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Participants:
Moderator: Alexander Retyunin,
The RZD-Partner magazine,
Editor-in-Chief 
Irina Roman, 
OOO Transcare, CEO 
Pavel Korsunsky,
OOO Rewico-Transport.ru (Fiege),
Deputy Director
Alexander Zyuzin,
OOO Partner Logistics, Expert 

Moderator:
– Our discussion focuses on the problem «Russian and foreign logistics companies: competitors or partners on  Russia’s market?» In this respect my question is, do foreign companies take the same or different niches on the national market? Should we consider non-local companies as something special? 

I. Roman:
– If we’re talking about the proportion the Russian and foreign players have, I’d like to say that the situation on the market is crucially changing. Still 6-7 years ago with a forming market, it was foreign companies that were active. 

They had famous brands, could offer a full range of services. Russians were not so active, but now they are. They are gradually gaining market shares, especially with strong presence in the regions. 

A. Zyuzin: 
– I agree that shares of local and foreign operators are becoming even. Earlier, the newly coming foreigners were bringing in their own views of how to provide services, their own standards of quality i.e. the things that Russians often didn’t have. But the newcomers let the local ones to get some training and improve the quality of services provided. Today one of the main problems of the Russian companies is thier unability to accomplish all legal procedures. 

Moderator: 
– Mr.Zyuzin, do you feel that the presence of foreign companies makes the market more competitive? Are you competitors?

A. Zyuzin: 
–Of course, we can see competition, but at the same time we try to be partners in the course of our business development. Time for an open fight has gone, and when we’re talking about quality, we should froget competition and take to partnership. 

P. Korsunsky:
– I agree with Alexander. Russian providers dominated in the country, and now there are more of them than those of foreign ones. However, one should be aimed at quality, and quality is a complicated question. For foreign clients it’s very important to accomplish all the local procedures, to pay all taxes. So they’ll go to providers with a famous name, history. 

Moderator: 
– Does the fact that you perform on behalf of the foreign companies  influence your business here, in Russia? Is the famous brand helpful? 

P. Korsunsky:
– As we’re approaching the civilized market, brand is one of the strongest factors. Thus, there is no sense to advertise high quality of services provided by our company since everybody realizes what sort of company it is. Thus, our barnd is very helpful. Fiege is more than one hundred years old, and it has acquired highly respected reputation. We have just brought in here what we do abroad including quality, safety and so on. 

I. Roman:
– For some customers the fact that we’re are German company is advantegeous. German logistic practice uses a systemic approach and is aimed at good quality. But there is a group of clients who say: «Since you’re Germans, you follow the rules that are accepted in Germany. We want you to take into account Russia’s reality as well». So, the attitude is different. I think we manage to combine both approaches effectively.

Moderator: 
– Following the problem, how could you evaluate advantages and disadantages of a foreign logistics provider working in Russia considering the national mentality? 

I. Roman:
– Western companies are bringing in proved technologies and quality standards. That’s their advantage that guarantees them significant success. These companies know how to implement logistics projects. Russian providers who don’t have such experience and technologies are acquring them gradually or by hiring experienced employees. By now, I would like to stress the fact that this disbalance has disappeared. Maybe my counterparts don’t agree with me, but I think that quality of services of domestic and foreign companies are similar. 

A. Zyuzin: 
– Foreigners have better tuned technologies, mainly owing to its experience. In Russia logistics is a rather young sort of business. However, we should understand that all Western technologies can be applied in our country. For successful use of foreign business methods, one needs some adaptation to local conditions. Today we see that domestic and Western operators hold rather even positions, despite the experience of the newcomers. The ability of local companies to learn enabled them to keep up with competitors from abroad. 

Moderator: 
–Thus, you believe Russian business has certain peculiarities. Would you please give examples? 

A. Zyuzin: 
– There is a lot of specific features. Many companies position themselves as 3PL, though they’re far behind even 2PL. As well as there are companies that tool modern technologies and, having adopted them to local features, perform a high level of service. 

P. Korsunsky:
– It’s not an easy question, there are many positive and negative aspects. No doubts, the significant advantage of foreign providers are technologies proved by time, as well as the brand. The major  problem is that the Germans do not always understand Russian legislative.  

Moderator: 
– So, what advice can you give to foreign logistics companies planning to enter the Russian market? 

I. Roman:
– We faced difficulties at a local administrative level when registering land. Registration process can take two-three years during which a project loses its attractiveness. Often problems come from the field of customs procedures that frequently change. The company cannot understand why customs office didn’t warn it beforehand that this or that governmental body typically giving certificates had lost its authorities. It takes too much time to solve customs-related problems.
Another problem with customs is a process of choosing customs terminal. Sometimes it’s necessary to transport goods to regions directly, but it’s difficult to find a terminal at which it would be possible to have clearance accomplished duly. So we have to transport goods via Moscow and St. Petersburg, otherwise you’ll spend a year for establishing fast and effective supply chains. 

Moderator: 
– Logistics is undeveloped in Russia, but the market is considered it as rather prospective business direction. What segments will be developing? What segments are the most interesting for foreign operators? 

I. Roman:
– Over the last two-three years we have seen a boost in the segment of net projects, when a company builds objects in a few cities. The warehousing square is enhancing. Two-three years ago we were talking about objects of 20 thousand square meters, today the square of each one may be five times more. Such warehouses are being built not only in Moscow, but also in St. Petersburg and Yekaterinburg. 

A. Zyuzin: 
– The rapidly developing segments are IT consulting, foreign trade activities,, customs clearance, transportation, and warehousing. More and more companies understand that it’s necessary to provide complex wide- ranged services. . The leading place is taken by outsourcing, because big traders are forced to delegate their logistics to professional providers.

Moderator: 
– We’ve come to conclusion that cooperation is inevitable. What forms can it take for foreign and Russian companies inter-relations?  

P. Korsunsky:
– Outsourcing makes us to cooperate with the Russian companies in this or that way. We have not captured regional markets yet compared to regional players. In this respect our contribution is modern technologies while  transportation is that of a Russian provider. A customer doesn’t care which way the service is delivered to them, the most important thing here is that a service is provided safely, on-time and in a not very expensive way.
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Participants:
Moderator: Alexander Retyunin,
The RZD-Partner magazine,
Editor-in-Chief 
Irina Roman, 
OOO Transcare, CEO 
Pavel Korsunsky,
OOO Rewico-Transport.ru (Fiege),
Deputy Director
Alexander Zyuzin,
OOO Partner Logistics, Expert 

Moderator:
– Our discussion focuses on the problem «Russian and foreign logistics companies: competitors or partners on  Russia’s market?» In this respect my question is, do foreign companies take the same or different niches on the national market? Should we consider non-local companies as something special? 

I. Roman:
– If we’re talking about the proportion the Russian and foreign players have, I’d like to say that the situation on the market is crucially changing. Still 6-7 years ago with a forming market, it was foreign companies that were active. 

They had famous brands, could offer a full range of services. Russians were not so active, but now they are. They are gradually gaining market shares, especially with strong presence in the regions. 

A. Zyuzin: 
– I agree that shares of local and foreign operators are becoming even. Earlier, the newly coming foreigners were bringing in their own views of how to provide services, their own standards of quality i.e. the things that Russians often didn’t have. But the newcomers let the local ones to get some training and improve the quality of services provided. Today one of the main problems of the Russian companies is thier unability to accomplish all legal procedures. 

Moderator: 
– Mr.Zyuzin, do you feel that the presence of foreign companies makes the market more competitive? Are you competitors?

A. Zyuzin: 
–Of course, we can see competition, but at the same time we try to be partners in the course of our business development. Time for an open fight has gone, and when we’re talking about quality, we should froget competition and take to partnership. 

P. Korsunsky:
– I agree with Alexander. Russian providers dominated in the country, and now there are more of them than those of foreign ones. However, one should be aimed at quality, and quality is a complicated question. For foreign clients it’s very important to accomplish all the local procedures, to pay all taxes. So they’ll go to providers with a famous name, history. 

Moderator: 
– Does the fact that you perform on behalf of the foreign companies  influence your business here, in Russia? Is the famous brand helpful? 

P. Korsunsky:
– As we’re approaching the civilized market, brand is one of the strongest factors. Thus, there is no sense to advertise high quality of services provided by our company since everybody realizes what sort of company it is. Thus, our barnd is very helpful. Fiege is more than one hundred years old, and it has acquired highly respected reputation. We have just brought in here what we do abroad including quality, safety and so on. 

I. Roman:
– For some customers the fact that we’re are German company is advantegeous. German logistic practice uses a systemic approach and is aimed at good quality. But there is a group of clients who say: «Since you’re Germans, you follow the rules that are accepted in Germany. We want you to take into account Russia’s reality as well». So, the attitude is different. I think we manage to combine both approaches effectively.

Moderator: 
– Following the problem, how could you evaluate advantages and disadantages of a foreign logistics provider working in Russia considering the national mentality? 

I. Roman:
– Western companies are bringing in proved technologies and quality standards. That’s their advantage that guarantees them significant success. These companies know how to implement logistics projects. Russian providers who don’t have such experience and technologies are acquring them gradually or by hiring experienced employees. By now, I would like to stress the fact that this disbalance has disappeared. Maybe my counterparts don’t agree with me, but I think that quality of services of domestic and foreign companies are similar. 

A. Zyuzin: 
– Foreigners have better tuned technologies, mainly owing to its experience. In Russia logistics is a rather young sort of business. However, we should understand that all Western technologies can be applied in our country. For successful use of foreign business methods, one needs some adaptation to local conditions. Today we see that domestic and Western operators hold rather even positions, despite the experience of the newcomers. The ability of local companies to learn enabled them to keep up with competitors from abroad. 

Moderator: 
–Thus, you believe Russian business has certain peculiarities. Would you please give examples? 

A. Zyuzin: 
– There is a lot of specific features. Many companies position themselves as 3PL, though they’re far behind even 2PL. As well as there are companies that tool modern technologies and, having adopted them to local features, perform a high level of service. 

P. Korsunsky:
– It’s not an easy question, there are many positive and negative aspects. No doubts, the significant advantage of foreign providers are technologies proved by time, as well as the brand. The major  problem is that the Germans do not always understand Russian legislative.  

Moderator: 
– So, what advice can you give to foreign logistics companies planning to enter the Russian market? 

I. Roman:
– We faced difficulties at a local administrative level when registering land. Registration process can take two-three years during which a project loses its attractiveness. Often problems come from the field of customs procedures that frequently change. The company cannot understand why customs office didn’t warn it beforehand that this or that governmental body typically giving certificates had lost its authorities. It takes too much time to solve customs-related problems.
Another problem with customs is a process of choosing customs terminal. Sometimes it’s necessary to transport goods to regions directly, but it’s difficult to find a terminal at which it would be possible to have clearance accomplished duly. So we have to transport goods via Moscow and St. Petersburg, otherwise you’ll spend a year for establishing fast and effective supply chains. 

Moderator: 
– Logistics is undeveloped in Russia, but the market is considered it as rather prospective business direction. What segments will be developing? What segments are the most interesting for foreign operators? 

I. Roman:
– Over the last two-three years we have seen a boost in the segment of net projects, when a company builds objects in a few cities. The warehousing square is enhancing. Two-three years ago we were talking about objects of 20 thousand square meters, today the square of each one may be five times more. Such warehouses are being built not only in Moscow, but also in St. Petersburg and Yekaterinburg. 

A. Zyuzin: 
– The rapidly developing segments are IT consulting, foreign trade activities,, customs clearance, transportation, and warehousing. More and more companies understand that it’s necessary to provide complex wide- ranged services. . The leading place is taken by outsourcing, because big traders are forced to delegate their logistics to professional providers.

Moderator: 
– We’ve come to conclusion that cooperation is inevitable. What forms can it take for foreign and Russian companies inter-relations?  

P. Korsunsky:
– Outsourcing makes us to cooperate with the Russian companies in this or that way. We have not captured regional markets yet compared to regional players. In this respect our contribution is modern technologies while  transportation is that of a Russian provider. A customer doesn’t care which way the service is delivered to them, the most important thing here is that a service is provided safely, on-time and in a not very expensive way.
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Moderator: Alexander Retyunin,
The RZD-Partner magazine,
Editor-in-Chief 
Irina Roman, 
OOO Transcare, CEO 
Pavel Korsunsky,
OOO Rewico-Transport.ru (Fiege),
Deputy Director
Alexander Zyuzin,
OOO Partner Logistics, Expert 

Moderator:
– Our discussion focuses on the problem «Russian and foreign logistics companies: competitors or partners on  Russia’s market?» In this respect my question is, do foreign companies take the same or different niches on the national market? Should we consider non-local companies as something special? 

I. Roman:
– If we’re talking about the proportion the Russian and foreign players have, I’d like to say that the situation on the market is crucially changing. Still 6-7 years ago with a forming market, it was foreign companies that were active. 

They had famous brands, could offer a full range of services. Russians were not so active, but now they are. They are gradually gaining market shares, especially with strong presence in the regions. 

A. Zyuzin: 
– I agree that shares of local and foreign operators are becoming even. Earlier, the newly coming foreigners were bringing in their own views of how to provide services, their own standards of quality i.e. the things that Russians often didn’t have. But the newcomers let the local ones to get some training and improve the quality of services provided. Today one of the main problems of the Russian companies is thier unability to accomplish all legal procedures. 

Moderator: 
– Mr.Zyuzin, do you feel that the presence of foreign companies makes the market more competitive? Are you competitors?

A. Zyuzin: 
–Of course, we can see competition, but at the same time we try to be partners in the course of our business development. Time for an open fight has gone, and when we’re talking about quality, we should froget competition and take to partnership. 

P. Korsunsky:
– I agree with Alexander. Russian providers dominated in the country, and now there are more of them than those of foreign ones. However, one should be aimed at quality, and quality is a complicated question. For foreign clients it’s very important to accomplish all the local procedures, to pay all taxes. So they’ll go to providers with a famous name, history. 

Moderator: 
– Does the fact that you perform on behalf of the foreign companies  influence your business here, in Russia? Is the famous brand helpful? 

P. Korsunsky:
– As we’re approaching the civilized market, brand is one of the strongest factors. Thus, there is no sense to advertise high quality of services provided by our company since everybody realizes what sort of company it is. Thus, our barnd is very helpful. Fiege is more than one hundred years old, and it has acquired highly respected reputation. We have just brought in here what we do abroad including quality, safety and so on. 

I. Roman:
– For some customers the fact that we’re are German company is advantegeous. German logistic practice uses a systemic approach and is aimed at good quality. But there is a group of clients who say: «Since you’re Germans, you follow the rules that are accepted in Germany. We want you to take into account Russia’s reality as well». So, the attitude is different. I think we manage to combine both approaches effectively.

Moderator: 
– Following the problem, how could you evaluate advantages and disadantages of a foreign logistics provider working in Russia considering the national mentality? 

I. Roman:
– Western companies are bringing in proved technologies and quality standards. That’s their advantage that guarantees them significant success. These companies know how to implement logistics projects. Russian providers who don’t have such experience and technologies are acquring them gradually or by hiring experienced employees. By now, I would like to stress the fact that this disbalance has disappeared. Maybe my counterparts don’t agree with me, but I think that quality of services of domestic and foreign companies are similar. 

A. Zyuzin: 
– Foreigners have better tuned technologies, mainly owing to its experience. In Russia logistics is a rather young sort of business. However, we should understand that all Western technologies can be applied in our country. For successful use of foreign business methods, one needs some adaptation to local conditions. Today we see that domestic and Western operators hold rather even positions, despite the experience of the newcomers. The ability of local companies to learn enabled them to keep up with competitors from abroad. 

Moderator: 
–Thus, you believe Russian business has certain peculiarities. Would you please give examples? 

A. Zyuzin: 
– There is a lot of specific features. Many companies position themselves as 3PL, though they’re far behind even 2PL. As well as there are companies that tool modern technologies and, having adopted them to local features, perform a high level of service. 

P. Korsunsky:
– It’s not an easy question, there are many positive and negative aspects. No doubts, the significant advantage of foreign providers are technologies proved by time, as well as the brand. The major  problem is that the Germans do not always understand Russian legislative.  

Moderator: 
– So, what advice can you give to foreign logistics companies planning to enter the Russian market? 

I. Roman:
– We faced difficulties at a local administrative level when registering land. Registration process can take two-three years during which a project loses its attractiveness. Often problems come from the field of customs procedures that frequently change. The company cannot understand why customs office didn’t warn it beforehand that this or that governmental body typically giving certificates had lost its authorities. It takes too much time to solve customs-related problems.
Another problem with customs is a process of choosing customs terminal. Sometimes it’s necessary to transport goods to regions directly, but it’s difficult to find a terminal at which it would be possible to have clearance accomplished duly. So we have to transport goods via Moscow and St. Petersburg, otherwise you’ll spend a year for establishing fast and effective supply chains. 

Moderator: 
– Logistics is undeveloped in Russia, but the market is considered it as rather prospective business direction. What segments will be developing? What segments are the most interesting for foreign operators? 

I. Roman:
– Over the last two-three years we have seen a boost in the segment of net projects, when a company builds objects in a few cities. The warehousing square is enhancing. Two-three years ago we were talking about objects of 20 thousand square meters, today the square of each one may be five times more. Such warehouses are being built not only in Moscow, but also in St. Petersburg and Yekaterinburg. 

A. Zyuzin: 
– The rapidly developing segments are IT consulting, foreign trade activities,, customs clearance, transportation, and warehousing. More and more companies understand that it’s necessary to provide complex wide- ranged services. . The leading place is taken by outsourcing, because big traders are forced to delegate their logistics to professional providers.

Moderator: 
– We’ve come to conclusion that cooperation is inevitable. What forms can it take for foreign and Russian companies inter-relations?  

P. Korsunsky:
– Outsourcing makes us to cooperate with the Russian companies in this or that way. We have not captured regional markets yet compared to regional players. In this respect our contribution is modern technologies while  transportation is that of a Russian provider. A customer doesn’t care which way the service is delivered to them, the most important thing here is that a service is provided safely, on-time and in a not very expensive way.
    [~DETAIL_TEXT] => 
Participants:
Moderator: Alexander Retyunin,
The RZD-Partner magazine,
Editor-in-Chief 
Irina Roman, 
OOO Transcare, CEO 
Pavel Korsunsky,
OOO Rewico-Transport.ru (Fiege),
Deputy Director
Alexander Zyuzin,
OOO Partner Logistics, Expert 

Moderator:
– Our discussion focuses on the problem «Russian and foreign logistics companies: competitors or partners on  Russia’s market?» In this respect my question is, do foreign companies take the same or different niches on the national market? Should we consider non-local companies as something special? 

I. Roman:
– If we’re talking about the proportion the Russian and foreign players have, I’d like to say that the situation on the market is crucially changing. Still 6-7 years ago with a forming market, it was foreign companies that were active. 

They had famous brands, could offer a full range of services. Russians were not so active, but now they are. They are gradually gaining market shares, especially with strong presence in the regions. 

A. Zyuzin: 
– I agree that shares of local and foreign operators are becoming even. Earlier, the newly coming foreigners were bringing in their own views of how to provide services, their own standards of quality i.e. the things that Russians often didn’t have. But the newcomers let the local ones to get some training and improve the quality of services provided. Today one of the main problems of the Russian companies is thier unability to accomplish all legal procedures. 

Moderator: 
– Mr.Zyuzin, do you feel that the presence of foreign companies makes the market more competitive? Are you competitors?

A. Zyuzin: 
–Of course, we can see competition, but at the same time we try to be partners in the course of our business development. Time for an open fight has gone, and when we’re talking about quality, we should froget competition and take to partnership. 

P. Korsunsky:
– I agree with Alexander. Russian providers dominated in the country, and now there are more of them than those of foreign ones. However, one should be aimed at quality, and quality is a complicated question. For foreign clients it’s very important to accomplish all the local procedures, to pay all taxes. So they’ll go to providers with a famous name, history. 

Moderator: 
– Does the fact that you perform on behalf of the foreign companies  influence your business here, in Russia? Is the famous brand helpful? 

P. Korsunsky:
– As we’re approaching the civilized market, brand is one of the strongest factors. Thus, there is no sense to advertise high quality of services provided by our company since everybody realizes what sort of company it is. Thus, our barnd is very helpful. Fiege is more than one hundred years old, and it has acquired highly respected reputation. We have just brought in here what we do abroad including quality, safety and so on. 

I. Roman:
– For some customers the fact that we’re are German company is advantegeous. German logistic practice uses a systemic approach and is aimed at good quality. But there is a group of clients who say: «Since you’re Germans, you follow the rules that are accepted in Germany. We want you to take into account Russia’s reality as well». So, the attitude is different. I think we manage to combine both approaches effectively.

Moderator: 
– Following the problem, how could you evaluate advantages and disadantages of a foreign logistics provider working in Russia considering the national mentality? 

I. Roman:
– Western companies are bringing in proved technologies and quality standards. That’s their advantage that guarantees them significant success. These companies know how to implement logistics projects. Russian providers who don’t have such experience and technologies are acquring them gradually or by hiring experienced employees. By now, I would like to stress the fact that this disbalance has disappeared. Maybe my counterparts don’t agree with me, but I think that quality of services of domestic and foreign companies are similar. 

A. Zyuzin: 
– Foreigners have better tuned technologies, mainly owing to its experience. In Russia logistics is a rather young sort of business. However, we should understand that all Western technologies can be applied in our country. For successful use of foreign business methods, one needs some adaptation to local conditions. Today we see that domestic and Western operators hold rather even positions, despite the experience of the newcomers. The ability of local companies to learn enabled them to keep up with competitors from abroad. 

Moderator: 
–Thus, you believe Russian business has certain peculiarities. Would you please give examples? 

A. Zyuzin: 
– There is a lot of specific features. Many companies position themselves as 3PL, though they’re far behind even 2PL. As well as there are companies that tool modern technologies and, having adopted them to local features, perform a high level of service. 

P. Korsunsky:
– It’s not an easy question, there are many positive and negative aspects. No doubts, the significant advantage of foreign providers are technologies proved by time, as well as the brand. The major  problem is that the Germans do not always understand Russian legislative.  

Moderator: 
– So, what advice can you give to foreign logistics companies planning to enter the Russian market? 

I. Roman:
– We faced difficulties at a local administrative level when registering land. Registration process can take two-three years during which a project loses its attractiveness. Often problems come from the field of customs procedures that frequently change. The company cannot understand why customs office didn’t warn it beforehand that this or that governmental body typically giving certificates had lost its authorities. It takes too much time to solve customs-related problems.
Another problem with customs is a process of choosing customs terminal. Sometimes it’s necessary to transport goods to regions directly, but it’s difficult to find a terminal at which it would be possible to have clearance accomplished duly. So we have to transport goods via Moscow and St. Petersburg, otherwise you’ll spend a year for establishing fast and effective supply chains. 

Moderator: 
– Logistics is undeveloped in Russia, but the market is considered it as rather prospective business direction. What segments will be developing? What segments are the most interesting for foreign operators? 

I. Roman:
– Over the last two-three years we have seen a boost in the segment of net projects, when a company builds objects in a few cities. The warehousing square is enhancing. Two-three years ago we were talking about objects of 20 thousand square meters, today the square of each one may be five times more. Such warehouses are being built not only in Moscow, but also in St. Petersburg and Yekaterinburg. 

A. Zyuzin: 
– The rapidly developing segments are IT consulting, foreign trade activities,, customs clearance, transportation, and warehousing. More and more companies understand that it’s necessary to provide complex wide- ranged services. . The leading place is taken by outsourcing, because big traders are forced to delegate their logistics to professional providers.

Moderator: 
– We’ve come to conclusion that cooperation is inevitable. What forms can it take for foreign and Russian companies inter-relations?  

P. Korsunsky:
– Outsourcing makes us to cooperate with the Russian companies in this or that way. We have not captured regional markets yet compared to regional players. In this respect our contribution is modern technologies while  transportation is that of a Russian provider. A customer doesn’t care which way the service is delivered to them, the most important thing here is that a service is provided safely, on-time and in a not very expensive way.
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    [DETAIL_TEXT] => 
– Mr.Shmuksts, what cargoes make up the basis of transit cargo flow following via the Baltic countries nowadays?

– The basic types of cargo transported by railways in the Baltic countries and further on to port terminals are oil and products, coal, mineral fertilizers and timber. However, in future experts foresee a drop of transit volumes due to the fact that currently Russia is constructing its own terminals to handle these types of cargo. This is a stimulus to search for new types of cargo and directions for the Baltic countries transport community. 

– What sectors can become the prospective cargo basis for the region? 

– Considering world tendencies in container transportation development and our experience in this respect, Latvian railway believes container turnover increase is a prospective step to take. Nowadays container transportation via Baltic railways makes an insignificant share in the total volumes of cargo transportation, though a stable growing trend of this share can be easily observed. For the sake of comparison: last year all Latvian ports handled 200 thousand TEU, the port of Klaipeda – 231 thousand TEU and the Estonian port of Tallinn – 152 thousand TEU. This shows that each single port taken separately handles a rather insignificant volume. However, considering results made by all Baltic ports as a whole, they handled over half a million TEU, which makes a serious difference. 

In general, in the world cargo turnover container transportation takes a significant part which is growing permanently. The basic flow of container transportation is transported from North and South Asia towards Europe by sea. Ten years ago about 98% from the aggregate container flow between China and Europe was transported by sea and only 2% by railways, in particular, by the TransSiberian railway. Now the situation hasn’t changed, unfortunately, despite great efforts to switch container flow going from China with the help of specialized block trains.

At the same time, the cargo flow of the Chinese ports is constantly growing and, according to experts, it will reach 5 billion tons in the next five years (actually, the container turnover grows twofold up to 130 mln TEU, and the cargo turnover of such fast growing Chinese ports аs Shanghai, Ninbo, Guanchzhou, Tyantzin, Tsindao and Dalyan will exceed 100 mln tons. Thus, the cargo turnover of the port of Shanghai in 2006 made 500 mln tons and the container turnover reached 21 mln TEU). This shows the fact that ports feel the lack of capacities, which gives us a chance to develop railway container transportation. 

– What are the factors that limit the successful development of the railway sector?

– Competition between railways and sea transportation works in favour of the latter for a number of reasons. First of all, there is an opinion that sea transportation is safer just because all the cargo owner needs is safety. No matter that the cargo is transported longer, the cargo owner feels confident that it will be safe and delivered in time, even if it is not within 10 days but within 40 days. This way he is able to plan his business for these 40 days period. Secondly, speaking of container transportation, the whole complex of services for transportation organization has been developed for sea transport. The client receives the whole range of services while transporting cargo by sea, i.e. insurance, charter, vessel etc. Moreover, sea transport has an opportunity to load bigger cargo volumes. Today we have container vessels capable to load over 8 500 containers. Lastly, railway container transportation has to do with several transportation participants, sometimes more than three sides are involved, and each of them is interested in their own financial reward. 

– In this case, what are the advantages of container transportation via transit corridors?

This is a cargo delivery term. The territory of China up to the Eastern border and access to ports makes 5 thousand kilometers (leaving alone the sea route distance to Western Europe market). The land route makes practically the same distance from Western borders of China to the EU border. That is the reason why regular block trains launch is advantageous and is more favourable for cargo owners. Thus, they can get a shorter delivery period, a regular schedule and, consequently, an opportunity to plan cargo flows, lower tariff rate, cargo safety due to efficient cargo tracking etc. 

One of the positive examples is the containerized train Baltica Transit. This is a joint project of the railway administrations of Latvian, Estonian and Lithuanian railways and TransSiberian Intermodal Service JSC. After four year of functioning this project has demonstrated its efficiency proved by growing financial results. 

Nowadays, Latvian railways is the «managing director» for the project. TransSiberian Intermodal Service JSC, who runs a wide client and agent net, performs as an operator-coordinator of the project. Baltica Transit train is finally formed at Rezekne Latvian station and goes further on to Russia and Kazakhstan according to the schedule. Thus, in May 2003 the first block train was made up of ten rail cars carrying containers. In 2005 over 7 thousand TEU was transported, which is 1.5 - 2 block trains per week. In 2006 about 3-4 trains per week were formed that transported over 10 thousand TEU. In January and February 2007 4-5 trains per week were made up. 

