 million users working with them. These are the users who need e-signatures. The target is scaled, but it can be reached due to the powerful computing equipment purchased by RZD. Later, the business processes will be re-arranged on the basis of data which can be received by means of the computer network. The computers may not just give a necessary sampling, but suggest possible solutions as well. 
The efficiency of IT systems may be estimated using the example of local products. For instance, the Novorossiysk transport junction has 12 stevedoring complexes. An automated system for controlling wagon traffic to the berths was put into operation at the railway port stations there. In the words of Roman Kruglyakov, CEO of Armada, it allowed to increase daily wagon turnover by 11% without enlarging the stations’ capacities. Due to combining information about train traffic and fleet arrival, stevedores managed to speed up cargo handling. 
Analysis of work of some railway junctions of the Oktyabrskaya Railway also revealed the opportunity to increase wagon turnover there by 10-30% (it depends on the measures taken). 
By Andrey Lazarev
viewpoint
Alexey Illarionov,
Head of IT and Corporate Process Management Department at RZD:
– Specialists at RZD aim to control online all 9 million infrastructure objects available to decrease the impact of the human factor by means of accounting automation, to have an opportunity to block unauthorised actions remotely, and to implement the automated monitoring of technological processes.

Vladimir Godin,
Vice Rector of the State University of Management:
– Large corporations became interested in IT systems when there appeared the opportunity to implement automated inspection systems enabling to optimise the work of personnel at distant facilities, when specialists cannot get fast to the place to find out the reason for failures. In this case it is very important to organise control over the key decisions made by personnel and to create remote control over the work of numerous network modules. 


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Innovations in Business Processes
In the opinion of Ilya Massuh, Deputy Head of the Russian Ministry of Connections and Mass Communications (Minkomsvyaz), the IT service of RZD absorbed the best practices providing targeted control over expenditure and envisaging the opportunity of business scaling.
Experts say that such IT systems help make management more efficient, improve strategic planning and control over the fulfillment of decisions due to clear division of the personnel’s powers and responsibilities. As a result, as Vladimir Godin, Vice Rector of the State University of Management, noted, up-to-date digital technologies become the basis for creation of the new corporate culture based on the team of top managers with leadership skills and able to fulfill scaled tasks step-by-step.
RZD is a very large company. Its infrastructure has more than 85,000 km of track, over half of which is electrified, and over 380 enterprises servicing transportation. Also, there is an electric power supply network and 160 energy facilities enterprises. Automation and telemechanics service consist of another 200 enterprises. The wagon complex consists of the rolling-stock park (over one million units of freight rolling stock) and more than 390 maintenance depots.
In the words of Alexey Illarionov, Head of the IT and Corporate Process Management Department at RZD, without the IT technologies it would have been impossible to create the single centre of competence and responsibility for carrying capacity provision – the Central Directorate of Infrastructure. 
This allowed to optimise expenditure, to improve infrastructure management efficiency and the quality of services, and to put into operation the outsourcing mechanism. Due to all these, additional resources appeared.
Although, the same example reveals the reason for many problems: traditional control means are not efficient in such a large company. Time is needed to find the person who made a non-efficient decision. For example, a dispatcher directed a new batch of wagons for cleaning to the tracks, which are already occupied by other rolling stock. He thought this decision was correct. Instead, his action caused train idling at the station. 
Specialists at RZD think that a possible measure for avoiding such situations is implementation of e-document turnover with a digital e-signature. Nowadays, there are 50,000 users who have digital e-signatures in the company. The specific feature of this technology is that the document is not just signed; one can see the timestamp as well. Also, all amendments are automatically recorded by large computers. In other words, such documents cannot be backdated, as personnel do sometimes with paper documents at railway stations. 
The number of corporate users with e-signature at Russian railways is supposed to increase to 1.2 million in the near future. In a year, there will be 280 million e-documents in the headquarters and at railways, and they will cover all key production and financial operations. 
For it, pilot projects using tablet devices and pocket PCs are being carried out. The former are used by managers to coordinate management decisions, and the latter – by the operating personnel (for example, electricians). The main difficulty is that the innovations are to simplify the work of the personnel and suggest optimal chains of action. And business technologies must be changed for that. Otherwise, people will have no stimuli to use all the opportunities afforded by the electronics. It will be considered as the top management’s urge to find that an employee’s actions mismatch the rules and regulations and cut the size of the bonus. 

Mainframes Will Provide Records and Control   
An up-to-date hardware platform is needed to provide business processes and put into operation different types of network devices. Valery Vishnyakov, Head of RZD’s Main Computer Centre,  said in his speech at the XVI international conference “Information Technologies at the Railway Transport” that the company is carrying basic information tasks of the network level to three data processing centres – in Moscow, St Petersburg, and Yekaterinburg. Why are such reforms needed?
“Plenty of automated work places and information systems are used in RZD. Usually, such systems, which serviced railways, were located in Information and Computer Centres at railway affiliates of RZD. Nowadays, the technical level of server equipment and data network allows to cut the number of used computing complexes. This will help to optimise maintenance costs and investments into its development. Computing consolidation is a usual process in the world allowing the use of available IT resources more efficiently,” emphasised Mr Vishnyakov.
In practice it will look like this: company’s basic information and computing complexes are accumulated in three computer centres. They provide the functioning of the company’s basic information systems such as ASU Express (Russian Railways ticketing system), ASU of cargo transportation, and automated systems for financial and labour resources control.
The work of ASU Express is already provided by two computing centres in Moscow and St Petersburg. Each of the centres supports its own sector for the load to be equal. The Information and Computer Centre in Moscow also maintains an analytical database. Regional centres continue to work with information systems, and all supercomputers supporting ASU Express are in Moscow and St Petersburg. 
Labour resources control system is supported by mainframes in St Petersburg and Yekaterinburg. 
As for freight transportation control system, the targets are even more scaled. That is why the network will be based on the server resources of all three centres – in Moscow, St Petersburg, and Yekaterinburg. In the near future, the project of transferring systems servicing the Kuibyshev Railway to the mainframes in St Petersburg is supposed to be completed. The next step is to transfer the systems of the Northern Railway.
Equipment reservation is an important issue for resources consolidation. Nowadays, railways cannot operate without information systems. Idling of a computer centre will make transportation impossible. Reserve data processing centres are needed to provide continuous calculations. The first reserve centre is to be built in Yekaterinburg. The building has been designed already, and its foundation is being laid. It is to be put into operation in several years. 
After the consolidation project is completed, the Information and Computer Centers of railways-affiliates of RZD will have the same responsibilities as before but for servicing the equipment of central computer complexes. This is technical and technological support for work places and for railway information systems. The major effect of consolidation comes from optimisation of equipment use, quality improvement, and reliability of information systems, but not from laying off staff. 
Similar measures are taken in a lot of large corporations all over the world. For example, VR-Group has done a lot in this sector. It created all necessary conditions to interact on paperless basis with RZD and customs at border stations. In the words of Jukka-Pekka Sounikko, IT Director of VR-Group, technologies for better operation of the agent network at the railway are being implemented nowadays. In future, the company plans to organise paperless monitoring of all equipment providing train traffic.  

E-Document Turnover Speed Up Train Traffic
Supercomputers are an ordinary thing in such large corporations as Russian Railways. The question is how to use them, what goals are to be set. RZD has ambitious plans in this field. And they are so complicated that specialists who took part in a similar conference two years ago doubted that such plans could be carried out. RZD is going not just to make transportation control paperless, but to record automatically all key managing decisions across the whole network. 
E-document turnover will allow expenditure to be cut, and to record all amendments to a document made while it passes through all the departments. In the words of Alexey Illarionov, Head of IT and Corporate Process Management Department at RZD, if railway executive officials use e-signature, it is easy to find out who made an amendment and when. Consequently, the order of the decision-making process may be restored easily. 
For example, a new batch of wagons was delivered for cleaning on the track occupied by other rolling stock. As a result, there appeared non-productive idling. The name of the executor may not be mentioned in the paper document, but it is very important to analyse the decision-making process and understand the motives. Perhaps, the person in charge at the station could have lacked the information that the track was occupied. For example, the railcars were to be removed for loading, but they stayed on the track because a car checker found defects and decided not to use the railcar. 
A shunting locomotive could have been busy. Data could have failed to be put into the report on time. If all events are recorded automatically, the efficiency of the railway station management can be easily evaluated. Thus, there appears the opportunity to find the risks of non-productive idling of railcars and to prevent them in future. 
The problem is that there are a lot of such key operations on RZD’s network. According to Sergey Vasilyev, Deputy Head of a department at the Main Computer Centre, engaged in development of infrastructure for intellectual management and safety systems at Russian Railways, there are about 280 million basic documents in circulation on the railways, and over 1.2 million users working with them. These are the users who need e-signatures. The target is scaled, but it can be reached due to the powerful computing equipment purchased by RZD. Later, the business processes will be re-arranged on the basis of data which can be received by means of the computer network. The computers may not just give a necessary sampling, but suggest possible solutions as well. 
The efficiency of IT systems may be estimated using the example of local products. For instance, the Novorossiysk transport junction has 12 stevedoring complexes. An automated system for controlling wagon traffic to the berths was put into operation at the railway port stations there. In the words of Roman Kruglyakov, CEO of Armada, it allowed to increase daily wagon turnover by 11% without enlarging the stations’ capacities. Due to combining information about train traffic and fleet arrival, stevedores managed to speed up cargo handling. 
Analysis of work of some railway junctions of the Oktyabrskaya Railway also revealed the opportunity to increase wagon turnover there by 10-30% (it depends on the measures taken). 
By Andrey Lazarev
viewpoint
Alexey Illarionov,
Head of IT and Corporate Process Management Department at RZD:
– Specialists at RZD aim to control online all 9 million infrastructure objects available to decrease the impact of the human factor by means of accounting automation, to have an opportunity to block unauthorised actions remotely, and to implement the automated monitoring of technological processes.

Vladimir Godin,
Vice Rector of the State University of Management:
– Large corporations became interested in IT systems when there appeared the opportunity to implement automated inspection systems enabling to optimise the work of personnel at distant facilities, when specialists cannot get fast to the place to find out the reason for failures. In this case it is very important to organise control over the key decisions made by personnel and to create remote control over the work of numerous network modules. 


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Innovations in Business Processes
In the opinion of Ilya Massuh, Deputy Head of the Russian Ministry of Connections and Mass Communications (Minkomsvyaz), the IT service of RZD absorbed the best practices providing targeted control over expenditure and envisaging the opportunity of business scaling.
Experts say that such IT systems help make management more efficient, improve strategic planning and control over the fulfillment of decisions due to clear division of the personnel’s powers and responsibilities. As a result, as Vladimir Godin, Vice Rector of the State University of Management, noted, up-to-date digital technologies become the basis for creation of the new corporate culture based on the team of top managers with leadership skills and able to fulfill scaled tasks step-by-step.
RZD is a very large company. Its infrastructure has more than 85,000 km of track, over half of which is electrified, and over 380 enterprises servicing transportation. Also, there is an electric power supply network and 160 energy facilities enterprises. Automation and telemechanics service consist of another 200 enterprises. The wagon complex consists of the rolling-stock park (over one million units of freight rolling stock) and more than 390 maintenance depots.
In the words of Alexey Illarionov, Head of the IT and Corporate Process Management Department at RZD, without the IT technologies it would have been impossible to create the single centre of competence and responsibility for carrying capacity provision – the Central Directorate of Infrastructure. 
This allowed to optimise expenditure, to improve infrastructure management efficiency and the quality of services, and to put into operation the outsourcing mechanism. Due to all these, additional resources appeared.
Although, the same example reveals the reason for many problems: traditional control means are not efficient in such a large company. Time is needed to find the person who made a non-efficient decision. For example, a dispatcher directed a new batch of wagons for cleaning to the tracks, which are already occupied by other rolling stock. He thought this decision was correct. Instead, his action caused train idling at the station. 
Specialists at RZD think that a possible measure for avoiding such situations is implementation of e-document turnover with a digital e-signature. Nowadays, there are 50,000 users who have digital e-signatures in the company. The specific feature of this technology is that the document is not just signed; one can see the timestamp as well. Also, all amendments are automatically recorded by large computers. In other words, such documents cannot be backdated, as personnel do sometimes with paper documents at railway stations. 
The number of corporate users with e-signature at Russian railways is supposed to increase to 1.2 million in the near future. In a year, there will be 280 million e-documents in the headquarters and at railways, and they will cover all key production and financial operations. 
For it, pilot projects using tablet devices and pocket PCs are being carried out. The former are used by managers to coordinate management decisions, and the latter – by the operating personnel (for example, electricians). The main difficulty is that the innovations are to simplify the work of the personnel and suggest optimal chains of action. And business technologies must be changed for that. Otherwise, people will have no stimuli to use all the opportunities afforded by the electronics. It will be considered as the top management’s urge to find that an employee’s actions mismatch the rules and regulations and cut the size of the bonus. 

Mainframes Will Provide Records and Control   
An up-to-date hardware platform is needed to provide business processes and put into operation different types of network devices. Valery Vishnyakov, Head of RZD’s Main Computer Centre,  said in his speech at the XVI international conference “Information Technologies at the Railway Transport” that the company is carrying basic information tasks of the network level to three data processing centres – in Moscow, St Petersburg, and Yekaterinburg. Why are such reforms needed?
“Plenty of automated work places and information systems are used in RZD. Usually, such systems, which serviced railways, were located in Information and Computer Centres at railway affiliates of RZD. Nowadays, the technical level of server equipment and data network allows to cut the number of used computing complexes. This will help to optimise maintenance costs and investments into its development. Computing consolidation is a usual process in the world allowing the use of available IT resources more efficiently,” emphasised Mr Vishnyakov.
In practice it will look like this: company’s basic information and computing complexes are accumulated in three computer centres. They provide the functioning of the company’s basic information systems such as ASU Express (Russian Railways ticketing system), ASU of cargo transportation, and automated systems for financial and labour resources control.
The work of ASU Express is already provided by two computing centres in Moscow and St Petersburg. Each of the centres supports its own sector for the load to be equal. The Information and Computer Centre in Moscow also maintains an analytical database. Regional centres continue to work with information systems, and all supercomputers supporting ASU Express are in Moscow and St Petersburg. 
Labour resources control system is supported by mainframes in St Petersburg and Yekaterinburg. 
As for freight transportation control system, the targets are even more scaled. That is why the network will be based on the server resources of all three centres – in Moscow, St Petersburg, and Yekaterinburg. In the near future, the project of transferring systems servicing the Kuibyshev Railway to the mainframes in St Petersburg is supposed to be completed. The next step is to transfer the systems of the Northern Railway.
Equipment reservation is an important issue for resources consolidation. Nowadays, railways cannot operate without information systems. Idling of a computer centre will make transportation impossible. Reserve data processing centres are needed to provide continuous calculations. The first reserve centre is to be built in Yekaterinburg. The building has been designed already, and its foundation is being laid. It is to be put into operation in several years. 
After the consolidation project is completed, the Information and Computer Centers of railways-affiliates of RZD will have the same responsibilities as before but for servicing the equipment of central computer complexes. This is technical and technological support for work places and for railway information systems. The major effect of consolidation comes from optimisation of equipment use, quality improvement, and reliability of information systems, but not from laying off staff. 
Similar measures are taken in a lot of large corporations all over the world. For example, VR-Group has done a lot in this sector. It created all necessary conditions to interact on paperless basis with RZD and customs at border stations. In the words of Jukka-Pekka Sounikko, IT Director of VR-Group, technologies for better operation of the agent network at the railway are being implemented nowadays. In future, the company plans to organise paperless monitoring of all equipment providing train traffic.  

E-Document Turnover Speed Up Train Traffic
Supercomputers are an ordinary thing in such large corporations as Russian Railways. The question is how to use them, what goals are to be set. RZD has ambitious plans in this field. And they are so complicated that specialists who took part in a similar conference two years ago doubted that such plans could be carried out. RZD is going not just to make transportation control paperless, but to record automatically all key managing decisions across the whole network. 
E-document turnover will allow expenditure to be cut, and to record all amendments to a document made while it passes through all the departments. In the words of Alexey Illarionov, Head of IT and Corporate Process Management Department at RZD, if railway executive officials use e-signature, it is easy to find out who made an amendment and when. Consequently, the order of the decision-making process may be restored easily. 
For example, a new batch of wagons was delivered for cleaning on the track occupied by other rolling stock. As a result, there appeared non-productive idling. The name of the executor may not be mentioned in the paper document, but it is very important to analyse the decision-making process and understand the motives. Perhaps, the person in charge at the station could have lacked the information that the track was occupied. For example, the railcars were to be removed for loading, but they stayed on the track because a car checker found defects and decided not to use the railcar. 
A shunting locomotive could have been busy. Data could have failed to be put into the report on time. If all events are recorded automatically, the efficiency of the railway station management can be easily evaluated. Thus, there appears the opportunity to find the risks of non-productive idling of railcars and to prevent them in future. 
The problem is that there are a lot of such key operations on RZD’s network. According to Sergey Vasilyev, Deputy Head of a department at the Main Computer Centre, engaged in development of infrastructure for intellectual management and safety systems at Russian Railways, there are about 280 million basic documents in circulation on the railways, and over 1.2 million users working with them. These are the users who need e-signatures. The target is scaled, but it can be reached due to the powerful computing equipment purchased by RZD. Later, the business processes will be re-arranged on the basis of data which can be received by means of the computer network. The computers may not just give a necessary sampling, but suggest possible solutions as well. 
The efficiency of IT systems may be estimated using the example of local products. For instance, the Novorossiysk transport junction has 12 stevedoring complexes. An automated system for controlling wagon traffic to the berths was put into operation at the railway port stations there. In the words of Roman Kruglyakov, CEO of Armada, it allowed to increase daily wagon turnover by 11% without enlarging the stations’ capacities. Due to combining information about train traffic and fleet arrival, stevedores managed to speed up cargo handling. 
Analysis of work of some railway junctions of the Oktyabrskaya Railway also revealed the opportunity to increase wagon turnover there by 10-30% (it depends on the measures taken). 
By Andrey Lazarev
viewpoint
Alexey Illarionov,
Head of IT and Corporate Process Management Department at RZD:
– Specialists at RZD aim to control online all 9 million infrastructure objects available to decrease the impact of the human factor by means of accounting automation, to have an opportunity to block unauthorised actions remotely, and to implement the automated monitoring of technological processes.

Vladimir Godin,
Vice Rector of the State University of Management:
– Large corporations became interested in IT systems when there appeared the opportunity to implement automated inspection systems enabling to optimise the work of personnel at distant facilities, when specialists cannot get fast to the place to find out the reason for failures. In this case it is very important to organise control over the key decisions made by personnel and to create remote control over the work of numerous network modules. 


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    [DETAIL_TEXT] => 
In the Process of Consultation
– Mr Muratov, at what stage is the preparation of the construction of the Moscow – St Petersburg high speed railway at the moment?

– Development of the Concept of HSRL-1 is completed. In late August of this year, Vladimir Putin, the Chairman of the Government of the Russian Federation, signed an order approving the plan of actions on implementation of projects on organization of high speed traffic in Russian Federation.
Several big companies from France, Germany, South Korea, China and Spain that have considerable experience in implementation of projects on high speed lines have announced their interest in participation in international tender on choosing the infrastructure provider. Each of the countries to a greater or lesser extent has great experience in design, in construction as well as in operation of such highways.
At the moment within the preparations for the international tender we are holding a series of consultations with potential partners who are interested in participation after which consortiums will be created. We have already held joint seminars for management of RZD JSC and representatives from South Korea and Spain and discussed possibilities of cooperation during the project implementation. Seminars for two companies from France and China are being planned by us at the moment. 

– What work on this project  has been carried out so far?

– Today we have prepared the tender documentation, designed proposals on introduction of changes to regulatory frameworks. We have also thought about the best mechanism for implementing the project to build the HSRL-1 from the point of view of structures that sponsor it. The Ministry of Transport, the Ministry of Finance and the Ministry of Economic Development together with RZD JSC and Vnesheconombank have prepared a report to the government of the Russian Federation. A complex of earthworks and geodesy research projects have been carried out.
According to the plan of actions, approved on August 31, 2011 by the Government of the Russian Federation, during the IV quarter the Ministry of Transport, the Ministry of Economic Development together with Roszeldor and RZD JSC have to define the list of measures on the reservation, land use planning and preparation for the withdrawal of lands (as well as properties that are on them), including the purchase of lands, that are meant for the construction of the infrastructure of the rail line. Proposals on funding of these costs should be prepared by the Ministry of Economic Development before the end of this year. The Ministry of Transport and the Ministry of Industry and Trade with the participation of RZD JSC have to determine the list of equipment that will be required for construction and operation of high speed rail transport infrastructure. They also need to provide an assessment of the advisability of production of this equipment in Russia in order to consider the need to adjust the rates of customs duties on it in the framework of the Customs Union Commission. Along with the establishing of a set of measures to educate and train qualified personnel for the organization of high speed rail traffic the Ministry of Transport and the Ministry of Education and Science with the participation of RZD JSC need to create a system of Continuing Professional Education.
By the end of the year our company has to provide the necessary documentation on preparation of the territory for the future infrastructural provider of HSRL-1 project. At the present moment High-Speed Rail Lines JSC is developing a plan of action to prepare land and to transfer communications. In fact, we have to prepare an area 658 km in length suitable for HSRL-1 so that the future infrastructure provider will be able to plan all constructions correctly. In its turn, this will reduce the cost, which is very beneficial for the state customer. Transfer of communications at the area of 658 km, crossed with swamps, forests and private lands, including branch lines of pipelines and transmission lines, – it is not an easy task that must be completed as soon as possible.

Non–Corruption Schemes
– Today much is said about the contract life cycle (CLC), on the basis of which HSRL-1 will be built. Please, tell us more details about this scheme. Indeed, the project is supposed to be implemented according to the contract life cycle. That is one of the forms of Public-Private Partnership, which is also known as DBFM abbreviation (Design Build Finance Maintain). According to the Russian legislation, the scheme must be implemented in accordance with the Law on Concession Agreements. The concedent and the concessionaire are participants of CLC. In this situation Roszeldor is the concedent but some of it rights and duties will be carried by RZD JSC. And a special project company (SPC) or infrastructure provider will become the concessionaire.
Selected during a tender and approved as the SPC winner should provide design, construction, partial funding and maintenance of the highway for the entire 30-year life cycle. Created HSRL-1 infrastructure unit  will be100% federally owned.
An infrastructure provider is a whole complex of organizations, including a construction company, funding organizations (a syndicate of banks) and the company responsible for the project, as well as the company that will operate the line for 30 years. It is important that at contract life cycle the contractor that is carrying out complex construction becomes financially responsible towards the state and is in charge of the technical risks. In addition, the contractor will be supported by its national banks, whose main task is the structuring of long-term financing together with Russian financial institutions, as well as reducing the cost of authorized capital of the provider (It is important for the government to understand that this company will be able to cover appearing risks during all the life cycle).
The government partner is obliged to finance partially the construction by 50% in the form of a capital grant or subsidy during the construction phase and to ensure the return of initial investment investment in the form of fixed annual service payment during the operation phase. It will be possible at the cost of collecting the payment by the State from transporters that use the highway for commercial purposes. RZD JSC will be occupied with selecting of transporters within a tender the companies that have car park. It is possible that RZD will become the only transporter. 
The amount of payment will be calculated in accordance with the total cost of the project, which will be determined during the tender. According to the contract terms this sum will depend on provision of the quality infrastructure that meet the requirements of the concession agreement. The volume of payments during the operation phase covers the cost of SPC on the maintenance and planned repair of infrastructure, as well as the costs during the construction phase (loans and borrowing repayments, the interest on them, provision of the equity capital profitability level established by the terms of the contract ). 
At the moment, the total amount of investment is about 696.2 billion rubles in the prices of 2010, without VAT (including the preparation of the territory for building at a cost of 50.6 billion rubles with the purchase of land costs).
Thus, LSC is the most appropriate scheme of the implementation of HSRL-1, since it helps to avoid the corruption schemes in tenders, including international, and it is the most open form of public procurement.

Accent on Harmonization
– How will be the funding of the project being approached? What could be the final cost of HSRL-1? What factors will it depend on?

– Minimal cost is one of the criteria for selection of a contractor, as well as profitability requested by the investor. It is important to note that reducing the price of construction reduces correspondingly the cost of payments. All four contenders for the status of the infrastructure provider will receive all the necessary details before the beginning of the tender, not at the day of opening the envelopes in order to be able to compare their potential to the plank of the entire project.
While the designing the focus will be on the harmonization of national standards with European standards. The calculations will be carried out in accordance with the Russian geological conditions, but with adaptation to European. This will allow us to approach the maximum reduction of the final cost. In addition, the concept of separation of operational business from tickets income from  guaranteed payment for the construction of highway has allowed us to reduce the price of construction by 15%. We are going to move in a way of reduction of the cost of the project that we have at the moment. The tender will show much lower figure, and ultimately I think that by minimizing the cost of design and engineer research we can reduce the price to 500 billion rubles.

– What challenges are you facing during the preparation of the tender on a contractor?

 – Sharing of risks is the most difficult area in our work. It’s not a secret that in all great projects the executors face competition for international capital, the best minds and technologies. And, despite the likely risks,  we must show how we can provide comfort conditions for placing money at us, but not in another country, where there are very large infrastructure projects too. In addition, we are actually fighting for educated people who can provide attraction of the investment. Therefore, during the distribution of the risks connected with all possible problems associated with obtaining permits (for logging, for example), we created an action plan, the implementation of which will not allow this difficulty to arise. Unfortunately, there are a lot of such risks.

– What is the amount of work that is to be done by your company and the one that will win the tender after its completion?

– Financial closing of the project with all the contracts after the announcement of the winner will take from three to six months, as a large number of legal documents will need to be prepared. But already now we understand what papers these should be and how the closing procedure will be carried out. Analysis of international experience in this field allows us to understand, how to perform the full range of work at the minimum cost and which way is not worth going. During the implementation of the project of HSRL-1 we have taken into account all the mistakes that could be made, as they have already been made by international consortiums and by our colleagues, project offices occupied with preparation of the high speed line in other countries. Any such mistakes made in the Russian conditions would be a disaster, and we don’t want to allow this to happen. 
Interviewed by  Albina Bulatova
    [~DETAIL_TEXT] => 
In the Process of Consultation
– Mr Muratov, at what stage is the preparation of the construction of the Moscow – St Petersburg high speed railway at the moment?

– Development of the Concept of HSRL-1 is completed. In late August of this year, Vladimir Putin, the Chairman of the Government of the Russian Federation, signed an order approving the plan of actions on implementation of projects on organization of high speed traffic in Russian Federation.
Several big companies from France, Germany, South Korea, China and Spain that have considerable experience in implementation of projects on high speed lines have announced their interest in participation in international tender on choosing the infrastructure provider. Each of the countries to a greater or lesser extent has great experience in design, in construction as well as in operation of such highways.
At the moment within the preparations for the international tender we are holding a series of consultations with potential partners who are interested in participation after which consortiums will be created. We have already held joint seminars for management of RZD JSC and representatives from South Korea and Spain and discussed possibilities of cooperation during the project implementation. Seminars for two companies from France and China are being planned by us at the moment. 

– What work on this project  has been carried out so far?

– Today we have prepared the tender documentation, designed proposals on introduction of changes to regulatory frameworks. We have also thought about the best mechanism for implementing the project to build the HSRL-1 from the point of view of structures that sponsor it. The Ministry of Transport, the Ministry of Finance and the Ministry of Economic Development together with RZD JSC and Vnesheconombank have prepared a report to the government of the Russian Federation. A complex of earthworks and geodesy research projects have been carried out.
According to the plan of actions, approved on August 31, 2011 by the Government of the Russian Federation, during the IV quarter the Ministry of Transport, the Ministry of Economic Development together with Roszeldor and RZD JSC have to define the list of measures on the reservation, land use planning and preparation for the withdrawal of lands (as well as properties that are on them), including the purchase of lands, that are meant for the construction of the infrastructure of the rail line. Proposals on funding of these costs should be prepared by the Ministry of Economic Development before the end of this year. The Ministry of Transport and the Ministry of Industry and Trade with the participation of RZD JSC have to determine the list of equipment that will be required for construction and operation of high speed rail transport infrastructure. They also need to provide an assessment of the advisability of production of this equipment in Russia in order to consider the need to adjust the rates of customs duties on it in the framework of the Customs Union Commission. Along with the establishing of a set of measures to educate and train qualified personnel for the organization of high speed rail traffic the Ministry of Transport and the Ministry of Education and Science with the participation of RZD JSC need to create a system of Continuing Professional Education.
By the end of the year our company has to provide the necessary documentation on preparation of the territory for the future infrastructural provider of HSRL-1 project. At the present moment High-Speed Rail Lines JSC is developing a plan of action to prepare land and to transfer communications. In fact, we have to prepare an area 658 km in length suitable for HSRL-1 so that the future infrastructure provider will be able to plan all constructions correctly. In its turn, this will reduce the cost, which is very beneficial for the state customer. Transfer of communications at the area of 658 km, crossed with swamps, forests and private lands, including branch lines of pipelines and transmission lines, – it is not an easy task that must be completed as soon as possible.

Non–Corruption Schemes
– Today much is said about the contract life cycle (CLC), on the basis of which HSRL-1 will be built. Please, tell us more details about this scheme. Indeed, the project is supposed to be implemented according to the contract life cycle. That is one of the forms of Public-Private Partnership, which is also known as DBFM abbreviation (Design Build Finance Maintain). According to the Russian legislation, the scheme must be implemented in accordance with the Law on Concession Agreements. The concedent and the concessionaire are participants of CLC. In this situation Roszeldor is the concedent but some of it rights and duties will be carried by RZD JSC. And a special project company (SPC) or infrastructure provider will become the concessionaire.
Selected during a tender and approved as the SPC winner should provide design, construction, partial funding and maintenance of the highway for the entire 30-year life cycle. Created HSRL-1 infrastructure unit  will be100% federally owned.
An infrastructure provider is a whole complex of organizations, including a construction company, funding organizations (a syndicate of banks) and the company responsible for the project, as well as the company that will operate the line for 30 years. It is important that at contract life cycle the contractor that is carrying out complex construction becomes financially responsible towards the state and is in charge of the technical risks. In addition, the contractor will be supported by its national banks, whose main task is the structuring of long-term financing together with Russian financial institutions, as well as reducing the cost of authorized capital of the provider (It is important for the government to understand that this company will be able to cover appearing risks during all the life cycle).
The government partner is obliged to finance partially the construction by 50% in the form of a capital grant or subsidy during the construction phase and to ensure the return of initial investment investment in the form of fixed annual service payment during the operation phase. It will be possible at the cost of collecting the payment by the State from transporters that use the highway for commercial purposes. RZD JSC will be occupied with selecting of transporters within a tender the companies that have car park. It is possible that RZD will become the only transporter. 
The amount of payment will be calculated in accordance with the total cost of the project, which will be determined during the tender. According to the contract terms this sum will depend on provision of the quality infrastructure that meet the requirements of the concession agreement. The volume of payments during the operation phase covers the cost of SPC on the maintenance and planned repair of infrastructure, as well as the costs during the construction phase (loans and borrowing repayments, the interest on them, provision of the equity capital profitability level established by the terms of the contract ). 
At the moment, the total amount of investment is about 696.2 billion rubles in the prices of 2010, without VAT (including the preparation of the territory for building at a cost of 50.6 billion rubles with the purchase of land costs).
Thus, LSC is the most appropriate scheme of the implementation of HSRL-1, since it helps to avoid the corruption schemes in tenders, including international, and it is the most open form of public procurement.

Accent on Harmonization
– How will be the funding of the project being approached? What could be the final cost of HSRL-1? What factors will it depend on?

– Minimal cost is one of the criteria for selection of a contractor, as well as profitability requested by the investor. It is important to note that reducing the price of construction reduces correspondingly the cost of payments. All four contenders for the status of the infrastructure provider will receive all the necessary details before the beginning of the tender, not at the day of opening the envelopes in order to be able to compare their potential to the plank of the entire project.
While the designing the focus will be on the harmonization of national standards with European standards. The calculations will be carried out in accordance with the Russian geological conditions, but with adaptation to European. This will allow us to approach the maximum reduction of the final cost. In addition, the concept of separation of operational business from tickets income from  guaranteed payment for the construction of highway has allowed us to reduce the price of construction by 15%. We are going to move in a way of reduction of the cost of the project that we have at the moment. The tender will show much lower figure, and ultimately I think that by minimizing the cost of design and engineer research we can reduce the price to 500 billion rubles.

– What challenges are you facing during the preparation of the tender on a contractor?

 – Sharing of risks is the most difficult area in our work. It’s not a secret that in all great projects the executors face competition for international capital, the best minds and technologies. And, despite the likely risks,  we must show how we can provide comfort conditions for placing money at us, but not in another country, where there are very large infrastructure projects too. In addition, we are actually fighting for educated people who can provide attraction of the investment. Therefore, during the distribution of the risks connected with all possible problems associated with obtaining permits (for logging, for example), we created an action plan, the implementation of which will not allow this difficulty to arise. Unfortunately, there are a lot of such risks.

– What is the amount of work that is to be done by your company and the one that will win the tender after its completion?

– Financial closing of the project with all the contracts after the announcement of the winner will take from three to six months, as a large number of legal documents will need to be prepared. But already now we understand what papers these should be and how the closing procedure will be carried out. Analysis of international experience in this field allows us to understand, how to perform the full range of work at the minimum cost and which way is not worth going. During the implementation of the project of HSRL-1 we have taken into account all the mistakes that could be made, as they have already been made by international consortiums and by our colleagues, project offices occupied with preparation of the high speed line in other countries. Any such mistakes made in the Russian conditions would be a disaster, and we don’t want to allow this to happen. 
Interviewed by  Albina Bulatova
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    [~PREVIEW_TEXT] => During the construction of the High Speed Rail Line-1 (HSRL-1) more than 2,000 new jobs will be created. And during its further exploitation this figure will rise to 35,000. We have asked Denis Muratov, General Director of High-Speed Rail Lines JSC, to tell us the details of the implementation 
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    [DETAIL_TEXT] => 
In the Process of Consultation
– Mr Muratov, at what stage is the preparation of the construction of the Moscow – St Petersburg high speed railway at the moment?

– Development of the Concept of HSRL-1 is completed. In late August of this year, Vladimir Putin, the Chairman of the Government of the Russian Federation, signed an order approving the plan of actions on implementation of projects on organization of high speed traffic in Russian Federation.
Several big companies from France, Germany, South Korea, China and Spain that have considerable experience in implementation of projects on high speed lines have announced their interest in participation in international tender on choosing the infrastructure provider. Each of the countries to a greater or lesser extent has great experience in design, in construction as well as in operation of such highways.
At the moment within the preparations for the international tender we are holding a series of consultations with potential partners who are interested in participation after which consortiums will be created. We have already held joint seminars for management of RZD JSC and representatives from South Korea and Spain and discussed possibilities of cooperation during the project implementation. Seminars for two companies from France and China are being planned by us at the moment. 

– What work on this project  has been carried out so far?

– Today we have prepared the tender documentation, designed proposals on introduction of changes to regulatory frameworks. We have also thought about the best mechanism for implementing the project to build the HSRL-1 from the point of view of structures that sponsor it. The Ministry of Transport, the Ministry of Finance and the Ministry of Economic Development together with RZD JSC and Vnesheconombank have prepared a report to the government of the Russian Federation. A complex of earthworks and geodesy research projects have been carried out.
According to the plan of actions, approved on August 31, 2011 by the Government of the Russian Federation, during the IV quarter the Ministry of Transport, the Ministry of Economic Development together with Roszeldor and RZD JSC have to define the list of measures on the reservation, land use planning and preparation for the withdrawal of lands (as well as properties that are on them), including the purchase of lands, that are meant for the construction of the infrastructure of the rail line. Proposals on funding of these costs should be prepared by the Ministry of Economic Development before the end of this year. The Ministry of Transport and the Ministry of Industry and Trade with the participation of RZD JSC have to determine the list of equipment that will be required for construction and operation of high speed rail transport infrastructure. They also need to provide an assessment of the advisability of production of this equipment in Russia in order to consider the need to adjust the rates of customs duties on it in the framework of the Customs Union Commission. Along with the establishing of a set of measures to educate and train qualified personnel for the organization of high speed rail traffic the Ministry of Transport and the Ministry of Education and Science with the participation of RZD JSC need to create a system of Continuing Professional Education.
By the end of the year our company has to provide the necessary documentation on preparation of the territory for the future infrastructural provider of HSRL-1 project. At the present moment High-Speed Rail Lines JSC is developing a plan of action to prepare land and to transfer communications. In fact, we have to prepare an area 658 km in length suitable for HSRL-1 so that the future infrastructure provider will be able to plan all constructions correctly. In its turn, this will reduce the cost, which is very beneficial for the state customer. Transfer of communications at the area of 658 km, crossed with swamps, forests and private lands, including branch lines of pipelines and transmission lines, – it is not an easy task that must be completed as soon as possible.

Non–Corruption Schemes
– Today much is said about the contract life cycle (CLC), on the basis of which HSRL-1 will be built. Please, tell us more details about this scheme. Indeed, the project is supposed to be implemented according to the contract life cycle. That is one of the forms of Public-Private Partnership, which is also known as DBFM abbreviation (Design Build Finance Maintain). According to the Russian legislation, the scheme must be implemented in accordance with the Law on Concession Agreements. The concedent and the concessionaire are participants of CLC. In this situation Roszeldor is the concedent but some of it rights and duties will be carried by RZD JSC. And a special project company (SPC) or infrastructure provider will become the concessionaire.
Selected during a tender and approved as the SPC winner should provide design, construction, partial funding and maintenance of the highway for the entire 30-year life cycle. Created HSRL-1 infrastructure unit  will be100% federally owned.
An infrastructure provider is a whole complex of organizations, including a construction company, funding organizations (a syndicate of banks) and the company responsible for the project, as well as the company that will operate the line for 30 years. It is important that at contract life cycle the contractor that is carrying out complex construction becomes financially responsible towards the state and is in charge of the technical risks. In addition, the contractor will be supported by its national banks, whose main task is the structuring of long-term financing together with Russian financial institutions, as well as reducing the cost of authorized capital of the provider (It is important for the government to understand that this company will be able to cover appearing risks during all the life cycle).
The government partner is obliged to finance partially the construction by 50% in the form of a capital grant or subsidy during the construction phase and to ensure the return of initial investment investment in the form of fixed annual service payment during the operation phase. It will be possible at the cost of collecting the payment by the State from transporters that use the highway for commercial purposes. RZD JSC will be occupied with selecting of transporters within a tender the companies that have car park. It is possible that RZD will become the only transporter. 
The amount of payment will be calculated in accordance with the total cost of the project, which will be determined during the tender. According to the contract terms this sum will depend on provision of the quality infrastructure that meet the requirements of the concession agreement. The volume of payments during the operation phase covers the cost of SPC on the maintenance and planned repair of infrastructure, as well as the costs during the construction phase (loans and borrowing repayments, the interest on them, provision of the equity capital profitability level established by the terms of the contract ). 
At the moment, the total amount of investment is about 696.2 billion rubles in the prices of 2010, without VAT (including the preparation of the territory for building at a cost of 50.6 billion rubles with the purchase of land costs).
Thus, LSC is the most appropriate scheme of the implementation of HSRL-1, since it helps to avoid the corruption schemes in tenders, including international, and it is the most open form of public procurement.