– At present one of the tools to improve efficiency for transport complex enterprise is believed to be logistic centers …

– This is a must for successful development and container transportation improvement. 
Nowadays several powerful container lines are run in the world. This system includes both ports and land routes of cargo transportation. For example, a vessel carrying over 2000 containers from China arrives in the port of Antwerp or Hamburg and after this the cargo is delivered to other ports, Baltic ports included, by smaller vessels to be carried by motor trucks or railways further on to destinations. However, some problems arise. Considering the great number of destinations where containers are to be delivered, they are transported by cargo trains in the ordinary technological mode, i.e. they pass all yards which make delivery period longer, as, speaking of motor transport, there is a risk of long queuing at the border. 

A logistic terminal can regulate these processes, accumulate and sort out container flows arriving both from sea and land. 

In Latvia the work on logistic centers construction is underway:
• In the port of Riga a powerful container terminal construction is planned;
• In the East of Latvia where the railway joint Krustpils is located, early in 2008, the company Central Euro-Asia Gateway plans to construct a logistic center capable to handle up to 200 thousand TEU. This terminal will focus on Chinese cargo handling coming from the Northern region of China where a special economic zone providing more favourable terms for manufacturers has been created. 

However, I’d like to emphasize that, despite all the above mentioned competitive advantages of the Baltic countries’ infrastructure (favourable geographic location, gauge single with the countries of the post-Soviet area, as well as unified technical and juridical norms, and high level of services), certain problems are still unsolved. Trends of the transport market changing regularly, alongside with economic and political factors, create some kind of instability in the transport sector of the Baltic countries. That is why it is quite obvious that cooperation with Eastern countries in attracting cargo flows towards Baltic ports must be developed together with other transportation process participants: China, Kazakhstan, Russia and Baltic countries working out attractive transportation schemes and tariff policy capable to compete with offers made
by sea carriers of Japan, China, South Korea, who now form the structure of international transportation in the North-Eastern Asia, develop cargo routes and set tariff policy. How fast we react to the changing market, how efficiently we use our unique geographic and geopolitical location will define how successfully we can join our efforts and reach the target of attracting additional container flow via the Baltic countries.

Biography
Erik Shmuksts 
Director of Freight Shipment Department of GAO Latvijas Dzelzcels. Born on September 22, 1961. In 1984 graduated from Daugavpils Railway Transport Technical School. In 1985-1986 was Deputy Chief of the Radvilishkis station of the Pribaltiyskaya railway. In 1986-1989 headed the Freight Shipment Department of the Shaulyaisk railway department. In 1989-1990 Head of the Gulbene station at the Pribaltiyskaya railway. At that time he graduated from Leningrad Institute of Railway Transport Engineers. 
In 1990-1993 was the Deputy Head of  Daugavpils station of the Latvian railway.
In 1993-1998 headed Riga railway exploitation sector. Since 1998 has been working as the Director of Freight Shipment Department of GAO Latvijas Dzelzcels.

Our reference
In January-March 2007, Latvijas Dzelzcels (Latvian Railway, LDz) carried 12.124 million tons of cargo, 3.9% down year-on-year. The share of import cargoes was 10.127 million tons (-1.8%), including 8.922 million tons carried via the Latvian ports (-3.6%). The railway transported 1.085 million tons of transit cargoes (-29.7%), 590 thousand tons of export freight (+47.5%) and 322 thousand tons of domestic cargoes. The railway transported 4.215 million tons of oil and products (-17.5%), 3.356 million tons of coal (-11%), and 1.670 million tons of mineral fertilizers (+24.8%). 
In March 2007, the company transported 4.729 million tons of cargoes, 6.7% up year-on-year.
In 2006, LDz carried 48.731 million tons, 11.2% down year-on-year.
 
Interviewed by Tatyana Tokareva  
    [~DETAIL_TEXT] => 
– Mr.Shmuksts, what cargoes make up the basis of transit cargo flow following via the Baltic countries nowadays?

– The basic types of cargo transported by railways in the Baltic countries and further on to port terminals are oil and products, coal, mineral fertilizers and timber. However, in future experts foresee a drop of transit volumes due to the fact that currently Russia is constructing its own terminals to handle these types of cargo. This is a stimulus to search for new types of cargo and directions for the Baltic countries transport community. 

– What sectors can become the prospective cargo basis for the region? 

– Considering world tendencies in container transportation development and our experience in this respect, Latvian railway believes container turnover increase is a prospective step to take. Nowadays container transportation via Baltic railways makes an insignificant share in the total volumes of cargo transportation, though a stable growing trend of this share can be easily observed. For the sake of comparison: last year all Latvian ports handled 200 thousand TEU, the port of Klaipeda – 231 thousand TEU and the Estonian port of Tallinn – 152 thousand TEU. This shows that each single port taken separately handles a rather insignificant volume. However, considering results made by all Baltic ports as a whole, they handled over half a million TEU, which makes a serious difference. 

In general, in the world cargo turnover container transportation takes a significant part which is growing permanently. The basic flow of container transportation is transported from North and South Asia towards Europe by sea. Ten years ago about 98% from the aggregate container flow between China and Europe was transported by sea and only 2% by railways, in particular, by the TransSiberian railway. Now the situation hasn’t changed, unfortunately, despite great efforts to switch container flow going from China with the help of specialized block trains.

At the same time, the cargo flow of the Chinese ports is constantly growing and, according to experts, it will reach 5 billion tons in the next five years (actually, the container turnover grows twofold up to 130 mln TEU, and the cargo turnover of such fast growing Chinese ports аs Shanghai, Ninbo, Guanchzhou, Tyantzin, Tsindao and Dalyan will exceed 100 mln tons. Thus, the cargo turnover of the port of Shanghai in 2006 made 500 mln tons and the container turnover reached 21 mln TEU). This shows the fact that ports feel the lack of capacities, which gives us a chance to develop railway container transportation. 

– What are the factors that limit the successful development of the railway sector?

– Competition between railways and sea transportation works in favour of the latter for a number of reasons. First of all, there is an opinion that sea transportation is safer just because all the cargo owner needs is safety. No matter that the cargo is transported longer, the cargo owner feels confident that it will be safe and delivered in time, even if it is not within 10 days but within 40 days. This way he is able to plan his business for these 40 days period. Secondly, speaking of container transportation, the whole complex of services for transportation organization has been developed for sea transport. The client receives the whole range of services while transporting cargo by sea, i.e. insurance, charter, vessel etc. Moreover, sea transport has an opportunity to load bigger cargo volumes. Today we have container vessels capable to load over 8 500 containers. Lastly, railway container transportation has to do with several transportation participants, sometimes more than three sides are involved, and each of them is interested in their own financial reward. 

– In this case, what are the advantages of container transportation via transit corridors?

This is a cargo delivery term. The territory of China up to the Eastern border and access to ports makes 5 thousand kilometers (leaving alone the sea route distance to Western Europe market). The land route makes practically the same distance from Western borders of China to the EU border. That is the reason why regular block trains launch is advantageous and is more favourable for cargo owners. Thus, they can get a shorter delivery period, a regular schedule and, consequently, an opportunity to plan cargo flows, lower tariff rate, cargo safety due to efficient cargo tracking etc. 

One of the positive examples is the containerized train Baltica Transit. This is a joint project of the railway administrations of Latvian, Estonian and Lithuanian railways and TransSiberian Intermodal Service JSC. After four year of functioning this project has demonstrated its efficiency proved by growing financial results. 

Nowadays, Latvian railways is the «managing director» for the project. TransSiberian Intermodal Service JSC, who runs a wide client and agent net, performs as an operator-coordinator of the project. Baltica Transit train is finally formed at Rezekne Latvian station and goes further on to Russia and Kazakhstan according to the schedule. Thus, in May 2003 the first block train was made up of ten rail cars carrying containers. In 2005 over 7 thousand TEU was transported, which is 1.5 - 2 block trains per week. In 2006 about 3-4 trains per week were formed that transported over 10 thousand TEU. In January and February 2007 4-5 trains per week were made up. 

– At present one of the tools to improve efficiency for transport complex enterprise is believed to be logistic centers …

– This is a must for successful development and container transportation improvement. 
Nowadays several powerful container lines are run in the world. This system includes both ports and land routes of cargo transportation. For example, a vessel carrying over 2000 containers from China arrives in the port of Antwerp or Hamburg and after this the cargo is delivered to other ports, Baltic ports included, by smaller vessels to be carried by motor trucks or railways further on to destinations. However, some problems arise. Considering the great number of destinations where containers are to be delivered, they are transported by cargo trains in the ordinary technological mode, i.e. they pass all yards which make delivery period longer, as, speaking of motor transport, there is a risk of long queuing at the border. 

A logistic terminal can regulate these processes, accumulate and sort out container flows arriving both from sea and land. 

In Latvia the work on logistic centers construction is underway:
• In the port of Riga a powerful container terminal construction is planned;
• In the East of Latvia where the railway joint Krustpils is located, early in 2008, the company Central Euro-Asia Gateway plans to construct a logistic center capable to handle up to 200 thousand TEU. This terminal will focus on Chinese cargo handling coming from the Northern region of China where a special economic zone providing more favourable terms for manufacturers has been created. 

However, I’d like to emphasize that, despite all the above mentioned competitive advantages of the Baltic countries’ infrastructure (favourable geographic location, gauge single with the countries of the post-Soviet area, as well as unified technical and juridical norms, and high level of services), certain problems are still unsolved. Trends of the transport market changing regularly, alongside with economic and political factors, create some kind of instability in the transport sector of the Baltic countries. That is why it is quite obvious that cooperation with Eastern countries in attracting cargo flows towards Baltic ports must be developed together with other transportation process participants: China, Kazakhstan, Russia and Baltic countries working out attractive transportation schemes and tariff policy capable to compete with offers made
by sea carriers of Japan, China, South Korea, who now form the structure of international transportation in the North-Eastern Asia, develop cargo routes and set tariff policy. How fast we react to the changing market, how efficiently we use our unique geographic and geopolitical location will define how successfully we can join our efforts and reach the target of attracting additional container flow via the Baltic countries.

Biography
Erik Shmuksts 
Director of Freight Shipment Department of GAO Latvijas Dzelzcels. Born on September 22, 1961. In 1984 graduated from Daugavpils Railway Transport Technical School. In 1985-1986 was Deputy Chief of the Radvilishkis station of the Pribaltiyskaya railway. In 1986-1989 headed the Freight Shipment Department of the Shaulyaisk railway department. In 1989-1990 Head of the Gulbene station at the Pribaltiyskaya railway. At that time he graduated from Leningrad Institute of Railway Transport Engineers. 
In 1990-1993 was the Deputy Head of  Daugavpils station of the Latvian railway.
In 1993-1998 headed Riga railway exploitation sector. Since 1998 has been working as the Director of Freight Shipment Department of GAO Latvijas Dzelzcels.

Our reference
In January-March 2007, Latvijas Dzelzcels (Latvian Railway, LDz) carried 12.124 million tons of cargo, 3.9% down year-on-year. The share of import cargoes was 10.127 million tons (-1.8%), including 8.922 million tons carried via the Latvian ports (-3.6%). The railway transported 1.085 million tons of transit cargoes (-29.7%), 590 thousand tons of export freight (+47.5%) and 322 thousand tons of domestic cargoes. The railway transported 4.215 million tons of oil and products (-17.5%), 3.356 million tons of coal (-11%), and 1.670 million tons of mineral fertilizers (+24.8%). 
In March 2007, the company transported 4.729 million tons of cargoes, 6.7% up year-on-year.
In 2006, LDz carried 48.731 million tons, 11.2% down year-on-year.
 
Interviewed by Tatyana Tokareva  
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    [DETAIL_TEXT] => 
– Mr.Shmuksts, what cargoes make up the basis of transit cargo flow following via the Baltic countries nowadays?

– The basic types of cargo transported by railways in the Baltic countries and further on to port terminals are oil and products, coal, mineral fertilizers and timber. However, in future experts foresee a drop of transit volumes due to the fact that currently Russia is constructing its own terminals to handle these types of cargo. This is a stimulus to search for new types of cargo and directions for the Baltic countries transport community. 

– What sectors can become the prospective cargo basis for the region? 

– Considering world tendencies in container transportation development and our experience in this respect, Latvian railway believes container turnover increase is a prospective step to take. Nowadays container transportation via Baltic railways makes an insignificant share in the total volumes of cargo transportation, though a stable growing trend of this share can be easily observed. For the sake of comparison: last year all Latvian ports handled 200 thousand TEU, the port of Klaipeda – 231 thousand TEU and the Estonian port of Tallinn – 152 thousand TEU. This shows that each single port taken separately handles a rather insignificant volume. However, considering results made by all Baltic ports as a whole, they handled over half a million TEU, which makes a serious difference. 

In general, in the world cargo turnover container transportation takes a significant part which is growing permanently. The basic flow of container transportation is transported from North and South Asia towards Europe by sea. Ten years ago about 98% from the aggregate container flow between China and Europe was transported by sea and only 2% by railways, in particular, by the TransSiberian railway. Now the situation hasn’t changed, unfortunately, despite great efforts to switch container flow going from China with the help of specialized block trains.

At the same time, the cargo flow of the Chinese ports is constantly growing and, according to experts, it will reach 5 billion tons in the next five years (actually, the container turnover grows twofold up to 130 mln TEU, and the cargo turnover of such fast growing Chinese ports аs Shanghai, Ninbo, Guanchzhou, Tyantzin, Tsindao and Dalyan will exceed 100 mln tons. Thus, the cargo turnover of the port of Shanghai in 2006 made 500 mln tons and the container turnover reached 21 mln TEU). This shows the fact that ports feel the lack of capacities, which gives us a chance to develop railway container transportation. 

– What are the factors that limit the successful development of the railway sector?

– Competition between railways and sea transportation works in favour of the latter for a number of reasons. First of all, there is an opinion that sea transportation is safer just because all the cargo owner needs is safety. No matter that the cargo is transported longer, the cargo owner feels confident that it will be safe and delivered in time, even if it is not within 10 days but within 40 days. This way he is able to plan his business for these 40 days period. Secondly, speaking of container transportation, the whole complex of services for transportation organization has been developed for sea transport. The client receives the whole range of services while transporting cargo by sea, i.e. insurance, charter, vessel etc. Moreover, sea transport has an opportunity to load bigger cargo volumes. Today we have container vessels capable to load over 8 500 containers. Lastly, railway container transportation has to do with several transportation participants, sometimes more than three sides are involved, and each of them is interested in their own financial reward. 

– In this case, what are the advantages of container transportation via transit corridors?

This is a cargo delivery term. The territory of China up to the Eastern border and access to ports makes 5 thousand kilometers (leaving alone the sea route distance to Western Europe market). The land route makes practically the same distance from Western borders of China to the EU border. That is the reason why regular block trains launch is advantageous and is more favourable for cargo owners. Thus, they can get a shorter delivery period, a regular schedule and, consequently, an opportunity to plan cargo flows, lower tariff rate, cargo safety due to efficient cargo tracking etc. 

One of the positive examples is the containerized train Baltica Transit. This is a joint project of the railway administrations of Latvian, Estonian and Lithuanian railways and TransSiberian Intermodal Service JSC. After four year of functioning this project has demonstrated its efficiency proved by growing financial results. 

Nowadays, Latvian railways is the «managing director» for the project. TransSiberian Intermodal Service JSC, who runs a wide client and agent net, performs as an operator-coordinator of the project. Baltica Transit train is finally formed at Rezekne Latvian station and goes further on to Russia and Kazakhstan according to the schedule. Thus, in May 2003 the first block train was made up of ten rail cars carrying containers. In 2005 over 7 thousand TEU was transported, which is 1.5 - 2 block trains per week. In 2006 about 3-4 trains per week were formed that transported over 10 thousand TEU. In January and February 2007 4-5 trains per week were made up. 

– At present one of the tools to improve efficiency for transport complex enterprise is believed to be logistic centers …

– This is a must for successful development and container transportation improvement. 
Nowadays several powerful container lines are run in the world. This system includes both ports and land routes of cargo transportation. For example, a vessel carrying over 2000 containers from China arrives in the port of Antwerp or Hamburg and after this the cargo is delivered to other ports, Baltic ports included, by smaller vessels to be carried by motor trucks or railways further on to destinations. However, some problems arise. Considering the great number of destinations where containers are to be delivered, they are transported by cargo trains in the ordinary technological mode, i.e. they pass all yards which make delivery period longer, as, speaking of motor transport, there is a risk of long queuing at the border. 

A logistic terminal can regulate these processes, accumulate and sort out container flows arriving both from sea and land. 

In Latvia the work on logistic centers construction is underway:
• In the port of Riga a powerful container terminal construction is planned;
• In the East of Latvia where the railway joint Krustpils is located, early in 2008, the company Central Euro-Asia Gateway plans to construct a logistic center capable to handle up to 200 thousand TEU. This terminal will focus on Chinese cargo handling coming from the Northern region of China where a special economic zone providing more favourable terms for manufacturers has been created. 

However, I’d like to emphasize that, despite all the above mentioned competitive advantages of the Baltic countries’ infrastructure (favourable geographic location, gauge single with the countries of the post-Soviet area, as well as unified technical and juridical norms, and high level of services), certain problems are still unsolved. Trends of the transport market changing regularly, alongside with economic and political factors, create some kind of instability in the transport sector of the Baltic countries. That is why it is quite obvious that cooperation with Eastern countries in attracting cargo flows towards Baltic ports must be developed together with other transportation process participants: China, Kazakhstan, Russia and Baltic countries working out attractive transportation schemes and tariff policy capable to compete with offers made
by sea carriers of Japan, China, South Korea, who now form the structure of international transportation in the North-Eastern Asia, develop cargo routes and set tariff policy. How fast we react to the changing market, how efficiently we use our unique geographic and geopolitical location will define how successfully we can join our efforts and reach the target of attracting additional container flow via the Baltic countries.

Biography
Erik Shmuksts 
Director of Freight Shipment Department of GAO Latvijas Dzelzcels. Born on September 22, 1961. In 1984 graduated from Daugavpils Railway Transport Technical School. In 1985-1986 was Deputy Chief of the Radvilishkis station of the Pribaltiyskaya railway. In 1986-1989 headed the Freight Shipment Department of the Shaulyaisk railway department. In 1989-1990 Head of the Gulbene station at the Pribaltiyskaya railway. At that time he graduated from Leningrad Institute of Railway Transport Engineers. 
In 1990-1993 was the Deputy Head of  Daugavpils station of the Latvian railway.
In 1993-1998 headed Riga railway exploitation sector. Since 1998 has been working as the Director of Freight Shipment Department of GAO Latvijas Dzelzcels.

Our reference
In January-March 2007, Latvijas Dzelzcels (Latvian Railway, LDz) carried 12.124 million tons of cargo, 3.9% down year-on-year. The share of import cargoes was 10.127 million tons (-1.8%), including 8.922 million tons carried via the Latvian ports (-3.6%). The railway transported 1.085 million tons of transit cargoes (-29.7%), 590 thousand tons of export freight (+47.5%) and 322 thousand tons of domestic cargoes. The railway transported 4.215 million tons of oil and products (-17.5%), 3.356 million tons of coal (-11%), and 1.670 million tons of mineral fertilizers (+24.8%). 
In March 2007, the company transported 4.729 million tons of cargoes, 6.7% up year-on-year.
In 2006, LDz carried 48.731 million tons, 11.2% down year-on-year.
 
Interviewed by Tatyana Tokareva  
    [~DETAIL_TEXT] => 
– Mr.Shmuksts, what cargoes make up the basis of transit cargo flow following via the Baltic countries nowadays?

– The basic types of cargo transported by railways in the Baltic countries and further on to port terminals are oil and products, coal, mineral fertilizers and timber. However, in future experts foresee a drop of transit volumes due to the fact that currently Russia is constructing its own terminals to handle these types of cargo. This is a stimulus to search for new types of cargo and directions for the Baltic countries transport community. 

– What sectors can become the prospective cargo basis for the region? 

– Considering world tendencies in container transportation development and our experience in this respect, Latvian railway believes container turnover increase is a prospective step to take. Nowadays container transportation via Baltic railways makes an insignificant share in the total volumes of cargo transportation, though a stable growing trend of this share can be easily observed. For the sake of comparison: last year all Latvian ports handled 200 thousand TEU, the port of Klaipeda – 231 thousand TEU and the Estonian port of Tallinn – 152 thousand TEU. This shows that each single port taken separately handles a rather insignificant volume. However, considering results made by all Baltic ports as a whole, they handled over half a million TEU, which makes a serious difference. 

In general, in the world cargo turnover container transportation takes a significant part which is growing permanently. The basic flow of container transportation is transported from North and South Asia towards Europe by sea. Ten years ago about 98% from the aggregate container flow between China and Europe was transported by sea and only 2% by railways, in particular, by the TransSiberian railway. Now the situation hasn’t changed, unfortunately, despite great efforts to switch container flow going from China with the help of specialized block trains.

At the same time, the cargo flow of the Chinese ports is constantly growing and, according to experts, it will reach 5 billion tons in the next five years (actually, the container turnover grows twofold up to 130 mln TEU, and the cargo turnover of such fast growing Chinese ports аs Shanghai, Ninbo, Guanchzhou, Tyantzin, Tsindao and Dalyan will exceed 100 mln tons. Thus, the cargo turnover of the port of Shanghai in 2006 made 500 mln tons and the container turnover reached 21 mln TEU). This shows the fact that ports feel the lack of capacities, which gives us a chance to develop railway container transportation. 

– What are the factors that limit the successful development of the railway sector?

– Competition between railways and sea transportation works in favour of the latter for a number of reasons. First of all, there is an opinion that sea transportation is safer just because all the cargo owner needs is safety. No matter that the cargo is transported longer, the cargo owner feels confident that it will be safe and delivered in time, even if it is not within 10 days but within 40 days. This way he is able to plan his business for these 40 days period. Secondly, speaking of container transportation, the whole complex of services for transportation organization has been developed for sea transport. The client receives the whole range of services while transporting cargo by sea, i.e. insurance, charter, vessel etc. Moreover, sea transport has an opportunity to load bigger cargo volumes. Today we have container vessels capable to load over 8 500 containers. Lastly, railway container transportation has to do with several transportation participants, sometimes more than three sides are involved, and each of them is interested in their own financial reward. 

– In this case, what are the advantages of container transportation via transit corridors?

This is a cargo delivery term. The territory of China up to the Eastern border and access to ports makes 5 thousand kilometers (leaving alone the sea route distance to Western Europe market). The land route makes practically the same distance from Western borders of China to the EU border. That is the reason why regular block trains launch is advantageous and is more favourable for cargo owners. Thus, they can get a shorter delivery period, a regular schedule and, consequently, an opportunity to plan cargo flows, lower tariff rate, cargo safety due to efficient cargo tracking etc. 

One of the positive examples is the containerized train Baltica Transit. This is a joint project of the railway administrations of Latvian, Estonian and Lithuanian railways and TransSiberian Intermodal Service JSC. After four year of functioning this project has demonstrated its efficiency proved by growing financial results. 

Nowadays, Latvian railways is the «managing director» for the project. TransSiberian Intermodal Service JSC, who runs a wide client and agent net, performs as an operator-coordinator of the project. Baltica Transit train is finally formed at Rezekne Latvian station and goes further on to Russia and Kazakhstan according to the schedule. Thus, in May 2003 the first block train was made up of ten rail cars carrying containers. In 2005 over 7 thousand TEU was transported, which is 1.5 - 2 block trains per week. In 2006 about 3-4 trains per week were formed that transported over 10 thousand TEU. In January and February 2007 4-5 trains per week were made up. 

– At present one of the tools to improve efficiency for transport complex enterprise is believed to be logistic centers …

– This is a must for successful development and container transportation improvement. 
Nowadays several powerful container lines are run in the world. This system includes both ports and land routes of cargo transportation. For example, a vessel carrying over 2000 containers from China arrives in the port of Antwerp or Hamburg and after this the cargo is delivered to other ports, Baltic ports included, by smaller vessels to be carried by motor trucks or railways further on to destinations. However, some problems arise. Considering the great number of destinations where containers are to be delivered, they are transported by cargo trains in the ordinary technological mode, i.e. they pass all yards which make delivery period longer, as, speaking of motor transport, there is a risk of long queuing at the border. 

A logistic terminal can regulate these processes, accumulate and sort out container flows arriving both from sea and land. 

In Latvia the work on logistic centers construction is underway:
• In the port of Riga a powerful container terminal construction is planned;
• In the East of Latvia where the railway joint Krustpils is located, early in 2008, the company Central Euro-Asia Gateway plans to construct a logistic center capable to handle up to 200 thousand TEU. This terminal will focus on Chinese cargo handling coming from the Northern region of China where a special economic zone providing more favourable terms for manufacturers has been created. 

However, I’d like to emphasize that, despite all the above mentioned competitive advantages of the Baltic countries’ infrastructure (favourable geographic location, gauge single with the countries of the post-Soviet area, as well as unified technical and juridical norms, and high level of services), certain problems are still unsolved. Trends of the transport market changing regularly, alongside with economic and political factors, create some kind of instability in the transport sector of the Baltic countries. That is why it is quite obvious that cooperation with Eastern countries in attracting cargo flows towards Baltic ports must be developed together with other transportation process participants: China, Kazakhstan, Russia and Baltic countries working out attractive transportation schemes and tariff policy capable to compete with offers made
by sea carriers of Japan, China, South Korea, who now form the structure of international transportation in the North-Eastern Asia, develop cargo routes and set tariff policy. How fast we react to the changing market, how efficiently we use our unique geographic and geopolitical location will define how successfully we can join our efforts and reach the target of attracting additional container flow via the Baltic countries.

Biography
Erik Shmuksts 
Director of Freight Shipment Department of GAO Latvijas Dzelzcels. Born on September 22, 1961. In 1984 graduated from Daugavpils Railway Transport Technical School. In 1985-1986 was Deputy Chief of the Radvilishkis station of the Pribaltiyskaya railway. In 1986-1989 headed the Freight Shipment Department of the Shaulyaisk railway department. In 1989-1990 Head of the Gulbene station at the Pribaltiyskaya railway. At that time he graduated from Leningrad Institute of Railway Transport Engineers. 
In 1990-1993 was the Deputy Head of  Daugavpils station of the Latvian railway.
In 1993-1998 headed Riga railway exploitation sector. Since 1998 has been working as the Director of Freight Shipment Department of GAO Latvijas Dzelzcels.

Our reference
In January-March 2007, Latvijas Dzelzcels (Latvian Railway, LDz) carried 12.124 million tons of cargo, 3.9% down year-on-year. The share of import cargoes was 10.127 million tons (-1.8%), including 8.922 million tons carried via the Latvian ports (-3.6%). The railway transported 1.085 million tons of transit cargoes (-29.7%), 590 thousand tons of export freight (+47.5%) and 322 thousand tons of domestic cargoes. The railway transported 4.215 million tons of oil and products (-17.5%), 3.356 million tons of coal (-11%), and 1.670 million tons of mineral fertilizers (+24.8%). 
In March 2007, the company transported 4.729 million tons of cargoes, 6.7% up year-on-year.
In 2006, LDz carried 48.731 million tons, 11.2% down year-on-year.
 
Interviewed by Tatyana Tokareva  
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2007/2/smukst.jpg" border="1" alt="Eric Shmuksts" title="Eric Shmuksts" hspace="3" vspace="3" width="148" height="194" align="left" />«The fact that the Baltic countries are located favourably in the heart of Northern transport ways and their port infrastructure, as well as that of railway and motor transport, is developed properly allows Latvia, Lithuania and Estonia to attract towards their transit corridors a significant part of cargo flow following between the two enormous markets of East and West» – Eric Shmuksts, Director of Cargo Transportation Department of Latvijas Dzelzcels JSC, believes.
            [ELEMENT_META_TITLE] => Not Only Sea
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    [NAME] => We Need More Joint Projects
    [~NAME] => We Need More Joint Projects
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    [DETAIL_TEXT] => – Would you, please, tell us about PKP results achieved in 2006 and your cargo nomenclature?
 