Accent on Harmonization
– How will be the funding of the project being approached? What could be the final cost of HSRL-1? What factors will it depend on?

– Minimal cost is one of the criteria for selection of a contractor, as well as profitability requested by the investor. It is important to note that reducing the price of construction reduces correspondingly the cost of payments. All four contenders for the status of the infrastructure provider will receive all the necessary details before the beginning of the tender, not at the day of opening the envelopes in order to be able to compare their potential to the plank of the entire project.
While the designing the focus will be on the harmonization of national standards with European standards. The calculations will be carried out in accordance with the Russian geological conditions, but with adaptation to European. This will allow us to approach the maximum reduction of the final cost. In addition, the concept of separation of operational business from tickets income from  guaranteed payment for the construction of highway has allowed us to reduce the price of construction by 15%. We are going to move in a way of reduction of the cost of the project that we have at the moment. The tender will show much lower figure, and ultimately I think that by minimizing the cost of design and engineer research we can reduce the price to 500 billion rubles.

– What challenges are you facing during the preparation of the tender on a contractor?

 – Sharing of risks is the most difficult area in our work. It’s not a secret that in all great projects the executors face competition for international capital, the best minds and technologies. And, despite the likely risks,  we must show how we can provide comfort conditions for placing money at us, but not in another country, where there are very large infrastructure projects too. In addition, we are actually fighting for educated people who can provide attraction of the investment. Therefore, during the distribution of the risks connected with all possible problems associated with obtaining permits (for logging, for example), we created an action plan, the implementation of which will not allow this difficulty to arise. Unfortunately, there are a lot of such risks.

– What is the amount of work that is to be done by your company and the one that will win the tender after its completion?

– Financial closing of the project with all the contracts after the announcement of the winner will take from three to six months, as a large number of legal documents will need to be prepared. But already now we understand what papers these should be and how the closing procedure will be carried out. Analysis of international experience in this field allows us to understand, how to perform the full range of work at the minimum cost and which way is not worth going. During the implementation of the project of HSRL-1 we have taken into account all the mistakes that could be made, as they have already been made by international consortiums and by our colleagues, project offices occupied with preparation of the high speed line in other countries. Any such mistakes made in the Russian conditions would be a disaster, and we don’t want to allow this to happen. 
Interviewed by  Albina Bulatova
    [~DETAIL_TEXT] => 
In the Process of Consultation
– Mr Muratov, at what stage is the preparation of the construction of the Moscow – St Petersburg high speed railway at the moment?

– Development of the Concept of HSRL-1 is completed. In late August of this year, Vladimir Putin, the Chairman of the Government of the Russian Federation, signed an order approving the plan of actions on implementation of projects on organization of high speed traffic in Russian Federation.
Several big companies from France, Germany, South Korea, China and Spain that have considerable experience in implementation of projects on high speed lines have announced their interest in participation in international tender on choosing the infrastructure provider. Each of the countries to a greater or lesser extent has great experience in design, in construction as well as in operation of such highways.
At the moment within the preparations for the international tender we are holding a series of consultations with potential partners who are interested in participation after which consortiums will be created. We have already held joint seminars for management of RZD JSC and representatives from South Korea and Spain and discussed possibilities of cooperation during the project implementation. Seminars for two companies from France and China are being planned by us at the moment. 

– What work on this project  has been carried out so far?

– Today we have prepared the tender documentation, designed proposals on introduction of changes to regulatory frameworks. We have also thought about the best mechanism for implementing the project to build the HSRL-1 from the point of view of structures that sponsor it. The Ministry of Transport, the Ministry of Finance and the Ministry of Economic Development together with RZD JSC and Vnesheconombank have prepared a report to the government of the Russian Federation. A complex of earthworks and geodesy research projects have been carried out.
According to the plan of actions, approved on August 31, 2011 by the Government of the Russian Federation, during the IV quarter the Ministry of Transport, the Ministry of Economic Development together with Roszeldor and RZD JSC have to define the list of measures on the reservation, land use planning and preparation for the withdrawal of lands (as well as properties that are on them), including the purchase of lands, that are meant for the construction of the infrastructure of the rail line. Proposals on funding of these costs should be prepared by the Ministry of Economic Development before the end of this year. The Ministry of Transport and the Ministry of Industry and Trade with the participation of RZD JSC have to determine the list of equipment that will be required for construction and operation of high speed rail transport infrastructure. They also need to provide an assessment of the advisability of production of this equipment in Russia in order to consider the need to adjust the rates of customs duties on it in the framework of the Customs Union Commission. Along with the establishing of a set of measures to educate and train qualified personnel for the organization of high speed rail traffic the Ministry of Transport and the Ministry of Education and Science with the participation of RZD JSC need to create a system of Continuing Professional Education.
By the end of the year our company has to provide the necessary documentation on preparation of the territory for the future infrastructural provider of HSRL-1 project. At the present moment High-Speed Rail Lines JSC is developing a plan of action to prepare land and to transfer communications. In fact, we have to prepare an area 658 km in length suitable for HSRL-1 so that the future infrastructure provider will be able to plan all constructions correctly. In its turn, this will reduce the cost, which is very beneficial for the state customer. Transfer of communications at the area of 658 km, crossed with swamps, forests and private lands, including branch lines of pipelines and transmission lines, – it is not an easy task that must be completed as soon as possible.

Non–Corruption Schemes
– Today much is said about the contract life cycle (CLC), on the basis of which HSRL-1 will be built. Please, tell us more details about this scheme. Indeed, the project is supposed to be implemented according to the contract life cycle. That is one of the forms of Public-Private Partnership, which is also known as DBFM abbreviation (Design Build Finance Maintain). According to the Russian legislation, the scheme must be implemented in accordance with the Law on Concession Agreements. The concedent and the concessionaire are participants of CLC. In this situation Roszeldor is the concedent but some of it rights and duties will be carried by RZD JSC. And a special project company (SPC) or infrastructure provider will become the concessionaire.
Selected during a tender and approved as the SPC winner should provide design, construction, partial funding and maintenance of the highway for the entire 30-year life cycle. Created HSRL-1 infrastructure unit  will be100% federally owned.
An infrastructure provider is a whole complex of organizations, including a construction company, funding organizations (a syndicate of banks) and the company responsible for the project, as well as the company that will operate the line for 30 years. It is important that at contract life cycle the contractor that is carrying out complex construction becomes financially responsible towards the state and is in charge of the technical risks. In addition, the contractor will be supported by its national banks, whose main task is the structuring of long-term financing together with Russian financial institutions, as well as reducing the cost of authorized capital of the provider (It is important for the government to understand that this company will be able to cover appearing risks during all the life cycle).
The government partner is obliged to finance partially the construction by 50% in the form of a capital grant or subsidy during the construction phase and to ensure the return of initial investment investment in the form of fixed annual service payment during the operation phase. It will be possible at the cost of collecting the payment by the State from transporters that use the highway for commercial purposes. RZD JSC will be occupied with selecting of transporters within a tender the companies that have car park. It is possible that RZD will become the only transporter. 
The amount of payment will be calculated in accordance with the total cost of the project, which will be determined during the tender. According to the contract terms this sum will depend on provision of the quality infrastructure that meet the requirements of the concession agreement. The volume of payments during the operation phase covers the cost of SPC on the maintenance and planned repair of infrastructure, as well as the costs during the construction phase (loans and borrowing repayments, the interest on them, provision of the equity capital profitability level established by the terms of the contract ). 
At the moment, the total amount of investment is about 696.2 billion rubles in the prices of 2010, without VAT (including the preparation of the territory for building at a cost of 50.6 billion rubles with the purchase of land costs).
Thus, LSC is the most appropriate scheme of the implementation of HSRL-1, since it helps to avoid the corruption schemes in tenders, including international, and it is the most open form of public procurement.

Accent on Harmonization
– How will be the funding of the project being approached? What could be the final cost of HSRL-1? What factors will it depend on?

– Minimal cost is one of the criteria for selection of a contractor, as well as profitability requested by the investor. It is important to note that reducing the price of construction reduces correspondingly the cost of payments. All four contenders for the status of the infrastructure provider will receive all the necessary details before the beginning of the tender, not at the day of opening the envelopes in order to be able to compare their potential to the plank of the entire project.
While the designing the focus will be on the harmonization of national standards with European standards. The calculations will be carried out in accordance with the Russian geological conditions, but with adaptation to European. This will allow us to approach the maximum reduction of the final cost. In addition, the concept of separation of operational business from tickets income from  guaranteed payment for the construction of highway has allowed us to reduce the price of construction by 15%. We are going to move in a way of reduction of the cost of the project that we have at the moment. The tender will show much lower figure, and ultimately I think that by minimizing the cost of design and engineer research we can reduce the price to 500 billion rubles.

– What challenges are you facing during the preparation of the tender on a contractor?

 – Sharing of risks is the most difficult area in our work. It’s not a secret that in all great projects the executors face competition for international capital, the best minds and technologies. And, despite the likely risks,  we must show how we can provide comfort conditions for placing money at us, but not in another country, where there are very large infrastructure projects too. In addition, we are actually fighting for educated people who can provide attraction of the investment. Therefore, during the distribution of the risks connected with all possible problems associated with obtaining permits (for logging, for example), we created an action plan, the implementation of which will not allow this difficulty to arise. Unfortunately, there are a lot of such risks.

– What is the amount of work that is to be done by your company and the one that will win the tender after its completion?

– Financial closing of the project with all the contracts after the announcement of the winner will take from three to six months, as a large number of legal documents will need to be prepared. But already now we understand what papers these should be and how the closing procedure will be carried out. Analysis of international experience in this field allows us to understand, how to perform the full range of work at the minimum cost and which way is not worth going. During the implementation of the project of HSRL-1 we have taken into account all the mistakes that could be made, as they have already been made by international consortiums and by our colleagues, project offices occupied with preparation of the high speed line in other countries. Any such mistakes made in the Russian conditions would be a disaster, and we don’t want to allow this to happen. 
Interviewed by  Albina Bulatova
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    [DETAIL_TEXT] => 
Innovations Are Waiting in the Wings
In the words of Alexey Vorotilkin, Vice President of RZD, as of January 1, 2011, the company’s inventory locomotive park consisted of 20,300 units. Of that, there were 9,800 electric and 10,500 diesel locomotives. The 2011 investment programme envisages that RUR 35.1 billion is to be spent to buy 425 locomotives. In the first eight months of the year, 274 locos were supplied to Russian Railways. Of that, there were 185 electric and 89 diesel locomotives (for the sum of RUR 16 billion and RUR 4.8 billion respectively). Meanwhile, not less than 725 locomotives are to be purchased every year till 2015. RUR 85-90 billion is needed for that, but only RUR 31.9 billion is envisaged in the budget.
According to experts, RZD and operators – owners of locomotives aim at deciding a pre-crisis traction machinery purchase amount. The forecasted demand for diesel shunters in the Russian and CIS market is approximately 200 units per annum in the short term period (1-2 years) and not less than 300-350 units per annum in the mid-term period (3-4 years). In the opinion of Valentin Gapanovich, Senior Vice President, Chief Engineer at RZD, a lot of time will be needed to reach the purchase amount of 2008 (455 units).   
It is expected that newly designed products offered by Russian enterprises will stimulate the demand for the machinery. In 2011, Transmashholding, a key player of the locomotive building sector, concluded a contract with RZD on supply of innovative mainline AC freight electric locomotive 2ES5, Artem Ledenev, Head of PR Department at Transmashholding, told a correspondent of “The RZD-Partner International”. According to this contract, Russian Railways will receive 200 electric locomotives of 2ES5 type in 2013-2020. The contract is estimated at approximately €1 billion. The electric locomotives will be produced at the Novocherkassk Electric Locomotive Plant (an affiliate of the joint engineering centre of Transmashholding and Alstom Transport – TRTrans company). This is the second locomotive of the 5th generation, developed in the framework of Russian-French partnership. A similar (according to the cost) contract on supply of 200 2-system passenger locomotives EP20 in 2012-2020 was concluded by the companies last year. The electric locomotives will also be produced at the Novocherkassk Electric Locomotive Plant, where the first specimen of EP20 loco is being tested now. The serial production of it is supposed to start in 2012, and already in 2012-2013, 36 EP20 locomotives will be given to RZD to organise passenger transportation between Moscow and Sochi, in particular during the Winter Olympics. EP20 will be the first Russian electric locomotive capable of pulling passenger trains at a speed of 200 kph. 
Ural Locomotives (a JV of Sinara and Siemens) is also going to start the serial manufacture of a new product – “Granite” (2ES10). There are no locomotives in the 1520 area able to compete with this freight eight-axle mainline electric locomotive with asynchronous traction motor drive. The new locomotive encompasses 60% of advanced local engineering solutions and Siemens R&D on traction and vehicle control. This machine will be able to pull wagons with a total weight of 9,000-10,000 tons, which is twice as much as the carrying capacity of VL11 electric locomotives. Meanwhile, its life cycle costs 21% less in comparison with that of VL11. The localisation of the model production will start from 60% and increase to 80%. 2ES10 locos will be used mainly at the Sverdlovskaya and South-Urals railways (affiliates of RZD). Before the end of 2011, Ural Locomotives will supply RZD with 11 innovative locomotives of 2ES10 type. All in all, according to the contract, 221 such mainline electric locomotives are to be supplied in 2011-2016. 
Nowadays, “Granite” is actively tested on RZD’s network. At the beginning of August, the pilot three-section 2ES10 locomotive delivered an unprecedented cargo of 9,000 tons from Yekaterinburg-Sortirovochny to Balezino. Launching the production of three-section 2ES10 locomotives will make it possible to develop and implement a technology to get 9,000-ton trains without breaking up the cargo and changing the locomotive. This will help to cut the cost price of transportation and increase railway capacity (there will appear an opportunity to pull 7,000-ton transit trains without breaking up the cargo and changing the locomotive on difficult mountain road sections). 
Moreover, the technology will make for the common harmonisation of railway transportation and reduction of peak loading on the infrastructure.
The consumers of this production, i.e. affiliates of RZD, say that the major advantage of traction machinery made by Russian manufacturers is the availability of line equipment and spares. “No international contracts are required,” say specialists at the North-Caucasus Railway (an affiliate of RZD). In the opinion of specialists at the West-Siberian Railway (an affiliate of RZD), there are several advantages of supplies of traction rolling stock made by Russian companies. 
“The key one is implementation of advanced technologies in this sector, the opportunity to interact with the manufacturers fast to solve issues of maintenance, repair, warranty service, improvement of the technical reliability of the new traction rolling stock, and a rather simple scheme of supply of spares and materials for locomotive repair and maintenance,” note specialists at the West-Siberian Railway.

Manufacturers VS Suppliers
Perhaps all the innovations mentioned above will help to change the situation regarding the lack of locomotives. However, the issue of quality of the production supplied to the network remains the most urgent today. According to the data of the RZD’s Technical Audit Centre, there were over 1,037 failures of new locomotives last year. Of that, 65% were for reasons connected with electronic systems of different types and purposes (including electric equipment (12%), micro-processor control system and electronics (20%), poor quality assemblage (19%)). Also, there were problems with electric machines (10% of the total number of failures), brake equipment (8%), engines (7%), and wheel-sets (5%). 
“The basic problem we faced while exploiting new locomotives was unstable work of micro-processor systems caused by insufficient cooling amid high ambient air temperature,” say representatives of the North-Caucasus Railway. According to specialists at the West-Siberian Railway, nowadays, there are 311 new locomotives exploited at the Railway. Of that, there are 18 electric locomotives of EP1 type and 34 electric locomotives of 2ES4K type produced by Novocherkassk Electric Locomotive Plant, 116 EP2K electric locomotives made by Kolomensky Plant, 151 diesel locomotives of TEM18D, DM series produced by the Bryansk Machine Building Plant, 2 TEM7A diesel locomotives made by Lyudinovsky Diesel Locomotive Building Plant. “As a rule, the availability rate of the locomotives at the beginning of exploitation is lower than that declared by the manufacturer. For example, the availability rate declared in the specifications of passenger electric locomotives EP2K was 0.97, but the real rate was just 0.89 last year. Meanwhile, the availability rate of the passenger electric locomotives of the “old” ChS2 type, which have been exploited since the 1960s, is higher and even now it amounts to 0.98,” say specialists at the West-Siberian Railway. The main problems with the technical reliability of new locomotives faced by experts of the West-Siberian Railway at the beginning of exploitation are unstable work and loss of order of traction motors, broken compressors, windscreen cracks, and failures of air conditioning systems because of design flaws, among a lot of other defects. 
“The reclamation work held by the Railway with the manufacturers allowed to remove a lot of design drawbacks of the new locomotives, but there is still much to do,” emphasise representatives of the West-Siberian Railway.
All the defects make the Railway stop using the machinery until it is repaired. And usually it takes a lot of time. Why? First of all, because of the lack of necessary spares and materials in the assigned depot, delays in supplies, and the insufficient number of service groups of manufacturers. Moreover, it takes suppliers of the broken equipment a lot of time to arrive to research and repair the failures.  
Technical and organisational decisions on failures repair by manufacturers are taken very slowly. Another important issue is the lack of producers’ monitoring of their production. For several years, they have not monitored, processed, and analysed received data about the problems with the machinery they produced. Experts say that such mechanisms worked in the USSR – special departments at enterprises monitored the durability and maintainability of the production. 
In their turn, specialists at the plants say that 75% of a locomotive’s details are given by suppliers, consequently, the quality of the machinery significantly depends on the quality of the plant partners’ production. 
For example, representatives of Transmashholding say that the share of the company’s own defects in the total number of failures is not as large as that of supplied equipment (on average, the figure is 70% for equipment made by Kolomensky Plant, and 66% for equipment produced by the Novocherkassk Electric Locomotive Plant). Nowadays, the specialists of the holding company consider audits of their partners’ production to be common practice. Incoming control is also put into operation at the plants incorporated into Transmashholding. Today, up to 60% of purchased component parts are inspected. “Having increased the requirements on the quality of components, the holding company is searching for new suppliers. Creation of a competition environment stimulates producers to improve the quality and consumer characteristic features of their production,” say representatives of Transmashholding. 
According to RZD’s Technical Audit Centre, the problem plants among contractors are Russian manufacturers of microprocessor control systems (LES CJSC, Novocherkassk city), electric equipment (Electromachines OJSC, Chelyabinsk), safety devices (Elektromechanics OJSC, Penza), electric machines (Karpinsky Machine Building Plant OJSC, Karpinsk); and a Ukrainian enterprise – Electrotyazhmash plant (Kharkov). However, it is the enterprise that chooses the supplier, so it is not fair to lay the blame on others, believe experts. “Several manufacturers offer similar components nowadays, so a plant can always choose where to order these or those components. Enterprises should have more serious requirements to their suppliers,” think specialists at RZD’s Technical Audit Centre. Also, efficient instruments in such cases are economic penalties for defects and regular work with suppliers.

Resume
At the same time, specialists in RZD say that the situation with some models has started to improve. “Recently one of the most problem series of EP2K locomotives (about 80 units of this type were supplied to the network at that time) had almost constant failures. Now, all the electric locomotives are is good condition and work actively. There was a similar situation with EP1 series and its version – EP1M. Soon, the new traction rolling stock will replace the old one efficiently,” say specialists at RZD’s Directorate for Traction Rolling Stock Repair. 
By Maria Shevchenko
    [~DETAIL_TEXT] => 
Innovations Are Waiting in the Wings
In the words of Alexey Vorotilkin, Vice President of RZD, as of January 1, 2011, the company’s inventory locomotive park consisted of 20,300 units. Of that, there were 9,800 electric and 10,500 diesel locomotives. The 2011 investment programme envisages that RUR 35.1 billion is to be spent to buy 425 locomotives. In the first eight months of the year, 274 locos were supplied to Russian Railways. Of that, there were 185 electric and 89 diesel locomotives (for the sum of RUR 16 billion and RUR 4.8 billion respectively). Meanwhile, not less than 725 locomotives are to be purchased every year till 2015. RUR 85-90 billion is needed for that, but only RUR 31.9 billion is envisaged in the budget.
According to experts, RZD and operators – owners of locomotives aim at deciding a pre-crisis traction machinery purchase amount. The forecasted demand for diesel shunters in the Russian and CIS market is approximately 200 units per annum in the short term period (1-2 years) and not less than 300-350 units per annum in the mid-term period (3-4 years). In the opinion of Valentin Gapanovich, Senior Vice President, Chief Engineer at RZD, a lot of time will be needed to reach the purchase amount of 2008 (455 units).   
It is expected that newly designed products offered by Russian enterprises will stimulate the demand for the machinery. In 2011, Transmashholding, a key player of the locomotive building sector, concluded a contract with RZD on supply of innovative mainline AC freight electric locomotive 2ES5, Artem Ledenev, Head of PR Department at Transmashholding, told a correspondent of “The RZD-Partner International”. According to this contract, Russian Railways will receive 200 electric locomotives of 2ES5 type in 2013-2020. The contract is estimated at approximately €1 billion. The electric locomotives will be produced at the Novocherkassk Electric Locomotive Plant (an affiliate of the joint engineering centre of Transmashholding and Alstom Transport – TRTrans company). This is the second locomotive of the 5th generation, developed in the framework of Russian-French partnership. A similar (according to the cost) contract on supply of 200 2-system passenger locomotives EP20 in 2012-2020 was concluded by the companies last year. The electric locomotives will also be produced at the Novocherkassk Electric Locomotive Plant, where the first specimen of EP20 loco is being tested now. The serial production of it is supposed to start in 2012, and already in 2012-2013, 36 EP20 locomotives will be given to RZD to organise passenger transportation between Moscow and Sochi, in particular during the Winter Olympics. EP20 will be the first Russian electric locomotive capable of pulling passenger trains at a speed of 200 kph. 
Ural Locomotives (a JV of Sinara and Siemens) is also going to start the serial manufacture of a new product – “Granite” (2ES10). There are no locomotives in the 1520 area able to compete with this freight eight-axle mainline electric locomotive with asynchronous traction motor drive. The new locomotive encompasses 60% of advanced local engineering solutions and Siemens R&D on traction and vehicle control. This machine will be able to pull wagons with a total weight of 9,000-10,000 tons, which is twice as much as the carrying capacity of VL11 electric locomotives. Meanwhile, its life cycle costs 21% less in comparison with that of VL11. The localisation of the model production will start from 60% and increase to 80%. 2ES10 locos will be used mainly at the Sverdlovskaya and South-Urals railways (affiliates of RZD). Before the end of 2011, Ural Locomotives will supply RZD with 11 innovative locomotives of 2ES10 type. All in all, according to the contract, 221 such mainline electric locomotives are to be supplied in 2011-2016. 
Nowadays, “Granite” is actively tested on RZD’s network. At the beginning of August, the pilot three-section 2ES10 locomotive delivered an unprecedented cargo of 9,000 tons from Yekaterinburg-Sortirovochny to Balezino. Launching the production of three-section 2ES10 locomotives will make it possible to develop and implement a technology to get 9,000-ton trains without breaking up the cargo and changing the locomotive. This will help to cut the cost price of transportation and increase railway capacity (there will appear an opportunity to pull 7,000-ton transit trains without breaking up the cargo and changing the locomotive on difficult mountain road sections). 
Moreover, the technology will make for the common harmonisation of railway transportation and reduction of peak loading on the infrastructure.
The consumers of this production, i.e. affiliates of RZD, say that the major advantage of traction machinery made by Russian manufacturers is the availability of line equipment and spares. “No international contracts are required,” say specialists at the North-Caucasus Railway (an affiliate of RZD). In the opinion of specialists at the West-Siberian Railway (an affiliate of RZD), there are several advantages of supplies of traction rolling stock made by Russian companies. 
“The key one is implementation of advanced technologies in this sector, the opportunity to interact with the manufacturers fast to solve issues of maintenance, repair, warranty service, improvement of the technical reliability of the new traction rolling stock, and a rather simple scheme of supply of spares and materials for locomotive repair and maintenance,” note specialists at the West-Siberian Railway.

Manufacturers VS Suppliers
Perhaps all the innovations mentioned above will help to change the situation regarding the lack of locomotives. However, the issue of quality of the production supplied to the network remains the most urgent today. According to the data of the RZD’s Technical Audit Centre, there were over 1,037 failures of new locomotives last year. Of that, 65% were for reasons connected with electronic systems of different types and purposes (including electric equipment (12%), micro-processor control system and electronics (20%), poor quality assemblage (19%)). Also, there were problems with electric machines (10% of the total number of failures), brake equipment (8%), engines (7%), and wheel-sets (5%). 
“The basic problem we faced while exploiting new locomotives was unstable work of micro-processor systems caused by insufficient cooling amid high ambient air temperature,” say representatives of the North-Caucasus Railway. According to specialists at the West-Siberian Railway, nowadays, there are 311 new locomotives exploited at the Railway. Of that, there are 18 electric locomotives of EP1 type and 34 electric locomotives of 2ES4K type produced by Novocherkassk Electric Locomotive Plant, 116 EP2K electric locomotives made by Kolomensky Plant, 151 diesel locomotives of TEM18D, DM series produced by the Bryansk Machine Building Plant, 2 TEM7A diesel locomotives made by Lyudinovsky Diesel Locomotive Building Plant. “As a rule, the availability rate of the locomotives at the beginning of exploitation is lower than that declared by the manufacturer. For example, the availability rate declared in the specifications of passenger electric locomotives EP2K was 0.97, but the real rate was just 0.89 last year. Meanwhile, the availability rate of the passenger electric locomotives of the “old” ChS2 type, which have been exploited since the 1960s, is higher and even now it amounts to 0.98,” say specialists at the West-Siberian Railway. The main problems with the technical reliability of new locomotives faced by experts of the West-Siberian Railway at the beginning of exploitation are unstable work and loss of order of traction motors, broken compressors, windscreen cracks, and failures of air conditioning systems because of design flaws, among a lot of other defects. 
“The reclamation work held by the Railway with the manufacturers allowed to remove a lot of design drawbacks of the new locomotives, but there is still much to do,” emphasise representatives of the West-Siberian Railway.
All the defects make the Railway stop using the machinery until it is repaired. And usually it takes a lot of time. Why? First of all, because of the lack of necessary spares and materials in the assigned depot, delays in supplies, and the insufficient number of service groups of manufacturers. Moreover, it takes suppliers of the broken equipment a lot of time to arrive to research and repair the failures.  
Technical and organisational decisions on failures repair by manufacturers are taken very slowly. Another important issue is the lack of producers’ monitoring of their production. For several years, they have not monitored, processed, and analysed received data about the problems with the machinery they produced. Experts say that such mechanisms worked in the USSR – special departments at enterprises monitored the durability and maintainability of the production. 
In their turn, specialists at the plants say that 75% of a locomotive’s details are given by suppliers, consequently, the quality of the machinery significantly depends on the quality of the plant partners’ production. 
For example, representatives of Transmashholding say that the share of the company’s own defects in the total number of failures is not as large as that of supplied equipment (on average, the figure is 70% for equipment made by Kolomensky Plant, and 66% for equipment produced by the Novocherkassk Electric Locomotive Plant). Nowadays, the specialists of the holding company consider audits of their partners’ production to be common practice. Incoming control is also put into operation at the plants incorporated into Transmashholding. Today, up to 60% of purchased component parts are inspected. “Having increased the requirements on the quality of components, the holding company is searching for new suppliers. Creation of a competition environment stimulates producers to improve the quality and consumer characteristic features of their production,” say representatives of Transmashholding. 
According to RZD’s Technical Audit Centre, the problem plants among contractors are Russian manufacturers of microprocessor control systems (LES CJSC, Novocherkassk city), electric equipment (Electromachines OJSC, Chelyabinsk), safety devices (Elektromechanics OJSC, Penza), electric machines (Karpinsky Machine Building Plant OJSC, Karpinsk); and a Ukrainian enterprise – Electrotyazhmash plant (Kharkov). However, it is the enterprise that chooses the supplier, so it is not fair to lay the blame on others, believe experts. “Several manufacturers offer similar components nowadays, so a plant can always choose where to order these or those components. Enterprises should have more serious requirements to their suppliers,” think specialists at RZD’s Technical Audit Centre. Also, efficient instruments in such cases are economic penalties for defects and regular work with suppliers.

Resume
At the same time, specialists in RZD say that the situation with some models has started to improve. “Recently one of the most problem series of EP2K locomotives (about 80 units of this type were supplied to the network at that time) had almost constant failures. Now, all the electric locomotives are is good condition and work actively. There was a similar situation with EP1 series and its version – EP1M. Soon, the new traction rolling stock will replace the old one efficiently,” say specialists at RZD’s Directorate for Traction Rolling Stock Repair. 
By Maria Shevchenko
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Innovations Are Waiting in the Wings
In the words of Alexey Vorotilkin, Vice President of RZD, as of January 1, 2011, the company’s inventory locomotive park consisted of 20,300 units. Of that, there were 9,800 electric and 10,500 diesel locomotives. The 2011 investment programme envisages that RUR 35.1 billion is to be spent to buy 425 locomotives. In the first eight months of the year, 274 locos were supplied to Russian Railways. Of that, there were 185 electric and 89 diesel locomotives (for the sum of RUR 16 billion and RUR 4.8 billion respectively). Meanwhile, not less than 725 locomotives are to be purchased every year till 2015. RUR 85-90 billion is needed for that, but only RUR 31.9 billion is envisaged in the budget.
According to experts, RZD and operators – owners of locomotives aim at deciding a pre-crisis traction machinery purchase amount. The forecasted demand for diesel shunters in the Russian and CIS market is approximately 200 units per annum in the short term period (1-2 years) and not less than 300-350 units per annum in the mid-term period (3-4 years). In the opinion of Valentin Gapanovich, Senior Vice President, Chief Engineer at RZD, a lot of time will be needed to reach the purchase amount of 2008 (455 units).   
It is expected that newly designed products offered by Russian enterprises will stimulate the demand for the machinery. In 2011, Transmashholding, a key player of the locomotive building sector, concluded a contract with RZD on supply of innovative mainline AC freight electric locomotive 2ES5, Artem Ledenev, Head of PR Department at Transmashholding, told a correspondent of “The RZD-Partner International”. According to this contract, Russian Railways will receive 200 electric locomotives of 2ES5 type in 2013-2020. The contract is estimated at approximately €1 billion. The electric locomotives will be produced at the Novocherkassk Electric Locomotive Plant (an affiliate of the joint engineering centre of Transmashholding and Alstom Transport – TRTrans company). This is the second locomotive of the 5th generation, developed in the framework of Russian-French partnership. A similar (according to the cost) contract on supply of 200 2-system passenger locomotives EP20 in 2012-2020 was concluded by the companies last year. The electric locomotives will also be produced at the Novocherkassk Electric Locomotive Plant, where the first specimen of EP20 loco is being tested now. The serial production of it is supposed to start in 2012, and already in 2012-2013, 36 EP20 locomotives will be given to RZD to organise passenger transportation between Moscow and Sochi, in particular during the Winter Olympics. EP20 will be the first Russian electric locomotive capable of pulling passenger trains at a speed of 200 kph. 
Ural Locomotives (a JV of Sinara and Siemens) is also going to start the serial manufacture of a new product – “Granite” (2ES10). There are no locomotives in the 1520 area able to compete with this freight eight-axle mainline electric locomotive with asynchronous traction motor drive. The new locomotive encompasses 60% of advanced local engineering solutions and Siemens R&D on traction and vehicle control. This machine will be able to pull wagons with a total weight of 9,000-10,000 tons, which is twice as much as the carrying capacity of VL11 electric locomotives. Meanwhile, its life cycle costs 21% less in comparison with that of VL11. The localisation of the model production will start from 60% and increase to 80%. 2ES10 locos will be used mainly at the Sverdlovskaya and South-Urals railways (affiliates of RZD). Before the end of 2011, Ural Locomotives will supply RZD with 11 innovative locomotives of 2ES10 type. All in all, according to the contract, 221 such mainline electric locomotives are to be supplied in 2011-2016. 
Nowadays, “Granite” is actively tested on RZD’s network. At the beginning of August, the pilot three-section 2ES10 locomotive delivered an unprecedented cargo of 9,000 tons from Yekaterinburg-Sortirovochny to Balezino. Launching the production of three-section 2ES10 locomotives will make it possible to develop and implement a technology to get 9,000-ton trains without breaking up the cargo and changing the locomotive. This will help to cut the cost price of transportation and increase railway capacity (there will appear an opportunity to pull 7,000-ton transit trains without breaking up the cargo and changing the locomotive on difficult mountain road sections). 
Moreover, the technology will make for the common harmonisation of railway transportation and reduction of peak loading on the infrastructure.
The consumers of this production, i.e. affiliates of RZD, say that the major advantage of traction machinery made by Russian manufacturers is the availability of line equipment and spares. “No international contracts are required,” say specialists at the North-Caucasus Railway (an affiliate of RZD). In the opinion of specialists at the West-Siberian Railway (an affiliate of RZD), there are several advantages of supplies of traction rolling stock made by Russian companies. 
“The key one is implementation of advanced technologies in this sector, the opportunity to interact with the manufacturers fast to solve issues of maintenance, repair, warranty service, improvement of the technical reliability of the new traction rolling stock, and a rather simple scheme of supply of spares and materials for locomotive repair and maintenance,” note specialists at the West-Siberian Railway.

Manufacturers VS Suppliers
Perhaps all the innovations mentioned above will help to change the situation regarding the lack of locomotives. However, the issue of quality of the production supplied to the network remains the most urgent today. According to the data of the RZD’s Technical Audit Centre, there were over 1,037 failures of new locomotives last year. Of that, 65% were for reasons connected with electronic systems of different types and purposes (including electric equipment (12%), micro-processor control system and electronics (20%), poor quality assemblage (19%)). Also, there were problems with electric machines (10% of the total number of failures), brake equipment (8%), engines (7%), and wheel-sets (5%). 
“The basic problem we faced while exploiting new locomotives was unstable work of micro-processor systems caused by insufficient cooling amid high ambient air temperature,” say representatives of the North-Caucasus Railway. According to specialists at the West-Siberian Railway, nowadays, there are 311 new locomotives exploited at the Railway. Of that, there are 18 electric locomotives of EP1 type and 34 electric locomotives of 2ES4K type produced by Novocherkassk Electric Locomotive Plant, 116 EP2K electric locomotives made by Kolomensky Plant, 151 diesel locomotives of TEM18D, DM series produced by the Bryansk Machine Building Plant, 2 TEM7A diesel locomotives made by Lyudinovsky Diesel Locomotive Building Plant. “As a rule, the availability rate of the locomotives at the beginning of exploitation is lower than that declared by the manufacturer. For example, the availability rate declared in the specifications of passenger electric locomotives EP2K was 0.97, but the real rate was just 0.89 last year. Meanwhile, the availability rate of the passenger electric locomotives of the “old” ChS2 type, which have been exploited since the 1960s, is higher and even now it amounts to 0.98,” say specialists at the West-Siberian Railway. The main problems with the technical reliability of new locomotives faced by experts of the West-Siberian Railway at the beginning of exploitation are unstable work and loss of order of traction motors, broken compressors, windscreen cracks, and failures of air conditioning systems because of design flaws, among a lot of other defects. 
“The reclamation work held by the Railway with the manufacturers allowed to remove a lot of design drawbacks of the new locomotives, but there is still much to do,” emphasise representatives of the West-Siberian Railway.
All the defects make the Railway stop using the machinery until it is repaired. And usually it takes a lot of time. Why? First of all, because of the lack of necessary spares and materials in the assigned depot, delays in supplies, and the insufficient number of service groups of manufacturers. Moreover, it takes suppliers of the broken equipment a lot of time to arrive to research and repair the failures.  
Technical and organisational decisions on failures repair by manufacturers are taken very slowly. Another important issue is the lack of producers’ monitoring of their production. For several years, they have not monitored, processed, and analysed received data about the problems with the machinery they produced. Experts say that such mechanisms worked in the USSR – special departments at enterprises monitored the durability and maintainability of the production. 
In their turn, specialists at the plants say that 75% of a locomotive’s details are given by suppliers, consequently, the quality of the machinery significantly depends on the quality of the plant partners’ production. 
For example, representatives of Transmashholding say that the share of the company’s own defects in the total number of failures is not as large as that of supplied equipment (on average, the figure is 70% for equipment made by Kolomensky Plant, and 66% for equipment produced by the Novocherkassk Electric Locomotive Plant). Nowadays, the specialists of the holding company consider audits of their partners’ production to be common practice. Incoming control is also put into operation at the plants incorporated into Transmashholding. Today, up to 60% of purchased component parts are inspected. “Having increased the requirements on the quality of components, the holding company is searching for new suppliers. Creation of a competition environment stimulates producers to improve the quality and consumer characteristic features of their production,” say representatives of Transmashholding. 
According to RZD’s Technical Audit Centre, the problem plants among contractors are Russian manufacturers of microprocessor control systems (LES CJSC, Novocherkassk city), electric equipment (Electromachines OJSC, Chelyabinsk), safety devices (Elektromechanics OJSC, Penza), electric machines (Karpinsky Machine Building Plant OJSC, Karpinsk); and a Ukrainian enterprise – Electrotyazhmash plant (Kharkov). However, it is the enterprise that chooses the supplier, so it is not fair to lay the blame on others, believe experts. “Several manufacturers offer similar components nowadays, so a plant can always choose where to order these or those components. Enterprises should have more serious requirements to their suppliers,” think specialists at RZD’s Technical Audit Centre. Also, efficient instruments in such cases are economic penalties for defects and regular work with suppliers.