– I can say last year was a good one for the company. We transported almost 150 mln tons of cargo (+4.4 mln tons or 3.4% year-on-year). As usual the bulk of the volume was taken by coal and coke – over 43.5%, and the second place belonged to oil bulk, which made 17%. Iron ore and metals followed and took over 13%, while almost 12% of PKP Cargo was made by construction materials. The cargo turnover structure did not undergo any serious changes; the only thing to mention is the fact that, due to the favourable metallurgic industry market situation and production growth, significant increase was observed for metal and iron transportation to metallurgic manufacturing complexes. Coke transportation volumes grew as well. Thanks to developing construction of blocks of houses and motor ways, certain increase was recorded for construction materials transportation (crushed stone etc).

– What is the container transportation dynamics like?

– Container transportation showed an impressive growth in 2006. The results boosted by 50% year-on-year. This became possible due to a settled cooperation with foreign operator companies involved into container transportation. Moreover, serious work on making up the schedule of regular services for block trains both within domestic and international transportation was held. Generally speaking, by now we’ve worked out all basic routes of the international transportation, including those with the countries with whom we run railway-ferry bridges (Sweden and other Scandinavian states) 

– What is your view of the results achieved at the start of the year?

– The first two months results inspire optimism. We do hope this tendency will be continuing. In 2007, PKP Cargo JSC won several tenders on key cargo consignors servicing. For example, we’ve won the tender on coal transportation to the biggest electric power station in the North-East of Poland. Quite significantly, not long ago it was serviced by private carriers. There are other factors that influenced the transportation volume during this period, for example, weather conditions (warm winter in fact) which made it possible to carry on with construction. 

– What was it that allowed your company to win the tender and outrun your competitors?

– I think it was possible due to the new approach developed by our new top-management. First, we do not work via middleman companies and conduct all relations with clients directly. Thus, extra links of the transport chain have been cut out, since they do no good. This way our offer becomes more attractive to the client. Of course, this is if the carrier can provide the whole range of services to the client. Consequently, the price becomes more attractive as well. 

Secondly, our new approach has to do with complex servicing of our key clients. This concerns cargo delivery, including demands set by the client in respect of schedule, logistics etc.

That gives us a chance to offer the whole range of services and provide them on a higher level. 
In general, the new approach to transportation envisages a large-scaled restructuring. At present, the commercial department of PKP Cargo JSC is being restructured and for this very reason an auditing company was invited to develop a new structure for the departments. Thus, in near future our company will be transformed to implement the set tasks and reach new goals. 

Our major target is the company’s services sale in the broad sense of this word. We want PKP Cargo potential to be realized to the full, i.e. so that the company’s services are in demand rail cars do not idle, employees are busy working and not worrying about their well-being. To do so, we are to turn from a typical railway carrier into a full-scaled logistic operator providing the whole complex of services to customers. 

– How strong is the competition on the cargo transportation market between private operators and your enterprise?

– I can easily state that competition on the Polish railway transport market is the strongest and the most aggressive of all, compared to other EU countries. Currently, there are 63 railway carriers (PKP Cargo JSC included) who have acquired respective licenses. They are functioning under the regulations of the European Union acting in the EU area supplemented by domestic acts. 

Despite the fact that similar laws are in force for all EU countries, each national carrier has its individual approach to transportation. The same normative acts can be treated differently. For example, speaking of our company, each separate unit is responsible for each separate type of work and runs individual businesses. In Germany it works another way: one concern is responsible for the infrastructure and it includes departments responsible for cargo and passenger transportation. 

The present-day situation on the Polish railway transport market resulted from a rather liberal domestic legislation on railway transport. If we compare transportation volumes, results will be that private companies take 46% of the general volume in terms of tonnage. At the same time, while comparing cargo turnover in terms of tons per kilometer, the situation turns round and private carriers make only 16–17%. Private operators transport mass cargo mainly at quite short distances and by full-loaded units, thus, they do their best to carry most profitable cargo towards most favourable routes. In this respect, we typically get costly transportation which is much harder to compensate. 

– What about your rolling stock? 

– Currently we operate over 3700 locomotives and almost 86 000 rail cars. Speaking of the park age, it is practically the same as that of other European railways (French, German etc.). Last year PKP Cargo JSC allocated over PLN 100 mln to modernize and repair the park of rolling stock. Now we plan to invest 800 mln more to purchase new and modernize old rail cars, while part of the allocated funds will be directed to logistic centers equipment. On the opposite, private carriers operate older cars purchased from the national carriers of other countries (Romania, Slovakia, Czech) and modernized afterwards. 

– Do you follow the process of Russian railways restructuring?  

– Of course, we are watching this process with great interest and know what is going on with OAO RZD at present. Mostly we are interested in the separation of specialized companies out of OAO RZD. In our opinion, the most important issue for this process is setting free tariffs for these companies, since state regulation is an inappropriate thing for the market economy and prevents doing business. We have already passed this stage and see the positive results of tariff regulation implemented by the carrier itself. 

I’m sure when the Russian Railways obtain the opportunity to set free tariffs, it will be much easier to cooperate with the structure. Moreover, it will influence the transportation dynamics positively for the Second Pan-European corridor, whose cargo turnover is insignificant due to state tariff regulation where business interests are not considered. Speaking of OAO RZD restructuring, I’d like to wish every success to our Russian colleagues so that their company becomes a new updated strong body ready to full-scale competition with private enterprises. Now we know pretty well how tough the market battles can be and how complicated it is to return cargoes left for competitors. I wish Russian colleagues would analyze our experience in this respect and make helpful conclusions. 

– Do you run joint projects with OAO RZD?

– First, we closely cooperate with our Russian colleagues in transportation via the territory of Kaliningrad region within our two border stations, though they are not major ones for the Russia – Poland route. The major cargo flow following from the RF to Western Europe goes via the border check-point on the Poland – Belarus border. Nevertheless, we are developing all our border check-points and transportation volume is growing steadily. However, we are launching new projects as well. One of them is Czech motor cars transportation to a car assembly plant in Kaluga (Moscow region). It is a large-scaled project and colleagues from OAO RZD, Belarus and Czech railways are intensively preparing to implement it. Moreover, we are cooperating with OAO RZD to implement the officially introduced on September 1, 2006 unified transport invoice. I wish we could run more joint projects, though it requires preliminary preparation to fulfill them properly. Thus, we need to co-ordinate tariffs, set unified transport documentation etc. 

Currently a joint enterprise of four railways is being launched by Russian, Belarus, Polish and German railways. During several months the required documentation was worked out and the enterprise will be registered soon. The major target of the project is to create conditions for boosting cargo turnover within the Second Pan-European Transport Corridor (Berlin – Warsaw – Minsk – Moscow – Nizhny Novgorod). The working conditions typical of the route are to be changed to become acceptable for customers: in this respect, the joint company will have to provide such conditions (logistics, delivery period, and price). I think, this project will become a good platform to share the experience accumulated by the four railways. 

Nowadays in accordance with the rates of modern world economy development, the growth of the cargo turnover between Russia and Western Europe can be observed. Thus, even if we manage to attract a small share of this volume and run several trains per week, it will be a good result. Moreover, we hope to take a part of our competitors’ volumes, i.e. that of motor transport and shippers. We believe it is possible to create all the required conditions to fulfill this task and this was proved by the trial run of the trains. The Second Pan-European Transport Corridor potential is to be re-discovered yet. 

The work we do to achieve this within this project is similar to what our foreign colleagues did. We were preparing required documents, solving legal issues and developing a business-plan. I presume the work will be completed shortly. Speaking of our company, we have done what we had to make this project work. 

Interviewed by  Nadezhda  Vtorushina
    [~DETAIL_TEXT] => – Would you, please, tell us about PKP results achieved in 2006 and your cargo nomenclature?
 
– I can say last year was a good one for the company. We transported almost 150 mln tons of cargo (+4.4 mln tons or 3.4% year-on-year). As usual the bulk of the volume was taken by coal and coke – over 43.5%, and the second place belonged to oil bulk, which made 17%. Iron ore and metals followed and took over 13%, while almost 12% of PKP Cargo was made by construction materials. The cargo turnover structure did not undergo any serious changes; the only thing to mention is the fact that, due to the favourable metallurgic industry market situation and production growth, significant increase was observed for metal and iron transportation to metallurgic manufacturing complexes. Coke transportation volumes grew as well. Thanks to developing construction of blocks of houses and motor ways, certain increase was recorded for construction materials transportation (crushed stone etc).

– What is the container transportation dynamics like?

– Container transportation showed an impressive growth in 2006. The results boosted by 50% year-on-year. This became possible due to a settled cooperation with foreign operator companies involved into container transportation. Moreover, serious work on making up the schedule of regular services for block trains both within domestic and international transportation was held. Generally speaking, by now we’ve worked out all basic routes of the international transportation, including those with the countries with whom we run railway-ferry bridges (Sweden and other Scandinavian states) 

– What is your view of the results achieved at the start of the year?

– The first two months results inspire optimism. We do hope this tendency will be continuing. In 2007, PKP Cargo JSC won several tenders on key cargo consignors servicing. For example, we’ve won the tender on coal transportation to the biggest electric power station in the North-East of Poland. Quite significantly, not long ago it was serviced by private carriers. There are other factors that influenced the transportation volume during this period, for example, weather conditions (warm winter in fact) which made it possible to carry on with construction. 

– What was it that allowed your company to win the tender and outrun your competitors?

– I think it was possible due to the new approach developed by our new top-management. First, we do not work via middleman companies and conduct all relations with clients directly. Thus, extra links of the transport chain have been cut out, since they do no good. This way our offer becomes more attractive to the client. Of course, this is if the carrier can provide the whole range of services to the client. Consequently, the price becomes more attractive as well. 

Secondly, our new approach has to do with complex servicing of our key clients. This concerns cargo delivery, including demands set by the client in respect of schedule, logistics etc.

That gives us a chance to offer the whole range of services and provide them on a higher level. 
In general, the new approach to transportation envisages a large-scaled restructuring. At present, the commercial department of PKP Cargo JSC is being restructured and for this very reason an auditing company was invited to develop a new structure for the departments. Thus, in near future our company will be transformed to implement the set tasks and reach new goals. 

Our major target is the company’s services sale in the broad sense of this word. We want PKP Cargo potential to be realized to the full, i.e. so that the company’s services are in demand rail cars do not idle, employees are busy working and not worrying about their well-being. To do so, we are to turn from a typical railway carrier into a full-scaled logistic operator providing the whole complex of services to customers. 

– How strong is the competition on the cargo transportation market between private operators and your enterprise?

– I can easily state that competition on the Polish railway transport market is the strongest and the most aggressive of all, compared to other EU countries. Currently, there are 63 railway carriers (PKP Cargo JSC included) who have acquired respective licenses. They are functioning under the regulations of the European Union acting in the EU area supplemented by domestic acts. 

Despite the fact that similar laws are in force for all EU countries, each national carrier has its individual approach to transportation. The same normative acts can be treated differently. For example, speaking of our company, each separate unit is responsible for each separate type of work and runs individual businesses. In Germany it works another way: one concern is responsible for the infrastructure and it includes departments responsible for cargo and passenger transportation. 

The present-day situation on the Polish railway transport market resulted from a rather liberal domestic legislation on railway transport. If we compare transportation volumes, results will be that private companies take 46% of the general volume in terms of tonnage. At the same time, while comparing cargo turnover in terms of tons per kilometer, the situation turns round and private carriers make only 16–17%. Private operators transport mass cargo mainly at quite short distances and by full-loaded units, thus, they do their best to carry most profitable cargo towards most favourable routes. In this respect, we typically get costly transportation which is much harder to compensate. 

– What about your rolling stock? 

– Currently we operate over 3700 locomotives and almost 86 000 rail cars. Speaking of the park age, it is practically the same as that of other European railways (French, German etc.). Last year PKP Cargo JSC allocated over PLN 100 mln to modernize and repair the park of rolling stock. Now we plan to invest 800 mln more to purchase new and modernize old rail cars, while part of the allocated funds will be directed to logistic centers equipment. On the opposite, private carriers operate older cars purchased from the national carriers of other countries (Romania, Slovakia, Czech) and modernized afterwards. 

– Do you follow the process of Russian railways restructuring?  

– Of course, we are watching this process with great interest and know what is going on with OAO RZD at present. Mostly we are interested in the separation of specialized companies out of OAO RZD. In our opinion, the most important issue for this process is setting free tariffs for these companies, since state regulation is an inappropriate thing for the market economy and prevents doing business. We have already passed this stage and see the positive results of tariff regulation implemented by the carrier itself. 

I’m sure when the Russian Railways obtain the opportunity to set free tariffs, it will be much easier to cooperate with the structure. Moreover, it will influence the transportation dynamics positively for the Second Pan-European corridor, whose cargo turnover is insignificant due to state tariff regulation where business interests are not considered. Speaking of OAO RZD restructuring, I’d like to wish every success to our Russian colleagues so that their company becomes a new updated strong body ready to full-scale competition with private enterprises. Now we know pretty well how tough the market battles can be and how complicated it is to return cargoes left for competitors. I wish Russian colleagues would analyze our experience in this respect and make helpful conclusions. 

– Do you run joint projects with OAO RZD?

– First, we closely cooperate with our Russian colleagues in transportation via the territory of Kaliningrad region within our two border stations, though they are not major ones for the Russia – Poland route. The major cargo flow following from the RF to Western Europe goes via the border check-point on the Poland – Belarus border. Nevertheless, we are developing all our border check-points and transportation volume is growing steadily. However, we are launching new projects as well. One of them is Czech motor cars transportation to a car assembly plant in Kaluga (Moscow region). It is a large-scaled project and colleagues from OAO RZD, Belarus and Czech railways are intensively preparing to implement it. Moreover, we are cooperating with OAO RZD to implement the officially introduced on September 1, 2006 unified transport invoice. I wish we could run more joint projects, though it requires preliminary preparation to fulfill them properly. Thus, we need to co-ordinate tariffs, set unified transport documentation etc. 

Currently a joint enterprise of four railways is being launched by Russian, Belarus, Polish and German railways. During several months the required documentation was worked out and the enterprise will be registered soon. The major target of the project is to create conditions for boosting cargo turnover within the Second Pan-European Transport Corridor (Berlin – Warsaw – Minsk – Moscow – Nizhny Novgorod). The working conditions typical of the route are to be changed to become acceptable for customers: in this respect, the joint company will have to provide such conditions (logistics, delivery period, and price). I think, this project will become a good platform to share the experience accumulated by the four railways. 

Nowadays in accordance with the rates of modern world economy development, the growth of the cargo turnover between Russia and Western Europe can be observed. Thus, even if we manage to attract a small share of this volume and run several trains per week, it will be a good result. Moreover, we hope to take a part of our competitors’ volumes, i.e. that of motor transport and shippers. We believe it is possible to create all the required conditions to fulfill this task and this was proved by the trial run of the trains. The Second Pan-European Transport Corridor potential is to be re-discovered yet. 

The work we do to achieve this within this project is similar to what our foreign colleagues did. We were preparing required documents, solving legal issues and developing a business-plan. I presume the work will be completed shortly. Speaking of our company, we have done what we had to make this project work. 

Interviewed by  Nadezhda  Vtorushina
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    [~PREVIEW_TEXT] => Competition battle unfolding between Polish railway cargo carrier is one of the toughest in the EU. Kazimierz Murawski, Board Member and Marketing Director of the Central Board of PKP Cargo JSC, comments on last year results, plans for the future and clarifies the goals set to the state carrier.
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    [DETAIL_TEXT] => – Would you, please, tell us about PKP results achieved in 2006 and your cargo nomenclature?
 
– I can say last year was a good one for the company. We transported almost 150 mln tons of cargo (+4.4 mln tons or 3.4% year-on-year). As usual the bulk of the volume was taken by coal and coke – over 43.5%, and the second place belonged to oil bulk, which made 17%. Iron ore and metals followed and took over 13%, while almost 12% of PKP Cargo was made by construction materials. The cargo turnover structure did not undergo any serious changes; the only thing to mention is the fact that, due to the favourable metallurgic industry market situation and production growth, significant increase was observed for metal and iron transportation to metallurgic manufacturing complexes. Coke transportation volumes grew as well. Thanks to developing construction of blocks of houses and motor ways, certain increase was recorded for construction materials transportation (crushed stone etc).

– What is the container transportation dynamics like?

– Container transportation showed an impressive growth in 2006. The results boosted by 50% year-on-year. This became possible due to a settled cooperation with foreign operator companies involved into container transportation. Moreover, serious work on making up the schedule of regular services for block trains both within domestic and international transportation was held. Generally speaking, by now we’ve worked out all basic routes of the international transportation, including those with the countries with whom we run railway-ferry bridges (Sweden and other Scandinavian states) 

– What is your view of the results achieved at the start of the year?

– The first two months results inspire optimism. We do hope this tendency will be continuing. In 2007, PKP Cargo JSC won several tenders on key cargo consignors servicing. For example, we’ve won the tender on coal transportation to the biggest electric power station in the North-East of Poland. Quite significantly, not long ago it was serviced by private carriers. There are other factors that influenced the transportation volume during this period, for example, weather conditions (warm winter in fact) which made it possible to carry on with construction. 

– What was it that allowed your company to win the tender and outrun your competitors?

– I think it was possible due to the new approach developed by our new top-management. First, we do not work via middleman companies and conduct all relations with clients directly. Thus, extra links of the transport chain have been cut out, since they do no good. This way our offer becomes more attractive to the client. Of course, this is if the carrier can provide the whole range of services to the client. Consequently, the price becomes more attractive as well. 

Secondly, our new approach has to do with complex servicing of our key clients. This concerns cargo delivery, including demands set by the client in respect of schedule, logistics etc.

That gives us a chance to offer the whole range of services and provide them on a higher level. 
In general, the new approach to transportation envisages a large-scaled restructuring. At present, the commercial department of PKP Cargo JSC is being restructured and for this very reason an auditing company was invited to develop a new structure for the departments. Thus, in near future our company will be transformed to implement the set tasks and reach new goals. 

Our major target is the company’s services sale in the broad sense of this word. We want PKP Cargo potential to be realized to the full, i.e. so that the company’s services are in demand rail cars do not idle, employees are busy working and not worrying about their well-being. To do so, we are to turn from a typical railway carrier into a full-scaled logistic operator providing the whole complex of services to customers. 

– How strong is the competition on the cargo transportation market between private operators and your enterprise?

– I can easily state that competition on the Polish railway transport market is the strongest and the most aggressive of all, compared to other EU countries. Currently, there are 63 railway carriers (PKP Cargo JSC included) who have acquired respective licenses. They are functioning under the regulations of the European Union acting in the EU area supplemented by domestic acts. 

Despite the fact that similar laws are in force for all EU countries, each national carrier has its individual approach to transportation. The same normative acts can be treated differently. For example, speaking of our company, each separate unit is responsible for each separate type of work and runs individual businesses. In Germany it works another way: one concern is responsible for the infrastructure and it includes departments responsible for cargo and passenger transportation. 

The present-day situation on the Polish railway transport market resulted from a rather liberal domestic legislation on railway transport. If we compare transportation volumes, results will be that private companies take 46% of the general volume in terms of tonnage. At the same time, while comparing cargo turnover in terms of tons per kilometer, the situation turns round and private carriers make only 16–17%. Private operators transport mass cargo mainly at quite short distances and by full-loaded units, thus, they do their best to carry most profitable cargo towards most favourable routes. In this respect, we typically get costly transportation which is much harder to compensate. 

– What about your rolling stock? 

– Currently we operate over 3700 locomotives and almost 86 000 rail cars. Speaking of the park age, it is practically the same as that of other European railways (French, German etc.). Last year PKP Cargo JSC allocated over PLN 100 mln to modernize and repair the park of rolling stock. Now we plan to invest 800 mln more to purchase new and modernize old rail cars, while part of the allocated funds will be directed to logistic centers equipment. On the opposite, private carriers operate older cars purchased from the national carriers of other countries (Romania, Slovakia, Czech) and modernized afterwards. 

– Do you follow the process of Russian railways restructuring?  

– Of course, we are watching this process with great interest and know what is going on with OAO RZD at present. Mostly we are interested in the separation of specialized companies out of OAO RZD. In our opinion, the most important issue for this process is setting free tariffs for these companies, since state regulation is an inappropriate thing for the market economy and prevents doing business. We have already passed this stage and see the positive results of tariff regulation implemented by the carrier itself. 

I’m sure when the Russian Railways obtain the opportunity to set free tariffs, it will be much easier to cooperate with the structure. Moreover, it will influence the transportation dynamics positively for the Second Pan-European corridor, whose cargo turnover is insignificant due to state tariff regulation where business interests are not considered. Speaking of OAO RZD restructuring, I’d like to wish every success to our Russian colleagues so that their company becomes a new updated strong body ready to full-scale competition with private enterprises. Now we know pretty well how tough the market battles can be and how complicated it is to return cargoes left for competitors. I wish Russian colleagues would analyze our experience in this respect and make helpful conclusions. 

– Do you run joint projects with OAO RZD?

– First, we closely cooperate with our Russian colleagues in transportation via the territory of Kaliningrad region within our two border stations, though they are not major ones for the Russia – Poland route. The major cargo flow following from the RF to Western Europe goes via the border check-point on the Poland – Belarus border. Nevertheless, we are developing all our border check-points and transportation volume is growing steadily. However, we are launching new projects as well. One of them is Czech motor cars transportation to a car assembly plant in Kaluga (Moscow region). It is a large-scaled project and colleagues from OAO RZD, Belarus and Czech railways are intensively preparing to implement it. Moreover, we are cooperating with OAO RZD to implement the officially introduced on September 1, 2006 unified transport invoice. I wish we could run more joint projects, though it requires preliminary preparation to fulfill them properly. Thus, we need to co-ordinate tariffs, set unified transport documentation etc. 

Currently a joint enterprise of four railways is being launched by Russian, Belarus, Polish and German railways. During several months the required documentation was worked out and the enterprise will be registered soon. The major target of the project is to create conditions for boosting cargo turnover within the Second Pan-European Transport Corridor (Berlin – Warsaw – Minsk – Moscow – Nizhny Novgorod). The working conditions typical of the route are to be changed to become acceptable for customers: in this respect, the joint company will have to provide such conditions (logistics, delivery period, and price). I think, this project will become a good platform to share the experience accumulated by the four railways. 

Nowadays in accordance with the rates of modern world economy development, the growth of the cargo turnover between Russia and Western Europe can be observed. Thus, even if we manage to attract a small share of this volume and run several trains per week, it will be a good result. Moreover, we hope to take a part of our competitors’ volumes, i.e. that of motor transport and shippers. We believe it is possible to create all the required conditions to fulfill this task and this was proved by the trial run of the trains. The Second Pan-European Transport Corridor potential is to be re-discovered yet. 

The work we do to achieve this within this project is similar to what our foreign colleagues did. We were preparing required documents, solving legal issues and developing a business-plan. I presume the work will be completed shortly. Speaking of our company, we have done what we had to make this project work. 

Interviewed by  Nadezhda  Vtorushina
    [~DETAIL_TEXT] => – Would you, please, tell us about PKP results achieved in 2006 and your cargo nomenclature?
 
– I can say last year was a good one for the company. We transported almost 150 mln tons of cargo (+4.4 mln tons or 3.4% year-on-year). As usual the bulk of the volume was taken by coal and coke – over 43.5%, and the second place belonged to oil bulk, which made 17%. Iron ore and metals followed and took over 13%, while almost 12% of PKP Cargo was made by construction materials. The cargo turnover structure did not undergo any serious changes; the only thing to mention is the fact that, due to the favourable metallurgic industry market situation and production growth, significant increase was observed for metal and iron transportation to metallurgic manufacturing complexes. Coke transportation volumes grew as well. Thanks to developing construction of blocks of houses and motor ways, certain increase was recorded for construction materials transportation (crushed stone etc).

– What is the container transportation dynamics like?

– Container transportation showed an impressive growth in 2006. The results boosted by 50% year-on-year. This became possible due to a settled cooperation with foreign operator companies involved into container transportation. Moreover, serious work on making up the schedule of regular services for block trains both within domestic and international transportation was held. Generally speaking, by now we’ve worked out all basic routes of the international transportation, including those with the countries with whom we run railway-ferry bridges (Sweden and other Scandinavian states) 

– What is your view of the results achieved at the start of the year?

– The first two months results inspire optimism. We do hope this tendency will be continuing. In 2007, PKP Cargo JSC won several tenders on key cargo consignors servicing. For example, we’ve won the tender on coal transportation to the biggest electric power station in the North-East of Poland. Quite significantly, not long ago it was serviced by private carriers. There are other factors that influenced the transportation volume during this period, for example, weather conditions (warm winter in fact) which made it possible to carry on with construction. 

– What was it that allowed your company to win the tender and outrun your competitors?

– I think it was possible due to the new approach developed by our new top-management. First, we do not work via middleman companies and conduct all relations with clients directly. Thus, extra links of the transport chain have been cut out, since they do no good. This way our offer becomes more attractive to the client. Of course, this is if the carrier can provide the whole range of services to the client. Consequently, the price becomes more attractive as well. 

Secondly, our new approach has to do with complex servicing of our key clients. This concerns cargo delivery, including demands set by the client in respect of schedule, logistics etc.

That gives us a chance to offer the whole range of services and provide them on a higher level. 
In general, the new approach to transportation envisages a large-scaled restructuring. At present, the commercial department of PKP Cargo JSC is being restructured and for this very reason an auditing company was invited to develop a new structure for the departments. Thus, in near future our company will be transformed to implement the set tasks and reach new goals. 

Our major target is the company’s services sale in the broad sense of this word. We want PKP Cargo potential to be realized to the full, i.e. so that the company’s services are in demand rail cars do not idle, employees are busy working and not worrying about their well-being. To do so, we are to turn from a typical railway carrier into a full-scaled logistic operator providing the whole complex of services to customers. 

– How strong is the competition on the cargo transportation market between private operators and your enterprise?

– I can easily state that competition on the Polish railway transport market is the strongest and the most aggressive of all, compared to other EU countries. Currently, there are 63 railway carriers (PKP Cargo JSC included) who have acquired respective licenses. They are functioning under the regulations of the European Union acting in the EU area supplemented by domestic acts. 

Despite the fact that similar laws are in force for all EU countries, each national carrier has its individual approach to transportation. The same normative acts can be treated differently. For example, speaking of our company, each separate unit is responsible for each separate type of work and runs individual businesses. In Germany it works another way: one concern is responsible for the infrastructure and it includes departments responsible for cargo and passenger transportation. 

The present-day situation on the Polish railway transport market resulted from a rather liberal domestic legislation on railway transport. If we compare transportation volumes, results will be that private companies take 46% of the general volume in terms of tonnage. At the same time, while comparing cargo turnover in terms of tons per kilometer, the situation turns round and private carriers make only 16–17%. Private operators transport mass cargo mainly at quite short distances and by full-loaded units, thus, they do their best to carry most profitable cargo towards most favourable routes. In this respect, we typically get costly transportation which is much harder to compensate. 

– What about your rolling stock? 

– Currently we operate over 3700 locomotives and almost 86 000 rail cars. Speaking of the park age, it is practically the same as that of other European railways (French, German etc.). Last year PKP Cargo JSC allocated over PLN 100 mln to modernize and repair the park of rolling stock. Now we plan to invest 800 mln more to purchase new and modernize old rail cars, while part of the allocated funds will be directed to logistic centers equipment. On the opposite, private carriers operate older cars purchased from the national carriers of other countries (Romania, Slovakia, Czech) and modernized afterwards. 

– Do you follow the process of Russian railways restructuring?  

– Of course, we are watching this process with great interest and know what is going on with OAO RZD at present. Mostly we are interested in the separation of specialized companies out of OAO RZD. In our opinion, the most important issue for this process is setting free tariffs for these companies, since state regulation is an inappropriate thing for the market economy and prevents doing business. We have already passed this stage and see the positive results of tariff regulation implemented by the carrier itself. 

I’m sure when the Russian Railways obtain the opportunity to set free tariffs, it will be much easier to cooperate with the structure. Moreover, it will influence the transportation dynamics positively for the Second Pan-European corridor, whose cargo turnover is insignificant due to state tariff regulation where business interests are not considered. Speaking of OAO RZD restructuring, I’d like to wish every success to our Russian colleagues so that their company becomes a new updated strong body ready to full-scale competition with private enterprises. Now we know pretty well how tough the market battles can be and how complicated it is to return cargoes left for competitors. I wish Russian colleagues would analyze our experience in this respect and make helpful conclusions. 

– Do you run joint projects with OAO RZD?

– First, we closely cooperate with our Russian colleagues in transportation via the territory of Kaliningrad region within our two border stations, though they are not major ones for the Russia – Poland route. The major cargo flow following from the RF to Western Europe goes via the border check-point on the Poland – Belarus border. Nevertheless, we are developing all our border check-points and transportation volume is growing steadily. However, we are launching new projects as well. One of them is Czech motor cars transportation to a car assembly plant in Kaluga (Moscow region). It is a large-scaled project and colleagues from OAO RZD, Belarus and Czech railways are intensively preparing to implement it. Moreover, we are cooperating with OAO RZD to implement the officially introduced on September 1, 2006 unified transport invoice. I wish we could run more joint projects, though it requires preliminary preparation to fulfill them properly. Thus, we need to co-ordinate tariffs, set unified transport documentation etc. 

Currently a joint enterprise of four railways is being launched by Russian, Belarus, Polish and German railways. During several months the required documentation was worked out and the enterprise will be registered soon. The major target of the project is to create conditions for boosting cargo turnover within the Second Pan-European Transport Corridor (Berlin – Warsaw – Minsk – Moscow – Nizhny Novgorod). The working conditions typical of the route are to be changed to become acceptable for customers: in this respect, the joint company will have to provide such conditions (logistics, delivery period, and price). I think, this project will become a good platform to share the experience accumulated by the four railways. 

Nowadays in accordance with the rates of modern world economy development, the growth of the cargo turnover between Russia and Western Europe can be observed. Thus, even if we manage to attract a small share of this volume and run several trains per week, it will be a good result. Moreover, we hope to take a part of our competitors’ volumes, i.e. that of motor transport and shippers. We believe it is possible to create all the required conditions to fulfill this task and this was proved by the trial run of the trains. The Second Pan-European Transport Corridor potential is to be re-discovered yet. 

The work we do to achieve this within this project is similar to what our foreign colleagues did. We were preparing required documents, solving legal issues and developing a business-plan. I presume the work will be completed shortly. Speaking of our company, we have done what we had to make this project work. 

Interviewed by  Nadezhda  Vtorushina
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– What is your view of last year results achieved by the company?

– In general, we have been enhancing transportation volumes steadily, thus, our company’s revenue has been growing as well. In 2005 the revenue of Yakutia Railways made RUR 12 mln and in 2006 we boosted it two-fold up to RUR 25 mln. Of course, it is not a breathtaking result on Russian scale, though for a regional company involved into regional railway transportation these results prove its stability and economic propriety of the business. 

However, we did not manage to escape some negative results either. Thus, for the first time cargo transportation drop has been recorded. This drop amounted to 1.7 mln tons (-8.3% year-on-year). First of all, this was caused by the unsatisfactory level of «Lena» motor way: railway is being constructed now and cargo is transported from Tommot to Yakutsk by motor transport for 500 kilometers. In 2006, due to heavy rains, the motor way became impassable and, for the first time in the RF history, a federal motor way was closed for the whole month. As a result, cargo trains formed a traffic jam and the number of rail cars awaiting the motor way opening exceeded hundreds of units. This influenced the company’s cargo turnover negatively, in particular this negative effect was obvious for containerized cargo transportation. 

Moreover, early last year a drop of power station coal transported from coal mines located along the railway was recorded. That is why initially the company planned to transport 1.5 mln tons, though in practice this amount reduced two-fold. Fortunately, by the end of the year the situation changed: coal enterprises started transportation and in December we managed to fulfill our plans for coal transportation. Despite the above-mentioned unfavourable circumstances, our company reached the end of 2006 with no losses. Moreover, due to transportation of other cargoes, we obtained serious profit and this shows Yakutia Railways are continuing to develop intensively. 

– What are your forecasts for the company for 2007?

– Forecasts for 2007 are most favourable. We expect serious cargo turnover growth due to deliveries of pipes (about 300 thousand tons) and components for Eastern Siberia – Pacific Ocean oil pipe-line. Also, construction material transportation to the North of Yakutia is quite promising and aimed at railway construction immediately. Moreover, now in Yakutsk city construction is growing rapidly and construction material transportation in general is increasing; this has to do with transportation of cement, finishing material etc. According to our forecasts, transportation volume will grow by 15–20% in 2007, thus, salary for railway men and population’s income will increase as well. 

– What about your company’s relations with foreign colleagues? How successful are your joint projects? 

– Of course, our company develops partnership both with Russian enterprises and foreign colleagues. This partnership gives us a chance to take our company onto a new level of higher quality, to expand the range of services and assist in transit transportation development. 

For example, we’ve been cooperating with Kazakhstan railways. Last year we signed a memorandum with Kazakhstan Temir Zholy JSC. This agreement resulted in the trial of a diesel locomotive rented from Kazakhstan company in severe climatic conditions. This experiment started in August 2006 and is unfolding quite successfully. 

Moreover, Yakutia Railways concluded a memorandum on intentions within technical and tariff policy with the Russian-Mongolian enterprise Ulan-Bator Railway JSC, which is similar to our company in terms of length, transportation volumes etc. 

Late in February representatives of Yakutia Railways had a meeting with a Lithuanian Railways representative. Heads of the companies discussed issues on cooperation within infrastructure, modernization of traction and rolling stock, as well as tariff policy carried out by enterprises. 

Mutually beneficial cooperation is very important to us, since it helps railway infrastructure development. I’d like to emphasize one of the major projects run jointly with the Lithuanian Railways. This is modernization of traction rolling stock, i.e. shunting diesel locomotives ТЭМ-2 with the use of Caterpillar power units. Our Lithuanian colleagues have such experience, and we are eager to get it as well. Moreover, our companies intend to come to an agreement on transit transportation within the two infrastructures of common use. Yakutia owns significant resources potential, such as timber, power station coal and coking coal and Lithuania, in its turn, is interested in our production. Stasis Gudvalis, CEO of Lithuanian Railways JSC, expressed hope that our cooperation will be prospective and will become the basis for new joint projects development. 

– As it is known, Yakutia Railways has developed a programme of diesel locomotives modernization on the basis of General Electric technology. 

– It is no secret that the major problem we face during transportation is the extremely high level of rolling-stock wear-and-tear. To solve this problem, the programme of rolling stock modernization was developed. By now, three units have already been given for modernization to Poltavsky locomotive repair works on lease terms. Two more units are being prepared for dispatch. Not long ago, at the meeting with the President and top-management of GE Transportation, we discussed our future project. We plan to launch a center of modernization for main line and shunting locomotives in the locomotive depot in Aldan, which would service the units operating in the Far Eastern region of Russia on the basis of General Electric modern technologies. 

Starting from last October we have been testing locomotives modernized according to two different technologies. They are diesel locomotive with Д–49 engine manufactured by Kolomensky diesel locomotive construction works and diesel locomotive with GE traction module on the basis of 7FDL diesel unit. We are planning to choose the model to launch a technology based on the two major criteria, i.e. reliability and maintenance costs. 

Our experts, headed by Alexander Kurchatov, our chief engineer, analyzed the preliminary results of trials held and made a conclusion that the American technology suits our regional conditions better. Besides simplicity of installation, 7FDL unit happened to be safer and more economic in respect of fuel and oil consumption. However, this modernized model also has certain failures, i.e. electronic devices fail under low temperatures. This defect is to be eliminated by our engineers.

– What is your view of your company’s relations with OAO RZD? 

– Two years ago OAO RZD treated us not as a railway, but as a long access, consequently, all the relations were built up respectively. By now the company has been officially acknowledged as an infrastructure of railway transport of common use and functions as an equal partner of OAO RZD – the monopolist within railway transportation. Our major goal now is setting efficient co-operation with the federal bodies controlling the transport sector, OAO RZD and other structures operating on the transportation market, as well as with partners abroad. 

One of the most significant achievements of 2006 was reaching an agreement «On cargo transportation in cargo rail cars and containers within direct communication» with OAO RZD, signed during the RF President visit to Yakutia. No doubts it is an important programme document that sets principles for Yakutia Railways and OAO RZD cooperation, which will also make the basis for infrastructure and carriers cooperation. 

– How is this programme document implemented?

– I have to say that this agreement set only general principles for the cooperation of the two companies performing as infrastructure owners. Additionally, a set of documents was developed. They are six contracts covering all areas of relations within cargo transportation. 

Starting from April 1, 2007, these documents became effective. Thus, the specific attitude of OAO RZD to Yakutia Railways is just one of many approached. This has brought certain changes. For example, now a client operating in our region will be charged for using our infrastructure. 

Services will be paid on the compensation basis, according to the rates for cargo transportation adopted in the CIS. This scheme excludes the opportunity of automatic discarding. A large-scaled introduction of this complex technology will be implemented starting from October 1, 2007. The issue which was important for our clients, i.e. charging for cargo transportation for the whole route the cargo follows via two infrastructures, has also been addressed. Now the client will be charged according to the «through» scheme: from departure point to destination. Before this the cargo consigner paid the tariff for the route from RZD dispatch station to Neryungri-Gruzovaya station, and the cargo consignee paid for the sector from the above-mentioned station to the destination point via Yakutia Railway. In near future we plan to conclude typical contracts with daughter operator companies of OAO RZD, in particular, with OAO TransContainer.

– Will the policy of tariff calculation for your infrastructure use the change after through tariff launch? 

– Of course. This is one of the basic conditions of the agreement concluded with OAO RZD. Earlier tariffs for our services were set by the Regional Energy Commission of Sakha Republic (Yakutia). However, since the moment Yakutia Railways acquired the status of a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects, our tariffs are to be set by the RF Federal Tariff service.

– Could you, please, comment on the new tariff system developed by Yakutia Railways considering recent changes? 

– As said earlier nowadays the infrastructure of Yakutia Railways is considered a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects. According to the acting legislation, tariffs for cargo and passenger transportation, as well as infrastructure services provision, become state-regulated. In this respect, at present the new system of transportation prime cost calculation and cargo tariffs formation is to be approved. This system differs from the present-day and from the one applied by OAO RZD due to the incomparable activities volume, set tasks, definite transportation terms etc. Our company experts have developed this system. In future, in the view of Yakutia Railways structure development, we do not exclude core institutions attraction to improve this system.

Interviewed  by  Nadezhda  Vtorushina
    [~DETAIL_TEXT] => Most favourable forecasts
 
– What is your view of last year results achieved by the company?

– In general, we have been enhancing transportation volumes steadily, thus, our company’s revenue has been growing as well. In 2005 the revenue of Yakutia Railways made RUR 12 mln and in 2006 we boosted it two-fold up to RUR 25 mln. Of course, it is not a breathtaking result on Russian scale, though for a regional company involved into regional railway transportation these results prove its stability and economic propriety of the business. 

However, we did not manage to escape some negative results either. Thus, for the first time cargo transportation drop has been recorded. This drop amounted to 1.7 mln tons (-8.3% year-on-year). First of all, this was caused by the unsatisfactory level of «Lena» motor way: railway is being constructed now and cargo is transported from Tommot to Yakutsk by motor transport for 500 kilometers. In 2006, due to heavy rains, the motor way became impassable and, for the first time in the RF history, a federal motor way was closed for the whole month. As a result, cargo trains formed a traffic jam and the number of rail cars awaiting the motor way opening exceeded hundreds of units. This influenced the company’s cargo turnover negatively, in particular this negative effect was obvious for containerized cargo transportation. 

Moreover, early last year a drop of power station coal transported from coal mines located along the railway was recorded. That is why initially the company planned to transport 1.5 mln tons, though in practice this amount reduced two-fold. Fortunately, by the end of the year the situation changed: coal enterprises started transportation and in December we managed to fulfill our plans for coal transportation. Despite the above-mentioned unfavourable circumstances, our company reached the end of 2006 with no losses. Moreover, due to transportation of other cargoes, we obtained serious profit and this shows Yakutia Railways are continuing to develop intensively. 

– What are your forecasts for the company for 2007?

– Forecasts for 2007 are most favourable. We expect serious cargo turnover growth due to deliveries of pipes (about 300 thousand tons) and components for Eastern Siberia – Pacific Ocean oil pipe-line. Also, construction material transportation to the North of Yakutia is quite promising and aimed at railway construction immediately. Moreover, now in Yakutsk city construction is growing rapidly and construction material transportation in general is increasing; this has to do with transportation of cement, finishing material etc. According to our forecasts, transportation volume will grow by 15–20% in 2007, thus, salary for railway men and population’s income will increase as well. 

– What about your company’s relations with foreign colleagues? How successful are your joint projects? 

– Of course, our company develops partnership both with Russian enterprises and foreign colleagues. This partnership gives us a chance to take our company onto a new level of higher quality, to expand the range of services and assist in transit transportation development. 

For example, we’ve been cooperating with Kazakhstan railways. Last year we signed a memorandum with Kazakhstan Temir Zholy JSC. This agreement resulted in the trial of a diesel locomotive rented from Kazakhstan company in severe climatic conditions. This experiment started in August 2006 and is unfolding quite successfully. 

Moreover, Yakutia Railways concluded a memorandum on intentions within technical and tariff policy with the Russian-Mongolian enterprise Ulan-Bator Railway JSC, which is similar to our company in terms of length, transportation volumes etc. 

Late in February representatives of Yakutia Railways had a meeting with a Lithuanian Railways representative. Heads of the companies discussed issues on cooperation within infrastructure, modernization of traction and rolling stock, as well as tariff policy carried out by enterprises. 

Mutually beneficial cooperation is very important to us, since it helps railway infrastructure development. I’d like to emphasize one of the major projects run jointly with the Lithuanian Railways. This is modernization of traction rolling stock, i.e. shunting diesel locomotives ТЭМ-2 with the use of Caterpillar power units. Our Lithuanian colleagues have such experience, and we are eager to get it as well. Moreover, our companies intend to come to an agreement on transit transportation within the two infrastructures of common use. Yakutia owns significant resources potential, such as timber, power station coal and coking coal and Lithuania, in its turn, is interested in our production. Stasis Gudvalis, CEO of Lithuanian Railways JSC, expressed hope that our cooperation will be prospective and will become the basis for new joint projects development. 

– As it is known, Yakutia Railways has developed a programme of diesel locomotives modernization on the basis of General Electric technology. 

– It is no secret that the major problem we face during transportation is the extremely high level of rolling-stock wear-and-tear. To solve this problem, the programme of rolling stock modernization was developed. By now, three units have already been given for modernization to Poltavsky locomotive repair works on lease terms. Two more units are being prepared for dispatch. Not long ago, at the meeting with the President and top-management of GE Transportation, we discussed our future project. We plan to launch a center of modernization for main line and shunting locomotives in the locomotive depot in Aldan, which would service the units operating in the Far Eastern region of Russia on the basis of General Electric modern technologies. 

Starting from last October we have been testing locomotives modernized according to two different technologies. They are diesel locomotive with Д–49 engine manufactured by Kolomensky diesel locomotive construction works and diesel locomotive with GE traction module on the basis of 7FDL diesel unit. We are planning to choose the model to launch a technology based on the two major criteria, i.e. reliability and maintenance costs. 

Our experts, headed by Alexander Kurchatov, our chief engineer, analyzed the preliminary results of trials held and made a conclusion that the American technology suits our regional conditions better. Besides simplicity of installation, 7FDL unit happened to be safer and more economic in respect of fuel and oil consumption. However, this modernized model also has certain failures, i.e. electronic devices fail under low temperatures. This defect is to be eliminated by our engineers.

– What is your view of your company’s relations with OAO RZD? 

– Two years ago OAO RZD treated us not as a railway, but as a long access, consequently, all the relations were built up respectively. By now the company has been officially acknowledged as an infrastructure of railway transport of common use and functions as an equal partner of OAO RZD – the monopolist within railway transportation. Our major goal now is setting efficient co-operation with the federal bodies controlling the transport sector, OAO RZD and other structures operating on the transportation market, as well as with partners abroad. 

One of the most significant achievements of 2006 was reaching an agreement «On cargo transportation in cargo rail cars and containers within direct communication» with OAO RZD, signed during the RF President visit to Yakutia. No doubts it is an important programme document that sets principles for Yakutia Railways and OAO RZD cooperation, which will also make the basis for infrastructure and carriers cooperation. 

– How is this programme document implemented?

– I have to say that this agreement set only general principles for the cooperation of the two companies performing as infrastructure owners. Additionally, a set of documents was developed. They are six contracts covering all areas of relations within cargo transportation. 

Starting from April 1, 2007, these documents became effective. Thus, the specific attitude of OAO RZD to Yakutia Railways is just one of many approached. This has brought certain changes. For example, now a client operating in our region will be charged for using our infrastructure. 

Services will be paid on the compensation basis, according to the rates for cargo transportation adopted in the CIS. This scheme excludes the opportunity of automatic discarding. A large-scaled introduction of this complex technology will be implemented starting from October 1, 2007. The issue which was important for our clients, i.e. charging for cargo transportation for the whole route the cargo follows via two infrastructures, has also been addressed. Now the client will be charged according to the «through» scheme: from departure point to destination. Before this the cargo consigner paid the tariff for the route from RZD dispatch station to Neryungri-Gruzovaya station, and the cargo consignee paid for the sector from the above-mentioned station to the destination point via Yakutia Railway. In near future we plan to conclude typical contracts with daughter operator companies of OAO RZD, in particular, with OAO TransContainer.

– Will the policy of tariff calculation for your infrastructure use the change after through tariff launch? 

– Of course. This is one of the basic conditions of the agreement concluded with OAO RZD. Earlier tariffs for our services were set by the Regional Energy Commission of Sakha Republic (Yakutia). However, since the moment Yakutia Railways acquired the status of a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects, our tariffs are to be set by the RF Federal Tariff service.

– Could you, please, comment on the new tariff system developed by Yakutia Railways considering recent changes? 

– As said earlier nowadays the infrastructure of Yakutia Railways is considered a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects. According to the acting legislation, tariffs for cargo and passenger transportation, as well as infrastructure services provision, become state-regulated. In this respect, at present the new system of transportation prime cost calculation and cargo tariffs formation is to be approved. This system differs from the present-day and from the one applied by OAO RZD due to the incomparable activities volume, set tasks, definite transportation terms etc. Our company experts have developed this system. In future, in the view of Yakutia Railways structure development, we do not exclude core institutions attraction to improve this system.

Interviewed  by  Nadezhda  Vtorushina
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    [DETAIL_TEXT] => Most favourable forecasts
 
– What is your view of last year results achieved by the company?

– In general, we have been enhancing transportation volumes steadily, thus, our company’s revenue has been growing as well. In 2005 the revenue of Yakutia Railways made RUR 12 mln and in 2006 we boosted it two-fold up to RUR 25 mln. Of course, it is not a breathtaking result on Russian scale, though for a regional company involved into regional railway transportation these results prove its stability and economic propriety of the business. 

However, we did not manage to escape some negative results either. Thus, for the first time cargo transportation drop has been recorded. This drop amounted to 1.7 mln tons (-8.3% year-on-year). First of all, this was caused by the unsatisfactory level of «Lena» motor way: railway is being constructed now and cargo is transported from Tommot to Yakutsk by motor transport for 500 kilometers. In 2006, due to heavy rains, the motor way became impassable and, for the first time in the RF history, a federal motor way was closed for the whole month. As a result, cargo trains formed a traffic jam and the number of rail cars awaiting the motor way opening exceeded hundreds of units. This influenced the company’s cargo turnover negatively, in particular this negative effect was obvious for containerized cargo transportation. 

Moreover, early last year a drop of power station coal transported from coal mines located along the railway was recorded. That is why initially the company planned to transport 1.5 mln tons, though in practice this amount reduced two-fold. Fortunately, by the end of the year the situation changed: coal enterprises started transportation and in December we managed to fulfill our plans for coal transportation. Despite the above-mentioned unfavourable circumstances, our company reached the end of 2006 with no losses. Moreover, due to transportation of other cargoes, we obtained serious profit and this shows Yakutia Railways are continuing to develop intensively. 

– What are your forecasts for the company for 2007?

– Forecasts for 2007 are most favourable. We expect serious cargo turnover growth due to deliveries of pipes (about 300 thousand tons) and components for Eastern Siberia – Pacific Ocean oil pipe-line. Also, construction material transportation to the North of Yakutia is quite promising and aimed at railway construction immediately. Moreover, now in Yakutsk city construction is growing rapidly and construction material transportation in general is increasing; this has to do with transportation of cement, finishing material etc. According to our forecasts, transportation volume will grow by 15–20% in 2007, thus, salary for railway men and population’s income will increase as well. 

– What about your company’s relations with foreign colleagues? How successful are your joint projects? 

– Of course, our company develops partnership both with Russian enterprises and foreign colleagues. This partnership gives us a chance to take our company onto a new level of higher quality, to expand the range of services and assist in transit transportation development. 

For example, we’ve been cooperating with Kazakhstan railways. Last year we signed a memorandum with Kazakhstan Temir Zholy JSC. This agreement resulted in the trial of a diesel locomotive rented from Kazakhstan company in severe climatic conditions. This experiment started in August 2006 and is unfolding quite successfully. 

Moreover, Yakutia Railways concluded a memorandum on intentions within technical and tariff policy with the Russian-Mongolian enterprise Ulan-Bator Railway JSC, which is similar to our company in terms of length, transportation volumes etc. 

Late in February representatives of Yakutia Railways had a meeting with a Lithuanian Railways representative. Heads of the companies discussed issues on cooperation within infrastructure, modernization of traction and rolling stock, as well as tariff policy carried out by enterprises. 

Mutually beneficial cooperation is very important to us, since it helps railway infrastructure development. I’d like to emphasize one of the major projects run jointly with the Lithuanian Railways. This is modernization of traction rolling stock, i.e. shunting diesel locomotives ТЭМ-2 with the use of Caterpillar power units. Our Lithuanian colleagues have such experience, and we are eager to get it as well. Moreover, our companies intend to come to an agreement on transit transportation within the two infrastructures of common use. Yakutia owns significant resources potential, such as timber, power station coal and coking coal and Lithuania, in its turn, is interested in our production. Stasis Gudvalis, CEO of Lithuanian Railways JSC, expressed hope that our cooperation will be prospective and will become the basis for new joint projects development. 

– As it is known, Yakutia Railways has developed a programme of diesel locomotives modernization on the basis of General Electric technology. 

– It is no secret that the major problem we face during transportation is the extremely high level of rolling-stock wear-and-tear. To solve this problem, the programme of rolling stock modernization was developed. By now, three units have already been given for modernization to Poltavsky locomotive repair works on lease terms. Two more units are being prepared for dispatch. Not long ago, at the meeting with the President and top-management of GE Transportation, we discussed our future project. We plan to launch a center of modernization for main line and shunting locomotives in the locomotive depot in Aldan, which would service the units operating in the Far Eastern region of Russia on the basis of General Electric modern technologies. 

Starting from last October we have been testing locomotives modernized according to two different technologies. They are diesel locomotive with Д–49 engine manufactured by Kolomensky diesel locomotive construction works and diesel locomotive with GE traction module on the basis of 7FDL diesel unit. We are planning to choose the model to launch a technology based on the two major criteria, i.e. reliability and maintenance costs. 

Our experts, headed by Alexander Kurchatov, our chief engineer, analyzed the preliminary results of trials held and made a conclusion that the American technology suits our regional conditions better. Besides simplicity of installation, 7FDL unit happened to be safer and more economic in respect of fuel and oil consumption. However, this modernized model also has certain failures, i.e. electronic devices fail under low temperatures. This defect is to be eliminated by our engineers.

– What is your view of your company’s relations with OAO RZD? 

– Two years ago OAO RZD treated us not as a railway, but as a long access, consequently, all the relations were built up respectively. By now the company has been officially acknowledged as an infrastructure of railway transport of common use and functions as an equal partner of OAO RZD – the monopolist within railway transportation. Our major goal now is setting efficient co-operation with the federal bodies controlling the transport sector, OAO RZD and other structures operating on the transportation market, as well as with partners abroad. 

One of the most significant achievements of 2006 was reaching an agreement «On cargo transportation in cargo rail cars and containers within direct communication» with OAO RZD, signed during the RF President visit to Yakutia. No doubts it is an important programme document that sets principles for Yakutia Railways and OAO RZD cooperation, which will also make the basis for infrastructure and carriers cooperation. 

– How is this programme document implemented?

– I have to say that this agreement set only general principles for the cooperation of the two companies performing as infrastructure owners. Additionally, a set of documents was developed. They are six contracts covering all areas of relations within cargo transportation. 

Starting from April 1, 2007, these documents became effective. Thus, the specific attitude of OAO RZD to Yakutia Railways is just one of many approached. This has brought certain changes. For example, now a client operating in our region will be charged for using our infrastructure. 

Services will be paid on the compensation basis, according to the rates for cargo transportation adopted in the CIS. This scheme excludes the opportunity of automatic discarding. A large-scaled introduction of this complex technology will be implemented starting from October 1, 2007. The issue which was important for our clients, i.e. charging for cargo transportation for the whole route the cargo follows via two infrastructures, has also been addressed. Now the client will be charged according to the «through» scheme: from departure point to destination. Before this the cargo consigner paid the tariff for the route from RZD dispatch station to Neryungri-Gruzovaya station, and the cargo consignee paid for the sector from the above-mentioned station to the destination point via Yakutia Railway. In near future we plan to conclude typical contracts with daughter operator companies of OAO RZD, in particular, with OAO TransContainer.

– Will the policy of tariff calculation for your infrastructure use the change after through tariff launch? 

– Of course. This is one of the basic conditions of the agreement concluded with OAO RZD. Earlier tariffs for our services were set by the Regional Energy Commission of Sakha Republic (Yakutia). However, since the moment Yakutia Railways acquired the status of a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects, our tariffs are to be set by the RF Federal Tariff service.

– Could you, please, comment on the new tariff system developed by Yakutia Railways considering recent changes? 

– As said earlier nowadays the infrastructure of Yakutia Railways is considered a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects. According to the acting legislation, tariffs for cargo and passenger transportation, as well as infrastructure services provision, become state-regulated. In this respect, at present the new system of transportation prime cost calculation and cargo tariffs formation is to be approved. This system differs from the present-day and from the one applied by OAO RZD due to the incomparable activities volume, set tasks, definite transportation terms etc. Our company experts have developed this system. In future, in the view of Yakutia Railways structure development, we do not exclude core institutions attraction to improve this system.

Interviewed  by  Nadezhda  Vtorushina
    [~DETAIL_TEXT] => Most favourable forecasts
 
– What is your view of last year results achieved by the company?

– In general, we have been enhancing transportation volumes steadily, thus, our company’s revenue has been growing as well. In 2005 the revenue of Yakutia Railways made RUR 12 mln and in 2006 we boosted it two-fold up to RUR 25 mln. Of course, it is not a breathtaking result on Russian scale, though for a regional company involved into regional railway transportation these results prove its stability and economic propriety of the business. 