Resume
At the same time, specialists in RZD say that the situation with some models has started to improve. “Recently one of the most problem series of EP2K locomotives (about 80 units of this type were supplied to the network at that time) had almost constant failures. Now, all the electric locomotives are is good condition and work actively. There was a similar situation with EP1 series and its version – EP1M. Soon, the new traction rolling stock will replace the old one efficiently,” say specialists at RZD’s Directorate for Traction Rolling Stock Repair. 
By Maria Shevchenko
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Innovations Are Waiting in the Wings
In the words of Alexey Vorotilkin, Vice President of RZD, as of January 1, 2011, the company’s inventory locomotive park consisted of 20,300 units. Of that, there were 9,800 electric and 10,500 diesel locomotives. The 2011 investment programme envisages that RUR 35.1 billion is to be spent to buy 425 locomotives. In the first eight months of the year, 274 locos were supplied to Russian Railways. Of that, there were 185 electric and 89 diesel locomotives (for the sum of RUR 16 billion and RUR 4.8 billion respectively). Meanwhile, not less than 725 locomotives are to be purchased every year till 2015. RUR 85-90 billion is needed for that, but only RUR 31.9 billion is envisaged in the budget.
According to experts, RZD and operators – owners of locomotives aim at deciding a pre-crisis traction machinery purchase amount. The forecasted demand for diesel shunters in the Russian and CIS market is approximately 200 units per annum in the short term period (1-2 years) and not less than 300-350 units per annum in the mid-term period (3-4 years). In the opinion of Valentin Gapanovich, Senior Vice President, Chief Engineer at RZD, a lot of time will be needed to reach the purchase amount of 2008 (455 units).   
It is expected that newly designed products offered by Russian enterprises will stimulate the demand for the machinery. In 2011, Transmashholding, a key player of the locomotive building sector, concluded a contract with RZD on supply of innovative mainline AC freight electric locomotive 2ES5, Artem Ledenev, Head of PR Department at Transmashholding, told a correspondent of “The RZD-Partner International”. According to this contract, Russian Railways will receive 200 electric locomotives of 2ES5 type in 2013-2020. The contract is estimated at approximately €1 billion. The electric locomotives will be produced at the Novocherkassk Electric Locomotive Plant (an affiliate of the joint engineering centre of Transmashholding and Alstom Transport – TRTrans company). This is the second locomotive of the 5th generation, developed in the framework of Russian-French partnership. A similar (according to the cost) contract on supply of 200 2-system passenger locomotives EP20 in 2012-2020 was concluded by the companies last year. The electric locomotives will also be produced at the Novocherkassk Electric Locomotive Plant, where the first specimen of EP20 loco is being tested now. The serial production of it is supposed to start in 2012, and already in 2012-2013, 36 EP20 locomotives will be given to RZD to organise passenger transportation between Moscow and Sochi, in particular during the Winter Olympics. EP20 will be the first Russian electric locomotive capable of pulling passenger trains at a speed of 200 kph. 
Ural Locomotives (a JV of Sinara and Siemens) is also going to start the serial manufacture of a new product – “Granite” (2ES10). There are no locomotives in the 1520 area able to compete with this freight eight-axle mainline electric locomotive with asynchronous traction motor drive. The new locomotive encompasses 60% of advanced local engineering solutions and Siemens R&D on traction and vehicle control. This machine will be able to pull wagons with a total weight of 9,000-10,000 tons, which is twice as much as the carrying capacity of VL11 electric locomotives. Meanwhile, its life cycle costs 21% less in comparison with that of VL11. The localisation of the model production will start from 60% and increase to 80%. 2ES10 locos will be used mainly at the Sverdlovskaya and South-Urals railways (affiliates of RZD). Before the end of 2011, Ural Locomotives will supply RZD with 11 innovative locomotives of 2ES10 type. All in all, according to the contract, 221 such mainline electric locomotives are to be supplied in 2011-2016. 
Nowadays, “Granite” is actively tested on RZD’s network. At the beginning of August, the pilot three-section 2ES10 locomotive delivered an unprecedented cargo of 9,000 tons from Yekaterinburg-Sortirovochny to Balezino. Launching the production of three-section 2ES10 locomotives will make it possible to develop and implement a technology to get 9,000-ton trains without breaking up the cargo and changing the locomotive. This will help to cut the cost price of transportation and increase railway capacity (there will appear an opportunity to pull 7,000-ton transit trains without breaking up the cargo and changing the locomotive on difficult mountain road sections). 
Moreover, the technology will make for the common harmonisation of railway transportation and reduction of peak loading on the infrastructure.
The consumers of this production, i.e. affiliates of RZD, say that the major advantage of traction machinery made by Russian manufacturers is the availability of line equipment and spares. “No international contracts are required,” say specialists at the North-Caucasus Railway (an affiliate of RZD). In the opinion of specialists at the West-Siberian Railway (an affiliate of RZD), there are several advantages of supplies of traction rolling stock made by Russian companies. 
“The key one is implementation of advanced technologies in this sector, the opportunity to interact with the manufacturers fast to solve issues of maintenance, repair, warranty service, improvement of the technical reliability of the new traction rolling stock, and a rather simple scheme of supply of spares and materials for locomotive repair and maintenance,” note specialists at the West-Siberian Railway.

Manufacturers VS Suppliers
Perhaps all the innovations mentioned above will help to change the situation regarding the lack of locomotives. However, the issue of quality of the production supplied to the network remains the most urgent today. According to the data of the RZD’s Technical Audit Centre, there were over 1,037 failures of new locomotives last year. Of that, 65% were for reasons connected with electronic systems of different types and purposes (including electric equipment (12%), micro-processor control system and electronics (20%), poor quality assemblage (19%)). Also, there were problems with electric machines (10% of the total number of failures), brake equipment (8%), engines (7%), and wheel-sets (5%). 
“The basic problem we faced while exploiting new locomotives was unstable work of micro-processor systems caused by insufficient cooling amid high ambient air temperature,” say representatives of the North-Caucasus Railway. According to specialists at the West-Siberian Railway, nowadays, there are 311 new locomotives exploited at the Railway. Of that, there are 18 electric locomotives of EP1 type and 34 electric locomotives of 2ES4K type produced by Novocherkassk Electric Locomotive Plant, 116 EP2K electric locomotives made by Kolomensky Plant, 151 diesel locomotives of TEM18D, DM series produced by the Bryansk Machine Building Plant, 2 TEM7A diesel locomotives made by Lyudinovsky Diesel Locomotive Building Plant. “As a rule, the availability rate of the locomotives at the beginning of exploitation is lower than that declared by the manufacturer. For example, the availability rate declared in the specifications of passenger electric locomotives EP2K was 0.97, but the real rate was just 0.89 last year. Meanwhile, the availability rate of the passenger electric locomotives of the “old” ChS2 type, which have been exploited since the 1960s, is higher and even now it amounts to 0.98,” say specialists at the West-Siberian Railway. The main problems with the technical reliability of new locomotives faced by experts of the West-Siberian Railway at the beginning of exploitation are unstable work and loss of order of traction motors, broken compressors, windscreen cracks, and failures of air conditioning systems because of design flaws, among a lot of other defects. 
“The reclamation work held by the Railway with the manufacturers allowed to remove a lot of design drawbacks of the new locomotives, but there is still much to do,” emphasise representatives of the West-Siberian Railway.
All the defects make the Railway stop using the machinery until it is repaired. And usually it takes a lot of time. Why? First of all, because of the lack of necessary spares and materials in the assigned depot, delays in supplies, and the insufficient number of service groups of manufacturers. Moreover, it takes suppliers of the broken equipment a lot of time to arrive to research and repair the failures.  
Technical and organisational decisions on failures repair by manufacturers are taken very slowly. Another important issue is the lack of producers’ monitoring of their production. For several years, they have not monitored, processed, and analysed received data about the problems with the machinery they produced. Experts say that such mechanisms worked in the USSR – special departments at enterprises monitored the durability and maintainability of the production. 
In their turn, specialists at the plants say that 75% of a locomotive’s details are given by suppliers, consequently, the quality of the machinery significantly depends on the quality of the plant partners’ production. 
For example, representatives of Transmashholding say that the share of the company’s own defects in the total number of failures is not as large as that of supplied equipment (on average, the figure is 70% for equipment made by Kolomensky Plant, and 66% for equipment produced by the Novocherkassk Electric Locomotive Plant). Nowadays, the specialists of the holding company consider audits of their partners’ production to be common practice. Incoming control is also put into operation at the plants incorporated into Transmashholding. Today, up to 60% of purchased component parts are inspected. “Having increased the requirements on the quality of components, the holding company is searching for new suppliers. Creation of a competition environment stimulates producers to improve the quality and consumer characteristic features of their production,” say representatives of Transmashholding. 
According to RZD’s Technical Audit Centre, the problem plants among contractors are Russian manufacturers of microprocessor control systems (LES CJSC, Novocherkassk city), electric equipment (Electromachines OJSC, Chelyabinsk), safety devices (Elektromechanics OJSC, Penza), electric machines (Karpinsky Machine Building Plant OJSC, Karpinsk); and a Ukrainian enterprise – Electrotyazhmash plant (Kharkov). However, it is the enterprise that chooses the supplier, so it is not fair to lay the blame on others, believe experts. “Several manufacturers offer similar components nowadays, so a plant can always choose where to order these or those components. Enterprises should have more serious requirements to their suppliers,” think specialists at RZD’s Technical Audit Centre. Also, efficient instruments in such cases are economic penalties for defects and regular work with suppliers.

Resume
At the same time, specialists in RZD say that the situation with some models has started to improve. “Recently one of the most problem series of EP2K locomotives (about 80 units of this type were supplied to the network at that time) had almost constant failures. Now, all the electric locomotives are is good condition and work actively. There was a similar situation with EP1 series and its version – EP1M. Soon, the new traction rolling stock will replace the old one efficiently,” say specialists at RZD’s Directorate for Traction Rolling Stock Repair. 
By Maria Shevchenko
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Feel yourself Russian
Many foreign managers who work in Russia learn Russian. Depending on the achieved level of knowledge the language is used for communication in their everyday life, and sometimes it eliminates the need for an interpreter in difficult business negotiations. Despite the fact that the Russian language has traditionally been considered as the difficult one for a foreigner, those who want to study and use it for business purposes make such a decision because they want to feel more confident in their team, to stop being afraid that ignorance of the language would prevent them getting into all details of the business’s processes.
Successful learning of Russian can help one not to get lost on the streets of the Russian metropolis because of the lack of Latin equivalents on ordinary street signs.
Elementary  shopping in a grocery store without an organized system of self-service will not become a problem due to which the foreigner has to go to the market, which is not the most comfortable place, but the place, which allows one simply to show one’s finger towards a desired product.
 Olga Andreeva (recently  she was the Head of Department on Work with Clients in large recruitment agency Ancor) has large experience in HR consulting and considers that the main motivation for learning the  Russian language is the desire to tie somehow one’s life to Russia.
A marriage to a Russian woman is very popular option for a manager who has worked here for several years. And the Russian wife often becomes like a part-time teacher who helps to improve and explain the finer points of the Russian language.
Olga Andreeva also stresses that people who work in the field of logistics and retail industries try to learn Russian more often. These are the “speed” types of businesses that need a good reaction in the decision-making. In addition, clear schemes are not always used during mutual settlement of accounts and foreign managers, being informed of such features of the business, really want to understand the whole situation.

Some matters request… a tet-a-tet discussion
Some of large international companies with a network of offices in different countries purposefully try to hire employees who are fluent in English. Thus, the problem of communication in company removes.
That’s why Marc  Brenneiser, General Director of STS Logistics in Russia, believes that if one knows English then it is quite sufficient for communication within the company.
In Marc’s opinion learning Russian is needed to feel confident and safe out of the office, to be free while walking around the city and, ideally, to feel yourself a part of the country where you have come to live and work.
Jorma Kervinen, former General Director of Huolintakeskus Ltd, explains his desire to learn Russian by the fact that in 2006, when he came to work in Russia, not all Russian partners and customers spoke English, and the discussion of some questions required only private communications.
Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia says that knowledge of the Russian language is very important for establishing business contacts and networking. “The better you know the language – the more productively you can negotiate. When translating, a lot of information is lost or distorted, so I never ask for an interpreter and, in fact, sometimes personally I become an interpreter for a while. The Russian language for me is an irreplaceable tool of communication,” says Rolf. 
Michael Schwartz, partner of Freshfields Bruckhaus Deringer LLP believes that knowledge of Russian helps to understand the Russian mentality and culture, and without this understanding a feeling that you are a “foreign element” appears. In the sphere of professional legal support of large international projects one can’t work without the knowledge of the language, is sure Michael – as there is always a danger of inaccurate understanding of the desires of our Russian clients.

Welcome back to school
As far as the decision to study the Russian language is made, it remains to decide what will be the process of learning. In most cases, private teachers are hired for top managers. They come to teach to office when there is spare time in intensive day of the manager. Practically never does the process of teaching start from a basic level. 
Jorma Kervinen, for example, began to study Russian in a Finnish school at the age of 12, then he continued learning with a private teacher and at the moment he improves his knowledge and his Russian wife helps him. Before coming to Russia Marc Brenneiser  had a three week intensive course of Russian at home, in Germany, and now he practices it with a teacher individually. Rolf Epstein studied the Russian language in secondary school, at home, and then it was a part of his education at the Leningrad Institute of Railway Transport Engineers. 
Michael Schwartz was born in Munich, and he has a unique relationship with the Russian language. The older generation of the family, Michael’s grandmother and grandfather, lived in Russia before the 1920s and spoke Russian. Heard in childhood, Russian speech generated a desire to visit exotic places. There followed a course of Russian language at school and afterwards education at the Munich University and a law practice in Leningrad.
In the early ‘80s, few  students and professors at Leningrad State University spoke fluent English or German, so the young German lawyer had to learn Russian very fast. Passion for Russia and its language has influenced the choice of the character of work and now Michael is in Moscow half of his working time.

Mission Is Possible 
Learning Russian is complicated by an unknown alphabet, unusual sounds, a variety of case forms, there is also no clear order of words in a sentence and a lot of nuances of using the perfect and imperfect forms of the verb. At the same time foreigners always admire the beauty of the sounds of the Russian language, its melody, and more importantly, the lexical diversity, by which you can describe all the niceties of state of mind and emotions. Russian is not boring, believes Michael. But he adds that it doesn’t forgive the mistakes. The point is that sometimes even one small mistake in grammar or punctuation can dramatically change the meaning of the whole phrase. A classic example is “Казнить (execute) нельзя (you can’t) помиловать (forgive)” where the place of comma influence on whether the phrase “you can’t” refers to the word “execute” or to “forgive”.
According to Olga Andreeva, at first foreign managers  who have just arrived in Russia experience considerable difficulties in adapting to the domestic environment, as inter-city logistics in Russia hardly can be understood and used by foreigners. Unfortunately, even the inhabitants of Russian cities are aware that our country is not exactly easy for adopting by people of other cultures. Most street signs, street nameplates (and earlier it was so with the inscriptions on the subway) contain the information only in Russian, and  men unfamiliar with the Cyrillic alphabet, can’t read this without an equivalent in the Latin alphabet.
The level of information in our society is still far from European and normal activities, such as payment for goods or services by credit card, is not always possible for foreigners in Russia. In general, these little things lead to a lack of confidence, lack freedom and ease, especially when traveling or moving within the city. To hire an ordinary taxi and to find out that you can pay only by cash, to buy a train ticket and to find out that the timetable and directions for local trains are only in Russian, to buy products where there are no Latin letters on packing – all these lead to depression. 
This feeling scares and causes a logical question: “How can I live here?”. On the other hand, in a half a year or year the situation changes for the better and this period is sufficient to understand the specific advantages of living in Russia. These are low prices, a huge number of cultural institutions and events, kind and sincere people and phenomenal business opportunities. Of course, not everyone can adapt to our realities, but many realize that they can implement projects for which there are no opportunities and place in the European market. Such people stay here, make Russia their second home, sometimes start families and genuinely love Russia.
By Marina Ermolenko 

viewpoint
JORMA KERVINEN, 
General Director of Huolintakeskus Ltd., 2006-2011:
– Russian is very hard to learn, but it is rich and diverse. With help one can express all nuances of mood and describe complex emotions. In Russia I have met wonderful storytellers, interesting interlocutors and I tried to catch and to understand the capabilities of the Russian language when somebody was describing his impressions connected with different occasions. 
I like the fact that mostly Russians are friendly, open, sincere and react with a gentle humor  unavoidable for foreigner who make mistakes in language. For example, once I said the phrase: “I have a great price (“цена”)!”  to Russians. My listeners were surprised at first, and then laughed for a long time, realizing that the hissing sounds of “Ц” and of “Ж” seem to me the same. And in fact, of course,
I wanted to compliment my wonderful wife (“I have a great wife (“жена”)!”) who is, by the way, Russian by birth.


MARC BRENNEISER,
General Director of STS Logistics:
– I could write a book about funny incidents that are connected with the adopting process in Russian society.  During my first year of living in Russia when I was riding in a car as a passenger I often tried to read  shop signs on the streets of Moscow and was amazed by the incredible number of  GAP shops. I even told my wife that the number of the shops was more then all imaginable limits. As it turned out, all these signs in Russian had nothing to do with the GAP shops, because there was an ordinary bar under each sign. The word “БАР” (“bar”) written in Cyrillic letters looks very similar to the GAP in Latin. The biggest problem for me is reading in Russian, as studying of a fundamentally different alphabet requires time and patience.

OLGA ANDREEVA,
Manager of Service Development at Finnish Technopolis Company, up to 2009 she was the Head of Department on Work with Clients in Ancor HR-agency:
– Several years ago it was popular to invite top managers from Eastern Europe to work in Russia. This was so not only because of their knowledge of the Russian language, familiarity with Slavic cultures and the work experience “behind the Iron Curtain”. The cost of such managers was lower than the cost of their colleagues from Western countries and this economic reason was also considered. Such criteria as knowledge of Russian has never emerged as the main one while searching for top managers from abroad. The logic is simple - to communicate in Russian you can always hire an interpreter. As for Russian managers, ten years ago it was really hard to find the one speaking English but during the last five years we can observe the tendency of a growth in the number of Russian managers who can do without an interpreter while speaking English.


ROLF EPSTEIN, 
CEO Complete Transportation Solutions of Siemens Russia:
– A funny story came out during the discussion of serious issues with Mr Roslyak, the former Vice Mayor of Moscow. The project was delayed and the situation was extremely stressful, we were searching for a solution and could not find it. Then I said to the Vice Mayor in Russian: “Let’s sit down together!” And I went on with a phrase, the sense of which was to offer a private discussion. The Vice Mayor’s response to “sit together” was: “Better not”. Everyone laughed, and I was told the double meaning of my words. The word “sit” in Russian also means to go to jail by court decision. But the stress was removed, the situation became better, and we successfully finished our negotiations.

MICHAEL SCHWARTZ, 
partner of Freshfieds Bruckhaus Deringer LLP:
– An interesting thing happened to me while working on a large scaled project worth nearly €300 million. The negotiations of two parties – West and Russian – were going for ten months with the help of an interpreter. The memorandum in English and Russian was signed at the end of the process. The English text was of a higher priority and that has been specifically mentioned in the document. The goal of the project was to build a large facility and to transfer it to the usage of a   municipal authority of one of the regions of Russia. According to the memorandum that subject of the federation had to provide payment guarantees for the return of investment expenses. 
But when the west side turned to us to draw up a contract the point about guarantees caused doubts. We decided to meet with Russian partners and literally in five minutes after the start of the meeting it became clear that there was a serious discrepancy. There was the right for free determination of the size of further return of payment investment expenses only in the Russian language version of the document. The term «Payment Guarantee» mentioned in the English version was lost during the translation and the meaning of the document has been changed. The unfolding scandal reached the governor of the region. As a result, there was a complete restructuring of the project, which took a whole year. This is a good example of the significant influence of linguistic nuances on the practical side of business.
    [~DETAIL_TEXT] => 
Feel yourself Russian
Many foreign managers who work in Russia learn Russian. Depending on the achieved level of knowledge the language is used for communication in their everyday life, and sometimes it eliminates the need for an interpreter in difficult business negotiations. Despite the fact that the Russian language has traditionally been considered as the difficult one for a foreigner, those who want to study and use it for business purposes make such a decision because they want to feel more confident in their team, to stop being afraid that ignorance of the language would prevent them getting into all details of the business’s processes.
Successful learning of Russian can help one not to get lost on the streets of the Russian metropolis because of the lack of Latin equivalents on ordinary street signs.
Elementary  shopping in a grocery store without an organized system of self-service will not become a problem due to which the foreigner has to go to the market, which is not the most comfortable place, but the place, which allows one simply to show one’s finger towards a desired product.
 Olga Andreeva (recently  she was the Head of Department on Work with Clients in large recruitment agency Ancor) has large experience in HR consulting and considers that the main motivation for learning the  Russian language is the desire to tie somehow one’s life to Russia.
A marriage to a Russian woman is very popular option for a manager who has worked here for several years. And the Russian wife often becomes like a part-time teacher who helps to improve and explain the finer points of the Russian language.
Olga Andreeva also stresses that people who work in the field of logistics and retail industries try to learn Russian more often. These are the “speed” types of businesses that need a good reaction in the decision-making. In addition, clear schemes are not always used during mutual settlement of accounts and foreign managers, being informed of such features of the business, really want to understand the whole situation.

Some matters request… a tet-a-tet discussion
Some of large international companies with a network of offices in different countries purposefully try to hire employees who are fluent in English. Thus, the problem of communication in company removes.
That’s why Marc  Brenneiser, General Director of STS Logistics in Russia, believes that if one knows English then it is quite sufficient for communication within the company.
In Marc’s opinion learning Russian is needed to feel confident and safe out of the office, to be free while walking around the city and, ideally, to feel yourself a part of the country where you have come to live and work.
Jorma Kervinen, former General Director of Huolintakeskus Ltd, explains his desire to learn Russian by the fact that in 2006, when he came to work in Russia, not all Russian partners and customers spoke English, and the discussion of some questions required only private communications.
Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia says that knowledge of the Russian language is very important for establishing business contacts and networking. “The better you know the language – the more productively you can negotiate. When translating, a lot of information is lost or distorted, so I never ask for an interpreter and, in fact, sometimes personally I become an interpreter for a while. The Russian language for me is an irreplaceable tool of communication,” says Rolf. 
Michael Schwartz, partner of Freshfields Bruckhaus Deringer LLP believes that knowledge of Russian helps to understand the Russian mentality and culture, and without this understanding a feeling that you are a “foreign element” appears. In the sphere of professional legal support of large international projects one can’t work without the knowledge of the language, is sure Michael – as there is always a danger of inaccurate understanding of the desires of our Russian clients.

Welcome back to school
As far as the decision to study the Russian language is made, it remains to decide what will be the process of learning. In most cases, private teachers are hired for top managers. They come to teach to office when there is spare time in intensive day of the manager. Practically never does the process of teaching start from a basic level. 
Jorma Kervinen, for example, began to study Russian in a Finnish school at the age of 12, then he continued learning with a private teacher and at the moment he improves his knowledge and his Russian wife helps him. Before coming to Russia Marc Brenneiser  had a three week intensive course of Russian at home, in Germany, and now he practices it with a teacher individually. Rolf Epstein studied the Russian language in secondary school, at home, and then it was a part of his education at the Leningrad Institute of Railway Transport Engineers. 
Michael Schwartz was born in Munich, and he has a unique relationship with the Russian language. The older generation of the family, Michael’s grandmother and grandfather, lived in Russia before the 1920s and spoke Russian. Heard in childhood, Russian speech generated a desire to visit exotic places. There followed a course of Russian language at school and afterwards education at the Munich University and a law practice in Leningrad.
In the early ‘80s, few  students and professors at Leningrad State University spoke fluent English or German, so the young German lawyer had to learn Russian very fast. Passion for Russia and its language has influenced the choice of the character of work and now Michael is in Moscow half of his working time.

Mission Is Possible 
Learning Russian is complicated by an unknown alphabet, unusual sounds, a variety of case forms, there is also no clear order of words in a sentence and a lot of nuances of using the perfect and imperfect forms of the verb. At the same time foreigners always admire the beauty of the sounds of the Russian language, its melody, and more importantly, the lexical diversity, by which you can describe all the niceties of state of mind and emotions. Russian is not boring, believes Michael. But he adds that it doesn’t forgive the mistakes. The point is that sometimes even one small mistake in grammar or punctuation can dramatically change the meaning of the whole phrase. A classic example is “Казнить (execute) нельзя (you can’t) помиловать (forgive)” where the place of comma influence on whether the phrase “you can’t” refers to the word “execute” or to “forgive”.
According to Olga Andreeva, at first foreign managers  who have just arrived in Russia experience considerable difficulties in adapting to the domestic environment, as inter-city logistics in Russia hardly can be understood and used by foreigners. Unfortunately, even the inhabitants of Russian cities are aware that our country is not exactly easy for adopting by people of other cultures. Most street signs, street nameplates (and earlier it was so with the inscriptions on the subway) contain the information only in Russian, and  men unfamiliar with the Cyrillic alphabet, can’t read this without an equivalent in the Latin alphabet.
The level of information in our society is still far from European and normal activities, such as payment for goods or services by credit card, is not always possible for foreigners in Russia. In general, these little things lead to a lack of confidence, lack freedom and ease, especially when traveling or moving within the city. To hire an ordinary taxi and to find out that you can pay only by cash, to buy a train ticket and to find out that the timetable and directions for local trains are only in Russian, to buy products where there are no Latin letters on packing – all these lead to depression. 
This feeling scares and causes a logical question: “How can I live here?”. On the other hand, in a half a year or year the situation changes for the better and this period is sufficient to understand the specific advantages of living in Russia. These are low prices, a huge number of cultural institutions and events, kind and sincere people and phenomenal business opportunities. Of course, not everyone can adapt to our realities, but many realize that they can implement projects for which there are no opportunities and place in the European market. Such people stay here, make Russia their second home, sometimes start families and genuinely love Russia.
By Marina Ermolenko 

viewpoint
JORMA KERVINEN, 
General Director of Huolintakeskus Ltd., 2006-2011:
– Russian is very hard to learn, but it is rich and diverse. With help one can express all nuances of mood and describe complex emotions. In Russia I have met wonderful storytellers, interesting interlocutors and I tried to catch and to understand the capabilities of the Russian language when somebody was describing his impressions connected with different occasions. 
I like the fact that mostly Russians are friendly, open, sincere and react with a gentle humor  unavoidable for foreigner who make mistakes in language. For example, once I said the phrase: “I have a great price (“цена”)!”  to Russians. My listeners were surprised at first, and then laughed for a long time, realizing that the hissing sounds of “Ц” and of “Ж” seem to me the same. And in fact, of course,
I wanted to compliment my wonderful wife (“I have a great wife (“жена”)!”) who is, by the way, Russian by birth.


MARC BRENNEISER,
General Director of STS Logistics:
– I could write a book about funny incidents that are connected with the adopting process in Russian society.  During my first year of living in Russia when I was riding in a car as a passenger I often tried to read  shop signs on the streets of Moscow and was amazed by the incredible number of  GAP shops. I even told my wife that the number of the shops was more then all imaginable limits. As it turned out, all these signs in Russian had nothing to do with the GAP shops, because there was an ordinary bar under each sign. The word “БАР” (“bar”) written in Cyrillic letters looks very similar to the GAP in Latin. The biggest problem for me is reading in Russian, as studying of a fundamentally different alphabet requires time and patience.

OLGA ANDREEVA,
Manager of Service Development at Finnish Technopolis Company, up to 2009 she was the Head of Department on Work with Clients in Ancor HR-agency:
– Several years ago it was popular to invite top managers from Eastern Europe to work in Russia. This was so not only because of their knowledge of the Russian language, familiarity with Slavic cultures and the work experience “behind the Iron Curtain”. The cost of such managers was lower than the cost of their colleagues from Western countries and this economic reason was also considered. Such criteria as knowledge of Russian has never emerged as the main one while searching for top managers from abroad. The logic is simple - to communicate in Russian you can always hire an interpreter. As for Russian managers, ten years ago it was really hard to find the one speaking English but during the last five years we can observe the tendency of a growth in the number of Russian managers who can do without an interpreter while speaking English.


ROLF EPSTEIN, 
CEO Complete Transportation Solutions of Siemens Russia:
– A funny story came out during the discussion of serious issues with Mr Roslyak, the former Vice Mayor of Moscow. The project was delayed and the situation was extremely stressful, we were searching for a solution and could not find it. Then I said to the Vice Mayor in Russian: “Let’s sit down together!” And I went on with a phrase, the sense of which was to offer a private discussion. The Vice Mayor’s response to “sit together” was: “Better not”. Everyone laughed, and I was told the double meaning of my words. The word “sit” in Russian also means to go to jail by court decision. But the stress was removed, the situation became better, and we successfully finished our negotiations.

MICHAEL SCHWARTZ, 
partner of Freshfieds Bruckhaus Deringer LLP:
– An interesting thing happened to me while working on a large scaled project worth nearly €300 million. The negotiations of two parties – West and Russian – were going for ten months with the help of an interpreter. The memorandum in English and Russian was signed at the end of the process. The English text was of a higher priority and that has been specifically mentioned in the document. The goal of the project was to build a large facility and to transfer it to the usage of a   municipal authority of one of the regions of Russia. According to the memorandum that subject of the federation had to provide payment guarantees for the return of investment expenses. 
But when the west side turned to us to draw up a contract the point about guarantees caused doubts. We decided to meet with Russian partners and literally in five minutes after the start of the meeting it became clear that there was a serious discrepancy. There was the right for free determination of the size of further return of payment investment expenses only in the Russian language version of the document. The term «Payment Guarantee» mentioned in the English version was lost during the translation and the meaning of the document has been changed. The unfolding scandal reached the governor of the region. As a result, there was a complete restructuring of the project, which took a whole year. This is a good example of the significant influence of linguistic nuances on the practical side of business.
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    [PREVIEW_TEXT] => «Водка» (vodka) и «скидка» (discount) were the first words that Jorma Kervinen, former General Director of Huolintakeskus Ltd  (a subsidiary of the Finnish  Nurminen Logistics company), learned when he arrived to Russia and started to learn the Russian language. And as for Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia, he once offered for his partners to sit together, which in Russian means to go to jail. What is in it for the non-Russians involved in Russia’s transport sector to learn the language? 
The answer is clear: to drink vodka with their local partners, to get discounts and… to stay far from prison.
    [~PREVIEW_TEXT] => «Водка» (vodka) и «скидка» (discount) were the first words that Jorma Kervinen, former General Director of Huolintakeskus Ltd  (a subsidiary of the Finnish  Nurminen Logistics company), learned when he arrived to Russia and started to learn the Russian language. And as for Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia, he once offered for his partners to sit together, which in Russian means to go to jail. What is in it for the non-Russians involved in Russia’s transport sector to learn the language? 
The answer is clear: to drink vodka with their local partners, to get discounts and… to stay far from prison.
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Feel yourself Russian
Many foreign managers who work in Russia learn Russian. Depending on the achieved level of knowledge the language is used for communication in their everyday life, and sometimes it eliminates the need for an interpreter in difficult business negotiations. Despite the fact that the Russian language has traditionally been considered as the difficult one for a foreigner, those who want to study and use it for business purposes make such a decision because they want to feel more confident in their team, to stop being afraid that ignorance of the language would prevent them getting into all details of the business’s processes.
Successful learning of Russian can help one not to get lost on the streets of the Russian metropolis because of the lack of Latin equivalents on ordinary street signs.
Elementary  shopping in a grocery store without an organized system of self-service will not become a problem due to which the foreigner has to go to the market, which is not the most comfortable place, but the place, which allows one simply to show one’s finger towards a desired product.
 Olga Andreeva (recently  she was the Head of Department on Work with Clients in large recruitment agency Ancor) has large experience in HR consulting and considers that the main motivation for learning the  Russian language is the desire to tie somehow one’s life to Russia.
A marriage to a Russian woman is very popular option for a manager who has worked here for several years. And the Russian wife often becomes like a part-time teacher who helps to improve and explain the finer points of the Russian language.
Olga Andreeva also stresses that people who work in the field of logistics and retail industries try to learn Russian more often. These are the “speed” types of businesses that need a good reaction in the decision-making. In addition, clear schemes are not always used during mutual settlement of accounts and foreign managers, being informed of such features of the business, really want to understand the whole situation.

Some matters request… a tet-a-tet discussion
Some of large international companies with a network of offices in different countries purposefully try to hire employees who are fluent in English. Thus, the problem of communication in company removes.
That’s why Marc  Brenneiser, General Director of STS Logistics in Russia, believes that if one knows English then it is quite sufficient for communication within the company.
In Marc’s opinion learning Russian is needed to feel confident and safe out of the office, to be free while walking around the city and, ideally, to feel yourself a part of the country where you have come to live and work.
Jorma Kervinen, former General Director of Huolintakeskus Ltd, explains his desire to learn Russian by the fact that in 2006, when he came to work in Russia, not all Russian partners and customers spoke English, and the discussion of some questions required only private communications.
Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia says that knowledge of the Russian language is very important for establishing business contacts and networking. “The better you know the language – the more productively you can negotiate. When translating, a lot of information is lost or distorted, so I never ask for an interpreter and, in fact, sometimes personally I become an interpreter for a while. The Russian language for me is an irreplaceable tool of communication,” says Rolf. 
Michael Schwartz, partner of Freshfields Bruckhaus Deringer LLP believes that knowledge of Russian helps to understand the Russian mentality and culture, and without this understanding a feeling that you are a “foreign element” appears. In the sphere of professional legal support of large international projects one can’t work without the knowledge of the language, is sure Michael – as there is always a danger of inaccurate understanding of the desires of our Russian clients.

Welcome back to school
As far as the decision to study the Russian language is made, it remains to decide what will be the process of learning. In most cases, private teachers are hired for top managers. They come to teach to office when there is spare time in intensive day of the manager. Practically never does the process of teaching start from a basic level. 
Jorma Kervinen, for example, began to study Russian in a Finnish school at the age of 12, then he continued learning with a private teacher and at the moment he improves his knowledge and his Russian wife helps him. Before coming to Russia Marc Brenneiser  had a three week intensive course of Russian at home, in Germany, and now he practices it with a teacher individually. Rolf Epstein studied the Russian language in secondary school, at home, and then it was a part of his education at the Leningrad Institute of Railway Transport Engineers. 
Michael Schwartz was born in Munich, and he has a unique relationship with the Russian language. The older generation of the family, Michael’s grandmother and grandfather, lived in Russia before the 1920s and spoke Russian. Heard in childhood, Russian speech generated a desire to visit exotic places. There followed a course of Russian language at school and afterwards education at the Munich University and a law practice in Leningrad.
In the early ‘80s, few  students and professors at Leningrad State University spoke fluent English or German, so the young German lawyer had to learn Russian very fast. Passion for Russia and its language has influenced the choice of the character of work and now Michael is in Moscow half of his working time.

Mission Is Possible 
Learning Russian is complicated by an unknown alphabet, unusual sounds, a variety of case forms, there is also no clear order of words in a sentence and a lot of nuances of using the perfect and imperfect forms of the verb. At the same time foreigners always admire the beauty of the sounds of the Russian language, its melody, and more importantly, the lexical diversity, by which you can describe all the niceties of state of mind and emotions. Russian is not boring, believes Michael. But he adds that it doesn’t forgive the mistakes. The point is that sometimes even one small mistake in grammar or punctuation can dramatically change the meaning of the whole phrase. A classic example is “Казнить (execute) нельзя (you can’t) помиловать (forgive)” where the place of comma influence on whether the phrase “you can’t” refers to the word “execute” or to “forgive”.
According to Olga Andreeva, at first foreign managers  who have just arrived in Russia experience considerable difficulties in adapting to the domestic environment, as inter-city logistics in Russia hardly can be understood and used by foreigners. Unfortunately, even the inhabitants of Russian cities are aware that our country is not exactly easy for adopting by people of other cultures. Most street signs, street nameplates (and earlier it was so with the inscriptions on the subway) contain the information only in Russian, and  men unfamiliar with the Cyrillic alphabet, can’t read this without an equivalent in the Latin alphabet.
The level of information in our society is still far from European and normal activities, such as payment for goods or services by credit card, is not always possible for foreigners in Russia. In general, these little things lead to a lack of confidence, lack freedom and ease, especially when traveling or moving within the city. To hire an ordinary taxi and to find out that you can pay only by cash, to buy a train ticket and to find out that the timetable and directions for local trains are only in Russian, to buy products where there are no Latin letters on packing – all these lead to depression. 
This feeling scares and causes a logical question: “How can I live here?”. On the other hand, in a half a year or year the situation changes for the better and this period is sufficient to understand the specific advantages of living in Russia. These are low prices, a huge number of cultural institutions and events, kind and sincere people and phenomenal business opportunities. Of course, not everyone can adapt to our realities, but many realize that they can implement projects for which there are no opportunities and place in the European market. Such people stay here, make Russia their second home, sometimes start families and genuinely love Russia.
By Marina Ermolenko 

viewpoint
JORMA KERVINEN, 
General Director of Huolintakeskus Ltd., 2006-2011:
– Russian is very hard to learn, but it is rich and diverse. With help one can express all nuances of mood and describe complex emotions. In Russia I have met wonderful storytellers, interesting interlocutors and I tried to catch and to understand the capabilities of the Russian language when somebody was describing his impressions connected with different occasions. 
I like the fact that mostly Russians are friendly, open, sincere and react with a gentle humor  unavoidable for foreigner who make mistakes in language. For example, once I said the phrase: “I have a great price (“цена”)!”  to Russians. My listeners were surprised at first, and then laughed for a long time, realizing that the hissing sounds of “Ц” and of “Ж” seem to me the same. And in fact, of course,
I wanted to compliment my wonderful wife (“I have a great wife (“жена”)!”) who is, by the way, Russian by birth.


MARC BRENNEISER,
General Director of STS Logistics:
– I could write a book about funny incidents that are connected with the adopting process in Russian society.  During my first year of living in Russia when I was riding in a car as a passenger I often tried to read  shop signs on the streets of Moscow and was amazed by the incredible number of  GAP shops. I even told my wife that the number of the shops was more then all imaginable limits. As it turned out, all these signs in Russian had nothing to do with the GAP shops, because there was an ordinary bar under each sign. The word “БАР” (“bar”) written in Cyrillic letters looks very similar to the GAP in Latin. The biggest problem for me is reading in Russian, as studying of a fundamentally different alphabet requires time and patience.

OLGA ANDREEVA,
Manager of Service Development at Finnish Technopolis Company, up to 2009 she was the Head of Department on Work with Clients in Ancor HR-agency:
– Several years ago it was popular to invite top managers from Eastern Europe to work in Russia. This was so not only because of their knowledge of the Russian language, familiarity with Slavic cultures and the work experience “behind the Iron Curtain”. The cost of such managers was lower than the cost of their colleagues from Western countries and this economic reason was also considered. Such criteria as knowledge of Russian has never emerged as the main one while searching for top managers from abroad. The logic is simple - to communicate in Russian you can always hire an interpreter. As for Russian managers, ten years ago it was really hard to find the one speaking English but during the last five years we can observe the tendency of a growth in the number of Russian managers who can do without an interpreter while speaking English.


ROLF EPSTEIN, 
CEO Complete Transportation Solutions of Siemens Russia:
– A funny story came out during the discussion of serious issues with Mr Roslyak, the former Vice Mayor of Moscow. The project was delayed and the situation was extremely stressful, we were searching for a solution and could not find it. Then I said to the Vice Mayor in Russian: “Let’s sit down together!” And I went on with a phrase, the sense of which was to offer a private discussion. The Vice Mayor’s response to “sit together” was: “Better not”. Everyone laughed, and I was told the double meaning of my words. The word “sit” in Russian also means to go to jail by court decision. But the stress was removed, the situation became better, and we successfully finished our negotiations.