However, we did not manage to escape some negative results either. Thus, for the first time cargo transportation drop has been recorded. This drop amounted to 1.7 mln tons (-8.3% year-on-year). First of all, this was caused by the unsatisfactory level of «Lena» motor way: railway is being constructed now and cargo is transported from Tommot to Yakutsk by motor transport for 500 kilometers. In 2006, due to heavy rains, the motor way became impassable and, for the first time in the RF history, a federal motor way was closed for the whole month. As a result, cargo trains formed a traffic jam and the number of rail cars awaiting the motor way opening exceeded hundreds of units. This influenced the company’s cargo turnover negatively, in particular this negative effect was obvious for containerized cargo transportation. 

Moreover, early last year a drop of power station coal transported from coal mines located along the railway was recorded. That is why initially the company planned to transport 1.5 mln tons, though in practice this amount reduced two-fold. Fortunately, by the end of the year the situation changed: coal enterprises started transportation and in December we managed to fulfill our plans for coal transportation. Despite the above-mentioned unfavourable circumstances, our company reached the end of 2006 with no losses. Moreover, due to transportation of other cargoes, we obtained serious profit and this shows Yakutia Railways are continuing to develop intensively. 

– What are your forecasts for the company for 2007?

– Forecasts for 2007 are most favourable. We expect serious cargo turnover growth due to deliveries of pipes (about 300 thousand tons) and components for Eastern Siberia – Pacific Ocean oil pipe-line. Also, construction material transportation to the North of Yakutia is quite promising and aimed at railway construction immediately. Moreover, now in Yakutsk city construction is growing rapidly and construction material transportation in general is increasing; this has to do with transportation of cement, finishing material etc. According to our forecasts, transportation volume will grow by 15–20% in 2007, thus, salary for railway men and population’s income will increase as well. 

– What about your company’s relations with foreign colleagues? How successful are your joint projects? 

– Of course, our company develops partnership both with Russian enterprises and foreign colleagues. This partnership gives us a chance to take our company onto a new level of higher quality, to expand the range of services and assist in transit transportation development. 

For example, we’ve been cooperating with Kazakhstan railways. Last year we signed a memorandum with Kazakhstan Temir Zholy JSC. This agreement resulted in the trial of a diesel locomotive rented from Kazakhstan company in severe climatic conditions. This experiment started in August 2006 and is unfolding quite successfully. 

Moreover, Yakutia Railways concluded a memorandum on intentions within technical and tariff policy with the Russian-Mongolian enterprise Ulan-Bator Railway JSC, which is similar to our company in terms of length, transportation volumes etc. 

Late in February representatives of Yakutia Railways had a meeting with a Lithuanian Railways representative. Heads of the companies discussed issues on cooperation within infrastructure, modernization of traction and rolling stock, as well as tariff policy carried out by enterprises. 

Mutually beneficial cooperation is very important to us, since it helps railway infrastructure development. I’d like to emphasize one of the major projects run jointly with the Lithuanian Railways. This is modernization of traction rolling stock, i.e. shunting diesel locomotives ТЭМ-2 with the use of Caterpillar power units. Our Lithuanian colleagues have such experience, and we are eager to get it as well. Moreover, our companies intend to come to an agreement on transit transportation within the two infrastructures of common use. Yakutia owns significant resources potential, such as timber, power station coal and coking coal and Lithuania, in its turn, is interested in our production. Stasis Gudvalis, CEO of Lithuanian Railways JSC, expressed hope that our cooperation will be prospective and will become the basis for new joint projects development. 

– As it is known, Yakutia Railways has developed a programme of diesel locomotives modernization on the basis of General Electric technology. 

– It is no secret that the major problem we face during transportation is the extremely high level of rolling-stock wear-and-tear. To solve this problem, the programme of rolling stock modernization was developed. By now, three units have already been given for modernization to Poltavsky locomotive repair works on lease terms. Two more units are being prepared for dispatch. Not long ago, at the meeting with the President and top-management of GE Transportation, we discussed our future project. We plan to launch a center of modernization for main line and shunting locomotives in the locomotive depot in Aldan, which would service the units operating in the Far Eastern region of Russia on the basis of General Electric modern technologies. 

Starting from last October we have been testing locomotives modernized according to two different technologies. They are diesel locomotive with Д–49 engine manufactured by Kolomensky diesel locomotive construction works and diesel locomotive with GE traction module on the basis of 7FDL diesel unit. We are planning to choose the model to launch a technology based on the two major criteria, i.e. reliability and maintenance costs. 

Our experts, headed by Alexander Kurchatov, our chief engineer, analyzed the preliminary results of trials held and made a conclusion that the American technology suits our regional conditions better. Besides simplicity of installation, 7FDL unit happened to be safer and more economic in respect of fuel and oil consumption. However, this modernized model also has certain failures, i.e. electronic devices fail under low temperatures. This defect is to be eliminated by our engineers.

– What is your view of your company’s relations with OAO RZD? 

– Two years ago OAO RZD treated us not as a railway, but as a long access, consequently, all the relations were built up respectively. By now the company has been officially acknowledged as an infrastructure of railway transport of common use and functions as an equal partner of OAO RZD – the monopolist within railway transportation. Our major goal now is setting efficient co-operation with the federal bodies controlling the transport sector, OAO RZD and other structures operating on the transportation market, as well as with partners abroad. 

One of the most significant achievements of 2006 was reaching an agreement «On cargo transportation in cargo rail cars and containers within direct communication» with OAO RZD, signed during the RF President visit to Yakutia. No doubts it is an important programme document that sets principles for Yakutia Railways and OAO RZD cooperation, which will also make the basis for infrastructure and carriers cooperation. 

– How is this programme document implemented?

– I have to say that this agreement set only general principles for the cooperation of the two companies performing as infrastructure owners. Additionally, a set of documents was developed. They are six contracts covering all areas of relations within cargo transportation. 

Starting from April 1, 2007, these documents became effective. Thus, the specific attitude of OAO RZD to Yakutia Railways is just one of many approached. This has brought certain changes. For example, now a client operating in our region will be charged for using our infrastructure. 

Services will be paid on the compensation basis, according to the rates for cargo transportation adopted in the CIS. This scheme excludes the opportunity of automatic discarding. A large-scaled introduction of this complex technology will be implemented starting from October 1, 2007. The issue which was important for our clients, i.e. charging for cargo transportation for the whole route the cargo follows via two infrastructures, has also been addressed. Now the client will be charged according to the «through» scheme: from departure point to destination. Before this the cargo consigner paid the tariff for the route from RZD dispatch station to Neryungri-Gruzovaya station, and the cargo consignee paid for the sector from the above-mentioned station to the destination point via Yakutia Railway. In near future we plan to conclude typical contracts with daughter operator companies of OAO RZD, in particular, with OAO TransContainer.

– Will the policy of tariff calculation for your infrastructure use the change after through tariff launch? 

– Of course. This is one of the basic conditions of the agreement concluded with OAO RZD. Earlier tariffs for our services were set by the Regional Energy Commission of Sakha Republic (Yakutia). However, since the moment Yakutia Railways acquired the status of a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects, our tariffs are to be set by the RF Federal Tariff service.

– Could you, please, comment on the new tariff system developed by Yakutia Railways considering recent changes? 

– As said earlier nowadays the infrastructure of Yakutia Railways is considered a railway infrastructure of common use and the company was entered into the Register of Natural Monopoly Subjects. According to the acting legislation, tariffs for cargo and passenger transportation, as well as infrastructure services provision, become state-regulated. In this respect, at present the new system of transportation prime cost calculation and cargo tariffs formation is to be approved. This system differs from the present-day and from the one applied by OAO RZD due to the incomparable activities volume, set tasks, definite transportation terms etc. Our company experts have developed this system. In future, in the view of Yakutia Railways structure development, we do not exclude core institutions attraction to improve this system.

Interviewed  by  Nadezhda  Vtorushina
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    [DETAIL_TEXT] => Olympic Games Give City a Chance

Russian resort city Sochi, located on the Black Sea, is one of the applicants to hold Winter Olympic Games in 2014. In preparation for the event, it is necessary to use the new technologies to solve transport problems. 

Nowadays, Russia has a unique (and first of all, financial) possibility to create and test the new model of passenger services market on the territory of the so-called Greater Sochi. The model will maximally consider the logistic principles on which carefully thought over and systemic construction of transport complexes is traditionally based. 

In case Sochi loses the competition for the Winter Olympic Games in 2014, the city will be transferred into an all-year sanatorium meeting all international requirements in accordance with the Federal Target Programme «Development of Sochi as a Sanatorium (2006-2014)» (Decree №58-p from 31.01.06 of the RF Government). All conditions will be created to hold training sessions and winter sports competitions. Thus, even if no Olympic Games are held in Sochi in 2014, most of the planned athletic facilities will be constructed. And the sum of investments is a tremendous one. 

According to the first – Olympic – scheme, the total sum of investments into the project amounts to RUR 316.8 bln, including RUR 188.7 bln. from the federal budget. RUR 31.3 bln (including RUR 18.7 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 115.9 bln (RUR 108.8 bln from the federal budget) is to be spent on development of the transport infrastructure.

The second – sanatorium – scheme envisages a smaller sum of investments – RUR 178 bln. RUR 21.5 bln (RUR 12.5 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 19.8 bln (including RUR 12.5 bln from the federal budget, or 21.6% of the total volume of federal resources) is to be spent on the transport infrastructure.

Besides, a favourable investment climate will be created to attract private capital and to use public-private partnership widely. As a result, there are to be constructed 15 new athletic facilities in Sochi and no less than 17 new transport objects. Thus, there will appear the necessity of their integration into the existing social cultural and economic area, consequently there arises a question of choosing the best solution in the sector of city, suburban, interregional, regional and other types of passenger transportation.

According to Principles

The prerequisites for a new transport system construction in Sochi by 2014 are based on two main principles: to construct the communication lanes where it is convenient for passengers, and to make passenger transportation fast, safe and comfortable. 

Considering the principles and requirements of the International Olympic Committee, a group of
experts developed the Transport Concept envisaging all the statements of the Olympic Bid Book officially given by Russia in Lausanne (Switzerland) in January 2007. The Concept contains the materials of the Federal Target Programme mentioned above and envisages servicing all transport modes in Greater Sochi. 

The Transport Concept contains the following requirements:
• to use maximally the existing transport infrastructure on condition that it is modernized;
• to have potential opportunities not only for organization but also for prospective development of innovative types of transport modes, including railway rolling stock;
• not to worsen the living conditions of people (the noise level, clear air, safety) by means of proper organization of transport work, reduction of the total intensity of traffic and the amount of vehicles on streets and roads.

Meet Railway
Railway transport has been chosen for mass (from 60% to 80%) passenger transportation in plain and plain-mountain zones. Both systems discussed by the specialists have never been
used in Russia:
• City high-speed railway will be constructed on the basis of the existing railway network by modernizing its track facilities and rolling stock (including electric sections). The system will function in conditions of plain scenery – in Sochi and in Imeretinskaya valley.
• Light railway (including some sectors of mountain rack-railway) will be created on the basis on new high-tech infrastructure. Besides, considering the experience of European countries, in particular Germany and Austria, special rolling stock (electric trains) will be built. The system will function in mountain-plain zone, transporting passengers from Adler and Veseloye settlement (Imeretinskaya valley) to the athletic facilities in Krasnaya and Grushevaya Meadows.
• In the framework of the city high-speed railway, it is planned to launch a through pendulum diameter servicing two routes on the railway sector Tuapse-Veseloye.

If necessary, a mini-pendulum schedule of Olympic trains may be organized on the sector between the station of the light railway «Airport» and Veseloye settlement. However, to do this, a revision of the existing train schedule and reconstruction of track facilities are required. 

Light Railway Is Key to Success 

The following parameters have been approved for the light railway launch:
1. The number of wagons in an electric train may be changed in accordance with the size of the passenger flow. It is based on the suitable for the conditions of Sochi exploited rolling stock of the StadtBahn modern system (Germany). The first version envisages three and more module wagons (for example, of VT 640 DB AG series); the second version envisages usage of articulated five-seven section module electric trains (for example, produced by Siemens).
2. The carrying capacity of the electric trains is changeable in correspondence with the passenger flow at the standard of 4 people per square meter of the empty floor area. The first version (module wagons of VT 640 DB AG series) – from 1.100 to 1.625 passengers; the second version (articulated electric trains produced by Siemens) – over 460 passengers (for example, one-wagon 8-axes train). 
3. The exploitation speed for either version of rolling stock is about 30-35 km/h, which is possible to achieve on a new infrastructure even under difficult mountain conditions.
4. The minimum time-interval in rush-hours is not to exceed 5-10 minutes. In short periods of time (0.5-1.5 hours) there may be a time-interval of two minutes.

The basic data for the preliminary calculations of the light railway system carrying capacity was the electric train’s capacity of 1.100 passengers. The type of wagons was not taken into consideration, since either version can carry the amount of passengers.

At the current stage of the project specialists have examined two routes of the light railway to connect the plain and the mountain zones. The second route may be used in a long-term prospect. It is also important that the light railway will work simultaneously with the light rail electric transport in the area, where the main sport centre and the square for the Olympic Games opening and closing ceremonies will be located.

For Many Years

Both railway systems – the city high-speed railway and the light railway – will function not only during the XXII Winter Olympic Games, but also after it to service the inhabitants and tourists. Its advantage is that foreigners are used to the system, and all the information signs are absolutely clear to them. Thus, they will have no obstacles when using the transport mode.

Besides, rail transport can solve the problem of speeded-up direct and through delivery of air passengers to the hotels and athletic facilities. Simultaneously, the road network of the city will be free from many vehicles, which pollute Sochi by ecologically dangerous emissions. 

Thus, the new integrated transport system of Greater Sochi is a complex of interconnected elements of the railway, road and pedestrian infrastructure (including six modern hubs), modeled with maximum consideration of the directions of pedestrians’ and passengers’ movement on the basis of all elements (existing and projected ones) of the innovation transport infrastructure carrying capacity. 

Eleonora Shabarova,
Project Engineer-in-Chief, ZAO Territorial Development and Transport Infrastructure Scientific Research and Design Institute
    [~DETAIL_TEXT] => Olympic Games Give City a Chance

Russian resort city Sochi, located on the Black Sea, is one of the applicants to hold Winter Olympic Games in 2014. In preparation for the event, it is necessary to use the new technologies to solve transport problems. 

Nowadays, Russia has a unique (and first of all, financial) possibility to create and test the new model of passenger services market on the territory of the so-called Greater Sochi. The model will maximally consider the logistic principles on which carefully thought over and systemic construction of transport complexes is traditionally based. 

In case Sochi loses the competition for the Winter Olympic Games in 2014, the city will be transferred into an all-year sanatorium meeting all international requirements in accordance with the Federal Target Programme «Development of Sochi as a Sanatorium (2006-2014)» (Decree №58-p from 31.01.06 of the RF Government). All conditions will be created to hold training sessions and winter sports competitions. Thus, even if no Olympic Games are held in Sochi in 2014, most of the planned athletic facilities will be constructed. And the sum of investments is a tremendous one. 

According to the first – Olympic – scheme, the total sum of investments into the project amounts to RUR 316.8 bln, including RUR 188.7 bln. from the federal budget. RUR 31.3 bln (including RUR 18.7 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 115.9 bln (RUR 108.8 bln from the federal budget) is to be spent on development of the transport infrastructure.

The second – sanatorium – scheme envisages a smaller sum of investments – RUR 178 bln. RUR 21.5 bln (RUR 12.5 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 19.8 bln (including RUR 12.5 bln from the federal budget, or 21.6% of the total volume of federal resources) is to be spent on the transport infrastructure.

Besides, a favourable investment climate will be created to attract private capital and to use public-private partnership widely. As a result, there are to be constructed 15 new athletic facilities in Sochi and no less than 17 new transport objects. Thus, there will appear the necessity of their integration into the existing social cultural and economic area, consequently there arises a question of choosing the best solution in the sector of city, suburban, interregional, regional and other types of passenger transportation.

According to Principles

The prerequisites for a new transport system construction in Sochi by 2014 are based on two main principles: to construct the communication lanes where it is convenient for passengers, and to make passenger transportation fast, safe and comfortable. 

Considering the principles and requirements of the International Olympic Committee, a group of
experts developed the Transport Concept envisaging all the statements of the Olympic Bid Book officially given by Russia in Lausanne (Switzerland) in January 2007. The Concept contains the materials of the Federal Target Programme mentioned above and envisages servicing all transport modes in Greater Sochi. 

The Transport Concept contains the following requirements:
• to use maximally the existing transport infrastructure on condition that it is modernized;
• to have potential opportunities not only for organization but also for prospective development of innovative types of transport modes, including railway rolling stock;
• not to worsen the living conditions of people (the noise level, clear air, safety) by means of proper organization of transport work, reduction of the total intensity of traffic and the amount of vehicles on streets and roads.

Meet Railway
Railway transport has been chosen for mass (from 60% to 80%) passenger transportation in plain and plain-mountain zones. Both systems discussed by the specialists have never been
used in Russia:
• City high-speed railway will be constructed on the basis of the existing railway network by modernizing its track facilities and rolling stock (including electric sections). The system will function in conditions of plain scenery – in Sochi and in Imeretinskaya valley.
• Light railway (including some sectors of mountain rack-railway) will be created on the basis on new high-tech infrastructure. Besides, considering the experience of European countries, in particular Germany and Austria, special rolling stock (electric trains) will be built. The system will function in mountain-plain zone, transporting passengers from Adler and Veseloye settlement (Imeretinskaya valley) to the athletic facilities in Krasnaya and Grushevaya Meadows.
• In the framework of the city high-speed railway, it is planned to launch a through pendulum diameter servicing two routes on the railway sector Tuapse-Veseloye.

If necessary, a mini-pendulum schedule of Olympic trains may be organized on the sector between the station of the light railway «Airport» and Veseloye settlement. However, to do this, a revision of the existing train schedule and reconstruction of track facilities are required. 

Light Railway Is Key to Success 

The following parameters have been approved for the light railway launch:
1. The number of wagons in an electric train may be changed in accordance with the size of the passenger flow. It is based on the suitable for the conditions of Sochi exploited rolling stock of the StadtBahn modern system (Germany). The first version envisages three and more module wagons (for example, of VT 640 DB AG series); the second version envisages usage of articulated five-seven section module electric trains (for example, produced by Siemens).
2. The carrying capacity of the electric trains is changeable in correspondence with the passenger flow at the standard of 4 people per square meter of the empty floor area. The first version (module wagons of VT 640 DB AG series) – from 1.100 to 1.625 passengers; the second version (articulated electric trains produced by Siemens) – over 460 passengers (for example, one-wagon 8-axes train). 
3. The exploitation speed for either version of rolling stock is about 30-35 km/h, which is possible to achieve on a new infrastructure even under difficult mountain conditions.
4. The minimum time-interval in rush-hours is not to exceed 5-10 minutes. In short periods of time (0.5-1.5 hours) there may be a time-interval of two minutes.

The basic data for the preliminary calculations of the light railway system carrying capacity was the electric train’s capacity of 1.100 passengers. The type of wagons was not taken into consideration, since either version can carry the amount of passengers.

At the current stage of the project specialists have examined two routes of the light railway to connect the plain and the mountain zones. The second route may be used in a long-term prospect. It is also important that the light railway will work simultaneously with the light rail electric transport in the area, where the main sport centre and the square for the Olympic Games opening and closing ceremonies will be located.

For Many Years

Both railway systems – the city high-speed railway and the light railway – will function not only during the XXII Winter Olympic Games, but also after it to service the inhabitants and tourists. Its advantage is that foreigners are used to the system, and all the information signs are absolutely clear to them. Thus, they will have no obstacles when using the transport mode.

Besides, rail transport can solve the problem of speeded-up direct and through delivery of air passengers to the hotels and athletic facilities. Simultaneously, the road network of the city will be free from many vehicles, which pollute Sochi by ecologically dangerous emissions. 

Thus, the new integrated transport system of Greater Sochi is a complex of interconnected elements of the railway, road and pedestrian infrastructure (including six modern hubs), modeled with maximum consideration of the directions of pedestrians’ and passengers’ movement on the basis of all elements (existing and projected ones) of the innovation transport infrastructure carrying capacity. 

Eleonora Shabarova,
Project Engineer-in-Chief, ZAO Territorial Development and Transport Infrastructure Scientific Research and Design Institute
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    [DETAIL_TEXT] => Olympic Games Give City a Chance

Russian resort city Sochi, located on the Black Sea, is one of the applicants to hold Winter Olympic Games in 2014. In preparation for the event, it is necessary to use the new technologies to solve transport problems. 

Nowadays, Russia has a unique (and first of all, financial) possibility to create and test the new model of passenger services market on the territory of the so-called Greater Sochi. The model will maximally consider the logistic principles on which carefully thought over and systemic construction of transport complexes is traditionally based. 

In case Sochi loses the competition for the Winter Olympic Games in 2014, the city will be transferred into an all-year sanatorium meeting all international requirements in accordance with the Federal Target Programme «Development of Sochi as a Sanatorium (2006-2014)» (Decree №58-p from 31.01.06 of the RF Government). All conditions will be created to hold training sessions and winter sports competitions. Thus, even if no Olympic Games are held in Sochi in 2014, most of the planned athletic facilities will be constructed. And the sum of investments is a tremendous one. 

According to the first – Olympic – scheme, the total sum of investments into the project amounts to RUR 316.8 bln, including RUR 188.7 bln. from the federal budget. RUR 31.3 bln (including RUR 18.7 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 115.9 bln (RUR 108.8 bln from the federal budget) is to be spent on development of the transport infrastructure.

The second – sanatorium – scheme envisages a smaller sum of investments – RUR 178 bln. RUR 21.5 bln (RUR 12.5 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 19.8 bln (including RUR 12.5 bln from the federal budget, or 21.6% of the total volume of federal resources) is to be spent on the transport infrastructure.

Besides, a favourable investment climate will be created to attract private capital and to use public-private partnership widely. As a result, there are to be constructed 15 new athletic facilities in Sochi and no less than 17 new transport objects. Thus, there will appear the necessity of their integration into the existing social cultural and economic area, consequently there arises a question of choosing the best solution in the sector of city, suburban, interregional, regional and other types of passenger transportation.

According to Principles

The prerequisites for a new transport system construction in Sochi by 2014 are based on two main principles: to construct the communication lanes where it is convenient for passengers, and to make passenger transportation fast, safe and comfortable. 

Considering the principles and requirements of the International Olympic Committee, a group of
experts developed the Transport Concept envisaging all the statements of the Olympic Bid Book officially given by Russia in Lausanne (Switzerland) in January 2007. The Concept contains the materials of the Federal Target Programme mentioned above and envisages servicing all transport modes in Greater Sochi. 

The Transport Concept contains the following requirements:
• to use maximally the existing transport infrastructure on condition that it is modernized;
• to have potential opportunities not only for organization but also for prospective development of innovative types of transport modes, including railway rolling stock;
• not to worsen the living conditions of people (the noise level, clear air, safety) by means of proper organization of transport work, reduction of the total intensity of traffic and the amount of vehicles on streets and roads.

Meet Railway
Railway transport has been chosen for mass (from 60% to 80%) passenger transportation in plain and plain-mountain zones. Both systems discussed by the specialists have never been
used in Russia:
• City high-speed railway will be constructed on the basis of the existing railway network by modernizing its track facilities and rolling stock (including electric sections). The system will function in conditions of plain scenery – in Sochi and in Imeretinskaya valley.
• Light railway (including some sectors of mountain rack-railway) will be created on the basis on new high-tech infrastructure. Besides, considering the experience of European countries, in particular Germany and Austria, special rolling stock (electric trains) will be built. The system will function in mountain-plain zone, transporting passengers from Adler and Veseloye settlement (Imeretinskaya valley) to the athletic facilities in Krasnaya and Grushevaya Meadows.
• In the framework of the city high-speed railway, it is planned to launch a through pendulum diameter servicing two routes on the railway sector Tuapse-Veseloye.

If necessary, a mini-pendulum schedule of Olympic trains may be organized on the sector between the station of the light railway «Airport» and Veseloye settlement. However, to do this, a revision of the existing train schedule and reconstruction of track facilities are required. 

Light Railway Is Key to Success 

The following parameters have been approved for the light railway launch:
1. The number of wagons in an electric train may be changed in accordance with the size of the passenger flow. It is based on the suitable for the conditions of Sochi exploited rolling stock of the StadtBahn modern system (Germany). The first version envisages three and more module wagons (for example, of VT 640 DB AG series); the second version envisages usage of articulated five-seven section module electric trains (for example, produced by Siemens).
2. The carrying capacity of the electric trains is changeable in correspondence with the passenger flow at the standard of 4 people per square meter of the empty floor area. The first version (module wagons of VT 640 DB AG series) – from 1.100 to 1.625 passengers; the second version (articulated electric trains produced by Siemens) – over 460 passengers (for example, one-wagon 8-axes train). 
3. The exploitation speed for either version of rolling stock is about 30-35 km/h, which is possible to achieve on a new infrastructure even under difficult mountain conditions.
4. The minimum time-interval in rush-hours is not to exceed 5-10 minutes. In short periods of time (0.5-1.5 hours) there may be a time-interval of two minutes.

The basic data for the preliminary calculations of the light railway system carrying capacity was the electric train’s capacity of 1.100 passengers. The type of wagons was not taken into consideration, since either version can carry the amount of passengers.

At the current stage of the project specialists have examined two routes of the light railway to connect the plain and the mountain zones. The second route may be used in a long-term prospect. It is also important that the light railway will work simultaneously with the light rail electric transport in the area, where the main sport centre and the square for the Olympic Games opening and closing ceremonies will be located.

For Many Years

Both railway systems – the city high-speed railway and the light railway – will function not only during the XXII Winter Olympic Games, but also after it to service the inhabitants and tourists. Its advantage is that foreigners are used to the system, and all the information signs are absolutely clear to them. Thus, they will have no obstacles when using the transport mode.

Besides, rail transport can solve the problem of speeded-up direct and through delivery of air passengers to the hotels and athletic facilities. Simultaneously, the road network of the city will be free from many vehicles, which pollute Sochi by ecologically dangerous emissions. 

Thus, the new integrated transport system of Greater Sochi is a complex of interconnected elements of the railway, road and pedestrian infrastructure (including six modern hubs), modeled with maximum consideration of the directions of pedestrians’ and passengers’ movement on the basis of all elements (existing and projected ones) of the innovation transport infrastructure carrying capacity. 

Eleonora Shabarova,
Project Engineer-in-Chief, ZAO Territorial Development and Transport Infrastructure Scientific Research and Design Institute
    [~DETAIL_TEXT] => Olympic Games Give City a Chance

Russian resort city Sochi, located on the Black Sea, is one of the applicants to hold Winter Olympic Games in 2014. In preparation for the event, it is necessary to use the new technologies to solve transport problems. 

Nowadays, Russia has a unique (and first of all, financial) possibility to create and test the new model of passenger services market on the territory of the so-called Greater Sochi. The model will maximally consider the logistic principles on which carefully thought over and systemic construction of transport complexes is traditionally based. 

In case Sochi loses the competition for the Winter Olympic Games in 2014, the city will be transferred into an all-year sanatorium meeting all international requirements in accordance with the Federal Target Programme «Development of Sochi as a Sanatorium (2006-2014)» (Decree №58-p from 31.01.06 of the RF Government). All conditions will be created to hold training sessions and winter sports competitions. Thus, even if no Olympic Games are held in Sochi in 2014, most of the planned athletic facilities will be constructed. And the sum of investments is a tremendous one. 

According to the first – Olympic – scheme, the total sum of investments into the project amounts to RUR 316.8 bln, including RUR 188.7 bln. from the federal budget. RUR 31.3 bln (including RUR 18.7 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 115.9 bln (RUR 108.8 bln from the federal budget) is to be spent on development of the transport infrastructure.

The second – sanatorium – scheme envisages a smaller sum of investments – RUR 178 bln. RUR 21.5 bln (RUR 12.5 bln from the federal budget) is to be invested into athletic facilities construction, and RUR 19.8 bln (including RUR 12.5 bln from the federal budget, or 21.6% of the total volume of federal resources) is to be spent on the transport infrastructure.