MICHAEL SCHWARTZ, 
partner of Freshfieds Bruckhaus Deringer LLP:
– An interesting thing happened to me while working on a large scaled project worth nearly €300 million. The negotiations of two parties – West and Russian – were going for ten months with the help of an interpreter. The memorandum in English and Russian was signed at the end of the process. The English text was of a higher priority and that has been specifically mentioned in the document. The goal of the project was to build a large facility and to transfer it to the usage of a   municipal authority of one of the regions of Russia. According to the memorandum that subject of the federation had to provide payment guarantees for the return of investment expenses. 
But when the west side turned to us to draw up a contract the point about guarantees caused doubts. We decided to meet with Russian partners and literally in five minutes after the start of the meeting it became clear that there was a serious discrepancy. There was the right for free determination of the size of further return of payment investment expenses only in the Russian language version of the document. The term «Payment Guarantee» mentioned in the English version was lost during the translation and the meaning of the document has been changed. The unfolding scandal reached the governor of the region. As a result, there was a complete restructuring of the project, which took a whole year. This is a good example of the significant influence of linguistic nuances on the practical side of business.
    [~DETAIL_TEXT] => 
Feel yourself Russian
Many foreign managers who work in Russia learn Russian. Depending on the achieved level of knowledge the language is used for communication in their everyday life, and sometimes it eliminates the need for an interpreter in difficult business negotiations. Despite the fact that the Russian language has traditionally been considered as the difficult one for a foreigner, those who want to study and use it for business purposes make such a decision because they want to feel more confident in their team, to stop being afraid that ignorance of the language would prevent them getting into all details of the business’s processes.
Successful learning of Russian can help one not to get lost on the streets of the Russian metropolis because of the lack of Latin equivalents on ordinary street signs.
Elementary  shopping in a grocery store without an organized system of self-service will not become a problem due to which the foreigner has to go to the market, which is not the most comfortable place, but the place, which allows one simply to show one’s finger towards a desired product.
 Olga Andreeva (recently  she was the Head of Department on Work with Clients in large recruitment agency Ancor) has large experience in HR consulting and considers that the main motivation for learning the  Russian language is the desire to tie somehow one’s life to Russia.
A marriage to a Russian woman is very popular option for a manager who has worked here for several years. And the Russian wife often becomes like a part-time teacher who helps to improve and explain the finer points of the Russian language.
Olga Andreeva also stresses that people who work in the field of logistics and retail industries try to learn Russian more often. These are the “speed” types of businesses that need a good reaction in the decision-making. In addition, clear schemes are not always used during mutual settlement of accounts and foreign managers, being informed of such features of the business, really want to understand the whole situation.

Some matters request… a tet-a-tet discussion
Some of large international companies with a network of offices in different countries purposefully try to hire employees who are fluent in English. Thus, the problem of communication in company removes.
That’s why Marc  Brenneiser, General Director of STS Logistics in Russia, believes that if one knows English then it is quite sufficient for communication within the company.
In Marc’s opinion learning Russian is needed to feel confident and safe out of the office, to be free while walking around the city and, ideally, to feel yourself a part of the country where you have come to live and work.
Jorma Kervinen, former General Director of Huolintakeskus Ltd, explains his desire to learn Russian by the fact that in 2006, when he came to work in Russia, not all Russian partners and customers spoke English, and the discussion of some questions required only private communications.
Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia says that knowledge of the Russian language is very important for establishing business contacts and networking. “The better you know the language – the more productively you can negotiate. When translating, a lot of information is lost or distorted, so I never ask for an interpreter and, in fact, sometimes personally I become an interpreter for a while. The Russian language for me is an irreplaceable tool of communication,” says Rolf. 
Michael Schwartz, partner of Freshfields Bruckhaus Deringer LLP believes that knowledge of Russian helps to understand the Russian mentality and culture, and without this understanding a feeling that you are a “foreign element” appears. In the sphere of professional legal support of large international projects one can’t work without the knowledge of the language, is sure Michael – as there is always a danger of inaccurate understanding of the desires of our Russian clients.

Welcome back to school
As far as the decision to study the Russian language is made, it remains to decide what will be the process of learning. In most cases, private teachers are hired for top managers. They come to teach to office when there is spare time in intensive day of the manager. Practically never does the process of teaching start from a basic level. 
Jorma Kervinen, for example, began to study Russian in a Finnish school at the age of 12, then he continued learning with a private teacher and at the moment he improves his knowledge and his Russian wife helps him. Before coming to Russia Marc Brenneiser  had a three week intensive course of Russian at home, in Germany, and now he practices it with a teacher individually. Rolf Epstein studied the Russian language in secondary school, at home, and then it was a part of his education at the Leningrad Institute of Railway Transport Engineers. 
Michael Schwartz was born in Munich, and he has a unique relationship with the Russian language. The older generation of the family, Michael’s grandmother and grandfather, lived in Russia before the 1920s and spoke Russian. Heard in childhood, Russian speech generated a desire to visit exotic places. There followed a course of Russian language at school and afterwards education at the Munich University and a law practice in Leningrad.
In the early ‘80s, few  students and professors at Leningrad State University spoke fluent English or German, so the young German lawyer had to learn Russian very fast. Passion for Russia and its language has influenced the choice of the character of work and now Michael is in Moscow half of his working time.

Mission Is Possible 
Learning Russian is complicated by an unknown alphabet, unusual sounds, a variety of case forms, there is also no clear order of words in a sentence and a lot of nuances of using the perfect and imperfect forms of the verb. At the same time foreigners always admire the beauty of the sounds of the Russian language, its melody, and more importantly, the lexical diversity, by which you can describe all the niceties of state of mind and emotions. Russian is not boring, believes Michael. But he adds that it doesn’t forgive the mistakes. The point is that sometimes even one small mistake in grammar or punctuation can dramatically change the meaning of the whole phrase. A classic example is “Казнить (execute) нельзя (you can’t) помиловать (forgive)” where the place of comma influence on whether the phrase “you can’t” refers to the word “execute” or to “forgive”.
According to Olga Andreeva, at first foreign managers  who have just arrived in Russia experience considerable difficulties in adapting to the domestic environment, as inter-city logistics in Russia hardly can be understood and used by foreigners. Unfortunately, even the inhabitants of Russian cities are aware that our country is not exactly easy for adopting by people of other cultures. Most street signs, street nameplates (and earlier it was so with the inscriptions on the subway) contain the information only in Russian, and  men unfamiliar with the Cyrillic alphabet, can’t read this without an equivalent in the Latin alphabet.
The level of information in our society is still far from European and normal activities, such as payment for goods or services by credit card, is not always possible for foreigners in Russia. In general, these little things lead to a lack of confidence, lack freedom and ease, especially when traveling or moving within the city. To hire an ordinary taxi and to find out that you can pay only by cash, to buy a train ticket and to find out that the timetable and directions for local trains are only in Russian, to buy products where there are no Latin letters on packing – all these lead to depression. 
This feeling scares and causes a logical question: “How can I live here?”. On the other hand, in a half a year or year the situation changes for the better and this period is sufficient to understand the specific advantages of living in Russia. These are low prices, a huge number of cultural institutions and events, kind and sincere people and phenomenal business opportunities. Of course, not everyone can adapt to our realities, but many realize that they can implement projects for which there are no opportunities and place in the European market. Such people stay here, make Russia their second home, sometimes start families and genuinely love Russia.
By Marina Ermolenko 

viewpoint
JORMA KERVINEN, 
General Director of Huolintakeskus Ltd., 2006-2011:
– Russian is very hard to learn, but it is rich and diverse. With help one can express all nuances of mood and describe complex emotions. In Russia I have met wonderful storytellers, interesting interlocutors and I tried to catch and to understand the capabilities of the Russian language when somebody was describing his impressions connected with different occasions. 
I like the fact that mostly Russians are friendly, open, sincere and react with a gentle humor  unavoidable for foreigner who make mistakes in language. For example, once I said the phrase: “I have a great price (“цена”)!”  to Russians. My listeners were surprised at first, and then laughed for a long time, realizing that the hissing sounds of “Ц” and of “Ж” seem to me the same. And in fact, of course,
I wanted to compliment my wonderful wife (“I have a great wife (“жена”)!”) who is, by the way, Russian by birth.


MARC BRENNEISER,
General Director of STS Logistics:
– I could write a book about funny incidents that are connected with the adopting process in Russian society.  During my first year of living in Russia when I was riding in a car as a passenger I often tried to read  shop signs on the streets of Moscow and was amazed by the incredible number of  GAP shops. I even told my wife that the number of the shops was more then all imaginable limits. As it turned out, all these signs in Russian had nothing to do with the GAP shops, because there was an ordinary bar under each sign. The word “БАР” (“bar”) written in Cyrillic letters looks very similar to the GAP in Latin. The biggest problem for me is reading in Russian, as studying of a fundamentally different alphabet requires time and patience.

OLGA ANDREEVA,
Manager of Service Development at Finnish Technopolis Company, up to 2009 she was the Head of Department on Work with Clients in Ancor HR-agency:
– Several years ago it was popular to invite top managers from Eastern Europe to work in Russia. This was so not only because of their knowledge of the Russian language, familiarity with Slavic cultures and the work experience “behind the Iron Curtain”. The cost of such managers was lower than the cost of their colleagues from Western countries and this economic reason was also considered. Such criteria as knowledge of Russian has never emerged as the main one while searching for top managers from abroad. The logic is simple - to communicate in Russian you can always hire an interpreter. As for Russian managers, ten years ago it was really hard to find the one speaking English but during the last five years we can observe the tendency of a growth in the number of Russian managers who can do without an interpreter while speaking English.


ROLF EPSTEIN, 
CEO Complete Transportation Solutions of Siemens Russia:
– A funny story came out during the discussion of serious issues with Mr Roslyak, the former Vice Mayor of Moscow. The project was delayed and the situation was extremely stressful, we were searching for a solution and could not find it. Then I said to the Vice Mayor in Russian: “Let’s sit down together!” And I went on with a phrase, the sense of which was to offer a private discussion. The Vice Mayor’s response to “sit together” was: “Better not”. Everyone laughed, and I was told the double meaning of my words. The word “sit” in Russian also means to go to jail by court decision. But the stress was removed, the situation became better, and we successfully finished our negotiations.

MICHAEL SCHWARTZ, 
partner of Freshfieds Bruckhaus Deringer LLP:
– An interesting thing happened to me while working on a large scaled project worth nearly €300 million. The negotiations of two parties – West and Russian – were going for ten months with the help of an interpreter. The memorandum in English and Russian was signed at the end of the process. The English text was of a higher priority and that has been specifically mentioned in the document. The goal of the project was to build a large facility and to transfer it to the usage of a   municipal authority of one of the regions of Russia. According to the memorandum that subject of the federation had to provide payment guarantees for the return of investment expenses. 
But when the west side turned to us to draw up a contract the point about guarantees caused doubts. We decided to meet with Russian partners and literally in five minutes after the start of the meeting it became clear that there was a serious discrepancy. There was the right for free determination of the size of further return of payment investment expenses only in the Russian language version of the document. The term «Payment Guarantee» mentioned in the English version was lost during the translation and the meaning of the document has been changed. The unfolding scandal reached the governor of the region. As a result, there was a complete restructuring of the project, which took a whole year. This is a good example of the significant influence of linguistic nuances on the practical side of business.
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The answer is clear: to drink vodka with their local partners, to get discounts and… to stay far from prison.
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The answer is clear: to drink vodka with their local partners, to get discounts and… to stay far from prison.
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            [SECTION_META_TITLE] => Lost in translation? Lost in Russia!
            [SECTION_META_KEYWORDS] => lost in translation? lost in russia!
            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/4/16.jpg" border="1" alt=" " hspace="5" width="200" height="301" align="left" />«Водка» (vodka) и «скидка» (discount) were the first words that Jorma Kervinen, former General Director of Huolintakeskus Ltd  (a subsidiary of the Finnish  Nurminen Logistics company), learned when he arrived to Russia and started to learn the Russian language. And as for Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia, he once offered for his partners to sit together, which in Russian means to go to jail. What is in it for the non-Russians involved in Russia’s transport sector to learn the language? <br />The answer is clear: to drink vodka with their local partners, to get discounts and… to stay far from prison.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/4/16.jpg" border="1" alt=" " hspace="5" width="200" height="301" align="left" />«Водка» (vodka) и «скидка» (discount) were the first words that Jorma Kervinen, former General Director of Huolintakeskus Ltd  (a subsidiary of the Finnish  Nurminen Logistics company), learned when he arrived to Russia and started to learn the Russian language. And as for Rolf Epstein, CEO Complete Transportation Solutions of Siemens Russia, he once offered for his partners to sit together, which in Russian means to go to jail. What is in it for the non-Russians involved in Russia’s transport sector to learn the language? <br />The answer is clear: to drink vodka with their local partners, to get discounts and… to stay far from prison.
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    [DETAIL_TEXT] => 
There Were Three Bidders
According to the terms of the deal, investors seeking to buy Freight One were to have not less than 15,000 wagons (not necessary in property), the Russian registration, at least a six month experience of rolling stock management, and a stable finance position (without past-due debts). Naturally, they were to be neither controlled by the state nor connected with the structures of RZD. Such requirements cannot be named impossible to meet. Nowadays, there are about ten companies in Russia that have over 15,000 railcars. Three operators decided to take part in the auction. All of them were from the top five private companies operating in the market of rolling stock supply for loading.
The first claimer was NefteTransService, whose park amounts to 40,000 units (gondola cars and tank wagons). This company managed to enlarge the number of its own gondola cars at the sales of the public park last year. 
Another participant in the auction was Transoil, one of the largest operators specialising in oil bulk transportation (the company’s share in the total volume of oil and petrochemicals railway transportation is 23.3%). The company’s rolling stock park consists of 30,000 tank wagons.
One more bidder and the winner was the Independent Transport Company. Vladimir Lisin was named one of the two most possible winners of the auction beforehand (the second was Gennady Timchenko). The Independent Transport Company, a captive operator of the NLMK, incorporated into UCL Holding, manages more than 30,000 railcars. 
Moreover, it has a nice auction history, due to which the Independent Transport Company succeeded in multiplying its park and transportation volume last year (an almost five-fold growth in the first half of 2011 as compared with the results of the same period in 2010). By the way, this was the first company that gave an application for participation in the auction. The Independent Transport Company owned just universal rolling stock. After purchasing Freight One, it becomes the largest private company in this segment, and on the whole market of rolling stock supply for loading.

Globaltrans Changed Its Mind
Considering the complicated financial situation on the market and the recent difficulties in the process of railway transportation organisation, it is impossible to say that the fight for Freight One was violent. As we have already mentioned, only three companies decided to participate in the auction, though participation was possible if a company had just 15,000 railcars.
Moreover, Globaltrans did not participate in the auction. Until recently, Novaya Perevozochnaya Kompaniya (is incorporated together with BaltTransService into Globaltrans group of companies, operates more than 30,000 railcars) was in the list of applicants for Freight One. However, a month before the auction, the company announced that “in the situation of ambiguity on the global financial markets, it was decided to abstain from participation in the auction.” “In accordance with the principles of the conservative financial policy,” the Board of Directors of Globaltrans considered “the significant increase in credit loading necessary for this deal financing too risky amid the current situation.”
In the words of Konstantin Romanov, Analyst at Finam investment company, Globaltrans planned to purchase a structure that was several times larger than the group of companies itself. To buy it, the company would have had to run into a serious debt, and then it would have to service it. “Amid the macroeconomic instability in the world, the decision made by Globaltrans is quite understandable,” marks the expert.
Earlier, this holding company was named the major applicant for Freight One. It was quite logical if we consider the company’s ambitious plans. When Freight Two was launched, Globaltrans was interested in the purchase of half of this subsidiary of Russian Railways. Then, the senior management of the group of companies worked actively to attract the resources to win the auction for a 75% stake in Freight One. At the end of September, Novaya Perevozochnaya Kompaniya attracted one more RUR 5 billion loan for the period until December 29, 2014.
Even now, after it refused to participate in the auction, Globaltrans says that it will continue to carry out the strategy targeted at the further growth and development of business by means of rolling stock purchase as well as “using the opportunities given by the future liberalisation of the locomotive market and the consolidation continuing in the sector.” For this, the company has both – the serious intentions of further development and financial opportunities.

More Would Be Better
Taking into account that Freight One was sold for RUR 125.5 billion, the participants in the auction were not very interested in the asset, which has become rather a problem lately because of the operating part consolidation. The initial price was RUR 125.375 billion, each bid increment was RUR 500 million (excluding the first bid increment of RUR 125 million). It turns out that nobody but representatives of the Independent Transport Company tried to fight to buy Freight One. In the words of its top managers, the holding company is going to pay for the purchase from its own and attracted means (at a 50-50 split). 
Nowadays, Freight One owns over 235,000 wagons, i.e. approximately 22% of the park operating on the Russian Railways’ network. Moreover, the largest operator manages more than 125,000 gondola cars and 66,000 tank wagons. Vladimir Yakunin, President of RZD, named the auction of selling Freight One “the largest privatisation of state property in the history of Russia.” 
It is impossible to say that RZD received for their largest subsidiary the sum they wanted. “We would like to get more, but enough is as good as a feast,” said the Head of RZD on the results of the auction. 
In the near future, the Independent Transport Company plans to make RZD an offer for the purchase of a 25% stake in Freight One plus 1 share at the auction price, said Mr Bukin, General Director of Transportation Assets Management (the managing company of  UCL Holding). “In accordance with the law on joint-stock companies, we are going to make an offer to all minority shareholders (in this case it is RZD) to purchase their stake in the company at the auction price. Consequently, if RZD and the state decide on the sale of the 25% stake plus one share, we will be obliged to buy it, and we are interested in it,” said Mr Bukin. However, the Head of RZD has already said that in the near future the holding company is not going to sell its stake in Freight One. 
A lot of experts think that the time, when there will be just three or four companies on the rolling stock operation market, as it was declared in the Target Model of Cargo Railway Transportation Market to 2015, will come soon. The purchase of Freight One by one of the private operators became another step towards private park consolidation and market enlargement. Dmitry Adamidov, expert at the independent analytical agency Investcafe, notes, “If the crisis does not impact Russia seriously, the profitability will fall, and many operators will leave the market of their own will but not because they will merge or be forced out. Anyway, in three or four years, there will be not more than four or five large operators and 10-15 local (regional) ones in the sector.”

Time Will Show
What can clients of Freight One expect after the company is sold?
Olga Lukyanova, Chairperson of the Non-Commercial Partnership of Railway Rolling Stock, believes that if Freight One is bought by subsidiaries of the NLMK, the company may focus on servicing this holding company and transporting its cargoes (metal, coke, and ore). Naturally, then, a part of cargo owners using services provided by Freight One will be in a worse condition than subsidiaries of NLMK. 
The auction may have other consequences as well. For example, representatives of Troika Dialog Investment Company believe that the new owner must be interested in maximisation of free cash flow of Freight One to cut the debt loading. Thus, the company’s expenditure on new railcars may drop, which will decrease the demand for new rolling stock as well as the prices for it, which have been rather high lately. This would create a favourable situation for other rolling stock operators, including Globaltrans group of companies. The latter may increase the volume of its investment programmes aimed at rolling stock park enlargement.  
Denis Vorchik, an analyst at Uralsib Financial Corporation, forecasts that the efficiency of Freight One will increase after its owner changes. Meanwhile, it is worth mentioning, that at the current stage, RZD’s subsidiaries have better exploitation figures than private companies. Clients speak about a similar situation in part of the tariff policy – at present, the rates of Freight One on certain directions and types of rolling stock are even a little bit lower than the market ones. 
It is interesting that before there appeared the information about the consolidation of the parks of Freight One and Freight Two, a lot of sectoral experts had forecast an increase in the tariffs of Freight One after its sale. In the opinion of analysts, operators are not sentimental, and any new owner of Freight One would increase rates on rolling stock at once, especially if we take into account the sum spent by the winner and the debt he would have to pay after the purchase.   
We should admit that the situation for holding an auction was not favourable. That is why ambitious Transoil, which used to be interested in purchasing Freight One, refused to fight for this asset, which had become not so attractive lately.
In fact, since November 1, 2011, the gondola cars of Freight One and Freight Two are involved in the project of park consolidation. The companies are obliged to rent their rolling stock park to RZD for the latter to transport cargo as before – at the tariffs of Price List №10-01. Moreover, Freight One recently launched a programme of boxcar supply on the North-Caucasus Railway, and it promised to expand the programme on the whole territory of Russia (from November 2011) and on all types of rolling stock (in 2012).
It is not known for sure what the new owner of Freight One purchased – the leading position on the market or a load of problems. 
by Nadezhda Vtorushina 
    [~DETAIL_TEXT] => 
There Were Three Bidders
According to the terms of the deal, investors seeking to buy Freight One were to have not less than 15,000 wagons (not necessary in property), the Russian registration, at least a six month experience of rolling stock management, and a stable finance position (without past-due debts). Naturally, they were to be neither controlled by the state nor connected with the structures of RZD. Such requirements cannot be named impossible to meet. Nowadays, there are about ten companies in Russia that have over 15,000 railcars. Three operators decided to take part in the auction. All of them were from the top five private companies operating in the market of rolling stock supply for loading.
The first claimer was NefteTransService, whose park amounts to 40,000 units (gondola cars and tank wagons). This company managed to enlarge the number of its own gondola cars at the sales of the public park last year. 
Another participant in the auction was Transoil, one of the largest operators specialising in oil bulk transportation (the company’s share in the total volume of oil and petrochemicals railway transportation is 23.3%). The company’s rolling stock park consists of 30,000 tank wagons.
One more bidder and the winner was the Independent Transport Company. Vladimir Lisin was named one of the two most possible winners of the auction beforehand (the second was Gennady Timchenko). The Independent Transport Company, a captive operator of the NLMK, incorporated into UCL Holding, manages more than 30,000 railcars. 
Moreover, it has a nice auction history, due to which the Independent Transport Company succeeded in multiplying its park and transportation volume last year (an almost five-fold growth in the first half of 2011 as compared with the results of the same period in 2010). By the way, this was the first company that gave an application for participation in the auction. The Independent Transport Company owned just universal rolling stock. After purchasing Freight One, it becomes the largest private company in this segment, and on the whole market of rolling stock supply for loading.

Globaltrans Changed Its Mind
Considering the complicated financial situation on the market and the recent difficulties in the process of railway transportation organisation, it is impossible to say that the fight for Freight One was violent. As we have already mentioned, only three companies decided to participate in the auction, though participation was possible if a company had just 15,000 railcars.
Moreover, Globaltrans did not participate in the auction. Until recently, Novaya Perevozochnaya Kompaniya (is incorporated together with BaltTransService into Globaltrans group of companies, operates more than 30,000 railcars) was in the list of applicants for Freight One. However, a month before the auction, the company announced that “in the situation of ambiguity on the global financial markets, it was decided to abstain from participation in the auction.” “In accordance with the principles of the conservative financial policy,” the Board of Directors of Globaltrans considered “the significant increase in credit loading necessary for this deal financing too risky amid the current situation.”
In the words of Konstantin Romanov, Analyst at Finam investment company, Globaltrans planned to purchase a structure that was several times larger than the group of companies itself. To buy it, the company would have had to run into a serious debt, and then it would have to service it. “Amid the macroeconomic instability in the world, the decision made by Globaltrans is quite understandable,” marks the expert.
Earlier, this holding company was named the major applicant for Freight One. It was quite logical if we consider the company’s ambitious plans. When Freight Two was launched, Globaltrans was interested in the purchase of half of this subsidiary of Russian Railways. Then, the senior management of the group of companies worked actively to attract the resources to win the auction for a 75% stake in Freight One. At the end of September, Novaya Perevozochnaya Kompaniya attracted one more RUR 5 billion loan for the period until December 29, 2014.
Even now, after it refused to participate in the auction, Globaltrans says that it will continue to carry out the strategy targeted at the further growth and development of business by means of rolling stock purchase as well as “using the opportunities given by the future liberalisation of the locomotive market and the consolidation continuing in the sector.” For this, the company has both – the serious intentions of further development and financial opportunities.

More Would Be Better
Taking into account that Freight One was sold for RUR 125.5 billion, the participants in the auction were not very interested in the asset, which has become rather a problem lately because of the operating part consolidation. The initial price was RUR 125.375 billion, each bid increment was RUR 500 million (excluding the first bid increment of RUR 125 million). It turns out that nobody but representatives of the Independent Transport Company tried to fight to buy Freight One. In the words of its top managers, the holding company is going to pay for the purchase from its own and attracted means (at a 50-50 split). 
Nowadays, Freight One owns over 235,000 wagons, i.e. approximately 22% of the park operating on the Russian Railways’ network. Moreover, the largest operator manages more than 125,000 gondola cars and 66,000 tank wagons. Vladimir Yakunin, President of RZD, named the auction of selling Freight One “the largest privatisation of state property in the history of Russia.” 
It is impossible to say that RZD received for their largest subsidiary the sum they wanted. “We would like to get more, but enough is as good as a feast,” said the Head of RZD on the results of the auction. 
In the near future, the Independent Transport Company plans to make RZD an offer for the purchase of a 25% stake in Freight One plus 1 share at the auction price, said Mr Bukin, General Director of Transportation Assets Management (the managing company of  UCL Holding). “In accordance with the law on joint-stock companies, we are going to make an offer to all minority shareholders (in this case it is RZD) to purchase their stake in the company at the auction price. Consequently, if RZD and the state decide on the sale of the 25% stake plus one share, we will be obliged to buy it, and we are interested in it,” said Mr Bukin. However, the Head of RZD has already said that in the near future the holding company is not going to sell its stake in Freight One. 
A lot of experts think that the time, when there will be just three or four companies on the rolling stock operation market, as it was declared in the Target Model of Cargo Railway Transportation Market to 2015, will come soon. The purchase of Freight One by one of the private operators became another step towards private park consolidation and market enlargement. Dmitry Adamidov, expert at the independent analytical agency Investcafe, notes, “If the crisis does not impact Russia seriously, the profitability will fall, and many operators will leave the market of their own will but not because they will merge or be forced out. Anyway, in three or four years, there will be not more than four or five large operators and 10-15 local (regional) ones in the sector.”

Time Will Show
What can clients of Freight One expect after the company is sold?
Olga Lukyanova, Chairperson of the Non-Commercial Partnership of Railway Rolling Stock, believes that if Freight One is bought by subsidiaries of the NLMK, the company may focus on servicing this holding company and transporting its cargoes (metal, coke, and ore). Naturally, then, a part of cargo owners using services provided by Freight One will be in a worse condition than subsidiaries of NLMK. 
The auction may have other consequences as well. For example, representatives of Troika Dialog Investment Company believe that the new owner must be interested in maximisation of free cash flow of Freight One to cut the debt loading. Thus, the company’s expenditure on new railcars may drop, which will decrease the demand for new rolling stock as well as the prices for it, which have been rather high lately. This would create a favourable situation for other rolling stock operators, including Globaltrans group of companies. The latter may increase the volume of its investment programmes aimed at rolling stock park enlargement.  
Denis Vorchik, an analyst at Uralsib Financial Corporation, forecasts that the efficiency of Freight One will increase after its owner changes. Meanwhile, it is worth mentioning, that at the current stage, RZD’s subsidiaries have better exploitation figures than private companies. Clients speak about a similar situation in part of the tariff policy – at present, the rates of Freight One on certain directions and types of rolling stock are even a little bit lower than the market ones. 
It is interesting that before there appeared the information about the consolidation of the parks of Freight One and Freight Two, a lot of sectoral experts had forecast an increase in the tariffs of Freight One after its sale. In the opinion of analysts, operators are not sentimental, and any new owner of Freight One would increase rates on rolling stock at once, especially if we take into account the sum spent by the winner and the debt he would have to pay after the purchase.   
We should admit that the situation for holding an auction was not favourable. That is why ambitious Transoil, which used to be interested in purchasing Freight One, refused to fight for this asset, which had become not so attractive lately.
In fact, since November 1, 2011, the gondola cars of Freight One and Freight Two are involved in the project of park consolidation. The companies are obliged to rent their rolling stock park to RZD for the latter to transport cargo as before – at the tariffs of Price List №10-01. Moreover, Freight One recently launched a programme of boxcar supply on the North-Caucasus Railway, and it promised to expand the programme on the whole territory of Russia (from November 2011) and on all types of rolling stock (in 2012).
It is not known for sure what the new owner of Freight One purchased – the leading position on the market or a load of problems. 
by Nadezhda Vtorushina 
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2011/4/15.jpg" border="1" alt=" " hspace="5" width="300" height="201" align="left" />In late October 2011, RZD held an auction to sell 75% minus 2 shares in its daughter company Freight One specialising in cargo transportation. The largest operator controlling almost a quarter of the whole Russian wagon park belongs now to the shareholders of UCL Holding.
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There Were Three Bidders
According to the terms of the deal, investors seeking to buy Freight One were to have not less than 15,000 wagons (not necessary in property), the Russian registration, at least a six month experience of rolling stock management, and a stable finance position (without past-due debts). Naturally, they were to be neither controlled by the state nor connected with the structures of RZD. Such requirements cannot be named impossible to meet. Nowadays, there are about ten companies in Russia that have over 15,000 railcars. Three operators decided to take part in the auction. All of them were from the top five private companies operating in the market of rolling stock supply for loading.
The first claimer was NefteTransService, whose park amounts to 40,000 units (gondola cars and tank wagons). This company managed to enlarge the number of its own gondola cars at the sales of the public park last year. 
Another participant in the auction was Transoil, one of the largest operators specialising in oil bulk transportation (the company’s share in the total volume of oil and petrochemicals railway transportation is 23.3%). The company’s rolling stock park consists of 30,000 tank wagons.
One more bidder and the winner was the Independent Transport Company. Vladimir Lisin was named one of the two most possible winners of the auction beforehand (the second was Gennady Timchenko). The Independent Transport Company, a captive operator of the NLMK, incorporated into UCL Holding, manages more than 30,000 railcars. 
Moreover, it has a nice auction history, due to which the Independent Transport Company succeeded in multiplying its park and transportation volume last year (an almost five-fold growth in the first half of 2011 as compared with the results of the same period in 2010). By the way, this was the first company that gave an application for participation in the auction. The Independent Transport Company owned just universal rolling stock. After purchasing Freight One, it becomes the largest private company in this segment, and on the whole market of rolling stock supply for loading.

Globaltrans Changed Its Mind
Considering the complicated financial situation on the market and the recent difficulties in the process of railway transportation organisation, it is impossible to say that the fight for Freight One was violent. As we have already mentioned, only three companies decided to participate in the auction, though participation was possible if a company had just 15,000 railcars.
Moreover, Globaltrans did not participate in the auction. Until recently, Novaya Perevozochnaya Kompaniya (is incorporated together with BaltTransService into Globaltrans group of companies, operates more than 30,000 railcars) was in the list of applicants for Freight One. However, a month before the auction, the company announced that “in the situation of ambiguity on the global financial markets, it was decided to abstain from participation in the auction.” “In accordance with the principles of the conservative financial policy,” the Board of Directors of Globaltrans considered “the significant increase in credit loading necessary for this deal financing too risky amid the current situation.”
In the words of Konstantin Romanov, Analyst at Finam investment company, Globaltrans planned to purchase a structure that was several times larger than the group of companies itself. To buy it, the company would have had to run into a serious debt, and then it would have to service it. “Amid the macroeconomic instability in the world, the decision made by Globaltrans is quite understandable,” marks the expert.
Earlier, this holding company was named the major applicant for Freight One. It was quite logical if we consider the company’s ambitious plans. When Freight Two was launched, Globaltrans was interested in the purchase of half of this subsidiary of Russian Railways. Then, the senior management of the group of companies worked actively to attract the resources to win the auction for a 75% stake in Freight One. At the end of September, Novaya Perevozochnaya Kompaniya attracted one more RUR 5 billion loan for the period until December 29, 2014.
Even now, after it refused to participate in the auction, Globaltrans says that it will continue to carry out the strategy targeted at the further growth and development of business by means of rolling stock purchase as well as “using the opportunities given by the future liberalisation of the locomotive market and the consolidation continuing in the sector.” For this, the company has both – the serious intentions of further development and financial opportunities.

More Would Be Better
Taking into account that Freight One was sold for RUR 125.5 billion, the participants in the auction were not very interested in the asset, which has become rather a problem lately because of the operating part consolidation. The initial price was RUR 125.375 billion, each bid increment was RUR 500 million (excluding the first bid increment of RUR 125 million). It turns out that nobody but representatives of the Independent Transport Company tried to fight to buy Freight One. In the words of its top managers, the holding company is going to pay for the purchase from its own and attracted means (at a 50-50 split). 
Nowadays, Freight One owns over 235,000 wagons, i.e. approximately 22% of the park operating on the Russian Railways’ network. Moreover, the largest operator manages more than 125,000 gondola cars and 66,000 tank wagons. Vladimir Yakunin, President of RZD, named the auction of selling Freight One “the largest privatisation of state property in the history of Russia.” 
It is impossible to say that RZD received for their largest subsidiary the sum they wanted. “We would like to get more, but enough is as good as a feast,” said the Head of RZD on the results of the auction. 
In the near future, the Independent Transport Company plans to make RZD an offer for the purchase of a 25% stake in Freight One plus 1 share at the auction price, said Mr Bukin, General Director of Transportation Assets Management (the managing company of  UCL Holding). “In accordance with the law on joint-stock companies, we are going to make an offer to all minority shareholders (in this case it is RZD) to purchase their stake in the company at the auction price. Consequently, if RZD and the state decide on the sale of the 25% stake plus one share, we will be obliged to buy it, and we are interested in it,” said Mr Bukin. However, the Head of RZD has already said that in the near future the holding company is not going to sell its stake in Freight One. 
A lot of experts think that the time, when there will be just three or four companies on the rolling stock operation market, as it was declared in the Target Model of Cargo Railway Transportation Market to 2015, will come soon. The purchase of Freight One by one of the private operators became another step towards private park consolidation and market enlargement. Dmitry Adamidov, expert at the independent analytical agency Investcafe, notes, “If the crisis does not impact Russia seriously, the profitability will fall, and many operators will leave the market of their own will but not because they will merge or be forced out. Anyway, in three or four years, there will be not more than four or five large operators and 10-15 local (regional) ones in the sector.”

Time Will Show
What can clients of Freight One expect after the company is sold?
Olga Lukyanova, Chairperson of the Non-Commercial Partnership of Railway Rolling Stock, believes that if Freight One is bought by subsidiaries of the NLMK, the company may focus on servicing this holding company and transporting its cargoes (metal, coke, and ore). Naturally, then, a part of cargo owners using services provided by Freight One will be in a worse condition than subsidiaries of NLMK. 
The auction may have other consequences as well. For example, representatives of Troika Dialog Investment Company believe that the new owner must be interested in maximisation of free cash flow of Freight One to cut the debt loading. Thus, the company’s expenditure on new railcars may drop, which will decrease the demand for new rolling stock as well as the prices for it, which have been rather high lately. This would create a favourable situation for other rolling stock operators, including Globaltrans group of companies. The latter may increase the volume of its investment programmes aimed at rolling stock park enlargement.  
Denis Vorchik, an analyst at Uralsib Financial Corporation, forecasts that the efficiency of Freight One will increase after its owner changes. Meanwhile, it is worth mentioning, that at the current stage, RZD’s subsidiaries have better exploitation figures than private companies. Clients speak about a similar situation in part of the tariff policy – at present, the rates of Freight One on certain directions and types of rolling stock are even a little bit lower than the market ones. 
It is interesting that before there appeared the information about the consolidation of the parks of Freight One and Freight Two, a lot of sectoral experts had forecast an increase in the tariffs of Freight One after its sale. In the opinion of analysts, operators are not sentimental, and any new owner of Freight One would increase rates on rolling stock at once, especially if we take into account the sum spent by the winner and the debt he would have to pay after the purchase.   
We should admit that the situation for holding an auction was not favourable. That is why ambitious Transoil, which used to be interested in purchasing Freight One, refused to fight for this asset, which had become not so attractive lately.
In fact, since November 1, 2011, the gondola cars of Freight One and Freight Two are involved in the project of park consolidation. The companies are obliged to rent their rolling stock park to RZD for the latter to transport cargo as before – at the tariffs of Price List №10-01. Moreover, Freight One recently launched a programme of boxcar supply on the North-Caucasus Railway, and it promised to expand the programme on the whole territory of Russia (from November 2011) and on all types of rolling stock (in 2012).
It is not known for sure what the new owner of Freight One purchased – the leading position on the market or a load of problems. 
by Nadezhda Vtorushina 
    [~DETAIL_TEXT] => 
There Were Three Bidders
According to the terms of the deal, investors seeking to buy Freight One were to have not less than 15,000 wagons (not necessary in property), the Russian registration, at least a six month experience of rolling stock management, and a stable finance position (without past-due debts). Naturally, they were to be neither controlled by the state nor connected with the structures of RZD. Such requirements cannot be named impossible to meet. Nowadays, there are about ten companies in Russia that have over 15,000 railcars. Three operators decided to take part in the auction. All of them were from the top five private companies operating in the market of rolling stock supply for loading.
The first claimer was NefteTransService, whose park amounts to 40,000 units (gondola cars and tank wagons). This company managed to enlarge the number of its own gondola cars at the sales of the public park last year. 
Another participant in the auction was Transoil, one of the largest operators specialising in oil bulk transportation (the company’s share in the total volume of oil and petrochemicals railway transportation is 23.3%). The company’s rolling stock park consists of 30,000 tank wagons.
One more bidder and the winner was the Independent Transport Company. Vladimir Lisin was named one of the two most possible winners of the auction beforehand (the second was Gennady Timchenko). The Independent Transport Company, a captive operator of the NLMK, incorporated into UCL Holding, manages more than 30,000 railcars. 
Moreover, it has a nice auction history, due to which the Independent Transport Company succeeded in multiplying its park and transportation volume last year (an almost five-fold growth in the first half of 2011 as compared with the results of the same period in 2010). By the way, this was the first company that gave an application for participation in the auction. The Independent Transport Company owned just universal rolling stock. After purchasing Freight One, it becomes the largest private company in this segment, and on the whole market of rolling stock supply for loading.

Globaltrans Changed Its Mind
Considering the complicated financial situation on the market and the recent difficulties in the process of railway transportation organisation, it is impossible to say that the fight for Freight One was violent. As we have already mentioned, only three companies decided to participate in the auction, though participation was possible if a company had just 15,000 railcars.
Moreover, Globaltrans did not participate in the auction. Until recently, Novaya Perevozochnaya Kompaniya (is incorporated together with BaltTransService into Globaltrans group of companies, operates more than 30,000 railcars) was in the list of applicants for Freight One. However, a month before the auction, the company announced that “in the situation of ambiguity on the global financial markets, it was decided to abstain from participation in the auction.” “In accordance with the principles of the conservative financial policy,” the Board of Directors of Globaltrans considered “the significant increase in credit loading necessary for this deal financing too risky amid the current situation.”
In the words of Konstantin Romanov, Analyst at Finam investment company, Globaltrans planned to purchase a structure that was several times larger than the group of companies itself. To buy it, the company would have had to run into a serious debt, and then it would have to service it. “Amid the macroeconomic instability in the world, the decision made by Globaltrans is quite understandable,” marks the expert.
Earlier, this holding company was named the major applicant for Freight One. It was quite logical if we consider the company’s ambitious plans. When Freight Two was launched, Globaltrans was interested in the purchase of half of this subsidiary of Russian Railways. Then, the senior management of the group of companies worked actively to attract the resources to win the auction for a 75% stake in Freight One. At the end of September, Novaya Perevozochnaya Kompaniya attracted one more RUR 5 billion loan for the period until December 29, 2014.
Even now, after it refused to participate in the auction, Globaltrans says that it will continue to carry out the strategy targeted at the further growth and development of business by means of rolling stock purchase as well as “using the opportunities given by the future liberalisation of the locomotive market and the consolidation continuing in the sector.” For this, the company has both – the serious intentions of further development and financial opportunities.