Besides, a favourable investment climate will be created to attract private capital and to use public-private partnership widely. As a result, there are to be constructed 15 new athletic facilities in Sochi and no less than 17 new transport objects. Thus, there will appear the necessity of their integration into the existing social cultural and economic area, consequently there arises a question of choosing the best solution in the sector of city, suburban, interregional, regional and other types of passenger transportation.

According to Principles

The prerequisites for a new transport system construction in Sochi by 2014 are based on two main principles: to construct the communication lanes where it is convenient for passengers, and to make passenger transportation fast, safe and comfortable. 

Considering the principles and requirements of the International Olympic Committee, a group of
experts developed the Transport Concept envisaging all the statements of the Olympic Bid Book officially given by Russia in Lausanne (Switzerland) in January 2007. The Concept contains the materials of the Federal Target Programme mentioned above and envisages servicing all transport modes in Greater Sochi. 

The Transport Concept contains the following requirements:
• to use maximally the existing transport infrastructure on condition that it is modernized;
• to have potential opportunities not only for organization but also for prospective development of innovative types of transport modes, including railway rolling stock;
• not to worsen the living conditions of people (the noise level, clear air, safety) by means of proper organization of transport work, reduction of the total intensity of traffic and the amount of vehicles on streets and roads.

Meet Railway
Railway transport has been chosen for mass (from 60% to 80%) passenger transportation in plain and plain-mountain zones. Both systems discussed by the specialists have never been
used in Russia:
• City high-speed railway will be constructed on the basis of the existing railway network by modernizing its track facilities and rolling stock (including electric sections). The system will function in conditions of plain scenery – in Sochi and in Imeretinskaya valley.
• Light railway (including some sectors of mountain rack-railway) will be created on the basis on new high-tech infrastructure. Besides, considering the experience of European countries, in particular Germany and Austria, special rolling stock (electric trains) will be built. The system will function in mountain-plain zone, transporting passengers from Adler and Veseloye settlement (Imeretinskaya valley) to the athletic facilities in Krasnaya and Grushevaya Meadows.
• In the framework of the city high-speed railway, it is planned to launch a through pendulum diameter servicing two routes on the railway sector Tuapse-Veseloye.

If necessary, a mini-pendulum schedule of Olympic trains may be organized on the sector between the station of the light railway «Airport» and Veseloye settlement. However, to do this, a revision of the existing train schedule and reconstruction of track facilities are required. 

Light Railway Is Key to Success 

The following parameters have been approved for the light railway launch:
1. The number of wagons in an electric train may be changed in accordance with the size of the passenger flow. It is based on the suitable for the conditions of Sochi exploited rolling stock of the StadtBahn modern system (Germany). The first version envisages three and more module wagons (for example, of VT 640 DB AG series); the second version envisages usage of articulated five-seven section module electric trains (for example, produced by Siemens).
2. The carrying capacity of the electric trains is changeable in correspondence with the passenger flow at the standard of 4 people per square meter of the empty floor area. The first version (module wagons of VT 640 DB AG series) – from 1.100 to 1.625 passengers; the second version (articulated electric trains produced by Siemens) – over 460 passengers (for example, one-wagon 8-axes train). 
3. The exploitation speed for either version of rolling stock is about 30-35 km/h, which is possible to achieve on a new infrastructure even under difficult mountain conditions.
4. The minimum time-interval in rush-hours is not to exceed 5-10 minutes. In short periods of time (0.5-1.5 hours) there may be a time-interval of two minutes.

The basic data for the preliminary calculations of the light railway system carrying capacity was the electric train’s capacity of 1.100 passengers. The type of wagons was not taken into consideration, since either version can carry the amount of passengers.

At the current stage of the project specialists have examined two routes of the light railway to connect the plain and the mountain zones. The second route may be used in a long-term prospect. It is also important that the light railway will work simultaneously with the light rail electric transport in the area, where the main sport centre and the square for the Olympic Games opening and closing ceremonies will be located.

For Many Years

Both railway systems – the city high-speed railway and the light railway – will function not only during the XXII Winter Olympic Games, but also after it to service the inhabitants and tourists. Its advantage is that foreigners are used to the system, and all the information signs are absolutely clear to them. Thus, they will have no obstacles when using the transport mode.

Besides, rail transport can solve the problem of speeded-up direct and through delivery of air passengers to the hotels and athletic facilities. Simultaneously, the road network of the city will be free from many vehicles, which pollute Sochi by ecologically dangerous emissions. 

Thus, the new integrated transport system of Greater Sochi is a complex of interconnected elements of the railway, road and pedestrian infrastructure (including six modern hubs), modeled with maximum consideration of the directions of pedestrians’ and passengers’ movement on the basis of all elements (existing and projected ones) of the innovation transport infrastructure carrying capacity. 

Eleonora Shabarova,
Project Engineer-in-Chief, ZAO Territorial Development and Transport Infrastructure Scientific Research and Design Institute
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    [DETAIL_TEXT] => – How do you estimate results of the transaction? How do you consider claims of the Estonian state that BRS did not satisfy a condition of the transaction, in particular did not carry out obligations on investment in an infrastructure which became the reason of cancellation of the transaction?

– From the point of view of an investor, I am very disappointed. Especially, considering that we invested more than planned in the infrastructure, and we believe, that now it is in the best condition, than was before privatization on the majority of parameters. In comparison with the state, BRS developed the efficiency to achieve investments with lower costs. But development of a railway infrastructure is defined by many parameters, therefore  the Estonian government was of course able to find technical problems even after realization of our investment program. We invested in works on perfection of a condition of a way, modernized works under the maintenance of an infrastructure. We managed to reduce quantity of the personal injuries connected with the railway, by 75 %. In 2001 the quantity of such incidents made 24, but in the past  year only 6. However since 2003 the Estonian government has directed all the energies to finding defects in our work.

– What is the main reason for failure of cooperation between BRS and the Estonian government? 

– The main reason became that fact that the government of Estonia at which Estonian Railways have been privatized was replaced. The new government has wanted to make railway services accessible at prices below costs to clients. In particular, the payment for access to a railway infrastructure  became the greatest problem for Estonian Railways. The government explained this measure to that Estonia now is a part of the Europe, under the all-European requirements the payment for access to a railway infrastructure should be reduced. But feature of the given situation consists that in no other country of the Europe there is no legislation in the field of a railway transportation similar to Estonian.

– How volumes of rail transportation have changed?

– Growth of volumes of transportations was very stable. The basis of a freight traffic was made with bulk-oil cargoes, however dynamics of transportations of this commodity was very competitive.

The greatest rates transportations new for Estonian railways of other commodity groups – coal, containers, agricultural products grew. For example, transportations of coal have grown about 1 million tons up to 4 million tons for two years. Our objective was diversification of the commodities of transportations and, in my opinion, we have achieved here serious successes. From the point of view of development of business, it was important to lower dependence of road on transportations of oil. We have involved new freight traffics: coal, grain from Kazakhstan, containers, production of the food-processing industry, etc. 

– What has changed in given services? 

– Quality and capacity of given services has noticeably increased. Our administrative structure gave big focus to this aspect, considering an increasing competition. We have deduced on a new level our cooperation with ports Tallin and Muuga. When we have started to work in Estonia, there were serious problems with throughput of road, now at Estonian Railways is no longer a capacity constraint, and if necessary increases in volumes all will depend on ports capacity. The Estonian market of transport services is a highly competitive  market, competing for the huge market of transportations of Russia. Nevertheless, the competition is becoming even more competitive, that is aggravated with that the volume of the market increases but there is downward pressure on rates. In this connection we consider, that basic our merit is preservation of a share of the company in the market. 

– How do you estimate the developed situation in the market of transport services of Estonia after renationalization of Estonian Railways and what forecasts you can give regarding its development?

– In the future the competition will still increase. And in given situation for Estonian Railways it is necessary not only to continue to invest in development and to raise efficiency, but also to make efforts, that changes in the tariff policy of Russia do not lower competitiveness of the Estonian route, in fact transportation on territory of Estonia on the average makes only 10 % from a total price. Even if Estonia will lower cost of transportation to zero, it all the same still might not be competitive, being in dependence from tariff policy of Russia

Vladimir  Retyunin
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– From the point of view of an investor, I am very disappointed. Especially, considering that we invested more than planned in the infrastructure, and we believe, that now it is in the best condition, than was before privatization on the majority of parameters. In comparison with the state, BRS developed the efficiency to achieve investments with lower costs. But development of a railway infrastructure is defined by many parameters, therefore  the Estonian government was of course able to find technical problems even after realization of our investment program. We invested in works on perfection of a condition of a way, modernized works under the maintenance of an infrastructure. We managed to reduce quantity of the personal injuries connected with the railway, by 75 %. In 2001 the quantity of such incidents made 24, but in the past  year only 6. However since 2003 the Estonian government has directed all the energies to finding defects in our work.

– What is the main reason for failure of cooperation between BRS and the Estonian government? 

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– How volumes of rail transportation have changed?

– Growth of volumes of transportations was very stable. The basis of a freight traffic was made with bulk-oil cargoes, however dynamics of transportations of this commodity was very competitive.

The greatest rates transportations new for Estonian railways of other commodity groups – coal, containers, agricultural products grew. For example, transportations of coal have grown about 1 million tons up to 4 million tons for two years. Our objective was diversification of the commodities of transportations and, in my opinion, we have achieved here serious successes. From the point of view of development of business, it was important to lower dependence of road on transportations of oil. We have involved new freight traffics: coal, grain from Kazakhstan, containers, production of the food-processing industry, etc. 

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– How do you estimate the developed situation in the market of transport services of Estonia after renationalization of Estonian Railways and what forecasts you can give regarding its development?

– In the future the competition will still increase. And in given situation for Estonian Railways it is necessary not only to continue to invest in development and to raise efficiency, but also to make efforts, that changes in the tariff policy of Russia do not lower competitiveness of the Estonian route, in fact transportation on territory of Estonia on the average makes only 10 % from a total price. Even if Estonia will lower cost of transportation to zero, it all the same still might not be competitive, being in dependence from tariff policy of Russia

Vladimir  Retyunin
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    [DETAIL_TEXT] => – How do you estimate results of the transaction? How do you consider claims of the Estonian state that BRS did not satisfy a condition of the transaction, in particular did not carry out obligations on investment in an infrastructure which became the reason of cancellation of the transaction?

– From the point of view of an investor, I am very disappointed. Especially, considering that we invested more than planned in the infrastructure, and we believe, that now it is in the best condition, than was before privatization on the majority of parameters. In comparison with the state, BRS developed the efficiency to achieve investments with lower costs. But development of a railway infrastructure is defined by many parameters, therefore  the Estonian government was of course able to find technical problems even after realization of our investment program. We invested in works on perfection of a condition of a way, modernized works under the maintenance of an infrastructure. We managed to reduce quantity of the personal injuries connected with the railway, by 75 %. In 2001 the quantity of such incidents made 24, but in the past  year only 6. However since 2003 the Estonian government has directed all the energies to finding defects in our work.

– What is the main reason for failure of cooperation between BRS and the Estonian government? 

– The main reason became that fact that the government of Estonia at which Estonian Railways have been privatized was replaced. The new government has wanted to make railway services accessible at prices below costs to clients. In particular, the payment for access to a railway infrastructure  became the greatest problem for Estonian Railways. The government explained this measure to that Estonia now is a part of the Europe, under the all-European requirements the payment for access to a railway infrastructure should be reduced. But feature of the given situation consists that in no other country of the Europe there is no legislation in the field of a railway transportation similar to Estonian.

– How volumes of rail transportation have changed?

– Growth of volumes of transportations was very stable. The basis of a freight traffic was made with bulk-oil cargoes, however dynamics of transportations of this commodity was very competitive.

The greatest rates transportations new for Estonian railways of other commodity groups – coal, containers, agricultural products grew. For example, transportations of coal have grown about 1 million tons up to 4 million tons for two years. Our objective was diversification of the commodities of transportations and, in my opinion, we have achieved here serious successes. From the point of view of development of business, it was important to lower dependence of road on transportations of oil. We have involved new freight traffics: coal, grain from Kazakhstan, containers, production of the food-processing industry, etc. 

– What has changed in given services? 

– Quality and capacity of given services has noticeably increased. Our administrative structure gave big focus to this aspect, considering an increasing competition. We have deduced on a new level our cooperation with ports Tallin and Muuga. When we have started to work in Estonia, there were serious problems with throughput of road, now at Estonian Railways is no longer a capacity constraint, and if necessary increases in volumes all will depend on ports capacity. The Estonian market of transport services is a highly competitive  market, competing for the huge market of transportations of Russia. Nevertheless, the competition is becoming even more competitive, that is aggravated with that the volume of the market increases but there is downward pressure on rates. In this connection we consider, that basic our merit is preservation of a share of the company in the market. 

– How do you estimate the developed situation in the market of transport services of Estonia after renationalization of Estonian Railways and what forecasts you can give regarding its development?

– In the future the competition will still increase. And in given situation for Estonian Railways it is necessary not only to continue to invest in development and to raise efficiency, but also to make efforts, that changes in the tariff policy of Russia do not lower competitiveness of the Estonian route, in fact transportation on territory of Estonia on the average makes only 10 % from a total price. Even if Estonia will lower cost of transportation to zero, it all the same still might not be competitive, being in dependence from tariff policy of Russia

Vladimir  Retyunin
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– From the point of view of an investor, I am very disappointed. Especially, considering that we invested more than planned in the infrastructure, and we believe, that now it is in the best condition, than was before privatization on the majority of parameters. In comparison with the state, BRS developed the efficiency to achieve investments with lower costs. But development of a railway infrastructure is defined by many parameters, therefore  the Estonian government was of course able to find technical problems even after realization of our investment program. We invested in works on perfection of a condition of a way, modernized works under the maintenance of an infrastructure. We managed to reduce quantity of the personal injuries connected with the railway, by 75 %. In 2001 the quantity of such incidents made 24, but in the past  year only 6. However since 2003 the Estonian government has directed all the energies to finding defects in our work.

– What is the main reason for failure of cooperation between BRS and the Estonian government? 

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– How volumes of rail transportation have changed?

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The greatest rates transportations new for Estonian railways of other commodity groups – coal, containers, agricultural products grew. For example, transportations of coal have grown about 1 million tons up to 4 million tons for two years. Our objective was diversification of the commodities of transportations and, in my opinion, we have achieved here serious successes. From the point of view of development of business, it was important to lower dependence of road on transportations of oil. We have involved new freight traffics: coal, grain from Kazakhstan, containers, production of the food-processing industry, etc. 

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Vladimir  Retyunin
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    [DETAIL_TEXT] => – Mr.Morozov, what role does railway transport play in trade communication between Russia and China? What are the results achieved by OAO RZD in this sector in 2006 and at the beginning of 2007? 

– In the aggregate cargo turnover between Russia and China railway transportation takes 80%. That is why OAO RZD stands as priority logistics development for Russia – China communication. Speaking of the statistics, the data are quite impressive. In 2006 transportation volume between Russia and China increased by 8.2% year-on-year. During the first three months of 2007 transportation volumes boosted by 17.4%. The basis of the cargo flow is still made up by raw materials and mass cargoes, including timber (35.4% in the cargo turnover structure), oil (24.4%), mineral fertilizers (15.2%), ferrous metals and iron ore (9.2% and 5.3% respectively).

– Which sectors can perform as the resource cargo base? What are the prospects of additional cargo turnover attraction to Russia – China communication in future?

– Transportation volumes for the above-mentioned cargoes will be increasing in future. However, for example, ferrous metal transportation volumes show a certain drop due to the fact that China has turned into the biggest exporter of ferrous metals by now. Nevertheless, iron ore import volumes are growing.

A new impulse for mutually profitable cooperation between the two countries was given by Vladimir Putin, the RF President, who visited China in March 2006. During his visit to Beijin, V.Putin and the Transport Ministry of China signed such important documents as the agreement on the mutual use of large-tonnage containers for export-import cargo transportation and the agreement on electronic data exchange during international railway cargo transportation. These steps will allow to shorten the time for cargo trains handling and provide the necessary conditions to increase container transportation between Russia and China significantly. 

Moreover, in order to meet the demands of the growing volumes of cargo transportation between Russia and China, including crude oil transportation, the two countries have significantly reconstructed and modernized border stations and accesses. In 2007 additional steps are being taken to enhance the carrying capacity. Thus, in particular, the permanent way of certain sectors is improved and some sectors of the railways are electrified. In 2007 Russia allocates RUR 8.7 bln for the national infrastructure development; similar steps are taken by the Chinese side. 

After the first stage of the pipe-line system Eastern Siberia – Pacific Ocean is completed, oil volumes for railway transportation en route to China will decrease. However, in future OAO RZD plans to compensate the railway oil losses by attracting additional cargoes.

The rapid development of the Chinese metallurgical complex, as mentioned above, leads to an increase in purchase of iron ore raw material. In this respect, Chita region seems to have some potential and is capable to provide the necessary volumes. According to experts, by 2015 the volumes of iron ore mining will amount to 35 mln tons per year and the volumes of transportation by Naryn – Lukogan new line can reach 13.5 mln tons per year by 2020. The development of Berezovskoyoe deposit is becoming more and more important now, while the license for deposit development belongs to the Chinese investment company «Lunen».

Export transportation of timber from Primorsky region is expected to grow, as well as potassium transportation from the Ural region aimed at satisfying the needs of the Chinese border. The forecasted cargo turnover of timber to China will amount to 20 mln tons and the fertilizer volume will reach 3 mln tons by 2015.

At the same time, there are obvious prospects for growth in power station coal transportation, which is extremely important to boost export cargo flows for the Russian railways. According to experts, Russian export can reach 5 mln tons of power station coal annually. 

It is important to note that in the near future Chinese import volumes growth can be expected, which mainly has to do with the production of food, glass, clothes, machinery and agriculture industries transported by containers. Currently railways transport about one million tons of export-import cargo. The potential growth of container transportation between Russia and China is estimated at 3-3.5 mln tons. 

We run several prospective projects concluded with big manufacturing (IKEA) and car-making enterprises (KIA Motors, Volkswagen, Great Wall Motors) who plan to transport their production by speeded block trains by the TransSiberian railway. Moreover, the load at border stations will be seriously influenced by the volumes of transit trading cargo from China and Europe. 

– During the last five years the volume of cargo transit transportation to/from China via the Russian territory dropped significantly. What steps are taken to stimulate this cargo flow?

– The drop in transit by 2.5 times during the above-mentioned period occurred due to the drop in ferrous metal transportation from Kazakhstan to China. However, the physical volume of trade between China and Europe has been growing permanently and now amounts to 60 mln tons. The major part of this volume is made up from oil and other raw material goods and, thus, the most efficient way to transport it is by sea. Those countries who can be linked by the Russian transport net take only 25%, i.e. 14 – 15 mln tons, wherein containerized cargo amounts to 8-9 mln tons. 

As our priority tasks we’ve set the development of efficient solutions to attract additional cargo volumes. 

Thus, at present, projects of OAO RZD cooperation with Germany and China aimed at the development of a transcontinental cargo line en route China – Russsia - Germany are worked out. Heads of Russian, German and Chinese railways came to an agreement on joint container transportation development via the TransSib and on the launch of a logistics company that will assist in the increase of railway transportation for cargo turnover between the countries following the launch of logistics services highly demanded by cargo consignors. Moreover, in 2007, OAO TransContainer is to launch its representative office in China. 

At the same time, one of the most important and financially intensive tasks is further development of a transport infrastructure corresponding to modern standards for transit transportation. This very sector has shown implementation of the most significant projects, which provided the basis for an efficient EuroAsian transit.

Moreover, due to cargo transportation growth, high modern economic demands to quality services and the need to cut expenditures while functioning on the competitive market, the problem of improving systemic production arises, as well as problems of production transportation and of logistics methods efficient use in production-transport activities management. A wide use of automated systems controlling transportation and other technological processes significantly assists in solving these problems.

During recent years the problem of railway companies’ co-operation with adjacent sectors has acquired serious importance and has become one of the basic components for success on the transport services market, i.e. shipping companies, motor companies, cargo owners etc. At the same time, it is important to note that the inter-sectoral alliances formed on the market pursue the same targets and interests. Each participant of such alliances is interested to boost their revenue, which is defined by the volume of joint efforts taken in order to win the competition in each particular sector of the transport services market. 

In this respect, ОАО RZD, together with other market players, take serious steps as well. Thus, Russkaya Troika, ОАО RZD and Far-Eastern Shipping Company jointly plan to develop their business on the basis of logistics principles with the aim of speeding up cargo flows and cutting down aggregate expenditures of cargo consignors and cargo consignees. For example, they consider an opportunity to acquire sea container carriers, sea container terminal construction in the Far East and the construction of a terminal net in the central part of Russia, Moscow and Moscow region included. As a result, cargo consignors and cargo consignees will get a «through» service corresponding to modern market demands. 

– In this respect the question about tariff policy arises… 

– Transit transportation via Russian railways to/from China and third countries is regulated according to the rates of Tariff policy developed for 2006 freight year for railways – CIS participants implementing cargo transportation in international communication. These rates were calculated on the basis of the Unified Transit Tariff with the use of a decreasing coefficient which depends on the cargo class and the rail car load volume, and, for containers, such parameter as distance matters. 

In the Tariff policy developed for 2007 tariffs were kept at the level of 2006 in Swiss Francs, while in US Dollars the tariff increased by 3.2%.

At the same time, this year decreasing coefficients and decreasing rates were set for transit transportation via OAO RZD infrastructure to/from China, including those for transit cargo and container transportation from third countries to China via Zabaikalsk, Naushki and Grodekovo and back. Moreover, there is an opportunity to set additional discounts to acting tariffs, in case the present-day transportation volume increases and cargo owners apply. 

– Generally speaking, what are the advantages of Russia as a transit corridor for Chinese cargo compared to shipping and alternative transport corridors?

– The transport system of Russia (and railways, first of all) is geographically located so that it is a convenient transport corridor for trade cargo flows circulating between China and Europe. 

According to Russian experts, in 2006 China became the biggest exporter who delivers goods to the EU, having won the competition with the US who took the second place. As a rule, the major part of these cargo flows is made up from containerized goods, finished commodity and semi-finished goods. Considering the high cost of these cargoes, the delivery term performs as a key parameter for transport services quality, since it influences the capital turnover immediately and, thus, the cargo owner’s business profitability. According to this parameter, the Russian Railways have an objective advantage, since, first of all, they provide high-speed transportation and, secondly, it is the shortest route between Eastern Asia and Europe. 

The East-West transport corridor going via the Russian territory also has other advantages as compared to alternative modes of cargo transportation. Compared to shipping, railway transportation is safe and gives an opportunity to transport relatively small cargo volumes. 

Moreover, railway routes give Chinese cargo consignors a «direct access» to central European regions located far from major sea ports. 

Among alternative transport corridors the TRASEKA route can be mentioned. It follows via the countries of Middle Asia, TransCaucasus, the Caspian and the Black seas, the central corridor of TransAsian route (Middle Asia, Iran, Turkey), and in future, if needed, links will be constructed via the TransKazakhstan railway and the South corridor of the TransAsian railway. However, all these options are out of competition with the West-East corridor which is supported by the powerful infrastructure of the TransSiberian route. They are longer, include railway sectors with different technical parameters (gauge, track dimensions etc.), and their carrying capacities also differ. 

Moreover, they have to do with ferry-bridges which, consequently, involve additional port loads, as well as a greater number of borders to cross with respective customs procedures, customs duties and risks involved due to the unstable international climate in the above-mentioned regions. Considering the attention drawn to these projects, we can conclude that they are developing due to political reasons, not economical factors. At the same time, I’d like to stress the fact that the greatest part of China’s export potential is concentrated in its Eastern coastal regions and objectively bent for sea ports, which demonstrate a phenomenal rate of container turnover growth. Of course, Russian transport corridors are unable to capture the whole volume of EuroAsian transit, though there are rather capacious niches of Euroasian transportation strongly attracted to the «West-East» corridor. Geographically they are the North-Eastern and partially the Central regions of China, which are linked with the TransSiberian route by Zabaikalsk, Grodekovo, and Naushki border stations; also, the North-West of China is linked with Kazakhstan’s railway net and further on with major transport corridors going via the Russian territory by Dostyk/Alashankou border station. The policy carried out by the Chinese Government and aimed at stimulating the economic development of these regions allows to forecast a significant growth of cargo base for railway transit.

Russian railways can acquire some part of cargo flows following from the Eastern regions of China, if shipping is organized between Chinese ports and Russian Far Eastern ports to forward the cargo further on via the TransSiberian railway. However, this scheme is not highly competitive, since it is quite restricted by the lack of through service, as well as regular service lines and high tariffs for shipping. ОАО RZD plans to solve this problem by controlling the sea ports of the Russian Far East basin and by closer cooperation with the national and international transport-logistics and forwarding companies. 

–What is your view of the border stations’ infrastructure? What is the investment volume allocated to their development this year? 

– In the last five years the dynamics of carrying capacities at border stations has shown a certain growth. Now the transport infrastructure of Zabaikalsk, Grodekovo and Naushki border stations allows to satisfy the necessary transportation volumes. 

In general, from 2002 to 2006, OAO RZD allocated some RUR 2 bln to border stations development, Zabaikalsk – RUR 1.4 bln, Naushki – RUR 500 mln, Grodekovo – RUR 100 mln.

Moreover, it is important to note that in 2007 OAO RZD infrastructure is ready to transport 15 mln tons of oil to China, in accordance with major Russian oil companies’ demands. In future OAO RZD investment recourses will also be directed to Zabaikalsk border station development, i.e. railway accesses improvement, as well as to a complex reconstruction of Karymskaya – Zabaikalsk sector, in particular the second track construction and this sector electrification. These steps will make it possible to transport 60 mln tons of cargo from/to China by 2015.

– You have already mentioned the high importance of cooperation efficiency on the technological level. What is going on now? What IT are applied? How efficient are they?

– The Far Eastern railway together with the Far Eastern Customs Board signed an agreement on information exchange during cargo transportation via Grodekovo – Suifenhe border station in 2005. This document envisages the terms according to which each side provides conditions to improve customs procedures and assists in foreign trade cargo transportation implementing mutual electronic exchange of data on imported, exported and transit cargo. As a result, starting from April 2005, while preparing transport documentation on export cargo destined at Grodekovo – Suifenhe, information for Grodekovo customs is transmitted from the load stations of the Far Eastern railway. Before export cargo arrival at Grodekovo, customs bodies receive e-data on cargo following to China. 

The first results were impressive by the late May 2005. The period for customs documentation preparation for an export train shortened by 4.5 hours. Due to the held reconstruction, we obtained the chance to manage 14-15 trains per day instead of 8-9 units as before. 
At present this scheme is functional at full range only for the Far Eastern railway, though some stations of the Western-Siberian, Zabailkalsk and Sverdlovsk railways joined the experiment. 

Biography
VADIM MOROZOV
Was born in 1954. Graduated from Leningrad Institute of Railway Transport Engineers in 1977.
Started his work in 1971 at locomotive depot Volkhovstroy -1 of October railway. In 1998 was appointed Deputy Chairman of Legislative Assembly of Leningrad region. 

From 1998 to 1999 and from 2000 to 2002 – First Deputy Head of South-Eastern and Moscow railways respectively. From May 1999 to May 2000 – Deputy Minister of Railways, from 2002 to 2003 – First Deputy Minister and from November 2003 to June 2004 – Minister of Railways of the RF. On August 17, 2005 appointed the First Vice-President of OAO RZD.
 
Tatyana Tokareva 
    [~DETAIL_TEXT] => – Mr.Morozov, what role does railway transport play in trade communication between Russia and China? What are the results achieved by OAO RZD in this sector in 2006 and at the beginning of 2007? 

– In the aggregate cargo turnover between Russia and China railway transportation takes 80%. That is why OAO RZD stands as priority logistics development for Russia – China communication. Speaking of the statistics, the data are quite impressive. In 2006 transportation volume between Russia and China increased by 8.2% year-on-year. During the first three months of 2007 transportation volumes boosted by 17.4%. The basis of the cargo flow is still made up by raw materials and mass cargoes, including timber (35.4% in the cargo turnover structure), oil (24.4%), mineral fertilizers (15.2%), ferrous metals and iron ore (9.2% and 5.3% respectively).

– Which sectors can perform as the resource cargo base? What are the prospects of additional cargo turnover attraction to Russia – China communication in future?

– Transportation volumes for the above-mentioned cargoes will be increasing in future. However, for example, ferrous metal transportation volumes show a certain drop due to the fact that China has turned into the biggest exporter of ferrous metals by now. Nevertheless, iron ore import volumes are growing.

A new impulse for mutually profitable cooperation between the two countries was given by Vladimir Putin, the RF President, who visited China in March 2006. During his visit to Beijin, V.Putin and the Transport Ministry of China signed such important documents as the agreement on the mutual use of large-tonnage containers for export-import cargo transportation and the agreement on electronic data exchange during international railway cargo transportation. These steps will allow to shorten the time for cargo trains handling and provide the necessary conditions to increase container transportation between Russia and China significantly. 

Moreover, in order to meet the demands of the growing volumes of cargo transportation between Russia and China, including crude oil transportation, the two countries have significantly reconstructed and modernized border stations and accesses. In 2007 additional steps are being taken to enhance the carrying capacity. Thus, in particular, the permanent way of certain sectors is improved and some sectors of the railways are electrified. In 2007 Russia allocates RUR 8.7 bln for the national infrastructure development; similar steps are taken by the Chinese side. 

After the first stage of the pipe-line system Eastern Siberia – Pacific Ocean is completed, oil volumes for railway transportation en route to China will decrease. However, in future OAO RZD plans to compensate the railway oil losses by attracting additional cargoes.

The rapid development of the Chinese metallurgical complex, as mentioned above, leads to an increase in purchase of iron ore raw material. In this respect, Chita region seems to have some potential and is capable to provide the necessary volumes. According to experts, by 2015 the volumes of iron ore mining will amount to 35 mln tons per year and the volumes of transportation by Naryn – Lukogan new line can reach 13.5 mln tons per year by 2020. The development of Berezovskoyoe deposit is becoming more and more important now, while the license for deposit development belongs to the Chinese investment company «Lunen».

Export transportation of timber from Primorsky region is expected to grow, as well as potassium transportation from the Ural region aimed at satisfying the needs of the Chinese border. The forecasted cargo turnover of timber to China will amount to 20 mln tons and the fertilizer volume will reach 3 mln tons by 2015.

At the same time, there are obvious prospects for growth in power station coal transportation, which is extremely important to boost export cargo flows for the Russian railways. According to experts, Russian export can reach 5 mln tons of power station coal annually. 

It is important to note that in the near future Chinese import volumes growth can be expected, which mainly has to do with the production of food, glass, clothes, machinery and agriculture industries transported by containers. Currently railways transport about one million tons of export-import cargo. The potential growth of container transportation between Russia and China is estimated at 3-3.5 mln tons. 

We run several prospective projects concluded with big manufacturing (IKEA) and car-making enterprises (KIA Motors, Volkswagen, Great Wall Motors) who plan to transport their production by speeded block trains by the TransSiberian railway. Moreover, the load at border stations will be seriously influenced by the volumes of transit trading cargo from China and Europe. 

– During the last five years the volume of cargo transit transportation to/from China via the Russian territory dropped significantly. What steps are taken to stimulate this cargo flow?

– The drop in transit by 2.5 times during the above-mentioned period occurred due to the drop in ferrous metal transportation from Kazakhstan to China. However, the physical volume of trade between China and Europe has been growing permanently and now amounts to 60 mln tons. The major part of this volume is made up from oil and other raw material goods and, thus, the most efficient way to transport it is by sea. Those countries who can be linked by the Russian transport net take only 25%, i.e. 14 – 15 mln tons, wherein containerized cargo amounts to 8-9 mln tons. 

As our priority tasks we’ve set the development of efficient solutions to attract additional cargo volumes. 

Thus, at present, projects of OAO RZD cooperation with Germany and China aimed at the development of a transcontinental cargo line en route China – Russsia - Germany are worked out. Heads of Russian, German and Chinese railways came to an agreement on joint container transportation development via the TransSib and on the launch of a logistics company that will assist in the increase of railway transportation for cargo turnover between the countries following the launch of logistics services highly demanded by cargo consignors. Moreover, in 2007, OAO TransContainer is to launch its representative office in China. 

At the same time, one of the most important and financially intensive tasks is further development of a transport infrastructure corresponding to modern standards for transit transportation. This very sector has shown implementation of the most significant projects, which provided the basis for an efficient EuroAsian transit.

Moreover, due to cargo transportation growth, high modern economic demands to quality services and the need to cut expenditures while functioning on the competitive market, the problem of improving systemic production arises, as well as problems of production transportation and of logistics methods efficient use in production-transport activities management. A wide use of automated systems controlling transportation and other technological processes significantly assists in solving these problems.

During recent years the problem of railway companies’ co-operation with adjacent sectors has acquired serious importance and has become one of the basic components for success on the transport services market, i.e. shipping companies, motor companies, cargo owners etc. At the same time, it is important to note that the inter-sectoral alliances formed on the market pursue the same targets and interests. Each participant of such alliances is interested to boost their revenue, which is defined by the volume of joint efforts taken in order to win the competition in each particular sector of the transport services market. 

In this respect, ОАО RZD, together with other market players, take serious steps as well. Thus, Russkaya Troika, ОАО RZD and Far-Eastern Shipping Company jointly plan to develop their business on the basis of logistics principles with the aim of speeding up cargo flows and cutting down aggregate expenditures of cargo consignors and cargo consignees. For example, they consider an opportunity to acquire sea container carriers, sea container terminal construction in the Far East and the construction of a terminal net in the central part of Russia, Moscow and Moscow region included. As a result, cargo consignors and cargo consignees will get a «through» service corresponding to modern market demands. 

– In this respect the question about tariff policy arises… 

– Transit transportation via Russian railways to/from China and third countries is regulated according to the rates of Tariff policy developed for 2006 freight year for railways – CIS participants implementing cargo transportation in international communication. These rates were calculated on the basis of the Unified Transit Tariff with the use of a decreasing coefficient which depends on the cargo class and the rail car load volume, and, for containers, such parameter as distance matters. 

In the Tariff policy developed for 2007 tariffs were kept at the level of 2006 in Swiss Francs, while in US Dollars the tariff increased by 3.2%.

At the same time, this year decreasing coefficients and decreasing rates were set for transit transportation via OAO RZD infrastructure to/from China, including those for transit cargo and container transportation from third countries to China via Zabaikalsk, Naushki and Grodekovo and back. Moreover, there is an opportunity to set additional discounts to acting tariffs, in case the present-day transportation volume increases and cargo owners apply. 

– Generally speaking, what are the advantages of Russia as a transit corridor for Chinese cargo compared to shipping and alternative transport corridors?

– The transport system of Russia (and railways, first of all) is geographically located so that it is a convenient transport corridor for trade cargo flows circulating between China and Europe. 

According to Russian experts, in 2006 China became the biggest exporter who delivers goods to the EU, having won the competition with the US who took the second place. As a rule, the major part of these cargo flows is made up from containerized goods, finished commodity and semi-finished goods. Considering the high cost of these cargoes, the delivery term performs as a key parameter for transport services quality, since it influences the capital turnover immediately and, thus, the cargo owner’s business profitability. According to this parameter, the Russian Railways have an objective advantage, since, first of all, they provide high-speed transportation and, secondly, it is the shortest route between Eastern Asia and Europe. 

The East-West transport corridor going via the Russian territory also has other advantages as compared to alternative modes of cargo transportation. Compared to shipping, railway transportation is safe and gives an opportunity to transport relatively small cargo volumes. 

Moreover, railway routes give Chinese cargo consignors a «direct access» to central European regions located far from major sea ports. 

Among alternative transport corridors the TRASEKA route can be mentioned. It follows via the countries of Middle Asia, TransCaucasus, the Caspian and the Black seas, the central corridor of TransAsian route (Middle Asia, Iran, Turkey), and in future, if needed, links will be constructed via the TransKazakhstan railway and the South corridor of the TransAsian railway. However, all these options are out of competition with the West-East corridor which is supported by the powerful infrastructure of the TransSiberian route. They are longer, include railway sectors with different technical parameters (gauge, track dimensions etc.), and their carrying capacities also differ. 

Moreover, they have to do with ferry-bridges which, consequently, involve additional port loads, as well as a greater number of borders to cross with respective customs procedures, customs duties and risks involved due to the unstable international climate in the above-mentioned regions. Considering the attention drawn to these projects, we can conclude that they are developing due to political reasons, not economical factors. At the same time, I’d like to stress the fact that the greatest part of China’s export potential is concentrated in its Eastern coastal regions and objectively bent for sea ports, which demonstrate a phenomenal rate of container turnover growth. Of course, Russian transport corridors are unable to capture the whole volume of EuroAsian transit, though there are rather capacious niches of Euroasian transportation strongly attracted to the «West-East» corridor. Geographically they are the North-Eastern and partially the Central regions of China, which are linked with the TransSiberian route by Zabaikalsk, Grodekovo, and Naushki border stations; also, the North-West of China is linked with Kazakhstan’s railway net and further on with major transport corridors going via the Russian territory by Dostyk/Alashankou border station. The policy carried out by the Chinese Government and aimed at stimulating the economic development of these regions allows to forecast a significant growth of cargo base for railway transit.

Russian railways can acquire some part of cargo flows following from the Eastern regions of China, if shipping is organized between Chinese ports and Russian Far Eastern ports to forward the cargo further on via the TransSiberian railway. However, this scheme is not highly competitive, since it is quite restricted by the lack of through service, as well as regular service lines and high tariffs for shipping. ОАО RZD plans to solve this problem by controlling the sea ports of the Russian Far East basin and by closer cooperation with the national and international transport-logistics and forwarding companies. 

–What is your view of the border stations’ infrastructure? What is the investment volume allocated to their development this year? 

– In the last five years the dynamics of carrying capacities at border stations has shown a certain growth. Now the transport infrastructure of Zabaikalsk, Grodekovo and Naushki border stations allows to satisfy the necessary transportation volumes. 

In general, from 2002 to 2006, OAO RZD allocated some RUR 2 bln to border stations development, Zabaikalsk – RUR 1.4 bln, Naushki – RUR 500 mln, Grodekovo – RUR 100 mln.

Moreover, it is important to note that in 2007 OAO RZD infrastructure is ready to transport 15 mln tons of oil to China, in accordance with major Russian oil companies’ demands. In future OAO RZD investment recourses will also be directed to Zabaikalsk border station development, i.e. railway accesses improvement, as well as to a complex reconstruction of Karymskaya – Zabaikalsk sector, in particular the second track construction and this sector electrification. These steps will make it possible to transport 60 mln tons of cargo from/to China by 2015.

– You have already mentioned the high importance of cooperation efficiency on the technological level. What is going on now? What IT are applied? How efficient are they?

– The Far Eastern railway together with the Far Eastern Customs Board signed an agreement on information exchange during cargo transportation via Grodekovo – Suifenhe border station in 2005. This document envisages the terms according to which each side provides conditions to improve customs procedures and assists in foreign trade cargo transportation implementing mutual electronic exchange of data on imported, exported and transit cargo. As a result, starting from April 2005, while preparing transport documentation on export cargo destined at Grodekovo – Suifenhe, information for Grodekovo customs is transmitted from the load stations of the Far Eastern railway. Before export cargo arrival at Grodekovo, customs bodies receive e-data on cargo following to China. 

The first results were impressive by the late May 2005. The period for customs documentation preparation for an export train shortened by 4.5 hours. Due to the held reconstruction, we obtained the chance to manage 14-15 trains per day instead of 8-9 units as before. 
At present this scheme is functional at full range only for the Far Eastern railway, though some stations of the Western-Siberian, Zabailkalsk and Sverdlovsk railways joined the experiment. 

Biography
VADIM MOROZOV
Was born in 1954. Graduated from Leningrad Institute of Railway Transport Engineers in 1977.
Started his work in 1971 at locomotive depot Volkhovstroy -1 of October railway. In 1998 was appointed Deputy Chairman of Legislative Assembly of Leningrad region. 

From 1998 to 1999 and from 2000 to 2002 – First Deputy Head of South-Eastern and Moscow railways respectively. From May 1999 to May 2000 – Deputy Minister of Railways, from 2002 to 2003 – First Deputy Minister and from November 2003 to June 2004 – Minister of Railways of the RF. On August 17, 2005 appointed the First Vice-President of OAO RZD.
 
Tatyana Tokareva 
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    [PREVIEW_TEXT] => The dynamics of the foreign trade cargo turnover between Russia and China has become stable in recent years. Thus, for the past six years the transportation volume between two countries has doubled (from 24 mln tons in 2000 to 47 mln tons in 2006). The export cargo volumes have doubled as well (from 22.6 mln tons to 43.8 mln tons), import has grown by 2.8 times (from 1.1 mln tons to 3 mln tons), though transit transportation has seriously dropped (from 637.4 thousand tons to 253.7 thousand tons). Vadim Morozov, OAO RZD First Vice-President, comments on the prospects of Russia – China railway cargo transportation.
    [~PREVIEW_TEXT] => The dynamics of the foreign trade cargo turnover between Russia and China has become stable in recent years. Thus, for the past six years the transportation volume between two countries has doubled (from 24 mln tons in 2000 to 47 mln tons in 2006). The export cargo volumes have doubled as well (from 22.6 mln tons to 43.8 mln tons), import has grown by 2.8 times (from 1.1 mln tons to 3 mln tons), though transit transportation has seriously dropped (from 637.4 thousand tons to 253.7 thousand tons). Vadim Morozov, OAO RZD First Vice-President, comments on the prospects of Russia – China railway cargo transportation.
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2007/2/morozov.jpg" border="1" alt="Vadim Morozov" title="Vadim Morozov" hspace="3" vspace="3" width="180" height="171" align="left" />The dynamics of the foreign trade cargo turnover between Russia and China has become stable in recent years. Thus, for the past six years the transportation volume between two countries has doubled (from 24 mln tons in 2000 to 47 mln tons in 2006). The export cargo volumes have doubled as well (from 22.6 mln tons to 43.8 mln tons), import has grown by 2.8 times (from 1.1 mln tons to 3 mln tons), though transit transportation has seriously dropped (from 637.4 thousand tons to 253.7 thousand tons). Vadim Morozov, OAO RZD First Vice-President, comments on the prospects of Russia – China railway cargo transportation.
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    [DETAIL_TEXT] => – Mr.Morozov, what role does railway transport play in trade communication between Russia and China? What are the results achieved by OAO RZD in this sector in 2006 and at the beginning of 2007? 

– In the aggregate cargo turnover between Russia and China railway transportation takes 80%. That is why OAO RZD stands as priority logistics development for Russia – China communication. Speaking of the statistics, the data are quite impressive. In 2006 transportation volume between Russia and China increased by 8.2% year-on-year. During the first three months of 2007 transportation volumes boosted by 17.4%. The basis of the cargo flow is still made up by raw materials and mass cargoes, including timber (35.4% in the cargo turnover structure), oil (24.4%), mineral fertilizers (15.2%), ferrous metals and iron ore (9.2% and 5.3% respectively).

– Which sectors can perform as the resource cargo base? What are the prospects of additional cargo turnover attraction to Russia – China communication in future?

– Transportation volumes for the above-mentioned cargoes will be increasing in future. However, for example, ferrous metal transportation volumes show a certain drop due to the fact that China has turned into the biggest exporter of ferrous metals by now. Nevertheless, iron ore import volumes are growing.

A new impulse for mutually profitable cooperation between the two countries was given by Vladimir Putin, the RF President, who visited China in March 2006. During his visit to Beijin, V.Putin and the Transport Ministry of China signed such important documents as the agreement on the mutual use of large-tonnage containers for export-import cargo transportation and the agreement on electronic data exchange during international railway cargo transportation. These steps will allow to shorten the time for cargo trains handling and provide the necessary conditions to increase container transportation between Russia and China significantly. 

Moreover, in order to meet the demands of the growing volumes of cargo transportation between Russia and China, including crude oil transportation, the two countries have significantly reconstructed and modernized border stations and accesses. In 2007 additional steps are being taken to enhance the carrying capacity. Thus, in particular, the permanent way of certain sectors is improved and some sectors of the railways are electrified. In 2007 Russia allocates RUR 8.7 bln for the national infrastructure development; similar steps are taken by the Chinese side. 

After the first stage of the pipe-line system Eastern Siberia – Pacific Ocean is completed, oil volumes for railway transportation en route to China will decrease. However, in future OAO RZD plans to compensate the railway oil losses by attracting additional cargoes.

The rapid development of the Chinese metallurgical complex, as mentioned above, leads to an increase in purchase of iron ore raw material. In this respect, Chita region seems to have some potential and is capable to provide the necessary volumes. According to experts, by 2015 the volumes of iron ore mining will amount to 35 mln tons per year and the volumes of transportation by Naryn – Lukogan new line can reach 13.5 mln tons per year by 2020. The development of Berezovskoyoe deposit is becoming more and more important now, while the license for deposit development belongs to the Chinese investment company «Lunen».

Export transportation of timber from Primorsky region is expected to grow, as well as potassium transportation from the Ural region aimed at satisfying the needs of the Chinese border. The forecasted cargo turnover of timber to China will amount to 20 mln tons and the fertilizer volume will reach 3 mln tons by 2015.

At the same time, there are obvious prospects for growth in power station coal transportation, which is extremely important to boost export cargo flows for the Russian railways. According to experts, Russian export can reach 5 mln tons of power station coal annually. 

It is important to note that in the near future Chinese import volumes growth can be expected, which mainly has to do with the production of food, glass, clothes, machinery and agriculture industries transported by containers. Currently railways transport about one million tons of export-import cargo. The potential growth of container transportation between Russia and China is estimated at 3-3.5 mln tons. 

We run several prospective projects concluded with big manufacturing (IKEA) and car-making enterprises (KIA Motors, Volkswagen, Great Wall Motors) who plan to transport their production by speeded block trains by the TransSiberian railway. Moreover, the load at border stations will be seriously influenced by the volumes of transit trading cargo from China and Europe. 

– During the last five years the volume of cargo transit transportation to/from China via the Russian territory dropped significantly. What steps are taken to stimulate this cargo flow?

– The drop in transit by 2.5 times during the above-mentioned period occurred due to the drop in ferrous metal transportation from Kazakhstan to China. However, the physical volume of trade between China and Europe has been growing permanently and now amounts to 60 mln tons. The major part of this volume is made up from oil and other raw material goods and, thus, the most efficient way to transport it is by sea. Those countries who can be linked by the Russian transport net take only 25%, i.e. 14 – 15 mln tons, wherein containerized cargo amounts to 8-9 mln tons. 

As our priority tasks we’ve set the development of efficient solutions to attract additional cargo volumes. 

Thus, at present, projects of OAO RZD cooperation with Germany and China aimed at the development of a transcontinental cargo line en route China – Russsia - Germany are worked out. Heads of Russian, German and Chinese railways came to an agreement on joint container transportation development via the TransSib and on the launch of a logistics company that will assist in the increase of railway transportation for cargo turnover between the countries following the launch of logistics services highly demanded by cargo consignors. Moreover, in 2007, OAO TransContainer is to launch its representative office in China. 

At the same time, one of the most important and financially intensive tasks is further development of a transport infrastructure corresponding to modern standards for transit transportation. This very sector has shown implementation of the most significant projects, which provided the basis for an efficient EuroAsian transit.

Moreover, due to cargo transportation growth, high modern economic demands to quality services and the need to cut expenditures while functioning on the competitive market, the problem of improving systemic production arises, as well as problems of production transportation and of logistics methods efficient use in production-transport activities management. A wide use of automated systems controlling transportation and other technological processes significantly assists in solving these problems.

During recent years the problem of railway companies’ co-operation with adjacent sectors has acquired serious importance and has become one of the basic components for success on the transport services market, i.e. shipping companies, motor companies, cargo owners etc. At the same time, it is important to note that the inter-sectoral alliances formed on the market pursue the same targets and interests. Each participant of such alliances is interested to boost their revenue, which is defined by the volume of joint efforts taken in order to win the competition in each particular sector of the transport services market. 

In this respect, ОАО RZD, together with other market players, take serious steps as well. Thus, Russkaya Troika, ОАО RZD and Far-Eastern Shipping Company jointly plan to develop their business on the basis of logistics principles with the aim of speeding up cargo flows and cutting down aggregate expenditures of cargo consignors and cargo consignees. For example, they consider an opportunity to acquire sea container carriers, sea container terminal construction in the Far East and the construction of a terminal net in the central part of Russia, Moscow and Moscow region included. As a result, cargo consignors and cargo consignees will get a «through» service corresponding to modern market demands. 

– In this respect the question about tariff policy arises… 

– Transit transportation via Russian railways to/from China and third countries is regulated according to the rates of Tariff policy developed for 2006 freight year for railways – CIS participants implementing cargo transportation in international communication. These rates were calculated on the basis of the Unified Transit Tariff with the use of a decreasing coefficient which depends on the cargo class and the rail car load volume, and, for containers, such parameter as distance matters. 

In the Tariff policy developed for 2007 tariffs were kept at the level of 2006 in Swiss Francs, while in US Dollars the tariff increased by 3.2%.

At the same time, this year decreasing coefficients and decreasing rates were set for transit transportation via OAO RZD infrastructure to/from China, including those for transit cargo and container transportation from third countries to China via Zabaikalsk, Naushki and Grodekovo and back. Moreover, there is an opportunity to set additional discounts to acting tariffs, in case the present-day transportation volume increases and cargo owners apply. 

– Generally speaking, what are the advantages of Russia as a transit corridor for Chinese cargo compared to shipping and alternative transport corridors?

– The transport system of Russia (and railways, first of all) is geographically located so that it is a convenient transport corridor for trade cargo flows circulating between China and Europe. 

According to Russian experts, in 2006 China became the biggest exporter who delivers goods to the EU, having won the competition with the US who took the second place. As a rule, the major part of these cargo flows is made up from containerized goods, finished commodity and semi-finished goods. Considering the high cost of these cargoes, the delivery term performs as a key parameter for transport services quality, since it influences the capital turnover immediately and, thus, the cargo owner’s business profitability. According to this parameter, the Russian Railways have an objective advantage, since, first of all, they provide high-speed transportation and, secondly, it is the shortest route between Eastern Asia and Europe. 

The East-West transport corridor going via the Russian territory also has other advantages as compared to alternative modes of cargo transportation. Compared to shipping, railway transportation is safe and gives an opportunity to transport relatively small cargo volumes. 

Moreover, railway routes give Chinese cargo consignors a «direct access» to central European regions located far from major sea ports. 

Among alternative transport corridors the TRASEKA route can be mentioned. It follows via the countries of Middle Asia, TransCaucasus, the Caspian and the Black seas, the central corridor of TransAsian route (Middle Asia, Iran, Turkey), and in future, if needed, links will be constructed via the TransKazakhstan railway and the South corridor of the TransAsian railway. However, all these options are out of competition with the West-East corridor which is supported by the powerful infrastructure of the TransSiberian route. They are longer, include railway sectors with different technical parameters (gauge, track dimensions etc.), and their carrying capacities also differ. 

Moreover, they have to do with ferry-bridges which, consequently, involve additional port loads, as well as a greater number of borders to cross with respective customs procedures, customs duties and risks involved due to the unstable international climate in the above-mentioned regions. Considering the attention drawn to these projects, we can conclude that they are developing due to political reasons, not economical factors. At the same time, I’d like to stress the fact that the greatest part of China’s export potential is concentrated in its Eastern coastal regions and objectively bent for sea ports, which demonstrate a phenomenal rate of container turnover growth. Of course, Russian transport corridors are unable to capture the whole volume of EuroAsian transit, though there are rather capacious niches of Euroasian transportation strongly attracted to the «West-East» corridor. Geographically they are the North-Eastern and partially the Central regions of China, which are linked with the TransSiberian route by Zabaikalsk, Grodekovo, and Naushki border stations; also, the North-West of China is linked with Kazakhstan’s railway net and further on with major transport corridors going via the Russian territory by Dostyk/Alashankou border station. The policy carried out by the Chinese Government and aimed at stimulating the economic development of these regions allows to forecast a significant growth of cargo base for railway transit.

Russian railways can acquire some part of cargo flows following from the Eastern regions of China, if shipping is organized between Chinese ports and Russian Far Eastern ports to forward the cargo further on via the TransSiberian railway. However, this scheme is not highly competitive, since it is quite restricted by the lack of through service, as well as regular service lines and high tariffs for shipping. ОАО RZD plans to solve this problem by controlling the sea ports of the Russian Far East basin and by closer cooperation with the national and international transport-logistics and forwarding companies. 

–What is your view of the border stations’ infrastructure? What is the investment volume allocated to their development this year? 

– In the last five years the dynamics of carrying capacities at border stations has shown a certain growth. Now the transport infrastructure of Zabaikalsk, Grodekovo and Naushki border stations allows to satisfy the necessary transportation volumes. 

In general, from 2002 to 2006, OAO RZD allocated some RUR 2 bln to border stations development, Zabaikalsk – RUR 1.4 bln, Naushki – RUR 500 mln, Grodekovo – RUR 100 mln.

Moreover, it is important to note that in 2007 OAO RZD infrastructure is ready to transport 15 mln tons of oil to China, in accordance with major Russian oil companies’ demands. In future OAO RZD investment recourses will also be directed to Zabaikalsk border station development, i.e. railway accesses improvement, as well as to a complex reconstruction of Karymskaya – Zabaikalsk sector, in particular the second track construction and this sector electrification. These steps will make it possible to transport 60 mln tons of cargo from/to China by 2015.

– You have already mentioned the high importance of cooperation efficiency on the technological level. What is going on now? What IT are applied? How efficient are they?

– The Far Eastern railway together with the Far Eastern Customs Board signed an agreement on information exchange during cargo transportation via Grodekovo – Suifenhe border station in 2005. This document envisages the terms according to which each side provides conditions to improve customs procedures and assists in foreign trade cargo transportation implementing mutual electronic exchange of data on imported, exported and transit cargo. As a result, starting from April 2005, while preparing transport documentation on export cargo destined at Grodekovo – Suifenhe, information for Grodekovo customs is transmitted from the load stations of the Far Eastern railway. Before export cargo arrival at Grodekovo, customs bodies receive e-data on cargo following to China. 

The first results were impressive by the late May 2005. The period for customs documentation preparation for an export train shortened by 4.5 hours. Due to the held reconstruction, we obtained the chance to manage 14-15 trains per day instead of 8-9 units as before. 
At present this scheme is functional at full range only for the Far Eastern railway, though some stations of the Western-Siberian, Zabailkalsk and Sverdlovsk railways joined the experiment. 

Biography
VADIM MOROZOV
Was born in 1954. Graduated from Leningrad Institute of Railway Transport Engineers in 1977.
Started his work in 1971 at locomotive depot Volkhovstroy -1 of October railway. In 1998 was appointed Deputy Chairman of Legislative Assembly of Leningrad region. 

From 1998 to 1999 and from 2000 to 2002 – First Deputy Head of South-Eastern and Moscow railways respectively. From May 1999 to May 2000 – Deputy Minister of Railways, from 2002 to 2003 – First Deputy Minister and from November 2003 to June 2004 – Minister of Railways of the RF. On August 17, 2005 appointed the First Vice-President of OAO RZD.
 
Tatyana Tokareva 
    [~DETAIL_TEXT] => – Mr.Morozov, what role does railway transport play in trade communication between Russia and China? What are the results achieved by OAO RZD in this sector in 2006 and at the beginning of 2007? 