More Would Be Better
Taking into account that Freight One was sold for RUR 125.5 billion, the participants in the auction were not very interested in the asset, which has become rather a problem lately because of the operating part consolidation. The initial price was RUR 125.375 billion, each bid increment was RUR 500 million (excluding the first bid increment of RUR 125 million). It turns out that nobody but representatives of the Independent Transport Company tried to fight to buy Freight One. In the words of its top managers, the holding company is going to pay for the purchase from its own and attracted means (at a 50-50 split). 
Nowadays, Freight One owns over 235,000 wagons, i.e. approximately 22% of the park operating on the Russian Railways’ network. Moreover, the largest operator manages more than 125,000 gondola cars and 66,000 tank wagons. Vladimir Yakunin, President of RZD, named the auction of selling Freight One “the largest privatisation of state property in the history of Russia.” 
It is impossible to say that RZD received for their largest subsidiary the sum they wanted. “We would like to get more, but enough is as good as a feast,” said the Head of RZD on the results of the auction. 
In the near future, the Independent Transport Company plans to make RZD an offer for the purchase of a 25% stake in Freight One plus 1 share at the auction price, said Mr Bukin, General Director of Transportation Assets Management (the managing company of  UCL Holding). “In accordance with the law on joint-stock companies, we are going to make an offer to all minority shareholders (in this case it is RZD) to purchase their stake in the company at the auction price. Consequently, if RZD and the state decide on the sale of the 25% stake plus one share, we will be obliged to buy it, and we are interested in it,” said Mr Bukin. However, the Head of RZD has already said that in the near future the holding company is not going to sell its stake in Freight One. 
A lot of experts think that the time, when there will be just three or four companies on the rolling stock operation market, as it was declared in the Target Model of Cargo Railway Transportation Market to 2015, will come soon. The purchase of Freight One by one of the private operators became another step towards private park consolidation and market enlargement. Dmitry Adamidov, expert at the independent analytical agency Investcafe, notes, “If the crisis does not impact Russia seriously, the profitability will fall, and many operators will leave the market of their own will but not because they will merge or be forced out. Anyway, in three or four years, there will be not more than four or five large operators and 10-15 local (regional) ones in the sector.”

Time Will Show
What can clients of Freight One expect after the company is sold?
Olga Lukyanova, Chairperson of the Non-Commercial Partnership of Railway Rolling Stock, believes that if Freight One is bought by subsidiaries of the NLMK, the company may focus on servicing this holding company and transporting its cargoes (metal, coke, and ore). Naturally, then, a part of cargo owners using services provided by Freight One will be in a worse condition than subsidiaries of NLMK. 
The auction may have other consequences as well. For example, representatives of Troika Dialog Investment Company believe that the new owner must be interested in maximisation of free cash flow of Freight One to cut the debt loading. Thus, the company’s expenditure on new railcars may drop, which will decrease the demand for new rolling stock as well as the prices for it, which have been rather high lately. This would create a favourable situation for other rolling stock operators, including Globaltrans group of companies. The latter may increase the volume of its investment programmes aimed at rolling stock park enlargement.  
Denis Vorchik, an analyst at Uralsib Financial Corporation, forecasts that the efficiency of Freight One will increase after its owner changes. Meanwhile, it is worth mentioning, that at the current stage, RZD’s subsidiaries have better exploitation figures than private companies. Clients speak about a similar situation in part of the tariff policy – at present, the rates of Freight One on certain directions and types of rolling stock are even a little bit lower than the market ones. 
It is interesting that before there appeared the information about the consolidation of the parks of Freight One and Freight Two, a lot of sectoral experts had forecast an increase in the tariffs of Freight One after its sale. In the opinion of analysts, operators are not sentimental, and any new owner of Freight One would increase rates on rolling stock at once, especially if we take into account the sum spent by the winner and the debt he would have to pay after the purchase.   
We should admit that the situation for holding an auction was not favourable. That is why ambitious Transoil, which used to be interested in purchasing Freight One, refused to fight for this asset, which had become not so attractive lately.
In fact, since November 1, 2011, the gondola cars of Freight One and Freight Two are involved in the project of park consolidation. The companies are obliged to rent their rolling stock park to RZD for the latter to transport cargo as before – at the tariffs of Price List №10-01. Moreover, Freight One recently launched a programme of boxcar supply on the North-Caucasus Railway, and it promised to expand the programme on the whole territory of Russia (from November 2011) and on all types of rolling stock (in 2012).
It is not known for sure what the new owner of Freight One purchased – the leading position on the market or a load of problems. 
by Nadezhda Vtorushina 
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Reorganisation
Before the middle of 2011, enterprises owned by the CDRV were dominating – their market share was 71%. There were 115 wagon repair depots in the CDRV. Their competitors were more than 30 companies: wagon repair plants (including those owned by RZD), private repair enterprises purchased from RZD in 2008-2009 (17 depots), and independent companies, which had mastered scheduled rolling stock repair types. Moreover, wagon repair enterprises from the CIS, particularly from Ukraine, Kazakhstan, and Belarus, participated actively in the Russian railcar repair market as well.  
On July 1, 2011, the CDRV was liquidated. Three wagon repair companies (WRC) were launched on its base. Organisational structure of each WRC consists of three elements – the headquarters, four affiliates, and wagon repair depots. Thus, WRC-1 unites affiliates in St Petersburg, Rostov, Samara, and Novosibirsk (the total number of enterprises is 40). WRC-2 has affiliates in Nizhny Novgorod, Voronezh, Yekaterinburg, and Khabarovsk (all in all, 38 enterprises). WRC-3 includes affiliates in Yaroslavl, Irkutsk, Chelyabinsk, and Saratov (37 enterprises). Wagon repair enterprises were given to the RZD’s daughter companies according to the extraterritorial principle. 
It means that each WRC is represented on the whole railway network. For example, the geography of services provided by WRC-3 covers the whole territory of Russia – from Kaliningrad (Chernyakhovsk) in the west to Blagoveschensk (Belogorsk) in the east and from the Republic of Karelia (Kem’) in the north to Rostov-on-Don (Salsk) in the south. This approach must provide a higher level of competition between the new players. According to their shares in the wagon repair market, available capacities, technical equipment, and the degree of universality, they do not differ from each other, which created almost equal starting conditions. The process of appointment of the heads of the headquarters, affiliates, and enterprises was completed within a period prescribed by RZD. Most of the people have significant experience of working in the CDRV system.
The business plan of the launch and further development of wagon repair subsidiaries had been created in advance, before the new companies started their manufacturing activity. In the words of Pavel Tikholoz, Head of the Corporate and Strategic Development Department at WRC-1, the business plan envisages three scenarios – pessimistic, basic, and optimistic. Calculations were made for each of the scenarios. The basic scenario is based on moderate but constant growth in demand for scheduled repair of cargo railcars. The main idea is that the existing structure of the wagon park will remain the same in the foreseeable future, the purchase amount of new railcars and changes in their construction will not have a significant impact on the structure of orders and the repair technology in the next five years. 
“A peculiar feature of forward-looking management solutions is a clear stage-by-stage scheme,” says Anna Korotkova, Head of the Corporate Management and Strategic Development Sector at WRC-3. “At first, we define the business sector – it is the repair of any type of cargo railcar. Our business plan envisages such diversification. Speaking about diversification, I mean both new wagons, which have been put into operation, and old, which must get a second life after modernization with the life-time period prolongation (gondola cars – by 5 or 11 years, tank wagons for petrochemicals transportation – by 16 years).”
Russian wagon repair depot facilities need the revision of norms and standards to make them meet European levels. In particular, this means personnel skills training, equipment and re-equipment of the repair base in accordance with lean manufacturing principles. In the opinion of Mrs Korotkova, one of the most important elements of the strategy is the pace. A company can choose a proper target and develop an absolutely correct strategy, but its capacities will be restricted by the resources it has and the sectors in which it is competent. “The analysis of the real market situation is especially important for us, because the growth and success of any business have their own ground,” she thinks.

Factors of Competitiveness
The major effect of the CDRV reorganisation, on which the market reckons, is the competition that must appear in the cargo railcar repair sector between the subsidiaries of RZD, and between them and private companies as well. And the new companies have started to think about it. “The market of cargo wagon scheduled repair is a major one for WRC-1. According to forecasts, the capacities of the wagon repairing enterprises are expected to increase by 2015, which will cause a surplus of production capacities. Thus, we can say that the scheduled repair sector has transferred from the seller’s market to a buyer’s one,” marks Mr Tikholoz. 
It is no secret that the most powerful and technically equipped wagon repair enterprises were given to WRC-1. “Under the increasing competition conditions, the transfer from a single repair to a complex service, implementation of wagon park maintenance services is a priority and competitive advantage of WRC-1,” Mr Tikholoz believes.
The scale of the business, available client base, and the level of competence will allow WRC-1 to become an attractive object for external investors (beyond RZD holding company). Due to it, the company will be able to upgrade radically its manufacturing and technological base and move to a qualitatively new level of development. In their turn, the depots incorporated into WRC-3 are located away from the regional centres, thus they have smaller overhead expenses in the cost of the production, and consequently they can hold a more flexible price policy. “One of the conditions attracting rolling stock owners is fulfillment of contract obligations on meeting the norms of wagon idling under repair,” emphasised Mrs Korotkova. “Technical equipment capability, shift-working arrangements of WRC-3 enterprises allow not only to meet the norms of wagon idling under repair, but even to reduce the real idling.”
Naturally, a flexible tariff policy is one of the key factors, defining the competitiveness. The cost of repair depends on the technical condition of a railcar. The price offered by WRC-1 is formed on the basis of works fulfilled when repairing each wagon in accordance with the price-list, which varies according to the location of wagon repair enterprises. Since July 1, 2011, WRC-1 uses the price list, earlier used by CDRV and indexed to the 2011 deflator index in accordance with the order made by a commission of RZD. 
The price for wagon repair depends significantly on the number of new expensive spares to be placed instead of damaged ones such as a wheel-set, a solebar, a bolster. By the way, new solebars and bolsters are supplied to the WRC-1 enterprises by Roszheldorsnab (the spares are made in Russia) and RZD Trading Company (the spares are made in China). 
The price policy of WRC-3 is being hold in accordance with the Instruction on Depot Repair of Cargo Railcars on 1520 mm Wide Gauge CV-587 and the Instruction of Capital Repair of Cargo Railcars on 1520 mm Wide Gauge CV-627. The key demands for the efficient work of wagon repair depots incorporated into WRC-3 is the reduction of a company’s own expenditure and the ability to meet the requirements of wagon owners regarding the quality of services. To provide competitive repair, WRC-3 uses price differentiation according to the region in which the depot is located. In the words of Mrs Korotkova, the activity of WRC-3 on the cargo railcar repair market will be diversified by means of enlarging the range of provided services. 
One of the important peculiarities of new wagon repair companies is modernisation of the document turnover system. The goal of this process is to make more comfortable conditions for clients, and to make the companies’ activities meet current sectoral standards. WRC-2 was the first company in the wagon repair sector that started to use e-document turnover with a liquid digital e-signature, accepted by all the participants in the process.
Processing and formalisation of e-documents are fulfilled in cooperation with partners, which helps a client to save his time and money. On August 1, 2011, WRC-2 in cooperation with Freight Two, Zheldoruchet, and TransTeleCom switched to the e-document system with a digital e-signature application. “Due to this system, a pack of documents necessary for financial accounting is agreed in 3-5 minutes. This allows our partners to save time and money,” says a representative of WRC-2. We must admit that all three new wagon repair companies are actively implementing e-document turnover. On September 1, 2011, WRC-1 also got the right to use e-signature. 

A Look into the Future
Most market players think that the process of organisation of interaction between rolling stock owners and new wagon repair companies has not influenced railcar repair plan fulfillment. Contracts on scheduled repair of cargo wagons and spares repair were re-concluded with clients, who had had contractual relations with the CDRV. Every day the companies work hard to attract new clients. Wagon repair subsidiaries do their best to use an individual approach to every contractor. 
According to official data, the quality of repair made in depots of the CDRV was not worse and sometimes was much better than that provided by private companies. In the first half of 2011, the fail-free performance figure was 98.26% for railcars repaired by the Directorate, and 97.29% for rolling stock repaired by private companies. After the reorganisation, the free-fail performance figure was 98.15% for wagons repaired by enterprises incorporated into WRC-1 in the first seven months of 2011; the fail-free performance figure of private companies in this period was 96.99%.
The market makes it necessary to improve the services. If any failure happens, a client may leave for a competitor. Besides, new wagon repair companies deal with strategic partners of their mother company, for whom quality of service is especially important. If a company is not able to provide them with the proper level of services, they will hardly put up with it. “That is why our first target is to develop a system of high-quality service, and then control it by means of a regular appraisal,” says Mrs Korotkova. “All planned centralised contracts have been concluded already. New clients come to the company and we do our best to fulfill their needs and make long-term relations. There are no unimportant clients for our company!”
In the foreseeable future, there will be other changes in the life of the wagon repair companies. According to the decision of the Board of Directors of RZD made on December 20, 2010, shareholdings in WRC-1 (not less than 50% minus 2 shares), WRC-2 and WRC-3 (not less than 75% minus 2 shares) are to be sold in 2013.
The demand for scheduled repair is quite stable and may be forecast easily, because wagons that failed to be maintained on time are not allowed to run on the public railway network. Relevant needs are generated by the market because of the long-term trend in cargo transportation growth. On the basis of these prerequisites, we can estimate the efficiency of operators’ investments into the wagon repair sector. The potential purchasers of the shares are rolling stock operators as well as portfolio investors.
Most experts interviewed by The RZD-Partner International think that either there will be hardly any differences after the reorganisation of the CDRV system or there will be some positive changes. At the same time, there are some sceptics. For example, there is an opinion that a business activity is most efficient if there is a single management. The best example of it is the situation that arose after the liquidation of the public park in Russia. After Freight One and Freight Two were launched, and a lot of other operators appeared, there are more and more failures in the wagon supply for getting loaded, meanwhile the prices for railway cargo transportation increased significantly in comparison with Price List №10-01.  
The situation may be the same after the launch of the railcar repair enterprises. Some depots will start to increase prices for their services because of a larger number of orders and competition between clients, others because of the lack of clients and the need to shift the constant expenses on their shoulders. As a result, operators will include this expenditure in the rate a cargo owner has to pay. We can just hope that the repair services system will benefit from all the changes. The sector will become more attractive for investors, due to which the material base will be renewed at last, and other problems will be solved.
By Elena Ushkova
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Reorganisation
Before the middle of 2011, enterprises owned by the CDRV were dominating – their market share was 71%. There were 115 wagon repair depots in the CDRV. Their competitors were more than 30 companies: wagon repair plants (including those owned by RZD), private repair enterprises purchased from RZD in 2008-2009 (17 depots), and independent companies, which had mastered scheduled rolling stock repair types. Moreover, wagon repair enterprises from the CIS, particularly from Ukraine, Kazakhstan, and Belarus, participated actively in the Russian railcar repair market as well.  
On July 1, 2011, the CDRV was liquidated. Three wagon repair companies (WRC) were launched on its base. Organisational structure of each WRC consists of three elements – the headquarters, four affiliates, and wagon repair depots. Thus, WRC-1 unites affiliates in St Petersburg, Rostov, Samara, and Novosibirsk (the total number of enterprises is 40). WRC-2 has affiliates in Nizhny Novgorod, Voronezh, Yekaterinburg, and Khabarovsk (all in all, 38 enterprises). WRC-3 includes affiliates in Yaroslavl, Irkutsk, Chelyabinsk, and Saratov (37 enterprises). Wagon repair enterprises were given to the RZD’s daughter companies according to the extraterritorial principle. 
It means that each WRC is represented on the whole railway network. For example, the geography of services provided by WRC-3 covers the whole territory of Russia – from Kaliningrad (Chernyakhovsk) in the west to Blagoveschensk (Belogorsk) in the east and from the Republic of Karelia (Kem’) in the north to Rostov-on-Don (Salsk) in the south. This approach must provide a higher level of competition between the new players. According to their shares in the wagon repair market, available capacities, technical equipment, and the degree of universality, they do not differ from each other, which created almost equal starting conditions. The process of appointment of the heads of the headquarters, affiliates, and enterprises was completed within a period prescribed by RZD. Most of the people have significant experience of working in the CDRV system.
The business plan of the launch and further development of wagon repair subsidiaries had been created in advance, before the new companies started their manufacturing activity. In the words of Pavel Tikholoz, Head of the Corporate and Strategic Development Department at WRC-1, the business plan envisages three scenarios – pessimistic, basic, and optimistic. Calculations were made for each of the scenarios. The basic scenario is based on moderate but constant growth in demand for scheduled repair of cargo railcars. The main idea is that the existing structure of the wagon park will remain the same in the foreseeable future, the purchase amount of new railcars and changes in their construction will not have a significant impact on the structure of orders and the repair technology in the next five years. 
“A peculiar feature of forward-looking management solutions is a clear stage-by-stage scheme,” says Anna Korotkova, Head of the Corporate Management and Strategic Development Sector at WRC-3. “At first, we define the business sector – it is the repair of any type of cargo railcar. Our business plan envisages such diversification. Speaking about diversification, I mean both new wagons, which have been put into operation, and old, which must get a second life after modernization with the life-time period prolongation (gondola cars – by 5 or 11 years, tank wagons for petrochemicals transportation – by 16 years).”
Russian wagon repair depot facilities need the revision of norms and standards to make them meet European levels. In particular, this means personnel skills training, equipment and re-equipment of the repair base in accordance with lean manufacturing principles. In the opinion of Mrs Korotkova, one of the most important elements of the strategy is the pace. A company can choose a proper target and develop an absolutely correct strategy, but its capacities will be restricted by the resources it has and the sectors in which it is competent. “The analysis of the real market situation is especially important for us, because the growth and success of any business have their own ground,” she thinks.

Factors of Competitiveness
The major effect of the CDRV reorganisation, on which the market reckons, is the competition that must appear in the cargo railcar repair sector between the subsidiaries of RZD, and between them and private companies as well. And the new companies have started to think about it. “The market of cargo wagon scheduled repair is a major one for WRC-1. According to forecasts, the capacities of the wagon repairing enterprises are expected to increase by 2015, which will cause a surplus of production capacities. Thus, we can say that the scheduled repair sector has transferred from the seller’s market to a buyer’s one,” marks Mr Tikholoz. 
It is no secret that the most powerful and technically equipped wagon repair enterprises were given to WRC-1. “Under the increasing competition conditions, the transfer from a single repair to a complex service, implementation of wagon park maintenance services is a priority and competitive advantage of WRC-1,” Mr Tikholoz believes.
The scale of the business, available client base, and the level of competence will allow WRC-1 to become an attractive object for external investors (beyond RZD holding company). Due to it, the company will be able to upgrade radically its manufacturing and technological base and move to a qualitatively new level of development. In their turn, the depots incorporated into WRC-3 are located away from the regional centres, thus they have smaller overhead expenses in the cost of the production, and consequently they can hold a more flexible price policy. “One of the conditions attracting rolling stock owners is fulfillment of contract obligations on meeting the norms of wagon idling under repair,” emphasised Mrs Korotkova. “Technical equipment capability, shift-working arrangements of WRC-3 enterprises allow not only to meet the norms of wagon idling under repair, but even to reduce the real idling.”
Naturally, a flexible tariff policy is one of the key factors, defining the competitiveness. The cost of repair depends on the technical condition of a railcar. The price offered by WRC-1 is formed on the basis of works fulfilled when repairing each wagon in accordance with the price-list, which varies according to the location of wagon repair enterprises. Since July 1, 2011, WRC-1 uses the price list, earlier used by CDRV and indexed to the 2011 deflator index in accordance with the order made by a commission of RZD. 
The price for wagon repair depends significantly on the number of new expensive spares to be placed instead of damaged ones such as a wheel-set, a solebar, a bolster. By the way, new solebars and bolsters are supplied to the WRC-1 enterprises by Roszheldorsnab (the spares are made in Russia) and RZD Trading Company (the spares are made in China). 
The price policy of WRC-3 is being hold in accordance with the Instruction on Depot Repair of Cargo Railcars on 1520 mm Wide Gauge CV-587 and the Instruction of Capital Repair of Cargo Railcars on 1520 mm Wide Gauge CV-627. The key demands for the efficient work of wagon repair depots incorporated into WRC-3 is the reduction of a company’s own expenditure and the ability to meet the requirements of wagon owners regarding the quality of services. To provide competitive repair, WRC-3 uses price differentiation according to the region in which the depot is located. In the words of Mrs Korotkova, the activity of WRC-3 on the cargo railcar repair market will be diversified by means of enlarging the range of provided services. 
One of the important peculiarities of new wagon repair companies is modernisation of the document turnover system. The goal of this process is to make more comfortable conditions for clients, and to make the companies’ activities meet current sectoral standards. WRC-2 was the first company in the wagon repair sector that started to use e-document turnover with a liquid digital e-signature, accepted by all the participants in the process.
Processing and formalisation of e-documents are fulfilled in cooperation with partners, which helps a client to save his time and money. On August 1, 2011, WRC-2 in cooperation with Freight Two, Zheldoruchet, and TransTeleCom switched to the e-document system with a digital e-signature application. “Due to this system, a pack of documents necessary for financial accounting is agreed in 3-5 minutes. This allows our partners to save time and money,” says a representative of WRC-2. We must admit that all three new wagon repair companies are actively implementing e-document turnover. On September 1, 2011, WRC-1 also got the right to use e-signature. 

A Look into the Future
Most market players think that the process of organisation of interaction between rolling stock owners and new wagon repair companies has not influenced railcar repair plan fulfillment. Contracts on scheduled repair of cargo wagons and spares repair were re-concluded with clients, who had had contractual relations with the CDRV. Every day the companies work hard to attract new clients. Wagon repair subsidiaries do their best to use an individual approach to every contractor. 
According to official data, the quality of repair made in depots of the CDRV was not worse and sometimes was much better than that provided by private companies. In the first half of 2011, the fail-free performance figure was 98.26% for railcars repaired by the Directorate, and 97.29% for rolling stock repaired by private companies. After the reorganisation, the free-fail performance figure was 98.15% for wagons repaired by enterprises incorporated into WRC-1 in the first seven months of 2011; the fail-free performance figure of private companies in this period was 96.99%.
The market makes it necessary to improve the services. If any failure happens, a client may leave for a competitor. Besides, new wagon repair companies deal with strategic partners of their mother company, for whom quality of service is especially important. If a company is not able to provide them with the proper level of services, they will hardly put up with it. “That is why our first target is to develop a system of high-quality service, and then control it by means of a regular appraisal,” says Mrs Korotkova. “All planned centralised contracts have been concluded already. New clients come to the company and we do our best to fulfill their needs and make long-term relations. There are no unimportant clients for our company!”
In the foreseeable future, there will be other changes in the life of the wagon repair companies. According to the decision of the Board of Directors of RZD made on December 20, 2010, shareholdings in WRC-1 (not less than 50% minus 2 shares), WRC-2 and WRC-3 (not less than 75% minus 2 shares) are to be sold in 2013.
The demand for scheduled repair is quite stable and may be forecast easily, because wagons that failed to be maintained on time are not allowed to run on the public railway network. Relevant needs are generated by the market because of the long-term trend in cargo transportation growth. On the basis of these prerequisites, we can estimate the efficiency of operators’ investments into the wagon repair sector. The potential purchasers of the shares are rolling stock operators as well as portfolio investors.
Most experts interviewed by The RZD-Partner International think that either there will be hardly any differences after the reorganisation of the CDRV system or there will be some positive changes. At the same time, there are some sceptics. For example, there is an opinion that a business activity is most efficient if there is a single management. The best example of it is the situation that arose after the liquidation of the public park in Russia. After Freight One and Freight Two were launched, and a lot of other operators appeared, there are more and more failures in the wagon supply for getting loaded, meanwhile the prices for railway cargo transportation increased significantly in comparison with Price List №10-01.  
The situation may be the same after the launch of the railcar repair enterprises. Some depots will start to increase prices for their services because of a larger number of orders and competition between clients, others because of the lack of clients and the need to shift the constant expenses on their shoulders. As a result, operators will include this expenditure in the rate a cargo owner has to pay. We can just hope that the repair services system will benefit from all the changes. The sector will become more attractive for investors, due to which the material base will be renewed at last, and other problems will be solved.
By Elena Ushkova
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Reorganisation
Before the middle of 2011, enterprises owned by the CDRV were dominating – their market share was 71%. There were 115 wagon repair depots in the CDRV. Their competitors were more than 30 companies: wagon repair plants (including those owned by RZD), private repair enterprises purchased from RZD in 2008-2009 (17 depots), and independent companies, which had mastered scheduled rolling stock repair types. Moreover, wagon repair enterprises from the CIS, particularly from Ukraine, Kazakhstan, and Belarus, participated actively in the Russian railcar repair market as well.  
On July 1, 2011, the CDRV was liquidated. Three wagon repair companies (WRC) were launched on its base. Organisational structure of each WRC consists of three elements – the headquarters, four affiliates, and wagon repair depots. Thus, WRC-1 unites affiliates in St Petersburg, Rostov, Samara, and Novosibirsk (the total number of enterprises is 40). WRC-2 has affiliates in Nizhny Novgorod, Voronezh, Yekaterinburg, and Khabarovsk (all in all, 38 enterprises). WRC-3 includes affiliates in Yaroslavl, Irkutsk, Chelyabinsk, and Saratov (37 enterprises). Wagon repair enterprises were given to the RZD’s daughter companies according to the extraterritorial principle. 
It means that each WRC is represented on the whole railway network. For example, the geography of services provided by WRC-3 covers the whole territory of Russia – from Kaliningrad (Chernyakhovsk) in the west to Blagoveschensk (Belogorsk) in the east and from the Republic of Karelia (Kem’) in the north to Rostov-on-Don (Salsk) in the south. This approach must provide a higher level of competition between the new players. According to their shares in the wagon repair market, available capacities, technical equipment, and the degree of universality, they do not differ from each other, which created almost equal starting conditions. The process of appointment of the heads of the headquarters, affiliates, and enterprises was completed within a period prescribed by RZD. Most of the people have significant experience of working in the CDRV system.
The business plan of the launch and further development of wagon repair subsidiaries had been created in advance, before the new companies started their manufacturing activity. In the words of Pavel Tikholoz, Head of the Corporate and Strategic Development Department at WRC-1, the business plan envisages three scenarios – pessimistic, basic, and optimistic. Calculations were made for each of the scenarios. The basic scenario is based on moderate but constant growth in demand for scheduled repair of cargo railcars. The main idea is that the existing structure of the wagon park will remain the same in the foreseeable future, the purchase amount of new railcars and changes in their construction will not have a significant impact on the structure of orders and the repair technology in the next five years. 
“A peculiar feature of forward-looking management solutions is a clear stage-by-stage scheme,” says Anna Korotkova, Head of the Corporate Management and Strategic Development Sector at WRC-3. “At first, we define the business sector – it is the repair of any type of cargo railcar. Our business plan envisages such diversification. Speaking about diversification, I mean both new wagons, which have been put into operation, and old, which must get a second life after modernization with the life-time period prolongation (gondola cars – by 5 or 11 years, tank wagons for petrochemicals transportation – by 16 years).”
Russian wagon repair depot facilities need the revision of norms and standards to make them meet European levels. In particular, this means personnel skills training, equipment and re-equipment of the repair base in accordance with lean manufacturing principles. In the opinion of Mrs Korotkova, one of the most important elements of the strategy is the pace. A company can choose a proper target and develop an absolutely correct strategy, but its capacities will be restricted by the resources it has and the sectors in which it is competent. “The analysis of the real market situation is especially important for us, because the growth and success of any business have their own ground,” she thinks.

Factors of Competitiveness
The major effect of the CDRV reorganisation, on which the market reckons, is the competition that must appear in the cargo railcar repair sector between the subsidiaries of RZD, and between them and private companies as well. And the new companies have started to think about it. “The market of cargo wagon scheduled repair is a major one for WRC-1. According to forecasts, the capacities of the wagon repairing enterprises are expected to increase by 2015, which will cause a surplus of production capacities. Thus, we can say that the scheduled repair sector has transferred from the seller’s market to a buyer’s one,” marks Mr Tikholoz. 
It is no secret that the most powerful and technically equipped wagon repair enterprises were given to WRC-1. “Under the increasing competition conditions, the transfer from a single repair to a complex service, implementation of wagon park maintenance services is a priority and competitive advantage of WRC-1,” Mr Tikholoz believes.
The scale of the business, available client base, and the level of competence will allow WRC-1 to become an attractive object for external investors (beyond RZD holding company). Due to it, the company will be able to upgrade radically its manufacturing and technological base and move to a qualitatively new level of development. In their turn, the depots incorporated into WRC-3 are located away from the regional centres, thus they have smaller overhead expenses in the cost of the production, and consequently they can hold a more flexible price policy. “One of the conditions attracting rolling stock owners is fulfillment of contract obligations on meeting the norms of wagon idling under repair,” emphasised Mrs Korotkova. “Technical equipment capability, shift-working arrangements of WRC-3 enterprises allow not only to meet the norms of wagon idling under repair, but even to reduce the real idling.”
Naturally, a flexible tariff policy is one of the key factors, defining the competitiveness. The cost of repair depends on the technical condition of a railcar. The price offered by WRC-1 is formed on the basis of works fulfilled when repairing each wagon in accordance with the price-list, which varies according to the location of wagon repair enterprises. Since July 1, 2011, WRC-1 uses the price list, earlier used by CDRV and indexed to the 2011 deflator index in accordance with the order made by a commission of RZD. 
The price for wagon repair depends significantly on the number of new expensive spares to be placed instead of damaged ones such as a wheel-set, a solebar, a bolster. By the way, new solebars and bolsters are supplied to the WRC-1 enterprises by Roszheldorsnab (the spares are made in Russia) and RZD Trading Company (the spares are made in China). 
The price policy of WRC-3 is being hold in accordance with the Instruction on Depot Repair of Cargo Railcars on 1520 mm Wide Gauge CV-587 and the Instruction of Capital Repair of Cargo Railcars on 1520 mm Wide Gauge CV-627. The key demands for the efficient work of wagon repair depots incorporated into WRC-3 is the reduction of a company’s own expenditure and the ability to meet the requirements of wagon owners regarding the quality of services. To provide competitive repair, WRC-3 uses price differentiation according to the region in which the depot is located. In the words of Mrs Korotkova, the activity of WRC-3 on the cargo railcar repair market will be diversified by means of enlarging the range of provided services. 
One of the important peculiarities of new wagon repair companies is modernisation of the document turnover system. The goal of this process is to make more comfortable conditions for clients, and to make the companies’ activities meet current sectoral standards. WRC-2 was the first company in the wagon repair sector that started to use e-document turnover with a liquid digital e-signature, accepted by all the participants in the process.
Processing and formalisation of e-documents are fulfilled in cooperation with partners, which helps a client to save his time and money. On August 1, 2011, WRC-2 in cooperation with Freight Two, Zheldoruchet, and TransTeleCom switched to the e-document system with a digital e-signature application. “Due to this system, a pack of documents necessary for financial accounting is agreed in 3-5 minutes. This allows our partners to save time and money,” says a representative of WRC-2. We must admit that all three new wagon repair companies are actively implementing e-document turnover. On September 1, 2011, WRC-1 also got the right to use e-signature. 

A Look into the Future
Most market players think that the process of organisation of interaction between rolling stock owners and new wagon repair companies has not influenced railcar repair plan fulfillment. Contracts on scheduled repair of cargo wagons and spares repair were re-concluded with clients, who had had contractual relations with the CDRV. Every day the companies work hard to attract new clients. Wagon repair subsidiaries do their best to use an individual approach to every contractor. 
According to official data, the quality of repair made in depots of the CDRV was not worse and sometimes was much better than that provided by private companies. In the first half of 2011, the fail-free performance figure was 98.26% for railcars repaired by the Directorate, and 97.29% for rolling stock repaired by private companies. After the reorganisation, the free-fail performance figure was 98.15% for wagons repaired by enterprises incorporated into WRC-1 in the first seven months of 2011; the fail-free performance figure of private companies in this period was 96.99%.
The market makes it necessary to improve the services. If any failure happens, a client may leave for a competitor. Besides, new wagon repair companies deal with strategic partners of their mother company, for whom quality of service is especially important. If a company is not able to provide them with the proper level of services, they will hardly put up with it. “That is why our first target is to develop a system of high-quality service, and then control it by means of a regular appraisal,” says Mrs Korotkova. “All planned centralised contracts have been concluded already. New clients come to the company and we do our best to fulfill their needs and make long-term relations. There are no unimportant clients for our company!”
In the foreseeable future, there will be other changes in the life of the wagon repair companies. According to the decision of the Board of Directors of RZD made on December 20, 2010, shareholdings in WRC-1 (not less than 50% minus 2 shares), WRC-2 and WRC-3 (not less than 75% minus 2 shares) are to be sold in 2013.
The demand for scheduled repair is quite stable and may be forecast easily, because wagons that failed to be maintained on time are not allowed to run on the public railway network. Relevant needs are generated by the market because of the long-term trend in cargo transportation growth. On the basis of these prerequisites, we can estimate the efficiency of operators’ investments into the wagon repair sector. The potential purchasers of the shares are rolling stock operators as well as portfolio investors.
Most experts interviewed by The RZD-Partner International think that either there will be hardly any differences after the reorganisation of the CDRV system or there will be some positive changes. At the same time, there are some sceptics. For example, there is an opinion that a business activity is most efficient if there is a single management. The best example of it is the situation that arose after the liquidation of the public park in Russia. After Freight One and Freight Two were launched, and a lot of other operators appeared, there are more and more failures in the wagon supply for getting loaded, meanwhile the prices for railway cargo transportation increased significantly in comparison with Price List №10-01.  
The situation may be the same after the launch of the railcar repair enterprises. Some depots will start to increase prices for their services because of a larger number of orders and competition between clients, others because of the lack of clients and the need to shift the constant expenses on their shoulders. As a result, operators will include this expenditure in the rate a cargo owner has to pay. We can just hope that the repair services system will benefit from all the changes. The sector will become more attractive for investors, due to which the material base will be renewed at last, and other problems will be solved.
By Elena Ushkova
    [~DETAIL_TEXT] => 
Reorganisation
Before the middle of 2011, enterprises owned by the CDRV were dominating – their market share was 71%. There were 115 wagon repair depots in the CDRV. Their competitors were more than 30 companies: wagon repair plants (including those owned by RZD), private repair enterprises purchased from RZD in 2008-2009 (17 depots), and independent companies, which had mastered scheduled rolling stock repair types. Moreover, wagon repair enterprises from the CIS, particularly from Ukraine, Kazakhstan, and Belarus, participated actively in the Russian railcar repair market as well.  
On July 1, 2011, the CDRV was liquidated. Three wagon repair companies (WRC) were launched on its base. Organisational structure of each WRC consists of three elements – the headquarters, four affiliates, and wagon repair depots. Thus, WRC-1 unites affiliates in St Petersburg, Rostov, Samara, and Novosibirsk (the total number of enterprises is 40). WRC-2 has affiliates in Nizhny Novgorod, Voronezh, Yekaterinburg, and Khabarovsk (all in all, 38 enterprises). WRC-3 includes affiliates in Yaroslavl, Irkutsk, Chelyabinsk, and Saratov (37 enterprises). Wagon repair enterprises were given to the RZD’s daughter companies according to the extraterritorial principle. 
It means that each WRC is represented on the whole railway network. For example, the geography of services provided by WRC-3 covers the whole territory of Russia – from Kaliningrad (Chernyakhovsk) in the west to Blagoveschensk (Belogorsk) in the east and from the Republic of Karelia (Kem’) in the north to Rostov-on-Don (Salsk) in the south. This approach must provide a higher level of competition between the new players. According to their shares in the wagon repair market, available capacities, technical equipment, and the degree of universality, they do not differ from each other, which created almost equal starting conditions. The process of appointment of the heads of the headquarters, affiliates, and enterprises was completed within a period prescribed by RZD. Most of the people have significant experience of working in the CDRV system.
The business plan of the launch and further development of wagon repair subsidiaries had been created in advance, before the new companies started their manufacturing activity. In the words of Pavel Tikholoz, Head of the Corporate and Strategic Development Department at WRC-1, the business plan envisages three scenarios – pessimistic, basic, and optimistic. Calculations were made for each of the scenarios. The basic scenario is based on moderate but constant growth in demand for scheduled repair of cargo railcars. The main idea is that the existing structure of the wagon park will remain the same in the foreseeable future, the purchase amount of new railcars and changes in their construction will not have a significant impact on the structure of orders and the repair technology in the next five years. 
“A peculiar feature of forward-looking management solutions is a clear stage-by-stage scheme,” says Anna Korotkova, Head of the Corporate Management and Strategic Development Sector at WRC-3. “At first, we define the business sector – it is the repair of any type of cargo railcar. Our business plan envisages such diversification. Speaking about diversification, I mean both new wagons, which have been put into operation, and old, which must get a second life after modernization with the life-time period prolongation (gondola cars – by 5 or 11 years, tank wagons for petrochemicals transportation – by 16 years).”
Russian wagon repair depot facilities need the revision of norms and standards to make them meet European levels. In particular, this means personnel skills training, equipment and re-equipment of the repair base in accordance with lean manufacturing principles. In the opinion of Mrs Korotkova, one of the most important elements of the strategy is the pace. A company can choose a proper target and develop an absolutely correct strategy, but its capacities will be restricted by the resources it has and the sectors in which it is competent. “The analysis of the real market situation is especially important for us, because the growth and success of any business have their own ground,” she thinks.

Factors of Competitiveness
The major effect of the CDRV reorganisation, on which the market reckons, is the competition that must appear in the cargo railcar repair sector between the subsidiaries of RZD, and between them and private companies as well. And the new companies have started to think about it. “The market of cargo wagon scheduled repair is a major one for WRC-1. According to forecasts, the capacities of the wagon repairing enterprises are expected to increase by 2015, which will cause a surplus of production capacities. Thus, we can say that the scheduled repair sector has transferred from the seller’s market to a buyer’s one,” marks Mr Tikholoz. 
It is no secret that the most powerful and technically equipped wagon repair enterprises were given to WRC-1. “Under the increasing competition conditions, the transfer from a single repair to a complex service, implementation of wagon park maintenance services is a priority and competitive advantage of WRC-1,” Mr Tikholoz believes.
The scale of the business, available client base, and the level of competence will allow WRC-1 to become an attractive object for external investors (beyond RZD holding company). Due to it, the company will be able to upgrade radically its manufacturing and technological base and move to a qualitatively new level of development. In their turn, the depots incorporated into WRC-3 are located away from the regional centres, thus they have smaller overhead expenses in the cost of the production, and consequently they can hold a more flexible price policy. “One of the conditions attracting rolling stock owners is fulfillment of contract obligations on meeting the norms of wagon idling under repair,” emphasised Mrs Korotkova. “Technical equipment capability, shift-working arrangements of WRC-3 enterprises allow not only to meet the norms of wagon idling under repair, but even to reduce the real idling.”
Naturally, a flexible tariff policy is one of the key factors, defining the competitiveness. The cost of repair depends on the technical condition of a railcar. The price offered by WRC-1 is formed on the basis of works fulfilled when repairing each wagon in accordance with the price-list, which varies according to the location of wagon repair enterprises. Since July 1, 2011, WRC-1 uses the price list, earlier used by CDRV and indexed to the 2011 deflator index in accordance with the order made by a commission of RZD. 
The price for wagon repair depends significantly on the number of new expensive spares to be placed instead of damaged ones such as a wheel-set, a solebar, a bolster. By the way, new solebars and bolsters are supplied to the WRC-1 enterprises by Roszheldorsnab (the spares are made in Russia) and RZD Trading Company (the spares are made in China). 
The price policy of WRC-3 is being hold in accordance with the Instruction on Depot Repair of Cargo Railcars on 1520 mm Wide Gauge CV-587 and the Instruction of Capital Repair of Cargo Railcars on 1520 mm Wide Gauge CV-627. The key demands for the efficient work of wagon repair depots incorporated into WRC-3 is the reduction of a company’s own expenditure and the ability to meet the requirements of wagon owners regarding the quality of services. To provide competitive repair, WRC-3 uses price differentiation according to the region in which the depot is located. In the words of Mrs Korotkova, the activity of WRC-3 on the cargo railcar repair market will be diversified by means of enlarging the range of provided services. 
One of the important peculiarities of new wagon repair companies is modernisation of the document turnover system. The goal of this process is to make more comfortable conditions for clients, and to make the companies’ activities meet current sectoral standards. WRC-2 was the first company in the wagon repair sector that started to use e-document turnover with a liquid digital e-signature, accepted by all the participants in the process.
Processing and formalisation of e-documents are fulfilled in cooperation with partners, which helps a client to save his time and money. On August 1, 2011, WRC-2 in cooperation with Freight Two, Zheldoruchet, and TransTeleCom switched to the e-document system with a digital e-signature application. “Due to this system, a pack of documents necessary for financial accounting is agreed in 3-5 minutes. This allows our partners to save time and money,” says a representative of WRC-2. We must admit that all three new wagon repair companies are actively implementing e-document turnover. On September 1, 2011, WRC-1 also got the right to use e-signature. 

A Look into the Future
Most market players think that the process of organisation of interaction between rolling stock owners and new wagon repair companies has not influenced railcar repair plan fulfillment. Contracts on scheduled repair of cargo wagons and spares repair were re-concluded with clients, who had had contractual relations with the CDRV. Every day the companies work hard to attract new clients. Wagon repair subsidiaries do their best to use an individual approach to every contractor. 
According to official data, the quality of repair made in depots of the CDRV was not worse and sometimes was much better than that provided by private companies. In the first half of 2011, the fail-free performance figure was 98.26% for railcars repaired by the Directorate, and 97.29% for rolling stock repaired by private companies. After the reorganisation, the free-fail performance figure was 98.15% for wagons repaired by enterprises incorporated into WRC-1 in the first seven months of 2011; the fail-free performance figure of private companies in this period was 96.99%.
The market makes it necessary to improve the services. If any failure happens, a client may leave for a competitor. Besides, new wagon repair companies deal with strategic partners of their mother company, for whom quality of service is especially important. If a company is not able to provide them with the proper level of services, they will hardly put up with it. “That is why our first target is to develop a system of high-quality service, and then control it by means of a regular appraisal,” says Mrs Korotkova. “All planned centralised contracts have been concluded already. New clients come to the company and we do our best to fulfill their needs and make long-term relations. There are no unimportant clients for our company!”
In the foreseeable future, there will be other changes in the life of the wagon repair companies. According to the decision of the Board of Directors of RZD made on December 20, 2010, shareholdings in WRC-1 (not less than 50% minus 2 shares), WRC-2 and WRC-3 (not less than 75% minus 2 shares) are to be sold in 2013.
The demand for scheduled repair is quite stable and may be forecast easily, because wagons that failed to be maintained on time are not allowed to run on the public railway network. Relevant needs are generated by the market because of the long-term trend in cargo transportation growth. On the basis of these prerequisites, we can estimate the efficiency of operators’ investments into the wagon repair sector. The potential purchasers of the shares are rolling stock operators as well as portfolio investors.
Most experts interviewed by The RZD-Partner International think that either there will be hardly any differences after the reorganisation of the CDRV system or there will be some positive changes. At the same time, there are some sceptics. For example, there is an opinion that a business activity is most efficient if there is a single management. The best example of it is the situation that arose after the liquidation of the public park in Russia. After Freight One and Freight Two were launched, and a lot of other operators appeared, there are more and more failures in the wagon supply for getting loaded, meanwhile the prices for railway cargo transportation increased significantly in comparison with Price List №10-01.  
The situation may be the same after the launch of the railcar repair enterprises. Some depots will start to increase prices for their services because of a larger number of orders and competition between clients, others because of the lack of clients and the need to shift the constant expenses on their shoulders. As a result, operators will include this expenditure in the rate a cargo owner has to pay. We can just hope that the repair services system will benefit from all the changes. The sector will become more attractive for investors, due to which the material base will be renewed at last, and other problems will be solved.
By Elena Ushkova
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This was done to demonopolise this sector, develop competition, and make companies providing rolling stock repair services more attractive for investors.
    [~PREVIEW_TEXT] => In the framework of Russian Railways’ wagon repair facilities reform, three railcar repair companies, subsidiaries of RZD, separated from the Central Directorate for Cargo Railcars Repair (CDRV). 
This was done to demonopolise this sector, develop competition, and make companies providing rolling stock repair services more attractive for investors.
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Russian Railways and PESA sign contract to manufacture and deliver 611M railcars
Russian Railways and the Polish concern PESA Bydgoszcz SA signed a contract for the manufacture and delivery of the 611M inspection railcar. The signing took place on 12 October 2011 during the 9 International Railway Fair TRAKO 2011, which was held in the Polish city of Gdansk.
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The 611M railcar will be equipped with a passive safety system to reduce the risk to the life and health of personnel during collisions, a satellite navigation system, satellite communications,
2 MHz hectometre and VHF (160 MHz) train radio communications, train radio communications using the GSM-R and TETRA digital standards, mobile radio using the GSM/GPRS/EDGE/UMTF/LTE standard, digital TV and CCTV.
The railcar will be manufactured at the PESA plant in Bydgoszcz in Poland and is to come into operation in 2013.

RZD and STM-Service Sign Maintenance Contract for SINARA Electric Freight Trains
In October, 2011, Russian Railways and STM-Service, which is part of Sinara-Transport Machines, signed a contract for the maintenance of the SINARA 2ES6 electric freight locomotive series. The trains are produced by Ural Locomotives, a joint venture between the Sinara Group and Siemens AG.
According to the contract, STM-Service will provide the quality maintenance services necessary to maintain the 2ES6 electric locomotives numbered 001 - 137 in good technical condition. Five service depots will be set up at Sverdlovsk, South Urals and West Siberian Railways.

FESCO and BLG LOGISTICS to Create Automotive Logistics JV 
BLG LOGISTICS GROUP and FESCO Transportation Group announced the creation of a joint venture company to develop integrated logistics solutions for the automotive industry in Russia. The initial amount of investment in the project is €10 million. The new company will include port handling operations for vehicles in St Petersburg in cooperation with the Sea Port of St Petersburg, with a current total area of 95,000 sq. m. and a projected annual volume of 60,000 units in 2011, as well as a truck operation with a fleet of 31 motor vehicle trailers.
The Shareholders Agreement was signed on October 11, 2011, by Sergey Generalov, President and CEO of FESCO Transportation Group, and Detthold Aden, Chairman of the Management Board of BLG LOGISTICS GROUP AG & Co. KG.
Both companies share a belief in the significant growth potential of the Russian car market, which is forecasted to grow at an average rate of 15% per year to soon become the biggest car market in Europe by number of units.
“I have no doubts that our joint efforts with BLG will enable us to offer clients attractive automotive logistics services, supporting our ambitions to develop this joint venture into one of the leading players on the Russian market within the next 5 years, combining sea transportation and port handling of vehicles in the European part of Russia and in the Far East with rail and truck transportation of both imported and locally assembled cars”, said Mr Generalov.
Detthold Aden added that “…the combination of FESCO’s deep knowledge of the local market, diversified portfolio of assets and services across the country, as well as striving for innovation make them a perfect match to BLG’s strong positions in Europe to Russia trade, existing presence in Russia, as well as our experience in organising automotive logistics in international markets.”

Alstom and TMH Sign a Contract to Produce the 2ES5 Electric Locomotive 
At the end of September 2011, Alstom and Transmashholding (TMH) signed a contract to develop and produce the new 2ES5 electric locomotive in Russia. This contract defines the terms and conditions under which the two partners will be working together to fulfil the order that Russian Railways (RZD) placed with Transmashholding in June 2011. This order relates to the supply of 200 freight locomotives and is worth a total of approximately €1 billion. Alstom’s share of this contract is €400 million. The first deliveries are scheduled to begin in 2012.
Alstom and Transmashholding entered into a global partnership, with Alstom acquiring a 25% stake in the parent company of TMH. This partnership has already resulted in the design and production of another locomotive - the EP20 passenger locomotive. It was presented to RZD at the Expo1520 rail show at the beginning of September.
Like the EP20, the 2ES5 will be designed by TRtrans, a joint venture engineering company that Alstom and Transmashholding set up in December 2010. The 2ES5’s key components (such as the bogies and motor block) will be manufactured by a second joint venture company, Railcomp. The creation of this company is in progress. Design and production of the 2ES5 will be carried out at Transmashholding’s Novocherkassk site in southern Russia. 
The 2ES5 is an asynchronous double-bogie freight locomotive for main lines. It will run at speeds of up to 120 kph with total output of 7,600 kW - which is what is required in order to pull freight convoys that can sometimes weigh more than 6,000 tons over distances of up to 3,000 kilometres.

Siemens Announces Investments in Russia of €1 Billion	
Over the next three years, Siemens AG intends – together with its partners – to invest €1 billion in Russia. Peter Löscher, President and CEO of Siemens AG, announced this initiative in Moscow on October 17, 2011, at the annual meeting of the Foreign Investment Advisory Council chaired by Russian Prime Minister Vladimir Putin. The company’s plans call for the new construction or expansion of locations for production, research and development (R&D) and services in regions such as Yekaterinburg, Perm, St Petersburg and Voronezh. 
A large part of the planned investments – some €700 million – will focus on the future-oriented energy market. 
Rail technology is also a very promising market in Russia – and one for which Siemens and its Russian partners can provide high-tech solutions. The joint venture established in Yekaterinburg with Russia’s Sinara Group in 2010 has already received more than €3 billion in orders for the production of advanced freight locomotives and regional trains. Local manufacturing capacity – in particular, for the production of regional trains – will now be substantially expanded through investments of several hundred million euros. Siemens’ JV in St Petersburg for the production of drives systems for trains will also be expanded through additional investments of over €20 million. 
“Our far-reaching investments underscore Russia’s great importance as a strategic core market for Siemens. By entering into a technology partnership, we’re supporting the country’s ambitious modernisation plans and placing our close cooperation with our Russian partners on a new, even broader basis,” said Mr Löscher.

Ust-Luga Company and Gulftainer Sign Agreement on Ust-Luga Port Development
Ust-Luga Company (the construction manager of Ust-Luga Commercial Sea Port) and Gulftainer Global Logistics Limited (an international terminal operator) announced the signing of an agreement on joining the companies’ production and financial potentials for further development of the transport and logistics complex at Ust-Luga Commercial Sea Port. The agreement also reveals the commitment to acquire the stock of 25% + 1 share of Transport Logistic Complex JSC. 
The agreement was signed by Valery Izraylit, Chairman of Ust-Luga Company Board, and Badr H. Jafar, Director of Gulftainer Global Logistics Limited. The signing ceremony took place within at the X International Investment Forum Sochi 2011. The final agreement will be concluded in 2012. Gulftainer, with its 35-year experience of logistic operations at sea ports, will promote efficient development of the Multipurpose Terminal “South-2” and the Warehousing Logistics Centre (WLC) designed for handling and storing rolling, general, container and other cargoes. In its turn, Ust-Luga Company, relying on its expertise as a construction manager in implementation of investment projects, will support the construction of the 3rd and the 4th Start-Up Facilities of “South-2”, as well as the designing and construction of the Warehousing Logistics Centre. In dealing with the project, Gulftainer is going to invest at least EUR 192 million within several years. 
Speaking at the signing ceremony, Peter Richards, Managing Director of Gulftainer Global Logistics Limited, noted: “This is a serious step for the Gulftainer Corporation as we realise that we are expanding to the most dynamic Russian region, the Baltic. Its role in the transit potential of Russia is critical, since it handles about 60% of the Russian container transportation, with the cargo volumes constantly growing. Still, the growth potential is far from being exhausted.” 
“We are glad that such a major and experienced logistics market player as Gulftainer has come to the port. This fact demonstrates that Russia is becoming a prominent player on the global market of transport-transit services. I believe that Gulftainer’s joining will increase the car transshipment volumes of the Multipurpose Terminal “South-2”; new services will be introduced both in the port’s territory and on the platform of the Warehousing Logistics Centre; and handling new cargo types will be mastered,” said Maxim Shirokov, Director General of Ust-Luga Company.

UCL Holding: One Brand for Stevedoring Assets 
UCL Holding consolidates stevedoring assets under one brand UCL Port. 
Blocks of shares in Sea Port of St Petersburg, Container Terminal St Petersburg, Taganrog Sea Port of St Petersburg and SP Container Terminal Ltd, which is the only owner of  Container Terminal St Petersburg were transferred to subsidiary sub-holding company UCL Port B.V., created by now especially for this purpose.
Till the end of 2011, Tuapse Sea Port of St Petersburg and Multipurpose Reloading Complex in port of Ust-Luga will be also included in UCL Port.
The reorganisation of assets under a unified brand was performed in accordance with the development strategy of the stevedoring division of the holding implemented in order to strengthen the position and increase the competitive ability of the sea ports of the group by means of a change-over to handling of more profitable and environmentally friendly cargoes. In particular, the development strategy of the group UCL Port, envisages modernisation of the existing terminals and construction of new ones for handling of general, bulk and container cargoes. It is expected that the turnover of the sub-holding companies will increase more than two-fold by 2016 in comparison with now.
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Russian Railways and PESA sign contract to manufacture and deliver 611M railcars
Russian Railways and the Polish concern PESA Bydgoszcz SA signed a contract for the manufacture and delivery of the 611M inspection railcar. The signing took place on 12 October 2011 during the 9 International Railway Fair TRAKO 2011, which was held in the Polish city of Gdansk.
The railcar is designed to carry out inspections of the infrastructure of Russia’s railways. In service, the railcar can reach a maximum speed on railway lines of 160 kph and can operate in temperatures ranging from -400C to +400C. The railcar has an observation room, conference room, sanitary unit, kitchen, office and service compartment.
The 611M railcar will be equipped with a passive safety system to reduce the risk to the life and health of personnel during collisions, a satellite navigation system, satellite communications,
2 MHz hectometre and VHF (160 MHz) train radio communications, train radio communications using the GSM-R and TETRA digital standards, mobile radio using the GSM/GPRS/EDGE/UMTF/LTE standard, digital TV and CCTV.
The railcar will be manufactured at the PESA plant in Bydgoszcz in Poland and is to come into operation in 2013.

RZD and STM-Service Sign Maintenance Contract for SINARA Electric Freight Trains
In October, 2011, Russian Railways and STM-Service, which is part of Sinara-Transport Machines, signed a contract for the maintenance of the SINARA 2ES6 electric freight locomotive series. The trains are produced by Ural Locomotives, a joint venture between the Sinara Group and Siemens AG.
According to the contract, STM-Service will provide the quality maintenance services necessary to maintain the 2ES6 electric locomotives numbered 001 - 137 in good technical condition. Five service depots will be set up at Sverdlovsk, South Urals and West Siberian Railways.

FESCO and BLG LOGISTICS to Create Automotive Logistics JV 
BLG LOGISTICS GROUP and FESCO Transportation Group announced the creation of a joint venture company to develop integrated logistics solutions for the automotive industry in Russia. The initial amount of investment in the project is €10 million. The new company will include port handling operations for vehicles in St Petersburg in cooperation with the Sea Port of St Petersburg, with a current total area of 95,000 sq. m. and a projected annual volume of 60,000 units in 2011, as well as a truck operation with a fleet of 31 motor vehicle trailers.
The Shareholders Agreement was signed on October 11, 2011, by Sergey Generalov, President and CEO of FESCO Transportation Group, and Detthold Aden, Chairman of the Management Board of BLG LOGISTICS GROUP AG & Co. KG.
Both companies share a belief in the significant growth potential of the Russian car market, which is forecasted to grow at an average rate of 15% per year to soon become the biggest car market in Europe by number of units.
“I have no doubts that our joint efforts with BLG will enable us to offer clients attractive automotive logistics services, supporting our ambitions to develop this joint venture into one of the leading players on the Russian market within the next 5 years, combining sea transportation and port handling of vehicles in the European part of Russia and in the Far East with rail and truck transportation of both imported and locally assembled cars”, said Mr Generalov.
Detthold Aden added that “…the combination of FESCO’s deep knowledge of the local market, diversified portfolio of assets and services across the country, as well as striving for innovation make them a perfect match to BLG’s strong positions in Europe to Russia trade, existing presence in Russia, as well as our experience in organising automotive logistics in international markets.”

Alstom and TMH Sign a Contract to Produce the 2ES5 Electric Locomotive 
At the end of September 2011, Alstom and Transmashholding (TMH) signed a contract to develop and produce the new 2ES5 electric locomotive in Russia. This contract defines the terms and conditions under which the two partners will be working together to fulfil the order that Russian Railways (RZD) placed with Transmashholding in June 2011. This order relates to the supply of 200 freight locomotives and is worth a total of approximately €1 billion. Alstom’s share of this contract is €400 million. The first deliveries are scheduled to begin in 2012.
Alstom and Transmashholding entered into a global partnership, with Alstom acquiring a 25% stake in the parent company of TMH. This partnership has already resulted in the design and production of another locomotive - the EP20 passenger locomotive. It was presented to RZD at the Expo1520 rail show at the beginning of September.
Like the EP20, the 2ES5 will be designed by TRtrans, a joint venture engineering company that Alstom and Transmashholding set up in December 2010. The 2ES5’s key components (such as the bogies and motor block) will be manufactured by a second joint venture company, Railcomp. The creation of this company is in progress. Design and production of the 2ES5 will be carried out at Transmashholding’s Novocherkassk site in southern Russia. 
The 2ES5 is an asynchronous double-bogie freight locomotive for main lines. It will run at speeds of up to 120 kph with total output of 7,600 kW - which is what is required in order to pull freight convoys that can sometimes weigh more than 6,000 tons over distances of up to 3,000 kilometres.

Siemens Announces Investments in Russia of €1 Billion	
Over the next three years, Siemens AG intends – together with its partners – to invest €1 billion in Russia. Peter Löscher, President and CEO of Siemens AG, announced this initiative in Moscow on October 17, 2011, at the annual meeting of the Foreign Investment Advisory Council chaired by Russian Prime Minister Vladimir Putin. The company’s plans call for the new construction or expansion of locations for production, research and development (R&D) and services in regions such as Yekaterinburg, Perm, St Petersburg and Voronezh. 
A large part of the planned investments – some €700 million – will focus on the future-oriented energy market. 
Rail technology is also a very promising market in Russia – and one for which Siemens and its Russian partners can provide high-tech solutions. The joint venture established in Yekaterinburg with Russia’s Sinara Group in 2010 has already received more than €3 billion in orders for the production of advanced freight locomotives and regional trains. Local manufacturing capacity – in particular, for the production of regional trains – will now be substantially expanded through investments of several hundred million euros. Siemens’ JV in St Petersburg for the production of drives systems for trains will also be expanded through additional investments of over €20 million. 
“Our far-reaching investments underscore Russia’s great importance as a strategic core market for Siemens. By entering into a technology partnership, we’re supporting the country’s ambitious modernisation plans and placing our close cooperation with our Russian partners on a new, even broader basis,” said Mr Löscher.

Ust-Luga Company and Gulftainer Sign Agreement on Ust-Luga Port Development
Ust-Luga Company (the construction manager of Ust-Luga Commercial Sea Port) and Gulftainer Global Logistics Limited (an international terminal operator) announced the signing of an agreement on joining the companies’ production and financial potentials for further development of the transport and logistics complex at Ust-Luga Commercial Sea Port. The agreement also reveals the commitment to acquire the stock of 25% + 1 share of Transport Logistic Complex JSC. 
The agreement was signed by Valery Izraylit, Chairman of Ust-Luga Company Board, and Badr H. Jafar, Director of Gulftainer Global Logistics Limited. The signing ceremony took place within at the X International Investment Forum Sochi 2011. The final agreement will be concluded in 2012. Gulftainer, with its 35-year experience of logistic operations at sea ports, will promote efficient development of the Multipurpose Terminal “South-2” and the Warehousing Logistics Centre (WLC) designed for handling and storing rolling, general, container and other cargoes. In its turn, Ust-Luga Company, relying on its expertise as a construction manager in implementation of investment projects, will support the construction of the 3rd and the 4th Start-Up Facilities of “South-2”, as well as the designing and construction of the Warehousing Logistics Centre. In dealing with the project, Gulftainer is going to invest at least EUR 192 million within several years. 
Speaking at the signing ceremony, Peter Richards, Managing Director of Gulftainer Global Logistics Limited, noted: “This is a serious step for the Gulftainer Corporation as we realise that we are expanding to the most dynamic Russian region, the Baltic. Its role in the transit potential of Russia is critical, since it handles about 60% of the Russian container transportation, with the cargo volumes constantly growing. Still, the growth potential is far from being exhausted.” 
“We are glad that such a major and experienced logistics market player as Gulftainer has come to the port. This fact demonstrates that Russia is becoming a prominent player on the global market of transport-transit services. I believe that Gulftainer’s joining will increase the car transshipment volumes of the Multipurpose Terminal “South-2”; new services will be introduced both in the port’s territory and on the platform of the Warehousing Logistics Centre; and handling new cargo types will be mastered,” said Maxim Shirokov, Director General of Ust-Luga Company.

UCL Holding: One Brand for Stevedoring Assets 
UCL Holding consolidates stevedoring assets under one brand UCL Port. 
Blocks of shares in Sea Port of St Petersburg, Container Terminal St Petersburg, Taganrog Sea Port of St Petersburg and SP Container Terminal Ltd, which is the only owner of  Container Terminal St Petersburg were transferred to subsidiary sub-holding company UCL Port B.V., created by now especially for this purpose.
Till the end of 2011, Tuapse Sea Port of St Petersburg and Multipurpose Reloading Complex in port of Ust-Luga will be also included in UCL Port.
The reorganisation of assets under a unified brand was performed in accordance with the development strategy of the stevedoring division of the holding implemented in order to strengthen the position and increase the competitive ability of the sea ports of the group by means of a change-over to handling of more profitable and environmentally friendly cargoes. In particular, the development strategy of the group UCL Port, envisages modernisation of the existing terminals and construction of new ones for handling of general, bulk and container cargoes. It is expected that the turnover of the sub-holding companies will increase more than two-fold by 2016 in comparison with now.
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The railcar is designed to carry out inspections of the infrastructure of Russia’s railways. In service, the railcar can reach a maximum speed on railway lines of 160 kph and can operate in temperatures ranging from -400C to +400C. The railcar has an observation room, conference room, sanitary unit, kitchen, office and service compartment.
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The railcar is designed to carry out inspections of the infrastructure of Russia’s railways. In service, the railcar can reach a maximum speed on railway lines of 160 kph and can operate in temperatures ranging from -400C to +400C. The railcar has an observation room, conference room, sanitary unit, kitchen, office and service compartment.
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Russian Railways and PESA sign contract to manufacture and deliver 611M railcars
Russian Railways and the Polish concern PESA Bydgoszcz SA signed a contract for the manufacture and delivery of the 611M inspection railcar. The signing took place on 12 October 2011 during the 9 International Railway Fair TRAKO 2011, which was held in the Polish city of Gdansk.
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The 611M railcar will be equipped with a passive safety system to reduce the risk to the life and health of personnel during collisions, a satellite navigation system, satellite communications,
2 MHz hectometre and VHF (160 MHz) train radio communications, train radio communications using the GSM-R and TETRA digital standards, mobile radio using the GSM/GPRS/EDGE/UMTF/LTE standard, digital TV and CCTV.
The railcar will be manufactured at the PESA plant in Bydgoszcz in Poland and is to come into operation in 2013.

RZD and STM-Service Sign Maintenance Contract for SINARA Electric Freight Trains
In October, 2011, Russian Railways and STM-Service, which is part of Sinara-Transport Machines, signed a contract for the maintenance of the SINARA 2ES6 electric freight locomotive series. The trains are produced by Ural Locomotives, a joint venture between the Sinara Group and Siemens AG.
According to the contract, STM-Service will provide the quality maintenance services necessary to maintain the 2ES6 electric locomotives numbered 001 - 137 in good technical condition. Five service depots will be set up at Sverdlovsk, South Urals and West Siberian Railways.

FESCO and BLG LOGISTICS to Create Automotive Logistics JV 
BLG LOGISTICS GROUP and FESCO Transportation Group announced the creation of a joint venture company to develop integrated logistics solutions for the automotive industry in Russia. The initial amount of investment in the project is €10 million. The new company will include port handling operations for vehicles in St Petersburg in cooperation with the Sea Port of St Petersburg, with a current total area of 95,000 sq. m. and a projected annual volume of 60,000 units in 2011, as well as a truck operation with a fleet of 31 motor vehicle trailers.
The Shareholders Agreement was signed on October 11, 2011, by Sergey Generalov, President and CEO of FESCO Transportation Group, and Detthold Aden, Chairman of the Management Board of BLG LOGISTICS GROUP AG & Co. KG.
Both companies share a belief in the significant growth potential of the Russian car market, which is forecasted to grow at an average rate of 15% per year to soon become the biggest car market in Europe by number of units.
“I have no doubts that our joint efforts with BLG will enable us to offer clients attractive automotive logistics services, supporting our ambitions to develop this joint venture into one of the leading players on the Russian market within the next 5 years, combining sea transportation and port handling of vehicles in the European part of Russia and in the Far East with rail and truck transportation of both imported and locally assembled cars”, said Mr Generalov.
Detthold Aden added that “…the combination of FESCO’s deep knowledge of the local market, diversified portfolio of assets and services across the country, as well as striving for innovation make them a perfect match to BLG’s strong positions in Europe to Russia trade, existing presence in Russia, as well as our experience in organising automotive logistics in international markets.”

Alstom and TMH Sign a Contract to Produce the 2ES5 Electric Locomotive 
At the end of September 2011, Alstom and Transmashholding (TMH) signed a contract to develop and produce the new 2ES5 electric locomotive in Russia. This contract defines the terms and conditions under which the two partners will be working together to fulfil the order that Russian Railways (RZD) placed with Transmashholding in June 2011. This order relates to the supply of 200 freight locomotives and is worth a total of approximately €1 billion. Alstom’s share of this contract is €400 million. The first deliveries are scheduled to begin in 2012.
Alstom and Transmashholding entered into a global partnership, with Alstom acquiring a 25% stake in the parent company of TMH. This partnership has already resulted in the design and production of another locomotive - the EP20 passenger locomotive. It was presented to RZD at the Expo1520 rail show at the beginning of September.
Like the EP20, the 2ES5 will be designed by TRtrans, a joint venture engineering company that Alstom and Transmashholding set up in December 2010. The 2ES5’s key components (such as the bogies and motor block) will be manufactured by a second joint venture company, Railcomp. The creation of this company is in progress. Design and production of the 2ES5 will be carried out at Transmashholding’s Novocherkassk site in southern Russia. 
The 2ES5 is an asynchronous double-bogie freight locomotive for main lines. It will run at speeds of up to 120 kph with total output of 7,600 kW - which is what is required in order to pull freight convoys that can sometimes weigh more than 6,000 tons over distances of up to 3,000 kilometres.

Siemens Announces Investments in Russia of €1 Billion	
Over the next three years, Siemens AG intends – together with its partners – to invest €1 billion in Russia. Peter Löscher, President and CEO of Siemens AG, announced this initiative in Moscow on October 17, 2011, at the annual meeting of the Foreign Investment Advisory Council chaired by Russian Prime Minister Vladimir Putin. The company’s plans call for the new construction or expansion of locations for production, research and development (R&D) and services in regions such as Yekaterinburg, Perm, St Petersburg and Voronezh. 
A large part of the planned investments – some €700 million – will focus on the future-oriented energy market. 
Rail technology is also a very promising market in Russia – and one for which Siemens and its Russian partners can provide high-tech solutions. The joint venture established in Yekaterinburg with Russia’s Sinara Group in 2010 has already received more than €3 billion in orders for the production of advanced freight locomotives and regional trains. Local manufacturing capacity – in particular, for the production of regional trains – will now be substantially expanded through investments of several hundred million euros. Siemens’ JV in St Petersburg for the production of drives systems for trains will also be expanded through additional investments of over €20 million. 
“Our far-reaching investments underscore Russia’s great importance as a strategic core market for Siemens. By entering into a technology partnership, we’re supporting the country’s ambitious modernisation plans and placing our close cooperation with our Russian partners on a new, even broader basis,” said Mr Löscher.

Ust-Luga Company and Gulftainer Sign Agreement on Ust-Luga Port Development
Ust-Luga Company (the construction manager of Ust-Luga Commercial Sea Port) and Gulftainer Global Logistics Limited (an international terminal operator) announced the signing of an agreement on joining the companies’ production and financial potentials for further development of the transport and logistics complex at Ust-Luga Commercial Sea Port. The agreement also reveals the commitment to acquire the stock of 25% + 1 share of Transport Logistic Complex JSC. 
The agreement was signed by Valery Izraylit, Chairman of Ust-Luga Company Board, and Badr H. Jafar, Director of Gulftainer Global Logistics Limited. The signing ceremony took place within at the X International Investment Forum Sochi 2011. The final agreement will be concluded in 2012. Gulftainer, with its 35-year experience of logistic operations at sea ports, will promote efficient development of the Multipurpose Terminal “South-2” and the Warehousing Logistics Centre (WLC) designed for handling and storing rolling, general, container and other cargoes. In its turn, Ust-Luga Company, relying on its expertise as a construction manager in implementation of investment projects, will support the construction of the 3rd and the 4th Start-Up Facilities of “South-2”, as well as the designing and construction of the Warehousing Logistics Centre. In dealing with the project, Gulftainer is going to invest at least EUR 192 million within several years. 
Speaking at the signing ceremony, Peter Richards, Managing Director of Gulftainer Global Logistics Limited, noted: “This is a serious step for the Gulftainer Corporation as we realise that we are expanding to the most dynamic Russian region, the Baltic. Its role in the transit potential of Russia is critical, since it handles about 60% of the Russian container transportation, with the cargo volumes constantly growing. Still, the growth potential is far from being exhausted.” 
“We are glad that such a major and experienced logistics market player as Gulftainer has come to the port. This fact demonstrates that Russia is becoming a prominent player on the global market of transport-transit services. I believe that Gulftainer’s joining will increase the car transshipment volumes of the Multipurpose Terminal “South-2”; new services will be introduced both in the port’s territory and on the platform of the Warehousing Logistics Centre; and handling new cargo types will be mastered,” said Maxim Shirokov, Director General of Ust-Luga Company.

UCL Holding: One Brand for Stevedoring Assets 
UCL Holding consolidates stevedoring assets under one brand UCL Port. 
Blocks of shares in Sea Port of St Petersburg, Container Terminal St Petersburg, Taganrog Sea Port of St Petersburg and SP Container Terminal Ltd, which is the only owner of  Container Terminal St Petersburg were transferred to subsidiary sub-holding company UCL Port B.V., created by now especially for this purpose.
Till the end of 2011, Tuapse Sea Port of St Petersburg and Multipurpose Reloading Complex in port of Ust-Luga will be also included in UCL Port.
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Russian Railways and PESA sign contract to manufacture and deliver 611M railcars
Russian Railways and the Polish concern PESA Bydgoszcz SA signed a contract for the manufacture and delivery of the 611M inspection railcar. The signing took place on 12 October 2011 during the 9 International Railway Fair TRAKO 2011, which was held in the Polish city of Gdansk.
The railcar is designed to carry out inspections of the infrastructure of Russia’s railways. In service, the railcar can reach a maximum speed on railway lines of 160 kph and can operate in temperatures ranging from -400C to +400C. The railcar has an observation room, conference room, sanitary unit, kitchen, office and service compartment.
The 611M railcar will be equipped with a passive safety system to reduce the risk to the life and health of personnel during collisions, a satellite navigation system, satellite communications,
2 MHz hectometre and VHF (160 MHz) train radio communications, train radio communications using the GSM-R and TETRA digital standards, mobile radio using the GSM/GPRS/EDGE/UMTF/LTE standard, digital TV and CCTV.
The railcar will be manufactured at the PESA plant in Bydgoszcz in Poland and is to come into operation in 2013.

RZD and STM-Service Sign Maintenance Contract for SINARA Electric Freight Trains
In October, 2011, Russian Railways and STM-Service, which is part of Sinara-Transport Machines, signed a contract for the maintenance of the SINARA 2ES6 electric freight locomotive series. The trains are produced by Ural Locomotives, a joint venture between the Sinara Group and Siemens AG.
According to the contract, STM-Service will provide the quality maintenance services necessary to maintain the 2ES6 electric locomotives numbered 001 - 137 in good technical condition. Five service depots will be set up at Sverdlovsk, South Urals and West Siberian Railways.

FESCO and BLG LOGISTICS to Create Automotive Logistics JV 
BLG LOGISTICS GROUP and FESCO Transportation Group announced the creation of a joint venture company to develop integrated logistics solutions for the automotive industry in Russia. The initial amount of investment in the project is €10 million. The new company will include port handling operations for vehicles in St Petersburg in cooperation with the Sea Port of St Petersburg, with a current total area of 95,000 sq. m. and a projected annual volume of 60,000 units in 2011, as well as a truck operation with a fleet of 31 motor vehicle trailers.
The Shareholders Agreement was signed on October 11, 2011, by Sergey Generalov, President and CEO of FESCO Transportation Group, and Detthold Aden, Chairman of the Management Board of BLG LOGISTICS GROUP AG & Co. KG.
Both companies share a belief in the significant growth potential of the Russian car market, which is forecasted to grow at an average rate of 15% per year to soon become the biggest car market in Europe by number of units.
“I have no doubts that our joint efforts with BLG will enable us to offer clients attractive automotive logistics services, supporting our ambitions to develop this joint venture into one of the leading players on the Russian market within the next 5 years, combining sea transportation and port handling of vehicles in the European part of Russia and in the Far East with rail and truck transportation of both imported and locally assembled cars”, said Mr Generalov.
Detthold Aden added that “…the combination of FESCO’s deep knowledge of the local market, diversified portfolio of assets and services across the country, as well as striving for innovation make them a perfect match to BLG’s strong positions in Europe to Russia trade, existing presence in Russia, as well as our experience in organising automotive logistics in international markets.”

Alstom and TMH Sign a Contract to Produce the 2ES5 Electric Locomotive 
At the end of September 2011, Alstom and Transmashholding (TMH) signed a contract to develop and produce the new 2ES5 electric locomotive in Russia. This contract defines the terms and conditions under which the two partners will be working together to fulfil the order that Russian Railways (RZD) placed with Transmashholding in June 2011. This order relates to the supply of 200 freight locomotives and is worth a total of approximately €1 billion. Alstom’s share of this contract is €400 million. The first deliveries are scheduled to begin in 2012.
Alstom and Transmashholding entered into a global partnership, with Alstom acquiring a 25% stake in the parent company of TMH. This partnership has already resulted in the design and production of another locomotive - the EP20 passenger locomotive. It was presented to RZD at the Expo1520 rail show at the beginning of September.
Like the EP20, the 2ES5 will be designed by TRtrans, a joint venture engineering company that Alstom and Transmashholding set up in December 2010. The 2ES5’s key components (such as the bogies and motor block) will be manufactured by a second joint venture company, Railcomp. The creation of this company is in progress. Design and production of the 2ES5 will be carried out at Transmashholding’s Novocherkassk site in southern Russia. 
The 2ES5 is an asynchronous double-bogie freight locomotive for main lines. It will run at speeds of up to 120 kph with total output of 7,600 kW - which is what is required in order to pull freight convoys that can sometimes weigh more than 6,000 tons over distances of up to 3,000 kilometres.

Siemens Announces Investments in Russia of €1 Billion	
Over the next three years, Siemens AG intends – together with its partners – to invest €1 billion in Russia. Peter Löscher, President and CEO of Siemens AG, announced this initiative in Moscow on October 17, 2011, at the annual meeting of the Foreign Investment Advisory Council chaired by Russian Prime Minister Vladimir Putin. The company’s plans call for the new construction or expansion of locations for production, research and development (R&D) and services in regions such as Yekaterinburg, Perm, St Petersburg and Voronezh. 
A large part of the planned investments – some €700 million – will focus on the future-oriented energy market. 
Rail technology is also a very promising market in Russia – and one for which Siemens and its Russian partners can provide high-tech solutions. The joint venture established in Yekaterinburg with Russia’s Sinara Group in 2010 has already received more than €3 billion in orders for the production of advanced freight locomotives and regional trains. Local manufacturing capacity – in particular, for the production of regional trains – will now be substantially expanded through investments of several hundred million euros. Siemens’ JV in St Petersburg for the production of drives systems for trains will also be expanded through additional investments of over €20 million. 
“Our far-reaching investments underscore Russia’s great importance as a strategic core market for Siemens. By entering into a technology partnership, we’re supporting the country’s ambitious modernisation plans and placing our close cooperation with our Russian partners on a new, even broader basis,” said Mr Löscher.

Ust-Luga Company and Gulftainer Sign Agreement on Ust-Luga Port Development
Ust-Luga Company (the construction manager of Ust-Luga Commercial Sea Port) and Gulftainer Global Logistics Limited (an international terminal operator) announced the signing of an agreement on joining the companies’ production and financial potentials for further development of the transport and logistics complex at Ust-Luga Commercial Sea Port. The agreement also reveals the commitment to acquire the stock of 25% + 1 share of Transport Logistic Complex JSC. 
The agreement was signed by Valery Izraylit, Chairman of Ust-Luga Company Board, and Badr H. Jafar, Director of Gulftainer Global Logistics Limited. The signing ceremony took place within at the X International Investment Forum Sochi 2011. The final agreement will be concluded in 2012. Gulftainer, with its 35-year experience of logistic operations at sea ports, will promote efficient development of the Multipurpose Terminal “South-2” and the Warehousing Logistics Centre (WLC) designed for handling and storing rolling, general, container and other cargoes. In its turn, Ust-Luga Company, relying on its expertise as a construction manager in implementation of investment projects, will support the construction of the 3rd and the 4th Start-Up Facilities of “South-2”, as well as the designing and construction of the Warehousing Logistics Centre. In dealing with the project, Gulftainer is going to invest at least EUR 192 million within several years. 
Speaking at the signing ceremony, Peter Richards, Managing Director of Gulftainer Global Logistics Limited, noted: “This is a serious step for the Gulftainer Corporation as we realise that we are expanding to the most dynamic Russian region, the Baltic. Its role in the transit potential of Russia is critical, since it handles about 60% of the Russian container transportation, with the cargo volumes constantly growing. Still, the growth potential is far from being exhausted.” 
“We are glad that such a major and experienced logistics market player as Gulftainer has come to the port. This fact demonstrates that Russia is becoming a prominent player on the global market of transport-transit services. I believe that Gulftainer’s joining will increase the car transshipment volumes of the Multipurpose Terminal “South-2”; new services will be introduced both in the port’s territory and on the platform of the Warehousing Logistics Centre; and handling new cargo types will be mastered,” said Maxim Shirokov, Director General of Ust-Luga Company.

UCL Holding: One Brand for Stevedoring Assets 
UCL Holding consolidates stevedoring assets under one brand UCL Port. 
Blocks of shares in Sea Port of St Petersburg, Container Terminal St Petersburg, Taganrog Sea Port of St Petersburg and SP Container Terminal Ltd, which is the only owner of  Container Terminal St Petersburg were transferred to subsidiary sub-holding company UCL Port B.V., created by now especially for this purpose.
Till the end of 2011, Tuapse Sea Port of St Petersburg and Multipurpose Reloading Complex in port of Ust-Luga will be also included in UCL Port.
The reorganisation of assets under a unified brand was performed in accordance with the development strategy of the stevedoring division of the holding implemented in order to strengthen the position and increase the competitive ability of the sea ports of the group by means of a change-over to handling of more profitable and environmentally friendly cargoes. In particular, the development strategy of the group UCL Port, envisages modernisation of the existing terminals and construction of new ones for handling of general, bulk and container cargoes. It is expected that the turnover of the sub-holding companies will increase more than two-fold by 2016 in comparison with now.
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The railcar is designed to carry out inspections of the infrastructure of Russia’s railways. In service, the railcar can reach a maximum speed on railway lines of 160 kph and can operate in temperatures ranging from -400C to +400C. The railcar has an observation room, conference room, sanitary unit, kitchen, office and service compartment.
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The railcar is designed to carry out inspections of the infrastructure of Russia’s railways. In service, the railcar can reach a maximum speed on railway lines of 160 kph and can operate in temperatures ranging from -400C to +400C. The railcar has an observation room, conference room, sanitary unit, kitchen, office and service compartment.
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    [DETAIL_TEXT] => 
A River Country
Lately, the Russian Federation and European countries pay more and more attention to inland water transport, because it has several significant advantages in comparison with other transport modes. It is first of all a high level of safety and energy saving, and a low level of air and water pollution. Also, the river fleet provides transportation of mass cargoes, especially mineral and construction materials that have a low cost price, and allows transport of oversized cargoes that can hardly be carried by other transport modes.
The Russian Federation has one of the longest inland waterway systems in the world. Its total length is 101,600 kilometres, there are over 20,000 vessels working there (1,500 ship owners), cargo is handled in 117 river ports. There are 723 hydro-engineering constructions built on the inland waterways, including 108 canal locks and the Krasnoyarsk ship-lift.
The 6,500 km-long United Inland Deep-Water System functions in the European part of Russia. It was created in the 1950s and is based on the Volga. It also unites the Volga – Baltic Sea, the White Sea – Baltic Sea (Belomorsko–Baltiyskiy Kanal, Belomorkanal), and Volga-Don shipping canals and the Moscow canal, which provide transport communication between five seas (the Baltic Sea, the White Sea, the Caspian Sea, the Azov Sea, and the Black Sea). Mainly, the United Inland Deep-Water System has guaranteed 4-metre depths but for some rather long sections. The System has 67 hydroelectric complexes. In the last three years, the number of shipping hydro-engineering constructions with the necessary safety level plummeted by more than 50%. However, Russia plans to bring all the constructions up to standard. In the 2010 navigation, there were over 230,000 locking operations, and over 350,000 units of fleet sailed via the United Inland Deep-Water System. 

Cargo Volume Has Started to Grow
The world economic crisis, the consequences of which shipping companies have to overcome even now, caused a cut in charter rates and delayed company announcements about overcoming the crisis and the “bright” outlook. In 2011, ship owners still have to focus on a qualitative management system and enlarging their share of new markets. According to the Ministry of Transport, the volume of cargo carried via inland waterways amounted to 105 million tons in 2010, a 7% increase in comparison with 2009. The positive trend will continue this year. Information-analytical agency PortNews forecasts that the cargo turnover of Russian river transport may grow by more than 10% in comparison with 2010 navigation, but the pre-crisis level will hardly be reached. The increase in transportation this year is caused by an earlier opening of navigation at some sections of rivers and canal locks, a rise in industrial output, and a better situation on the external market.
About 70% of the freight flow carried by river transport is transported via the United Inland Deep-Water System in the European part of Russian, and 30% – in Siberia and the Far East. Cargoes transported via rivers in Russia are oil products, metal, fertilisers, loam, equipment, sand, timber, ore, salt, construction materials, grain, sulphur, and general cargoes. 
The share of dry cargoes in the total transportation volume is 60-65%. The major part of it is construction materials, metal, coal, and timber.
This year, the most intensive transportation took place in the Volga basin, on the Volga – Baltic Sea waterway, the Moscow canal, in the Ob’, Ob’ – Irtysh, and the White Sea – Onega basins. The share of oil products (fuel oil, diesel oil, and gasoil) in the freight transportation structure is significant.

Barriers
Most cargoes are transported via the waterways of the United Inland Deep-Water System, but limiting sections, where the depth is less than 4 metres, impact negatively the development of navigation. In the last few years, Russia managed to remove one such bottleneck in the United Inland Deep-Water System – the Kochetovsky hydro-electric complex. The second line of this canal lock was launched in 2008.
Shipping companies lose over RUR 2 billion per annum because of the low level of water in the inland waterways in Russia. The lack of guaranteed depths on the waterways caused a 40 centimetre decrease in the permissible draft on average in 2011. “Each 10 centimetres of draft is about 200 tons of cargo on the ship,” says Mr Klyavin, President of the ASC. In his opinion, if only infrastructure problems at inland waterways are solved, the volume of cargo transportation will grow by 5-7 million tons per annum. Otherwise, the non-transported cargo is carried by railway or road haulage. 
“This means additional 175,000 wagons, i.e. a 2,500 km-long train, the greenhouse gas emissions of which will be twice as large in comparison with those of river vessels. Or this volume can be transported by 700 lorries, then the greenhouse gas emissions will be ten-fold larger than those made by water transport,” explains the President of the ASC.  
The decrease in the loading of a vessel causes the increase in the pay-back period of the fleet. This puts the shipbuilding development in Russia under threat. That is why the 4-metre depth of inland waterways is important for the growth of transportation volume as well as for giving a real impulse to the Russian river shipbuilding sector. 
Nowadays, there are barriers for shipping at several parts of the United Inland Deep-Water System. The major problem section is 40 kilometre-long waterway in the Nizhegorodskaya Oblast from Gorodets to Nizhny Novgorod, where the depth is about 2.5 metres. That is why cargo vessels have either to be underloaded, or to get cargo reloaded on other ships (to pause). Sometimes, owners of passenger cruise fleet have to go to extremes at this section – they transport tourists in buses, if it takes too much time to wait for water from the Gorkov water storage basin. 
The problem of river shipping on the Volga near Gorodets town is to be solved by 2015 by means of increasing the water level in the Cheboksary water storage basin (located in the Nizhegorodskaya Oblast) by 5 metres.
Another limiting section is the canal lock of the Nizhnesvirsky hydroelectric complex on the Volga – Baltic Sea waterway. It was built in 1933, and its size is half that of other canal locks, which were constructed on the waterway later. Nowadays, at this section the decrease in the carrying capacity of the waterway amounts to 70%, because vessels have to idle about 3 days waiting for their turn to pass the canal lock. In the framework of the federal target programme “Development of Russian Transport System in 2010-2015”, money is given to construct the second line of the Nizhnesvirsky canal lock.  
One more limiting section lies in the lower reaches of the Volga. It is the Sarayevsky water complex. Due to the active long-term processes of re-forming the riverbed, this section is the most complicated for shipping on the Volga. There the depth of the navigable pass falls to 3.6 metres, and its width  to 100 metres, thus, only one-way vessel traffic is possible there. This negatively impacts the navigation safety and economic efficiency of the fleet. The RF Government plans to solve this issue before 2015.

New Fleet of Russia Is Ordered
The largest river shipping companies react fast to even a small revival of the market in freight transportation via the inland waterways and are starting serious programmes of fleet renewal.
The largest shipbuilding programme belongs to Universal Cargo Logistics Holding (UCL Holding) that incorporates a number of stevedoring assets, two shipbuilding plants, the North-Western Shipping Company, the Volga Shipping Company, the Western Shipping Company, Volga-Flot Tanker, and Vodohod shipping company. 
In the last two years, UCL Holding placed orders on construction of 55 vessels (23 oil tankers and 32 dry cargo vessels), which are to be delivered in 2011-2015. Most of the orders were placed on Russian shipbuilding yards – Okskaya Sudoverf (Shipyard Oka), Krasnoye Sormovo, the Neva Shipbuilding and Repair Plant, Lotos shipbuilding yard. By now, the customer has received 16 vessels, which are already included into the fleet of the shipping companies of the holding. Also, the existing passenger cruise fleet is being upgraded and re-equipped. Moscow River Shipping Company started a new programme of river-sea tankers construction in 2010. 
The first three vessels are to be built by Shipyard of Brothers Nobel (Rybinsk town in Yaroslavskaya Oblast). Also, the shipping company concluded a contract with Lotos shipbuilding yard on construction of two similar tankers. Moreover, Passenger Port (Stolichnaya Shipping Company trade mark, incorporated into the Moscow River Shipping Company) had the first two passenger leisure boats of “Stolichny” series built by the Moscow Shipbuilding and Repair Plant in 2011. One of them was used on the Moscow river last summer. This series will be continued. The cruise fleet of the shipping company is to be renewed either. In 2011, one river motor-ship transporting foreign tourists on the Moscow – St Petersburg line was upgraded. The company’s second upgraded river motor-ship will be put into operation in the 2012 navigation.
Tanker shipping companies Palmali, Volgotrans, and Navigator also have shipbuilding programmes. It is worth noting that the launch of the shipbuilding programmes is based to a significant degree on the positive expectations of the ship owners that Russian legislation will be changed and improved. 

The Key Bill
By the end of October 2011, both chambers of the Russian State Duma approved the most important sectoral bill on support for Russian shipbuilding and navigation and then the document has been signed by the President of the Russian Federation and have received the status of a federal law. It took the RF Transport Ministry and the Ministry of Industry and Trade more than a year to develop the bill. The United Shipbuilding Corporation and representatives of the largest Russian shipping companies also took part in the bill’s development.
The bill is aimed at development of legal mechanisms providing the creation of economic prerequisites to attract vessels under the Russian Federation flag and to stimulate Russian ship owners to renew their fleet and place orders on new vessels construction on Russian shipbuilding yards.  
Privileges envisaged by the bill will be given to ship owners whose vessels are registered in the Russian International Vessel Register (RIVR). More privileges will be given to ship owners whose vessels were built by Russian shipbuilding yards after January 1, 2010 and registered in the Russian International Vessel Register. Registration in the RIVR is possible for sea, river, and river-sea vessels. When making coastal-trade trips, such vessels are remitted from profit tax payment. The bill implements limitation on the initial registration in the RIVR for vessels the age of which is more than 15 years, which are now registered in foreign Vessel Registers, and for ships older than 15 years providing only coastal-trade transportation.
The document fixes the norm on the zero rate (for 15 years) of insurance payments made by ship owners for the crews of their vessels with the compensation of these payments from the budget of the Russian Federation (the Pension Fund, the Social Insurance Fund, the Federal Fund of the Obligatory Medical Insurance). This measure will allow Russian shipping companies to compete with foreign vessel owners in the sector of crew recruitment. The new bill envisages that the ship owner and the crew may conclude fixed term employment agreement but upon mutual agreement of the parties. The conclusion of indefinite employment agreements and trip contracts is also possible. A number of privileges will be given to shipbuilding and repair enterprises, which will get the status of residents of industrial special economic zones.
The adoption of this bill, according to its authors, will reduce the pay-back period of a new vessel from the current 20 to 12 years. This will allow Russian ship owners to take investment decisions on placing orders at Russian shipbuilding yards.
By Nadezhda Malysheva, PortNews
    [~DETAIL_TEXT] => 
A River Country
Lately, the Russian Federation and European countries pay more and more attention to inland water transport, because it has several significant advantages in comparison with other transport modes. It is first of all a high level of safety and energy saving, and a low level of air and water pollution. Also, the river fleet provides transportation of mass cargoes, especially mineral and construction materials that have a low cost price, and allows transport of oversized cargoes that can hardly be carried by other transport modes.
The Russian Federation has one of the longest inland waterway systems in the world. Its total length is 101,600 kilometres, there are over 20,000 vessels working there (1,500 ship owners), cargo is handled in 117 river ports. There are 723 hydro-engineering constructions built on the inland waterways, including 108 canal locks and the Krasnoyarsk ship-lift.
The 6,500 km-long United Inland Deep-Water System functions in the European part of Russia. It was created in the 1950s and is based on the Volga. It also unites the Volga – Baltic Sea, the White Sea – Baltic Sea (Belomorsko–Baltiyskiy Kanal, Belomorkanal), and Volga-Don shipping canals and the Moscow canal, which provide transport communication between five seas (the Baltic Sea, the White Sea, the Caspian Sea, the Azov Sea, and the Black Sea). Mainly, the United Inland Deep-Water System has guaranteed 4-metre depths but for some rather long sections. The System has 67 hydroelectric complexes. In the last three years, the number of shipping hydro-engineering constructions with the necessary safety level plummeted by more than 50%. However, Russia plans to bring all the constructions up to standard. In the 2010 navigation, there were over 230,000 locking operations, and over 350,000 units of fleet sailed via the United Inland Deep-Water System. 

Cargo Volume Has Started to Grow
The world economic crisis, the consequences of which shipping companies have to overcome even now, caused a cut in charter rates and delayed company announcements about overcoming the crisis and the “bright” outlook. In 2011, ship owners still have to focus on a qualitative management system and enlarging their share of new markets. According to the Ministry of Transport, the volume of cargo carried via inland waterways amounted to 105 million tons in 2010, a 7% increase in comparison with 2009. The positive trend will continue this year. Information-analytical agency PortNews forecasts that the cargo turnover of Russian river transport may grow by more than 10% in comparison with 2010 navigation, but the pre-crisis level will hardly be reached. The increase in transportation this year is caused by an earlier opening of navigation at some sections of rivers and canal locks, a rise in industrial output, and a better situation on the external market.
About 70% of the freight flow carried by river transport is transported via the United Inland Deep-Water System in the European part of Russian, and 30% – in Siberia and the Far East. Cargoes transported via rivers in Russia are oil products, metal, fertilisers, loam, equipment, sand, timber, ore, salt, construction materials, grain, sulphur, and general cargoes. 
The share of dry cargoes in the total transportation volume is 60-65%. The major part of it is construction materials, metal, coal, and timber.
This year, the most intensive transportation took place in the Volga basin, on the Volga – Baltic Sea waterway, the Moscow canal, in the Ob’, Ob’ – Irtysh, and the White Sea – Onega basins. The share of oil products (fuel oil, diesel oil, and gasoil) in the freight transportation structure is significant.

Barriers
Most cargoes are transported via the waterways of the United Inland Deep-Water System, but limiting sections, where the depth is less than 4 metres, impact negatively the development of navigation. In the last few years, Russia managed to remove one such bottleneck in the United Inland Deep-Water System – the Kochetovsky hydro-electric complex. The second line of this canal lock was launched in 2008.
Shipping companies lose over RUR 2 billion per annum because of the low level of water in the inland waterways in Russia. The lack of guaranteed depths on the waterways caused a 40 centimetre decrease in the permissible draft on average in 2011. “Each 10 centimetres of draft is about 200 tons of cargo on the ship,” says Mr Klyavin, President of the ASC. In his opinion, if only infrastructure problems at inland waterways are solved, the volume of cargo transportation will grow by 5-7 million tons per annum. Otherwise, the non-transported cargo is carried by railway or road haulage. 
“This means additional 175,000 wagons, i.e. a 2,500 km-long train, the greenhouse gas emissions of which will be twice as large in comparison with those of river vessels. Or this volume can be transported by 700 lorries, then the greenhouse gas emissions will be ten-fold larger than those made by water transport,” explains the President of the ASC.  
The decrease in the loading of a vessel causes the increase in the pay-back period of the fleet. This puts the shipbuilding development in Russia under threat. That is why the 4-metre depth of inland waterways is important for the growth of transportation volume as well as for giving a real impulse to the Russian river shipbuilding sector. 
Nowadays, there are barriers for shipping at several parts of the United Inland Deep-Water System. The major problem section is 40 kilometre-long waterway in the Nizhegorodskaya Oblast from Gorodets to Nizhny Novgorod, where the depth is about 2.5 metres. That is why cargo vessels have either to be underloaded, or to get cargo reloaded on other ships (to pause). Sometimes, owners of passenger cruise fleet have to go to extremes at this section – they transport tourists in buses, if it takes too much time to wait for water from the Gorkov water storage basin. 
The problem of river shipping on the Volga near Gorodets town is to be solved by 2015 by means of increasing the water level in the Cheboksary water storage basin (located in the Nizhegorodskaya Oblast) by 5 metres.
Another limiting section is the canal lock of the Nizhnesvirsky hydroelectric complex on the Volga – Baltic Sea waterway. It was built in 1933, and its size is half that of other canal locks, which were constructed on the waterway later. Nowadays, at this section the decrease in the carrying capacity of the waterway amounts to 70%, because vessels have to idle about 3 days waiting for their turn to pass the canal lock. In the framework of the federal target programme “Development of Russian Transport System in 2010-2015”, money is given to construct the second line of the Nizhnesvirsky canal lock.  
One more limiting section lies in the lower reaches of the Volga. It is the Sarayevsky water complex. Due to the active long-term processes of re-forming the riverbed, this section is the most complicated for shipping on the Volga. There the depth of the navigable pass falls to 3.6 metres, and its width  to 100 metres, thus, only one-way vessel traffic is possible there. This negatively impacts the navigation safety and economic efficiency of the fleet. The RF Government plans to solve this issue before 2015.

New Fleet of Russia Is Ordered
The largest river shipping companies react fast to even a small revival of the market in freight transportation via the inland waterways and are starting serious programmes of fleet renewal.
The largest shipbuilding programme belongs to Universal Cargo Logistics Holding (UCL Holding) that incorporates a number of stevedoring assets, two shipbuilding plants, the North-Western Shipping Company, the Volga Shipping Company, the Western Shipping Company, Volga-Flot Tanker, and Vodohod shipping company. 
In the last two years, UCL Holding placed orders on construction of 55 vessels (23 oil tankers and 32 dry cargo vessels), which are to be delivered in 2011-2015. Most of the orders were placed on Russian shipbuilding yards – Okskaya Sudoverf (Shipyard Oka), Krasnoye Sormovo, the Neva Shipbuilding and Repair Plant, Lotos shipbuilding yard. By now, the customer has received 16 vessels, which are already included into the fleet of the shipping companies of the holding. Also, the existing passenger cruise fleet is being upgraded and re-equipped. Moscow River Shipping Company started a new programme of river-sea tankers construction in 2010. 
The first three vessels are to be built by Shipyard of Brothers Nobel (Rybinsk town in Yaroslavskaya Oblast). Also, the shipping company concluded a contract with Lotos shipbuilding yard on construction of two similar tankers. Moreover, Passenger Port (Stolichnaya Shipping Company trade mark, incorporated into the Moscow River Shipping Company) had the first two passenger leisure boats of “Stolichny” series built by the Moscow Shipbuilding and Repair Plant in 2011. One of them was used on the Moscow river last summer. This series will be continued. The cruise fleet of the shipping company is to be renewed either. In 2011, one river motor-ship transporting foreign tourists on the Moscow – St Petersburg line was upgraded. The company’s second upgraded river motor-ship will be put into operation in the 2012 navigation.
Tanker shipping companies Palmali, Volgotrans, and Navigator also have shipbuilding programmes. It is worth noting that the launch of the shipbuilding programmes is based to a significant degree on the positive expectations of the ship owners that Russian legislation will be changed and improved. 

The Key Bill
By the end of October 2011, both chambers of the Russian State Duma approved the most important sectoral bill on support for Russian shipbuilding and navigation and then the document has been signed by the President of the Russian Federation and have received the status of a federal law. It took the RF Transport Ministry and the Ministry of Industry and Trade more than a year to develop the bill. The United Shipbuilding Corporation and representatives of the largest Russian shipping companies also took part in the bill’s development.
The bill is aimed at development of legal mechanisms providing the creation of economic prerequisites to attract vessels under the Russian Federation flag and to stimulate Russian ship owners to renew their fleet and place orders on new vessels construction on Russian shipbuilding yards.  
Privileges envisaged by the bill will be given to ship owners whose vessels are registered in the Russian International Vessel Register (RIVR). More privileges will be given to ship owners whose vessels were built by Russian shipbuilding yards after January 1, 2010 and registered in the Russian International Vessel Register. Registration in the RIVR is possible for sea, river, and river-sea vessels. When making coastal-trade trips, such vessels are remitted from profit tax payment. The bill implements limitation on the initial registration in the RIVR for vessels the age of which is more than 15 years, which are now registered in foreign Vessel Registers, and for ships older than 15 years providing only coastal-trade transportation.
The document fixes the norm on the zero rate (for 15 years) of insurance payments made by ship owners for the crews of their vessels with the compensation of these payments from the budget of the Russian Federation (the Pension Fund, the Social Insurance Fund, the Federal Fund of the Obligatory Medical Insurance). This measure will allow Russian shipping companies to compete with foreign vessel owners in the sector of crew recruitment. The new bill envisages that the ship owner and the crew may conclude fixed term employment agreement but upon mutual agreement of the parties. The conclusion of indefinite employment agreements and trip contracts is also possible. A number of privileges will be given to shipbuilding and repair enterprises, which will get the status of residents of industrial special economic zones.
The adoption of this bill, according to its authors, will reduce the pay-back period of a new vessel from the current 20 to 12 years. This will allow Russian ship owners to take investment decisions on placing orders at Russian shipbuilding yards.
By Nadezhda Malysheva, PortNews
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A River Country
Lately, the Russian Federation and European countries pay more and more attention to inland water transport, because it has several significant advantages in comparison with other transport modes. It is first of all a high level of safety and energy saving, and a low level of air and water pollution. Also, the river fleet provides transportation of mass cargoes, especially mineral and construction materials that have a low cost price, and allows transport of oversized cargoes that can hardly be carried by other transport modes.
The Russian Federation has one of the longest inland waterway systems in the world. Its total length is 101,600 kilometres, there are over 20,000 vessels working there (1,500 ship owners), cargo is handled in 117 river ports. There are 723 hydro-engineering constructions built on the inland waterways, including 108 canal locks and the Krasnoyarsk ship-lift.
The 6,500 km-long United Inland Deep-Water System functions in the European part of Russia. It was created in the 1950s and is based on the Volga. It also unites the Volga – Baltic Sea, the White Sea – Baltic Sea (Belomorsko–Baltiyskiy Kanal, Belomorkanal), and Volga-Don shipping canals and the Moscow canal, which provide transport communication between five seas (the Baltic Sea, the White Sea, the Caspian Sea, the Azov Sea, and the Black Sea). Mainly, the United Inland Deep-Water System has guaranteed 4-metre depths but for some rather long sections. The System has 67 hydroelectric complexes. In the last three years, the number of shipping hydro-engineering constructions with the necessary safety level plummeted by more than 50%. However, Russia plans to bring all the constructions up to standard. In the 2010 navigation, there were over 230,000 locking operations, and over 350,000 units of fleet sailed via the United Inland Deep-Water System. 

Cargo Volume Has Started to Grow
The world economic crisis, the consequences of which shipping companies have to overcome even now, caused a cut in charter rates and delayed company announcements about overcoming the crisis and the “bright” outlook. In 2011, ship owners still have to focus on a qualitative management system and enlarging their share of new markets. According to the Ministry of Transport, the volume of cargo carried via inland waterways amounted to 105 million tons in 2010, a 7% increase in comparison with 2009. The positive trend will continue this year. Information-analytical agency PortNews forecasts that the cargo turnover of Russian river transport may grow by more than 10% in comparison with 2010 navigation, but the pre-crisis level will hardly be reached. The increase in transportation this year is caused by an earlier opening of navigation at some sections of rivers and canal locks, a rise in industrial output, and a better situation on the external market.
About 70% of the freight flow carried by river transport is transported via the United Inland Deep-Water System in the European part of Russian, and 30% – in Siberia and the Far East. Cargoes transported via rivers in Russia are oil products, metal, fertilisers, loam, equipment, sand, timber, ore, salt, construction materials, grain, sulphur, and general cargoes. 
The share of dry cargoes in the total transportation volume is 60-65%. The major part of it is construction materials, metal, coal, and timber.
This year, the most intensive transportation took place in the Volga basin, on the Volga – Baltic Sea waterway, the Moscow canal, in the Ob’, Ob’ – Irtysh, and the White Sea – Onega basins. The share of oil products (fuel oil, diesel oil, and gasoil) in the freight transportation structure is significant.

Barriers
Most cargoes are transported via the waterways of the United Inland Deep-Water System, but limiting sections, where the depth is less than 4 metres, impact negatively the development of navigation. In the last few years, Russia managed to remove one such bottleneck in the United Inland Deep-Water System – the Kochetovsky hydro-electric complex. The second line of this canal lock was launched in 2008.
Shipping companies lose over RUR 2 billion per annum because of the low level of water in the inland waterways in Russia. The lack of guaranteed depths on the waterways caused a 40 centimetre decrease in the permissible draft on average in 2011. “Each 10 centimetres of draft is about 200 tons of cargo on the ship,” says Mr Klyavin, President of the ASC. In his opinion, if only infrastructure problems at inland waterways are solved, the volume of cargo transportation will grow by 5-7 million tons per annum. Otherwise, the non-transported cargo is carried by railway or road haulage. 
“This means additional 175,000 wagons, i.e. a 2,500 km-long train, the greenhouse gas emissions of which will be twice as large in comparison with those of river vessels. Or this volume can be transported by 700 lorries, then the greenhouse gas emissions will be ten-fold larger than those made by water transport,” explains the President of the ASC.  
The decrease in the loading of a vessel causes the increase in the pay-back period of the fleet. This puts the shipbuilding development in Russia under threat. That is why the 4-metre depth of inland waterways is important for the growth of transportation volume as well as for giving a real impulse to the Russian river shipbuilding sector. 
Nowadays, there are barriers for shipping at several parts of the United Inland Deep-Water System. The major problem section is 40 kilometre-long waterway in the Nizhegorodskaya Oblast from Gorodets to Nizhny Novgorod, where the depth is about 2.5 metres. That is why cargo vessels have either to be underloaded, or to get cargo reloaded on other ships (to pause). Sometimes, owners of passenger cruise fleet have to go to extremes at this section – they transport tourists in buses, if it takes too much time to wait for water from the Gorkov water storage basin. 
The problem of river shipping on the Volga near Gorodets town is to be solved by 2015 by means of increasing the water level in the Cheboksary water storage basin (located in the Nizhegorodskaya Oblast) by 5 metres.
Another limiting section is the canal lock of the Nizhnesvirsky hydroelectric complex on the Volga – Baltic Sea waterway. It was built in 1933, and its size is half that of other canal locks, which were constructed on the waterway later. Nowadays, at this section the decrease in the carrying capacity of the waterway amounts to 70%, because vessels have to idle about 3 days waiting for their turn to pass the canal lock. In the framework of the federal target programme “Development of Russian Transport System in 2010-2015”, money is given to construct the second line of the Nizhnesvirsky canal lock.  
One more limiting section lies in the lower reaches of the Volga. It is the Sarayevsky water complex. Due to the active long-term processes of re-forming the riverbed, this section is the most complicated for shipping on the Volga. There the depth of the navigable pass falls to 3.6 metres, and its width  to 100 metres, thus, only one-way vessel traffic is possible there. This negatively impacts the navigation safety and economic efficiency of the fleet. The RF Government plans to solve this issue before 2015.

New Fleet of Russia Is Ordered
The largest river shipping companies react fast to even a small revival of the market in freight transportation via the inland waterways and are starting serious programmes of fleet renewal.
The largest shipbuilding programme belongs to Universal Cargo Logistics Holding (UCL Holding) that incorporates a number of stevedoring assets, two shipbuilding plants, the North-Western Shipping Company, the Volga Shipping Company, the Western Shipping Company, Volga-Flot Tanker, and Vodohod shipping company. 
In the last two years, UCL Holding placed orders on construction of 55 vessels (23 oil tankers and 32 dry cargo vessels), which are to be delivered in 2011-2015. Most of the orders were placed on Russian shipbuilding yards – Okskaya Sudoverf (Shipyard Oka), Krasnoye Sormovo, the Neva Shipbuilding and Repair Plant, Lotos shipbuilding yard. By now, the customer has received 16 vessels, which are already included into the fleet of the shipping companies of the holding. Also, the existing passenger cruise fleet is being upgraded and re-equipped. Moscow River Shipping Company started a new programme of river-sea tankers construction in 2010. 
The first three vessels are to be built by Shipyard of Brothers Nobel (Rybinsk town in Yaroslavskaya Oblast). Also, the shipping company concluded a contract with Lotos shipbuilding yard on construction of two similar tankers. Moreover, Passenger Port (Stolichnaya Shipping Company trade mark, incorporated into the Moscow River Shipping Company) had the first two passenger leisure boats of “Stolichny” series built by the Moscow Shipbuilding and Repair Plant in 2011. One of them was used on the Moscow river last summer. This series will be continued. The cruise fleet of the shipping company is to be renewed either. In 2011, one river motor-ship transporting foreign tourists on the Moscow – St Petersburg line was upgraded. The company’s second upgraded river motor-ship will be put into operation in the 2012 navigation.
Tanker shipping companies Palmali, Volgotrans, and Navigator also have shipbuilding programmes. It is worth noting that the launch of the shipbuilding programmes is based to a significant degree on the positive expectations of the ship owners that Russian legislation will be changed and improved. 

The Key Bill
By the end of October 2011, both chambers of the Russian State Duma approved the most important sectoral bill on support for Russian shipbuilding and navigation and then the document has been signed by the President of the Russian Federation and have received the status of a federal law. It took the RF Transport Ministry and the Ministry of Industry and Trade more than a year to develop the bill. The United Shipbuilding Corporation and representatives of the largest Russian shipping companies also took part in the bill’s development.
The bill is aimed at development of legal mechanisms providing the creation of economic prerequisites to attract vessels under the Russian Federation flag and to stimulate Russian ship owners to renew their fleet and place orders on new vessels construction on Russian shipbuilding yards.  
Privileges envisaged by the bill will be given to ship owners whose vessels are registered in the Russian International Vessel Register (RIVR). More privileges will be given to ship owners whose vessels were built by Russian shipbuilding yards after January 1, 2010 and registered in the Russian International Vessel Register. Registration in the RIVR is possible for sea, river, and river-sea vessels. When making coastal-trade trips, such vessels are remitted from profit tax payment. The bill implements limitation on the initial registration in the RIVR for vessels the age of which is more than 15 years, which are now registered in foreign Vessel Registers, and for ships older than 15 years providing only coastal-trade transportation.
The document fixes the norm on the zero rate (for 15 years) of insurance payments made by ship owners for the crews of their vessels with the compensation of these payments from the budget of the Russian Federation (the Pension Fund, the Social Insurance Fund, the Federal Fund of the Obligatory Medical Insurance). This measure will allow Russian shipping companies to compete with foreign vessel owners in the sector of crew recruitment. The new bill envisages that the ship owner and the crew may conclude fixed term employment agreement but upon mutual agreement of the parties. The conclusion of indefinite employment agreements and trip contracts is also possible. A number of privileges will be given to shipbuilding and repair enterprises, which will get the status of residents of industrial special economic zones.
The adoption of this bill, according to its authors, will reduce the pay-back period of a new vessel from the current 20 to 12 years. This will allow Russian ship owners to take investment decisions on placing orders at Russian shipbuilding yards.
By Nadezhda Malysheva, PortNews
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A River Country
Lately, the Russian Federation and European countries pay more and more attention to inland water transport, because it has several significant advantages in comparison with other transport modes. It is first of all a high level of safety and energy saving, and a low level of air and water pollution. Also, the river fleet provides transportation of mass cargoes, especially mineral and construction materials that have a low cost price, and allows transport of oversized cargoes that can hardly be carried by other transport modes.
The Russian Federation has one of the longest inland waterway systems in the world. Its total length is 101,600 kilometres, there are over 20,000 vessels working there (1,500 ship owners), cargo is handled in 117 river ports. There are 723 hydro-engineering constructions built on the inland waterways, including 108 canal locks and the Krasnoyarsk ship-lift.
The 6,500 km-long United Inland Deep-Water System functions in the European part of Russia. It was created in the 1950s and is based on the Volga. It also unites the Volga – Baltic Sea, the White Sea – Baltic Sea (Belomorsko–Baltiyskiy Kanal, Belomorkanal), and Volga-Don shipping canals and the Moscow canal, which provide transport communication between five seas (the Baltic Sea, the White Sea, the Caspian Sea, the Azov Sea, and the Black Sea). Mainly, the United Inland Deep-Water System has guaranteed 4-metre depths but for some rather long sections. The System has 67 hydroelectric complexes. In the last three years, the number of shipping hydro-engineering constructions with the necessary safety level plummeted by more than 50%. However, Russia plans to bring all the constructions up to standard. In the 2010 navigation, there were over 230,000 locking operations, and over 350,000 units of fleet sailed via the United Inland Deep-Water System. 

Cargo Volume Has Started to Grow
The world economic crisis, the consequences of which shipping companies have to overcome even now, caused a cut in charter rates and delayed company announcements about overcoming the crisis and the “bright” outlook. In 2011, ship owners still have to focus on a qualitative management system and enlarging their share of new markets. According to the Ministry of Transport, the volume of cargo carried via inland waterways amounted to 105 million tons in 2010, a 7% increase in comparison with 2009. The positive trend will continue this year. Information-analytical agency PortNews forecasts that the cargo turnover of Russian river transport may grow by more than 10% in comparison with 2010 navigation, but the pre-crisis level will hardly be reached. The increase in transportation this year is caused by an earlier opening of navigation at some sections of rivers and canal locks, a rise in industrial output, and a better situation on the external market.
About 70% of the freight flow carried by river transport is transported via the United Inland Deep-Water System in the European part of Russian, and 30% – in Siberia and the Far East. Cargoes transported via rivers in Russia are oil products, metal, fertilisers, loam, equipment, sand, timber, ore, salt, construction materials, grain, sulphur, and general cargoes. 
The share of dry cargoes in the total transportation volume is 60-65%. The major part of it is construction materials, metal, coal, and timber.
This year, the most intensive transportation took place in the Volga basin, on the Volga – Baltic Sea waterway, the Moscow canal, in the Ob’, Ob’ – Irtysh, and the White Sea – Onega basins. The share of oil products (fuel oil, diesel oil, and gasoil) in the freight transportation structure is significant.

Barriers
Most cargoes are transported via the waterways of the United Inland Deep-Water System, but limiting sections, where the depth is less than 4 metres, impact negatively the development of navigation. In the last few years, Russia managed to remove one such bottleneck in the United Inland Deep-Water System – the Kochetovsky hydro-electric complex. The second line of this canal lock was launched in 2008.
Shipping companies lose over RUR 2 billion per annum because of the low level of water in the inland waterways in Russia. The lack of guaranteed depths on the waterways caused a 40 centimetre decrease in the permissible draft on average in 2011. “Each 10 centimetres of draft is about 200 tons of cargo on the ship,” says Mr Klyavin, President of the ASC. In his opinion, if only infrastructure problems at inland waterways are solved, the volume of cargo transportation will grow by 5-7 million tons per annum. Otherwise, the non-transported cargo is carried by railway or road haulage. 
“This means additional 175,000 wagons, i.e. a 2,500 km-long train, the greenhouse gas emissions of which will be twice as large in comparison with those of river vessels. Or this volume can be transported by 700 lorries, then the greenhouse gas emissions will be ten-fold larger than those made by water transport,” explains the President of the ASC.  
The decrease in the loading of a vessel causes the increase in the pay-back period of the fleet. This puts the shipbuilding development in Russia under threat. That is why the 4-metre depth of inland waterways is important for the growth of transportation volume as well as for giving a real impulse to the Russian river shipbuilding sector. 
Nowadays, there are barriers for shipping at several parts of the United Inland Deep-Water System. The major problem section is 40 kilometre-long waterway in the Nizhegorodskaya Oblast from Gorodets to Nizhny Novgorod, where the depth is about 2.5 metres. That is why cargo vessels have either to be underloaded, or to get cargo reloaded on other ships (to pause). Sometimes, owners of passenger cruise fleet have to go to extremes at this section – they transport tourists in buses, if it takes too much time to wait for water from the Gorkov water storage basin. 
The problem of river shipping on the Volga near Gorodets town is to be solved by 2015 by means of increasing the water level in the Cheboksary water storage basin (located in the Nizhegorodskaya Oblast) by 5 metres.
Another limiting section is the canal lock of the Nizhnesvirsky hydroelectric complex on the Volga – Baltic Sea waterway. It was built in 1933, and its size is half that of other canal locks, which were constructed on the waterway later. Nowadays, at this section the decrease in the carrying capacity of the waterway amounts to 70%, because vessels have to idle about 3 days waiting for their turn to pass the canal lock. In the framework of the federal target programme “Development of Russian Transport System in 2010-2015”, money is given to construct the second line of the Nizhnesvirsky canal lock.  
One more limiting section lies in the lower reaches of the Volga. It is the Sarayevsky water complex. Due to the active long-term processes of re-forming the riverbed, this section is the most complicated for shipping on the Volga. There the depth of the navigable pass falls to 3.6 metres, and its width  to 100 metres, thus, only one-way vessel traffic is possible there. This negatively impacts the navigation safety and economic efficiency of the fleet. The RF Government plans to solve this issue before 2015.

New Fleet of Russia Is Ordered
The largest river shipping companies react fast to even a small revival of the market in freight transportation via the inland waterways and are starting serious programmes of fleet renewal.
The largest shipbuilding programme belongs to Universal Cargo Logistics Holding (UCL Holding) that incorporates a number of stevedoring assets, two shipbuilding plants, the North-Western Shipping Company, the Volga Shipping Company, the Western Shipping Company, Volga-Flot Tanker, and Vodohod shipping company. 
In the last two years, UCL Holding placed orders on construction of 55 vessels (23 oil tankers and 32 dry cargo vessels), which are to be delivered in 2011-2015. Most of the orders were placed on Russian shipbuilding yards – Okskaya Sudoverf (Shipyard Oka), Krasnoye Sormovo, the Neva Shipbuilding and Repair Plant, Lotos shipbuilding yard. By now, the customer has received 16 vessels, which are already included into the fleet of the shipping companies of the holding. Also, the existing passenger cruise fleet is being upgraded and re-equipped. Moscow River Shipping Company started a new programme of river-sea tankers construction in 2010. 
The first three vessels are to be built by Shipyard of Brothers Nobel (Rybinsk town in Yaroslavskaya Oblast). Also, the shipping company concluded a contract with Lotos shipbuilding yard on construction of two similar tankers. Moreover, Passenger Port (Stolichnaya Shipping Company trade mark, incorporated into the Moscow River Shipping Company) had the first two passenger leisure boats of “Stolichny” series built by the Moscow Shipbuilding and Repair Plant in 2011. One of them was used on the Moscow river last summer. This series will be continued. The cruise fleet of the shipping company is to be renewed either. In 2011, one river motor-ship transporting foreign tourists on the Moscow – St Petersburg line was upgraded. The company’s second upgraded river motor-ship will be put into operation in the 2012 navigation.
Tanker shipping companies Palmali, Volgotrans, and Navigator also have shipbuilding programmes. It is worth noting that the launch of the shipbuilding programmes is based to a significant degree on the positive expectations of the ship owners that Russian legislation will be changed and improved. 

The Key Bill
By the end of October 2011, both chambers of the Russian State Duma approved the most important sectoral bill on support for Russian shipbuilding and navigation and then the document has been signed by the President of the Russian Federation and have received the status of a federal law. It took the RF Transport Ministry and the Ministry of Industry and Trade more than a year to develop the bill. The United Shipbuilding Corporation and representatives of the largest Russian shipping companies also took part in the bill’s development.
The bill is aimed at development of legal mechanisms providing the creation of economic prerequisites to attract vessels under the Russian Federation flag and to stimulate Russian ship owners to renew their fleet and place orders on new vessels construction on Russian shipbuilding yards.  
Privileges envisaged by the bill will be given to ship owners whose vessels are registered in the Russian International Vessel Register (RIVR). More privileges will be given to ship owners whose vessels were built by Russian shipbuilding yards after January 1, 2010 and registered in the Russian International Vessel Register. Registration in the RIVR is possible for sea, river, and river-sea vessels. When making coastal-trade trips, such vessels are remitted from profit tax payment. The bill implements limitation on the initial registration in the RIVR for vessels the age of which is more than 15 years, which are now registered in foreign Vessel Registers, and for ships older than 15 years providing only coastal-trade transportation.
The document fixes the norm on the zero rate (for 15 years) of insurance payments made by ship owners for the crews of their vessels with the compensation of these payments from the budget of the Russian Federation (the Pension Fund, the Social Insurance Fund, the Federal Fund of the Obligatory Medical Insurance). This measure will allow Russian shipping companies to compete with foreign vessel owners in the sector of crew recruitment. The new bill envisages that the ship owner and the crew may conclude fixed term employment agreement but upon mutual agreement of the parties. The conclusion of indefinite employment agreements and trip contracts is also possible. A number of privileges will be given to shipbuilding and repair enterprises, which will get the status of residents of industrial special economic zones.
The adoption of this bill, according to its authors, will reduce the pay-back period of a new vessel from the current 20 to 12 years. This will allow Russian ship owners to take investment decisions on placing orders at Russian shipbuilding yards.
By Nadezhda Malysheva, PortNews
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The first sea hub in the North-West to be launched 
Andrey Lavrischev, the President of Rosmorport, notes that the optimistic scenario implies innovative development and introduction of new logistics services and facilities. Serik Zhusupov, Chief Executive Director of the Russian Sea Commercial Ports Association believes this prognosis is quite realistic, so do many independent experts. The Union of Russian Shipowners note that the demand for sea transportation almost recovered after the economic crisis. Rail operator’s forecasts in this area are also optimistic. Institute of Economics and Transportation Development forecast that by 2030 rail traffic flows to the sea terminals would see 3.3-fold rise (compared with 2010 figures) in the North-West regions, 3-fold – in the South Russia and 3.8 times in the Far East. Maximal growth rate is expected in the container traffic industry. 
For the optimistic scenario to come true it is enough that announced investment programs would be implemented. Rosmorport authorities explained that federal government is ready to support construction and upgrading of 18 large facilities (including berths, cargo terminals and ports). Let’s review the main of them. 
In the Nort-West there are two key areas: sea ports of St Petersburg and Ust-Luga. The first one is being renovated in order to diversify cargo flows. Bulk and raw goods are meant to be replaced with value-added and eco-friendly products. Container transportation development is one of the key trends. Petrolesport has established up-to-date container handling equipment, as well as the First Container Terminal. International sea operator Maersk in cooperation with Petrolesport launched direct container services linking St Petersburg to the ports of South America. Federal government had funded dredging operations that made it possible to handle Panamax-class vessels in Petrolesport. Previously, such hauls were carried out by means of feeder rotation. The Head of St Petersburg Sea Port administration Petr Barinov explained that they had to transfer goods from America to Europe by Panamax carriers, then reload them at one of the European hubs, and only after that deliver by smaller vessels to St Petersburg. The new depths made direct transportation possible and gave St Petersburg a competitive edge as an international transport hub. 
Petrolesport became the second-biggest stevedoring company in the Port of St Petersburg by containerized cargo volume. Its handling capacity exceeds 1 million TEU per year and is expected to approach 2.3 million TEU in the nearest future. The Petersburg Fuel Company (PFC) and Petrolesport achieved substantial increase in turnover after in 2010 they started to form shipload lots in the dry (inland) ports. From these sites containers are transported to the berths by rail without preliminary classifying of cars (block train technology). Containers are loaded in the right order to be delivered to the sea carriers. 
At present five block train services link two port railway stations (Avtovo and New Port) to tree stations in the cargo terminals (Zanevsky post with warehouses of Yanino Logistic park, Shushary with Voskhod and Logistica terminal dry ports and Predportovaya station with facilities of the company Modul). 15 block trains a month run on the Sushary –
New Port route and 13 trains between Shushary and Avtovo. According to Octyabrskaya Railroad administration statistics for the first nine months of 2011, an average of 46 trains a month run on all these routes, this is two times more than in 2010. 
In two years’ time a third large container facility in St Petersburg will start operations –
the port complex of Bronka. It’s designed to handle large vessels with draft up to 13.4 meters. The new port is located behind the dam of the anti-flood complex of the city. It’ll be expanded with a logistic center, including dry port infrastructure. Alexey Shukletsov, an Executive Director of the Phoenix Company (investor of the project) claimed that the terminal’s designed capacity would reach 1.9 million TEU per year. The first phase of the port is to be commissioned in 2013. By summer 2011 over RUR 3 billion have been invested in the project, hydraulic levee for future berths is constructed. 

Arctic ports waiting for coal
In the North priority projects are the ports of Arkhangelsk and Murmansk. Mining and smelting company Norilsky Nickel is leading the largest ones. Director of the regional transport branch of the company Alexey Tukavin announced that Norilsky Nickel was constructing a terminal of 1.5 million tonnes capacity (general and container cargo) in Murmansk. Work is to be completed by the end of 2013, investments amounting to RUR 3 billion. 
In Arkhangelsk several woodworking companies (Solombalsky woodworking plant, Lesozavod-2, Lesozavod-3 and Lesozavod-25) recently acquired berths in the city port. In 2011 they handled about 85% of all timber cargo in the port, most of it being exported. 
The Murmansk Sea Commercial Port in its expansion will follow the development of the rail trunk. Cargo turnover growth in the eastern coast of Kola Bay is limited by the road’s capacity, the western coast areas are still undeveloped but remain promising. 
The Murmansk transport hub development scheme sees establishing facilities to handle annually 15 million tonnes of coal (project by Kuzbassrazrezugol and Transservice), 25 million tonnes of oil products (Synthesis Corporation) and a container terminal for 3 million TEU. Total throughput of the hub by 2020 may reach 85-90 million tonnes, half of the volume is coal. To implement these plans the Murmansk transport hub management company was established, its shareholders are the Murmansk Sea Commercial port (40% of shares), the RZD (25%), Rosneft oil company (15%), Rosmorport State Unitary Enterprise (15%) and the Government of Murmansk region (5%). The management company has to construct a rail branch between Murmashi-2 and Lavna rail stations, its cost estimated at $256 million. The berths need to be constructed anew. The project is impossible without governmental support. The stevedoring companies believe that plans to renew cargo transit via Northern Sea Route could step up this work. Experts estimate that it’s possible to enhance cargo transit on this route from below 2 million tonnes to 5-6 million tonnes in several years. 

The South is ready for large scale fleet
In the South there are two key ports of the Black Sea basin: Novorossiysk and Taman in the Krasnodarsky region. Taman is supposed to become the second largest port in the region with turnover up to 35 million tonnes per year. It would accept large-capacity carriers with deadweight up to 100,000 tonnes. In perspective the port would be equipped with coal and container terminals, grain and mineral fertilizers complexes. Dry cargo site of the port is being designed to handle 66 million tonnes a year. According to the estimation of Novorossiysk Sea Commercial Port Executive Director Alexander Khalezin, the project would cost the government about RUR 120-150 billion, as hydraulic engineering works require large-scale funding. Authorities from the Federal Sea and River Transport Agency believe that RUR 50 billion of budget investments would be enough.
In the port of Novorossiysk improvements of the existing infrastructure could boost its current capacities 1.5-2 times. 
As for the Azov Sea, the key area here is the port Ola where in 2011 the First cargo area was launched. It comprises an auto-ferry complex for general cargoes, container terminal and berths. Its throughput is to be expanded to 4.5 million tonnes per year. At present the Second cargo area is being organized. Upon work completion total capacity of the three port complexes (dry cargo, ferry and oil-loading) would reach 30 million tonnes per year. The third phase of the project implies construction of the logistics centre to facilitate oversea trade with Iran and India. Overall investments are estimated at USD 5 billion.
A range of local objects is projected in the ports of Temruk and Kavkaz, and a new deep-water port in Tuapse. As a result, the South region is supposed to become the second-largest in the country by the sea ports turnover by 2030. It’s forecast to handle up to 95% of all bulk cargoes, 66% of ro-ro and 41% of general cargoes in the country.

Far East: getting specialized 
In the Far East the main investments are directed to the transport hub Vostochny – Nakhodka (Primorsky region). Federal government is going to fund upgrading of the port, customs and other transport infrastructure, while private companies are supposed to invest into handling and storage facilities, like container, grain and coal terminals. The concept of Vostochny – Nakhodka transport hub sees extension of the Transsib rail trunk and development of the motor ways on the Primorje-1 international transport corridor. By 2030 the hub is meant to handle 128 million tonnes. 
Several terminals in other ports are being projected: a coal facility in Vanino, a second phase of Kozmino Sea Port. Mechel-Trans plan to introduce new capacities to enhance Posiet Commercial Port throughput to 7 million tonnes in 2012. The berths of the port are to be dredged to accept 70,000-tonne vessels. Ports of Kholmsk (Sakhalin region) and Petropavlovsk-Kamchatsky (Kamchatka) also consider expansion. 
The common trend in the region is specialization and diversification of the dry cargo port facilities. Vladivostok Maritime Commercial Port in the last few years concentrates on container transportation. Its Director Vyacheslav Pertsev explained that since 2011 the port started handling containers on all its berths and redesigned several terminals for this purpose. 
If all modernization and construction programs announced in the region are completed, by 2030 the volumes of containerized export and import cargoes via Far Eastern ports would increase 3.8 times. Limited capacities of the railroads in the region remain the main risk factor for the investors. Still, this year Far East is the third region in Russia by the volume of private investments into port infrastructure (after North-West and South).
By Andrey Lazarev
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The first sea hub in the North-West to be launched 
Andrey Lavrischev, the President of Rosmorport, notes that the optimistic scenario implies innovative development and introduction of new logistics services and facilities. Serik Zhusupov, Chief Executive Director of the Russian Sea Commercial Ports Association believes this prognosis is quite realistic, so do many independent experts. The Union of Russian Shipowners note that the demand for sea transportation almost recovered after the economic crisis. Rail operator’s forecasts in this area are also optimistic. Institute of Economics and Transportation Development forecast that by 2030 rail traffic flows to the sea terminals would see 3.3-fold rise (compared with 2010 figures) in the North-West regions, 3-fold – in the South Russia and 3.8 times in the Far East. Maximal growth rate is expected in the container traffic industry. 
For the optimistic scenario to come true it is enough that announced investment programs would be implemented. Rosmorport authorities explained that federal government is ready to support construction and upgrading of 18 large facilities (including berths, cargo terminals and ports). Let’s review the main of them. 
In the Nort-West there are two key areas: sea ports of St Petersburg and Ust-Luga. The first one is being renovated in order to diversify cargo flows. Bulk and raw goods are meant to be replaced with value-added and eco-friendly products. Container transportation development is one of the key trends. Petrolesport has established up-to-date container handling equipment, as well as the First Container Terminal. International sea operator Maersk in cooperation with Petrolesport launched direct container services linking St Petersburg to the ports of South America. Federal government had funded dredging operations that made it possible to handle Panamax-class vessels in Petrolesport. Previously, such hauls were carried out by means of feeder rotation. The Head of St Petersburg Sea Port administration Petr Barinov explained that they had to transfer goods from America to Europe by Panamax carriers, then reload them at one of the European hubs, and only after that deliver by smaller vessels to St Petersburg. The new depths made direct transportation possible and gave St Petersburg a competitive edge as an international transport hub. 
Petrolesport became the second-biggest stevedoring company in the Port of St Petersburg by containerized cargo volume. Its handling capacity exceeds 1 million TEU per year and is expected to approach 2.3 million TEU in the nearest future. The Petersburg Fuel Company (PFC) and Petrolesport achieved substantial increase in turnover after in 2010 they started to form shipload lots in the dry (inland) ports. From these sites containers are transported to the berths by rail without preliminary classifying of cars (block train technology). Containers are loaded in the right order to be delivered to the sea carriers. 
At present five block train services link two port railway stations (Avtovo and New Port) to tree stations in the cargo terminals (Zanevsky post with warehouses of Yanino Logistic park, Shushary with Voskhod and Logistica terminal dry ports and Predportovaya station with facilities of the company Modul). 15 block trains a month run on the Sushary –
New Port route and 13 trains between Shushary and Avtovo. According to Octyabrskaya Railroad administration statistics for the first nine months of 2011, an average of 46 trains a month run on all these routes, this is two times more than in 2010. 
In two years’ time a third large container facility in St Petersburg will start operations –
the port complex of Bronka. It’s designed to handle large vessels with draft up to 13.4 meters. The new port is located behind the dam of the anti-flood complex of the city. It’ll be expanded with a logistic center, including dry port infrastructure. Alexey Shukletsov, an Executive Director of the Phoenix Company (investor of the project) claimed that the terminal’s designed capacity would reach 1.9 million TEU per year. The first phase of the port is to be commissioned in 2013. By summer 2011 over RUR 3 billion have been invested in the project, hydraulic levee for future berths is constructed. 

Arctic ports waiting for coal
In the North priority projects are the ports of Arkhangelsk and Murmansk. Mining and smelting company Norilsky Nickel is leading the largest ones. Director of the regional transport branch of the company Alexey Tukavin announced that Norilsky Nickel was constructing a terminal of 1.5 million tonnes capacity (general and container cargo) in Murmansk. Work is to be completed by the end of 2013, investments amounting to RUR 3 billion. 
In Arkhangelsk several woodworking companies (Solombalsky woodworking plant, Lesozavod-2, Lesozavod-3 and Lesozavod-25) recently acquired berths in the city port. In 2011 they handled about 85% of all timber cargo in the port, most of it being exported. 
The Murmansk Sea Commercial Port in its expansion will follow the development of the rail trunk. Cargo turnover growth in the eastern coast of Kola Bay is limited by the road’s capacity, the western coast areas are still undeveloped but remain promising. 
The Murmansk transport hub development scheme sees establishing facilities to handle annually 15 million tonnes of coal (project by Kuzbassrazrezugol and Transservice), 25 million tonnes of oil products (Synthesis Corporation) and a container terminal for 3 million TEU. Total throughput of the hub by 2020 may reach 85-90 million tonnes, half of the volume is coal. To implement these plans the Murmansk transport hub management company was established, its shareholders are the Murmansk Sea Commercial port (40% of shares), the RZD (25%), Rosneft oil company (15%), Rosmorport State Unitary Enterprise (15%) and the Government of Murmansk region (5%). The management company has to construct a rail branch between Murmashi-2 and Lavna rail stations, its cost estimated at $256 million. The berths need to be constructed anew. The project is impossible without governmental support. The stevedoring companies believe that plans to renew cargo transit via Northern Sea Route could step up this work. Experts estimate that it’s possible to enhance cargo transit on this route from below 2 million tonnes to 5-6 million tonnes in several years. 

The South is ready for large scale fleet
In the South there are two key ports of the Black Sea basin: Novorossiysk and Taman in the Krasnodarsky region. Taman is supposed to become the second largest port in the region with turnover up to 35 million tonnes per year. It would accept large-capacity carriers with deadweight up to 100,000 tonnes. In perspective the port would be equipped with coal and container terminals, grain and mineral fertilizers complexes. Dry cargo site of the port is being designed to handle 66 million tonnes a year. According to the estimation of Novorossiysk Sea Commercial Port Executive Director Alexander Khalezin, the project would cost the government about RUR 120-150 billion, as hydraulic engineering works require large-scale funding. Authorities from the Federal Sea and River Transport Agency believe that RUR 50 billion of budget investments would be enough.
In the port of Novorossiysk improvements of the existing infrastructure could boost its current capacities 1.5-2 times. 
As for the Azov Sea, the key area here is the port Ola where in 2011 the First cargo area was launched. It comprises an auto-ferry complex for general cargoes, container terminal and berths. Its throughput is to be expanded to 4.5 million tonnes per year. At present the Second cargo area is being organized. Upon work completion total capacity of the three port complexes (dry cargo, ferry and oil-loading) would reach 30 million tonnes per year. The third phase of the project implies construction of the logistics centre to facilitate oversea trade with Iran and India. Overall investments are estimated at USD 5 billion.
A range of local objects is projected in the ports of Temruk and Kavkaz, and a new deep-water port in Tuapse. As a result, the South region is supposed to become the second-largest in the country by the sea ports turnover by 2030. It’s forecast to handle up to 95% of all bulk cargoes, 66% of ro-ro and 41% of general cargoes in the country.

Far East: getting specialized 
In the Far East the main investments are directed to the transport hub Vostochny – Nakhodka (Primorsky region). Federal government is going to fund upgrading of the port, customs and other transport infrastructure, while private companies are supposed to invest into handling and storage facilities, like container, grain and coal terminals. The concept of Vostochny – Nakhodka transport hub sees extension of the Transsib rail trunk and development of the motor ways on the Primorje-1 international transport corridor. By 2030 the hub is meant to handle 128 million tonnes. 
Several terminals in other ports are being projected: a coal facility in Vanino, a second phase of Kozmino Sea Port. Mechel-Trans plan to introduce new capacities to enhance Posiet Commercial Port throughput to 7 million tonnes in 2012. The berths of the port are to be dredged to accept 70,000-tonne vessels. Ports of Kholmsk (Sakhalin region) and Petropavlovsk-Kamchatsky (Kamchatka) also consider expansion. 
The common trend in the region is specialization and diversification of the dry cargo port facilities. Vladivostok Maritime Commercial Port in the last few years concentrates on container transportation. Its Director Vyacheslav Pertsev explained that since 2011 the port started handling containers on all its berths and redesigned several terminals for this purpose. 
If all modernization and construction programs announced in the region are completed, by 2030 the volumes of containerized export and import cargoes via Far Eastern ports would increase 3.8 times. Limited capacities of the railroads in the region remain the main risk factor for the investors. Still, this year Far East is the third region in Russia by the volume of private investments into port infrastructure (after North-West and South).
By Andrey Lazarev
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The first sea hub in the North-West to be launched 
Andrey Lavrischev, the President of Rosmorport, notes that the optimistic scenario implies innovative development and introduction of new logistics services and facilities. Serik Zhusupov, Chief Executive Director of the Russian Sea Commercial Ports Association believes this prognosis is quite realistic, so do many independent experts. The Union of Russian Shipowners note that the demand for sea transportation almost recovered after the economic crisis. Rail operator’s forecasts in this area are also optimistic. Institute of Economics and Transportation Development forecast that by 2030 rail traffic flows to the sea terminals would see 3.3-fold rise (compared with 2010 figures) in the North-West regions, 3-fold – in the South Russia and 3.8 times in the Far East. Maximal growth rate is expected in the container traffic industry. 
For the optimistic scenario to come true it is enough that announced investment programs would be implemented. Rosmorport authorities explained that federal government is ready to support construction and upgrading of 18 large facilities (including berths, cargo terminals and ports). Let’s review the main of them. 
In the Nort-West there are two key areas: sea ports of St Petersburg and Ust-Luga. The first one is being renovated in order to diversify cargo flows. Bulk and raw goods are meant to be replaced with value-added and eco-friendly products. Container transportation development is one of the key trends. Petrolesport has established up-to-date container handling equipment, as well as the First Container Terminal. International sea operator Maersk in cooperation with Petrolesport launched direct container services linking St Petersburg to the ports of South America. Federal government had funded dredging operations that made it possible to handle Panamax-class vessels in Petrolesport. Previously, such hauls were carried out by means of feeder rotation. The Head of St Petersburg Sea Port administration Petr Barinov explained that they had to transfer goods from America to Europe by Panamax carriers, then reload them at one of the European hubs, and only after that deliver by smaller vessels to St Petersburg. The new depths made direct transportation possible and gave St Petersburg a competitive edge as an international transport hub. 
Petrolesport became the second-biggest stevedoring company in the Port of St Petersburg by containerized cargo volume. Its handling capacity exceeds 1 million TEU per year and is expected to approach 2.3 million TEU in the nearest future. The Petersburg Fuel Company (PFC) and Petrolesport achieved substantial increase in turnover after in 2010 they started to form shipload lots in the dry (inland) ports. From these sites containers are transported to the berths by rail without preliminary classifying of cars (block train technology). Containers are loaded in the right order to be delivered to the sea carriers. 
At present five block train services link two port railway stations (Avtovo and New Port) to tree stations in the cargo terminals (Zanevsky post with warehouses of Yanino Logistic park, Shushary with Voskhod and Logistica terminal dry ports and Predportovaya station with facilities of the company Modul). 15 block trains a month run on the Sushary –
New Port route and 13 trains between Shushary and Avtovo. According to Octyabrskaya Railroad administration statistics for the first nine months of 2011, an average of 46 trains a month run on all these routes, this is two times more than in 2010. 
In two years’ time a third large container facility in St Petersburg will start operations –
the port complex of Bronka. It’s designed to handle large vessels with draft up to 13.4 meters. The new port is located behind the dam of the anti-flood complex of the city. It’ll be expanded with a logistic center, including dry port infrastructure. Alexey Shukletsov, an Executive Director of the Phoenix Company (investor of the project) claimed that the terminal’s designed capacity would reach 1.9 million TEU per year. The first phase of the port is to be commissioned in 2013. By summer 2011 over RUR 3 billion have been invested in the project, hydraulic levee for future berths is constructed. 

Arctic ports waiting for coal
In the North priority projects are the ports of Arkhangelsk and Murmansk. Mining and smelting company Norilsky Nickel is leading the largest ones. Director of the regional transport branch of the company Alexey Tukavin announced that Norilsky Nickel was constructing a terminal of 1.5 million tonnes capacity (general and container cargo) in Murmansk. Work is to be completed by the end of 2013, investments amounting to RUR 3 billion. 
In Arkhangelsk several woodworking companies (Solombalsky woodworking plant, Lesozavod-2, Lesozavod-3 and Lesozavod-25) recently acquired berths in the city port. In 2011 they handled about 85% of all timber cargo in the port, most of it being exported. 
The Murmansk Sea Commercial Port in its expansion will follow the development of the rail trunk. Cargo turnover growth in the eastern coast of Kola Bay is limited by the road’s capacity, the western coast areas are still undeveloped but remain promising. 
The Murmansk transport hub development scheme sees establishing facilities to handle annually 15 million tonnes of coal (project by Kuzbassrazrezugol and Transservice), 25 million tonnes of oil products (Synthesis Corporation) and a container terminal for 3 million TEU. Total throughput of the hub by 2020 may reach 85-90 million tonnes, half of the volume is coal. To implement these plans the Murmansk transport hub management company was established, its shareholders are the Murmansk Sea Commercial port (40% of shares), the RZD (25%), Rosneft oil company (15%), Rosmorport State Unitary Enterprise (15%) and the Government of Murmansk region (5%). The management company has to construct a rail branch between Murmashi-2 and Lavna rail stations, its cost estimated at $256 million. The berths need to be constructed anew. The project is impossible without governmental support. The stevedoring companies believe that plans to renew cargo transit via Northern Sea Route could step up this work. Experts estimate that it’s possible to enhance cargo transit on this route from below 2 million tonnes to 5-6 million tonnes in several years. 

The South is ready for large scale fleet
In the South there are two key ports of the Black Sea basin: Novorossiysk and Taman in the Krasnodarsky region. Taman is supposed to become the second largest port in the region with turnover up to 35 million tonnes per year. It would accept large-capacity carriers with deadweight up to 100,000 tonnes. In perspective the port would be equipped with coal and container terminals, grain and mineral fertilizers complexes. Dry cargo site of the port is being designed to handle 66 million tonnes a year. According to the estimation of Novorossiysk Sea Commercial Port Executive Director Alexander Khalezin, the project would cost the government about RUR 120-150 billion, as hydraulic engineering works require large-scale funding. Authorities from the Federal Sea and River Transport Agency believe that RUR 50 billion of budget investments would be enough.
In the port of Novorossiysk improvements of the existing infrastructure could boost its current capacities 1.5-2 times. 
As for the Azov Sea, the key area here is the port Ola where in 2011 the First cargo area was launched. It comprises an auto-ferry complex for general cargoes, container terminal and berths. Its throughput is to be expanded to 4.5 million tonnes per year. At present the Second cargo area is being organized. Upon work completion total capacity of the three port complexes (dry cargo, ferry and oil-loading) would reach 30 million tonnes per year. The third phase of the project implies construction of the logistics centre to facilitate oversea trade with Iran and India. Overall investments are estimated at USD 5 billion.
A range of local objects is projected in the ports of Temruk and Kavkaz, and a new deep-water port in Tuapse. As a result, the South region is supposed to become the second-largest in the country by the sea ports turnover by 2030. It’s forecast to handle up to 95% of all bulk cargoes, 66% of ro-ro and 41% of general cargoes in the country.

Far East: getting specialized 
In the Far East the main investments are directed to the transport hub Vostochny – Nakhodka (Primorsky region). Federal government is going to fund upgrading of the port, customs and other transport infrastructure, while private companies are supposed to invest into handling and storage facilities, like container, grain and coal terminals. The concept of Vostochny – Nakhodka transport hub sees extension of the Transsib rail trunk and development of the motor ways on the Primorje-1 international transport corridor. By 2030 the hub is meant to handle 128 million tonnes. 
Several terminals in other ports are being projected: a coal facility in Vanino, a second phase of Kozmino Sea Port. Mechel-Trans plan to introduce new capacities to enhance Posiet Commercial Port throughput to 7 million tonnes in 2012. The berths of the port are to be dredged to accept 70,000-tonne vessels. Ports of Kholmsk (Sakhalin region) and Petropavlovsk-Kamchatsky (Kamchatka) also consider expansion. 
The common trend in the region is specialization and diversification of the dry cargo port facilities. Vladivostok Maritime Commercial Port in the last few years concentrates on container transportation. Its Director Vyacheslav Pertsev explained that since 2011 the port started handling containers on all its berths and redesigned several terminals for this purpose. 
If all modernization and construction programs announced in the region are completed, by 2030 the volumes of containerized export and import cargoes via Far Eastern ports would increase 3.8 times. Limited capacities of the railroads in the region remain the main risk factor for the investors. Still, this year Far East is the third region in Russia by the volume of private investments into port infrastructure (after North-West and South).
By Andrey Lazarev
    [~DETAIL_TEXT] => 
The first sea hub in the North-West to be launched 
Andrey Lavrischev, the President of Rosmorport, notes that the optimistic scenario implies innovative development and introduction of new logistics services and facilities. Serik Zhusupov, Chief Executive Director of the Russian Sea Commercial Ports Association believes this prognosis is quite realistic, so do many independent experts. The Union of Russian Shipowners note that the demand for sea transportation almost recovered after the economic crisis. Rail operator’s forecasts in this area are also optimistic. Institute of Economics and Transportation Development forecast that by 2030 rail traffic flows to the sea terminals would see 3.3-fold rise (compared with 2010 figures) in the North-West regions, 3-fold – in the South Russia and 3.8 times in the Far East. Maximal growth rate is expected in the container traffic industry. 
For the optimistic scenario to come true it is enough that announced investment programs would be implemented. Rosmorport authorities explained that federal government is ready to support construction and upgrading of 18 large facilities (including berths, cargo terminals and ports). Let’s review the main of them. 
In the Nort-West there are two key areas: sea ports of St Petersburg and Ust-Luga. The first one is being renovated in order to diversify cargo flows. Bulk and raw goods are meant to be replaced with value-added and eco-friendly products. Container transportation development is one of the key trends. Petrolesport has established up-to-date container handling equipment, as well as the First Container Terminal. International sea operator Maersk in cooperation with Petrolesport launched direct container services linking St Petersburg to the ports of South America. Federal government had funded dredging operations that made it possible to handle Panamax-class vessels in Petrolesport. Previously, such hauls were carried out by means of feeder rotation. The Head of St Petersburg Sea Port administration Petr Barinov explained that they had to transfer goods from America to Europe by Panamax carriers, then reload them at one of the European hubs, and only after that deliver by smaller vessels to St Petersburg. The new depths made direct transportation possible and gave St Petersburg a competitive edge as an international transport hub. 
Petrolesport became the second-biggest stevedoring company in the Port of St Petersburg by containerized cargo volume. Its handling capacity exceeds 1 million TEU per year and is expected to approach 2.3 million TEU in the nearest future. The Petersburg Fuel Company (PFC) and Petrolesport achieved substantial increase in turnover after in 2010 they started to form shipload lots in the dry (inland) ports. From these sites containers are transported to the berths by rail without preliminary classifying of cars (block train technology). Containers are loaded in the right order to be delivered to the sea carriers. 
At present five block train services link two port railway stations (Avtovo and New Port) to tree stations in the cargo terminals (Zanevsky post with warehouses of Yanino Logistic park, Shushary with Voskhod and Logistica terminal dry ports and Predportovaya station with facilities of the company Modul). 15 block trains a month run on the Sushary –
New Port route and 13 trains between Shushary and Avtovo. According to Octyabrskaya Railroad administration statistics for the first nine months of 2011, an average of 46 trains a month run on all these routes, this is two times more than in 2010. 
In two years’ time a third large container facility in St Petersburg will start operations –
the port complex of Bronka. It’s designed to handle large vessels with draft up to 13.4 meters. The new port is located behind the dam of the anti-flood complex of the city. It’ll be expanded with a logistic center, including dry port infrastructure. Alexey Shukletsov, an Executive Director of the Phoenix Company (investor of the project) claimed that the terminal’s designed capacity would reach 1.9 million TEU per year. The first phase of the port is to be commissioned in 2013. By summer 2011 over RUR 3 billion have been invested in the project, hydraulic levee for future berths is constructed. 

Arctic ports waiting for coal
In the North priority projects are the ports of Arkhangelsk and Murmansk. Mining and smelting company Norilsky Nickel is leading the largest ones. Director of the regional transport branch of the company Alexey Tukavin announced that Norilsky Nickel was constructing a terminal of 1.5 million tonnes capacity (general and container cargo) in Murmansk. Work is to be completed by the end of 2013, investments amounting to RUR 3 billion. 
In Arkhangelsk several woodworking companies (Solombalsky woodworking plant, Lesozavod-2, Lesozavod-3 and Lesozavod-25) recently acquired berths in the city port. In 2011 they handled about 85% of all timber cargo in the port, most of it being exported. 
The Murmansk Sea Commercial Port in its expansion will follow the development of the rail trunk. Cargo turnover growth in the eastern coast of Kola Bay is limited by the road’s capacity, the western coast areas are still undeveloped but remain promising. 
The Murmansk transport hub development scheme sees establishing facilities to handle annually 15 million tonnes of coal (project by Kuzbassrazrezugol and Transservice), 25 million tonnes of oil products (Synthesis Corporation) and a container terminal for 3 million TEU. Total throughput of the hub by 2020 may reach 85-90 million tonnes, half of the volume is coal. To implement these plans the Murmansk transport hub management company was established, its shareholders are the Murmansk Sea Commercial port (40% of shares), the RZD (25%), Rosneft oil company (15%), Rosmorport State Unitary Enterprise (15%) and the Government of Murmansk region (5%). The management company has to construct a rail branch between Murmashi-2 and Lavna rail stations, its cost estimated at $256 million. The berths need to be constructed anew. The project is impossible without governmental support. The stevedoring companies believe that plans to renew cargo transit via Northern Sea Route could step up this work. Experts estimate that it’s possible to enhance cargo transit on this route from below 2 million tonnes to 5-6 million tonnes in several years. 

The South is ready for large scale fleet
In the South there are two key ports of the Black Sea basin: Novorossiysk and Taman in the Krasnodarsky region. Taman is supposed to become the second largest port in the region with turnover up to 35 million tonnes per year. It would accept large-capacity carriers with deadweight up to 100,000 tonnes. In perspective the port would be equipped with coal and container terminals, grain and mineral fertilizers complexes. Dry cargo site of the port is being designed to handle 66 million tonnes a year. According to the estimation of Novorossiysk Sea Commercial Port Executive Director Alexander Khalezin, the project would cost the government about RUR 120-150 billion, as hydraulic engineering works require large-scale funding. Authorities from the Federal Sea and River Transport Agency believe that RUR 50 billion of budget investments would be enough.
In the port of Novorossiysk improvements of the existing infrastructure could boost its current capacities 1.5-2 times. 
As for the Azov Sea, the key area here is the port Ola where in 2011 the First cargo area was launched. It comprises an auto-ferry complex for general cargoes, container terminal and berths. Its throughput is to be expanded to 4.5 million tonnes per year. At present the Second cargo area is being organized. Upon work completion total capacity of the three port complexes (dry cargo, ferry and oil-loading) would reach 30 million tonnes per year. The third phase of the project implies construction of the logistics centre to facilitate oversea trade with Iran and India. Overall investments are estimated at USD 5 billion.
A range of local objects is projected in the ports of Temruk and Kavkaz, and a new deep-water port in Tuapse. As a result, the South region is supposed to become the second-largest in the country by the sea ports turnover by 2030. It’s forecast to handle up to 95% of all bulk cargoes, 66% of ro-ro and 41% of general cargoes in the country.

Far East: getting specialized 
In the Far East the main investments are directed to the transport hub Vostochny – Nakhodka (Primorsky region). Federal government is going to fund upgrading of the port, customs and other transport infrastructure, while private companies are supposed to invest into handling and storage facilities, like container, grain and coal terminals. The concept of Vostochny – Nakhodka transport hub sees extension of the Transsib rail trunk and development of the motor ways on the Primorje-1 international transport corridor. By 2030 the hub is meant to handle 128 million tonnes. 
Several terminals in other ports are being projected: a coal facility in Vanino, a second phase of Kozmino Sea Port. Mechel-Trans plan to introduce new capacities to enhance Posiet Commercial Port throughput to 7 million tonnes in 2012. The berths of the port are to be dredged to accept 70,000-tonne vessels. Ports of Kholmsk (Sakhalin region) and Petropavlovsk-Kamchatsky (Kamchatka) also consider expansion. 
The common trend in the region is specialization and diversification of the dry cargo port facilities. Vladivostok Maritime Commercial Port in the last few years concentrates on container transportation. Its Director Vyacheslav Pertsev explained that since 2011 the port started handling containers on all its berths and redesigned several terminals for this purpose. 
If all modernization and construction programs announced in the region are completed, by 2030 the volumes of containerized export and import cargoes via Far Eastern ports would increase 3.8 times. Limited capacities of the railroads in the region remain the main risk factor for the investors. Still, this year Far East is the third region in Russia by the volume of private investments into port infrastructure (after North-West and South).
By Andrey Lazarev
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            [ELEMENT_META_TITLE] => Russia will build 18 new sea ports until 2030
            [ELEMENT_META_KEYWORDS] => russia will build 18 new sea ports until 2030
            [ELEMENT_META_DESCRIPTION] => The updated strategy for Russian sea ports development outlines three scenarios of industry growth up to 2030. In line with the conservative scenario, cargo capacities of Russian ports are to reach 800 million tonnes. According to the optimistic version, it will be 1.3-1.6 billion tonnes. Such a growth rate requires at least 18 new terminals to be commissioned.
            [SECTION_PICTURE_FILE_ALT] => Russia will build 18 new sea ports until 2030
            [SECTION_PICTURE_FILE_TITLE] => Russia will build 18 new sea ports until 2030
            [SECTION_DETAIL_PICTURE_FILE_ALT] => Russia will build 18 new sea ports until 2030
            [SECTION_DETAIL_PICTURE_FILE_TITLE] => Russia will build 18 new sea ports until 2030
            [ELEMENT_PREVIEW_PICTURE_FILE_ALT] => Russia will build 18 new sea ports until 2030
            [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => Russia will build 18 new sea ports until 2030
            [ELEMENT_DETAIL_PICTURE_FILE_ALT] => Russia will build 18 new sea ports until 2030
            [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => Russia will build 18 new sea ports until 2030
        )

)