– In the aggregate cargo turnover between Russia and China railway transportation takes 80%. That is why OAO RZD stands as priority logistics development for Russia – China communication. Speaking of the statistics, the data are quite impressive. In 2006 transportation volume between Russia and China increased by 8.2% year-on-year. During the first three months of 2007 transportation volumes boosted by 17.4%. The basis of the cargo flow is still made up by raw materials and mass cargoes, including timber (35.4% in the cargo turnover structure), oil (24.4%), mineral fertilizers (15.2%), ferrous metals and iron ore (9.2% and 5.3% respectively).

– Which sectors can perform as the resource cargo base? What are the prospects of additional cargo turnover attraction to Russia – China communication in future?

– Transportation volumes for the above-mentioned cargoes will be increasing in future. However, for example, ferrous metal transportation volumes show a certain drop due to the fact that China has turned into the biggest exporter of ferrous metals by now. Nevertheless, iron ore import volumes are growing.

A new impulse for mutually profitable cooperation between the two countries was given by Vladimir Putin, the RF President, who visited China in March 2006. During his visit to Beijin, V.Putin and the Transport Ministry of China signed such important documents as the agreement on the mutual use of large-tonnage containers for export-import cargo transportation and the agreement on electronic data exchange during international railway cargo transportation. These steps will allow to shorten the time for cargo trains handling and provide the necessary conditions to increase container transportation between Russia and China significantly. 

Moreover, in order to meet the demands of the growing volumes of cargo transportation between Russia and China, including crude oil transportation, the two countries have significantly reconstructed and modernized border stations and accesses. In 2007 additional steps are being taken to enhance the carrying capacity. Thus, in particular, the permanent way of certain sectors is improved and some sectors of the railways are electrified. In 2007 Russia allocates RUR 8.7 bln for the national infrastructure development; similar steps are taken by the Chinese side. 

After the first stage of the pipe-line system Eastern Siberia – Pacific Ocean is completed, oil volumes for railway transportation en route to China will decrease. However, in future OAO RZD plans to compensate the railway oil losses by attracting additional cargoes.

The rapid development of the Chinese metallurgical complex, as mentioned above, leads to an increase in purchase of iron ore raw material. In this respect, Chita region seems to have some potential and is capable to provide the necessary volumes. According to experts, by 2015 the volumes of iron ore mining will amount to 35 mln tons per year and the volumes of transportation by Naryn – Lukogan new line can reach 13.5 mln tons per year by 2020. The development of Berezovskoyoe deposit is becoming more and more important now, while the license for deposit development belongs to the Chinese investment company «Lunen».

Export transportation of timber from Primorsky region is expected to grow, as well as potassium transportation from the Ural region aimed at satisfying the needs of the Chinese border. The forecasted cargo turnover of timber to China will amount to 20 mln tons and the fertilizer volume will reach 3 mln tons by 2015.

At the same time, there are obvious prospects for growth in power station coal transportation, which is extremely important to boost export cargo flows for the Russian railways. According to experts, Russian export can reach 5 mln tons of power station coal annually. 

It is important to note that in the near future Chinese import volumes growth can be expected, which mainly has to do with the production of food, glass, clothes, machinery and agriculture industries transported by containers. Currently railways transport about one million tons of export-import cargo. The potential growth of container transportation between Russia and China is estimated at 3-3.5 mln tons. 

We run several prospective projects concluded with big manufacturing (IKEA) and car-making enterprises (KIA Motors, Volkswagen, Great Wall Motors) who plan to transport their production by speeded block trains by the TransSiberian railway. Moreover, the load at border stations will be seriously influenced by the volumes of transit trading cargo from China and Europe. 

– During the last five years the volume of cargo transit transportation to/from China via the Russian territory dropped significantly. What steps are taken to stimulate this cargo flow?

– The drop in transit by 2.5 times during the above-mentioned period occurred due to the drop in ferrous metal transportation from Kazakhstan to China. However, the physical volume of trade between China and Europe has been growing permanently and now amounts to 60 mln tons. The major part of this volume is made up from oil and other raw material goods and, thus, the most efficient way to transport it is by sea. Those countries who can be linked by the Russian transport net take only 25%, i.e. 14 – 15 mln tons, wherein containerized cargo amounts to 8-9 mln tons. 

As our priority tasks we’ve set the development of efficient solutions to attract additional cargo volumes. 

Thus, at present, projects of OAO RZD cooperation with Germany and China aimed at the development of a transcontinental cargo line en route China – Russsia - Germany are worked out. Heads of Russian, German and Chinese railways came to an agreement on joint container transportation development via the TransSib and on the launch of a logistics company that will assist in the increase of railway transportation for cargo turnover between the countries following the launch of logistics services highly demanded by cargo consignors. Moreover, in 2007, OAO TransContainer is to launch its representative office in China. 

At the same time, one of the most important and financially intensive tasks is further development of a transport infrastructure corresponding to modern standards for transit transportation. This very sector has shown implementation of the most significant projects, which provided the basis for an efficient EuroAsian transit.

Moreover, due to cargo transportation growth, high modern economic demands to quality services and the need to cut expenditures while functioning on the competitive market, the problem of improving systemic production arises, as well as problems of production transportation and of logistics methods efficient use in production-transport activities management. A wide use of automated systems controlling transportation and other technological processes significantly assists in solving these problems.

During recent years the problem of railway companies’ co-operation with adjacent sectors has acquired serious importance and has become one of the basic components for success on the transport services market, i.e. shipping companies, motor companies, cargo owners etc. At the same time, it is important to note that the inter-sectoral alliances formed on the market pursue the same targets and interests. Each participant of such alliances is interested to boost their revenue, which is defined by the volume of joint efforts taken in order to win the competition in each particular sector of the transport services market. 

In this respect, ОАО RZD, together with other market players, take serious steps as well. Thus, Russkaya Troika, ОАО RZD and Far-Eastern Shipping Company jointly plan to develop their business on the basis of logistics principles with the aim of speeding up cargo flows and cutting down aggregate expenditures of cargo consignors and cargo consignees. For example, they consider an opportunity to acquire sea container carriers, sea container terminal construction in the Far East and the construction of a terminal net in the central part of Russia, Moscow and Moscow region included. As a result, cargo consignors and cargo consignees will get a «through» service corresponding to modern market demands. 

– In this respect the question about tariff policy arises… 

– Transit transportation via Russian railways to/from China and third countries is regulated according to the rates of Tariff policy developed for 2006 freight year for railways – CIS participants implementing cargo transportation in international communication. These rates were calculated on the basis of the Unified Transit Tariff with the use of a decreasing coefficient which depends on the cargo class and the rail car load volume, and, for containers, such parameter as distance matters. 

In the Tariff policy developed for 2007 tariffs were kept at the level of 2006 in Swiss Francs, while in US Dollars the tariff increased by 3.2%.

At the same time, this year decreasing coefficients and decreasing rates were set for transit transportation via OAO RZD infrastructure to/from China, including those for transit cargo and container transportation from third countries to China via Zabaikalsk, Naushki and Grodekovo and back. Moreover, there is an opportunity to set additional discounts to acting tariffs, in case the present-day transportation volume increases and cargo owners apply. 

– Generally speaking, what are the advantages of Russia as a transit corridor for Chinese cargo compared to shipping and alternative transport corridors?

– The transport system of Russia (and railways, first of all) is geographically located so that it is a convenient transport corridor for trade cargo flows circulating between China and Europe. 

According to Russian experts, in 2006 China became the biggest exporter who delivers goods to the EU, having won the competition with the US who took the second place. As a rule, the major part of these cargo flows is made up from containerized goods, finished commodity and semi-finished goods. Considering the high cost of these cargoes, the delivery term performs as a key parameter for transport services quality, since it influences the capital turnover immediately and, thus, the cargo owner’s business profitability. According to this parameter, the Russian Railways have an objective advantage, since, first of all, they provide high-speed transportation and, secondly, it is the shortest route between Eastern Asia and Europe. 

The East-West transport corridor going via the Russian territory also has other advantages as compared to alternative modes of cargo transportation. Compared to shipping, railway transportation is safe and gives an opportunity to transport relatively small cargo volumes. 

Moreover, railway routes give Chinese cargo consignors a «direct access» to central European regions located far from major sea ports. 

Among alternative transport corridors the TRASEKA route can be mentioned. It follows via the countries of Middle Asia, TransCaucasus, the Caspian and the Black seas, the central corridor of TransAsian route (Middle Asia, Iran, Turkey), and in future, if needed, links will be constructed via the TransKazakhstan railway and the South corridor of the TransAsian railway. However, all these options are out of competition with the West-East corridor which is supported by the powerful infrastructure of the TransSiberian route. They are longer, include railway sectors with different technical parameters (gauge, track dimensions etc.), and their carrying capacities also differ. 

Moreover, they have to do with ferry-bridges which, consequently, involve additional port loads, as well as a greater number of borders to cross with respective customs procedures, customs duties and risks involved due to the unstable international climate in the above-mentioned regions. Considering the attention drawn to these projects, we can conclude that they are developing due to political reasons, not economical factors. At the same time, I’d like to stress the fact that the greatest part of China’s export potential is concentrated in its Eastern coastal regions and objectively bent for sea ports, which demonstrate a phenomenal rate of container turnover growth. Of course, Russian transport corridors are unable to capture the whole volume of EuroAsian transit, though there are rather capacious niches of Euroasian transportation strongly attracted to the «West-East» corridor. Geographically they are the North-Eastern and partially the Central regions of China, which are linked with the TransSiberian route by Zabaikalsk, Grodekovo, and Naushki border stations; also, the North-West of China is linked with Kazakhstan’s railway net and further on with major transport corridors going via the Russian territory by Dostyk/Alashankou border station. The policy carried out by the Chinese Government and aimed at stimulating the economic development of these regions allows to forecast a significant growth of cargo base for railway transit.

Russian railways can acquire some part of cargo flows following from the Eastern regions of China, if shipping is organized between Chinese ports and Russian Far Eastern ports to forward the cargo further on via the TransSiberian railway. However, this scheme is not highly competitive, since it is quite restricted by the lack of through service, as well as regular service lines and high tariffs for shipping. ОАО RZD plans to solve this problem by controlling the sea ports of the Russian Far East basin and by closer cooperation with the national and international transport-logistics and forwarding companies. 

–What is your view of the border stations’ infrastructure? What is the investment volume allocated to their development this year? 

– In the last five years the dynamics of carrying capacities at border stations has shown a certain growth. Now the transport infrastructure of Zabaikalsk, Grodekovo and Naushki border stations allows to satisfy the necessary transportation volumes. 

In general, from 2002 to 2006, OAO RZD allocated some RUR 2 bln to border stations development, Zabaikalsk – RUR 1.4 bln, Naushki – RUR 500 mln, Grodekovo – RUR 100 mln.

Moreover, it is important to note that in 2007 OAO RZD infrastructure is ready to transport 15 mln tons of oil to China, in accordance with major Russian oil companies’ demands. In future OAO RZD investment recourses will also be directed to Zabaikalsk border station development, i.e. railway accesses improvement, as well as to a complex reconstruction of Karymskaya – Zabaikalsk sector, in particular the second track construction and this sector electrification. These steps will make it possible to transport 60 mln tons of cargo from/to China by 2015.

– You have already mentioned the high importance of cooperation efficiency on the technological level. What is going on now? What IT are applied? How efficient are they?

– The Far Eastern railway together with the Far Eastern Customs Board signed an agreement on information exchange during cargo transportation via Grodekovo – Suifenhe border station in 2005. This document envisages the terms according to which each side provides conditions to improve customs procedures and assists in foreign trade cargo transportation implementing mutual electronic exchange of data on imported, exported and transit cargo. As a result, starting from April 2005, while preparing transport documentation on export cargo destined at Grodekovo – Suifenhe, information for Grodekovo customs is transmitted from the load stations of the Far Eastern railway. Before export cargo arrival at Grodekovo, customs bodies receive e-data on cargo following to China. 

The first results were impressive by the late May 2005. The period for customs documentation preparation for an export train shortened by 4.5 hours. Due to the held reconstruction, we obtained the chance to manage 14-15 trains per day instead of 8-9 units as before. 
At present this scheme is functional at full range only for the Far Eastern railway, though some stations of the Western-Siberian, Zabailkalsk and Sverdlovsk railways joined the experiment. 

Biography
VADIM MOROZOV
Was born in 1954. Graduated from Leningrad Institute of Railway Transport Engineers in 1977.
Started his work in 1971 at locomotive depot Volkhovstroy -1 of October railway. In 1998 was appointed Deputy Chairman of Legislative Assembly of Leningrad region. 

From 1998 to 1999 and from 2000 to 2002 – First Deputy Head of South-Eastern and Moscow railways respectively. From May 1999 to May 2000 – Deputy Minister of Railways, from 2002 to 2003 – First Deputy Minister and from November 2003 to June 2004 – Minister of Railways of the RF. On August 17, 2005 appointed the First Vice-President of OAO RZD.
 
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Reform as objective necessity 
All the railways of the CIS and Baltic region separated from the USSR transport system. What problems did they have to overcome after the empire collapsed? What are the reasons to state that sooner or later all countries of 1520 format are to carry out analogous reforms? 

In the Soviet era railway transport was an inseparable element of the unified plan-administrative system, i.e. an object of tough centralized planning, pricing, provision and control in general. Each management level of the system was objectively interested in being given the lowest production volume task possible with the widest resources possible to fulfill it. 

The mechanism of money flows movement was quite significant. Transportation documents made out by the cargo owner were forwarded for payment to the bank which transferred the sum required to the railway’s account. If the cargo owner did not have the money to settle the account, the bank paid for transportation anyway giving credit to the client. The Ministry of Railways depending on the profit and work implemented defined the average rate for the net and, with the help of differentiation, these funds were distributed via the net departments. «In fact, each railway received such a coefficient for profit acquiring from aggregate revenue that it guaranteed profit no matter how efficiently the work was done by this very railway», - Nigmatzhan Isingarin, former Deputy Transport Minister of the USSR and Transport Minister of Kazakhstan, stated. 

Thus, in general, the economic relations on railway transport of the 1980-s did not motivate the sector to turn into an efficient unit and to cut expenditures by creating less expensive services. 
«The tough centralized management system did not allow business activities and every initiative was suppressed. Any individual decision contradicting the accepted instructions and regulations was forbidden and punished», N.Isingarin emphasized. 

It is important to note that the USSR railway transport did not cope with its economic duties. Moreover, while analyzing railway sector trends during 1965-1990, the sector specialists noted negative tendencies, such as low speed of cargo transportation, unsatisfactory level of clients servicing compared to these abroad, exhaustion of carrying capacities on the major cargo routes, poor technical state of rolling stock etc. 

The major problem for railway transport was the permanent deficit of services. To buy a ticket was only possible via personal contacts or after long queuing. Cargo rail cars were in deficit as well and distributed by the transport department of the Communist Party of the Soviet Union.
 
It is quite natural that the radical restructuring of the economy and the transfer from socialist economic principles to competitive-market relations required significant change on railways. Objectively, the railway transport reform in the CIS was a must and was focused on the creation of the new system where the consumer dominated over manufacture, not vice versa. 

Theoretically, the restructuring essence envisaged such basic changes as follows: separation of the functions of the state control and economic activities, railway property complex privatization, different types of activities separation, independent transport services manufacturers’ arrival, and tariffs de-regulation. The launch of a competitive model for railways had to result in setting such market methods of economic activities that aimed at acquiring revenues, expenditure optimization, personal and corporate motivation etc. 

Real market yet to come
Kazakhstan is believed to be a pioneer in railway restructuring in the CIS. The problem of separation between the state regulation and economic activities was solved here in 1991 when the unified Ministry of Transport and Communication was formed, in comparison with Russia where two separate bodies were launched, i.e. the Ministry of Transport and the Ministry of Railways.

In Kazakhstan the property complex was given to three railways which were united in 1997 into Kazakstan Temir Zholy (Kazakhstan Railways). However, during the decade of the 1990-s no reforming steps were taken in Kazakhstan. In 1999 the transportation volume grew by 26%, compared to the results achieved in 1991; rail cars park decreased by one third and railway basic assets wear-and-tear made 60%. In 1999-2000 Kazakhstan welcomed industrial growth which accentuated the task of railway transport restructuring. 

In the late 1990-s the Concept of railway transport development for the period of 1999-2003 was worked out, as well as the programme of de-monopolization of Kazakhstan Temir Zholy state-run enterprise. In July-August 1999, on the basis of these two documents, the Kazakhstan Government approved two laws which envisaged separating into subsidiaries the units specializing in repair-auxiliary activities. The state-run enterprise Kazakhstan Temir Zholy also underwent restructuring, followed by the efforts to launch state-run enterprises «Infrastructure», «Locomotiv», and Cargo Transportation. The essence of these steps lies in the intention to transfer different types of activities into separate business units and to solve the problem of separate financial accounting, which is still a crucial problem for Russia, for example. Late in 2001 the law «On railway transport» was approved in Kazakhstan. According to this law, the main railway net had to be run by the state, though private operators were allowed to use railways and infrastructure objects, as well as rolling stock. The law separated railway transport activities into monopolistic, monopolistic-competitive and competitive sectors. The national company whose activities would cover the first and the second sectors was to be launched. This structure was to perform such functions as maintenance of the main railway net, transportation process management and providing infrastructure services as an operator of the main railway net, as well as implementing transportation itself. Together with the national company operating on the market, independent carriers were to be formed who would use the services of the main railway net on equal terms and compete with each other. Thus, the law officially announced the necessity of both the state regulation of the sector and competition development in transportation. In 2004 it was amended. In particular, amendments clarified the terms of such transportation market subjects as national carrier, car operator, operator of locomotive haulage, transportation process participant and forwarder. 

In 2001 the Government approved the Programme of Railway Transport Restructuring in Kazakhstan Republic for the period of 2001-2005. In 2002 the implementation of this programme resulted in the launch of a state-run company National Company Kazakhstan Temir Zholy JSC. In 2003, on the basis of this company’s locomotive park, JSC Locomotive was formed to provide services of locomotive haulage, and also JSC Kazzheldortrans (now Kaztemirtrans) was launched. Kaztemirtrans was given the whole inventory park of rail cars of 60 thousand units (46 thousand units functioning). It is important to stress that in Kazakhstan they were preparing to separate infrastructure and transportation by 2007, although within the limits of one holding.
Moreover, Passenger transportation JSC was launched. 

At the same time the institution of private rolling stock operators started to develop rapidly. In 2002 the Agency on Natural Monopolies Regulation defined the car component in the tariff and decreasing coefficients were set for rail cars run by juridical persons. The work on formation a cargo tariff with separated components was carried on afterwards. The ideology dictated to keep state regulation over the infrastructure part and to de-regulate the transportation part, including the car and locomotive components. 

Operator tariff discounts gave a chance to develop transportation by private rolling stock, which amounted to 30 thousand units in 2006. Now 180 companies operate their own rail cars and 40 of them operate over 200 units. In 2004, Kazakhstan Association of Carriers and Rail Cars Operators was formed. Nigmatzhan Isingarin headed this association. He pointed out that this organization was launched in order to assist in competition development in railway cargo transportation. Now it includes about 20 big companies. 	

In 2004 the new Programme of railway transport restructuring for the period of 2004-2006 was approved. This version envisaged in particular the creation of a competitive market for carriers, the financial separation of the national carrier and the main railway net operator, as well as daughter companies shares sale. Also, in 2004 the authorities officially announced the launch of first independent carriers on the basis of big enterprises of metallurgic and coal industries. Yury Lavrinenko, the first Vice-Minister of Transport and Communication, stated, «Thus, by now we have started to form a competitive surrounding where National Company Kazakhstan Temir Zholy JSC performs as an operator of the main railway net and as a carrier in the person of Kazzheldortrans JSC, while private rolling stock owners perform as private carriers». 

Now the official position of the Ministry of Transport and Kazakhstan railways maintains that the launch of independent operators who would work according to liberalized tariffs on the contractual base and compete with the public state carrier is impossible without a major destruction of stability and accessibility of railway transport. President of NC Kazakhstan Temir Zholy JSC Yerlan Atamkulov defines his corporation status in the near future in the following way, «The company will be a holding providing technological integrity and coordination of transportation process and perform as an operator of the main railway net. With this aim the company will consolidate all assets connected with access to the main net and safety control. Kazakhstan Temir Zholy will remain the only carrier with whom all the payment is implemented. In the near future it will remain the only public carrier who is to satisfy international agreements demands».

Awaiting Competition

As a result, one can state that at present Kazakhstan has managed to separate its non-core sector into a competitive area. The core activities have not undergone tariff liberalization for transportation or any of its components, thus, it makes no sense to wait for market mechanisms to be switched on. They are based on free prices fluctuations which motivate market participants to make decisions either of business, or managerial or innovative kind. We cannot state that problems of the former socialist system have been overcome: there is still a deficit in rolling stock, a serious degree of basic assets wear-and-tear etc. However, Y.Atamkulov said while commenting on the results achieved during the restructuring, «Restructuring resulted in a separation of basic activities from auxiliary ones and non-core enterprises went to the competitive market. The major goal was achieved and we created conditions that provide competition in transportation».

Now major hopes for competition development in Kazakhstan are laid upon giving rolling stock for cargo transportation, i.e. rail cars operators. In this respect efforts to develop a normative base for this sector were made. Thus, in 2004 Regulations for rail cars operators were developed and approved that defined relations of an operator company and its partners – cargo owner and carrier. However, the whole range of problems for this market segment is still unsolved. In N.Isingarin’s opinion, the Regulations should include a clause on issues «developed by the association offers and a proposal clarifying rail cars operator activities, basic forms of their participation in the process of transportation, contractual agreements with cargo consignors and carriers etc.» 

At the same time, N.Isingarin is against imposing an independent carriers market, since he believes this sector is not ready for restructuring. «Neither in Russia, nor in Kazakhstan proper organization-technical conditions exist for independent carrier functioning even in domestic transportation. To do this, we need new systems of documentation, information services etc.», believes one of the patriarchs of railway restructuring in Kazakhstan.

Andrey Guryev
    [~DETAIL_TEXT] => 
Reform as objective necessity 
All the railways of the CIS and Baltic region separated from the USSR transport system. What problems did they have to overcome after the empire collapsed? What are the reasons to state that sooner or later all countries of 1520 format are to carry out analogous reforms? 

In the Soviet era railway transport was an inseparable element of the unified plan-administrative system, i.e. an object of tough centralized planning, pricing, provision and control in general. Each management level of the system was objectively interested in being given the lowest production volume task possible with the widest resources possible to fulfill it. 

The mechanism of money flows movement was quite significant. Transportation documents made out by the cargo owner were forwarded for payment to the bank which transferred the sum required to the railway’s account. If the cargo owner did not have the money to settle the account, the bank paid for transportation anyway giving credit to the client. The Ministry of Railways depending on the profit and work implemented defined the average rate for the net and, with the help of differentiation, these funds were distributed via the net departments. «In fact, each railway received such a coefficient for profit acquiring from aggregate revenue that it guaranteed profit no matter how efficiently the work was done by this very railway», - Nigmatzhan Isingarin, former Deputy Transport Minister of the USSR and Transport Minister of Kazakhstan, stated. 

Thus, in general, the economic relations on railway transport of the 1980-s did not motivate the sector to turn into an efficient unit and to cut expenditures by creating less expensive services. 
«The tough centralized management system did not allow business activities and every initiative was suppressed. Any individual decision contradicting the accepted instructions and regulations was forbidden and punished», N.Isingarin emphasized. 

It is important to note that the USSR railway transport did not cope with its economic duties. Moreover, while analyzing railway sector trends during 1965-1990, the sector specialists noted negative tendencies, such as low speed of cargo transportation, unsatisfactory level of clients servicing compared to these abroad, exhaustion of carrying capacities on the major cargo routes, poor technical state of rolling stock etc. 

The major problem for railway transport was the permanent deficit of services. To buy a ticket was only possible via personal contacts or after long queuing. Cargo rail cars were in deficit as well and distributed by the transport department of the Communist Party of the Soviet Union.
 
It is quite natural that the radical restructuring of the economy and the transfer from socialist economic principles to competitive-market relations required significant change on railways. Objectively, the railway transport reform in the CIS was a must and was focused on the creation of the new system where the consumer dominated over manufacture, not vice versa. 

Theoretically, the restructuring essence envisaged such basic changes as follows: separation of the functions of the state control and economic activities, railway property complex privatization, different types of activities separation, independent transport services manufacturers’ arrival, and tariffs de-regulation. The launch of a competitive model for railways had to result in setting such market methods of economic activities that aimed at acquiring revenues, expenditure optimization, personal and corporate motivation etc. 

Real market yet to come
Kazakhstan is believed to be a pioneer in railway restructuring in the CIS. The problem of separation between the state regulation and economic activities was solved here in 1991 when the unified Ministry of Transport and Communication was formed, in comparison with Russia where two separate bodies were launched, i.e. the Ministry of Transport and the Ministry of Railways.

In Kazakhstan the property complex was given to three railways which were united in 1997 into Kazakstan Temir Zholy (Kazakhstan Railways). However, during the decade of the 1990-s no reforming steps were taken in Kazakhstan. In 1999 the transportation volume grew by 26%, compared to the results achieved in 1991; rail cars park decreased by one third and railway basic assets wear-and-tear made 60%. In 1999-2000 Kazakhstan welcomed industrial growth which accentuated the task of railway transport restructuring. 

In the late 1990-s the Concept of railway transport development for the period of 1999-2003 was worked out, as well as the programme of de-monopolization of Kazakhstan Temir Zholy state-run enterprise. In July-August 1999, on the basis of these two documents, the Kazakhstan Government approved two laws which envisaged separating into subsidiaries the units specializing in repair-auxiliary activities. The state-run enterprise Kazakhstan Temir Zholy also underwent restructuring, followed by the efforts to launch state-run enterprises «Infrastructure», «Locomotiv», and Cargo Transportation. The essence of these steps lies in the intention to transfer different types of activities into separate business units and to solve the problem of separate financial accounting, which is still a crucial problem for Russia, for example. Late in 2001 the law «On railway transport» was approved in Kazakhstan. According to this law, the main railway net had to be run by the state, though private operators were allowed to use railways and infrastructure objects, as well as rolling stock. The law separated railway transport activities into monopolistic, monopolistic-competitive and competitive sectors. The national company whose activities would cover the first and the second sectors was to be launched. This structure was to perform such functions as maintenance of the main railway net, transportation process management and providing infrastructure services as an operator of the main railway net, as well as implementing transportation itself. Together with the national company operating on the market, independent carriers were to be formed who would use the services of the main railway net on equal terms and compete with each other. Thus, the law officially announced the necessity of both the state regulation of the sector and competition development in transportation. In 2004 it was amended. In particular, amendments clarified the terms of such transportation market subjects as national carrier, car operator, operator of locomotive haulage, transportation process participant and forwarder. 

In 2001 the Government approved the Programme of Railway Transport Restructuring in Kazakhstan Republic for the period of 2001-2005. In 2002 the implementation of this programme resulted in the launch of a state-run company National Company Kazakhstan Temir Zholy JSC. In 2003, on the basis of this company’s locomotive park, JSC Locomotive was formed to provide services of locomotive haulage, and also JSC Kazzheldortrans (now Kaztemirtrans) was launched. Kaztemirtrans was given the whole inventory park of rail cars of 60 thousand units (46 thousand units functioning). It is important to stress that in Kazakhstan they were preparing to separate infrastructure and transportation by 2007, although within the limits of one holding.
Moreover, Passenger transportation JSC was launched. 

At the same time the institution of private rolling stock operators started to develop rapidly. In 2002 the Agency on Natural Monopolies Regulation defined the car component in the tariff and decreasing coefficients were set for rail cars run by juridical persons. The work on formation a cargo tariff with separated components was carried on afterwards. The ideology dictated to keep state regulation over the infrastructure part and to de-regulate the transportation part, including the car and locomotive components. 

Operator tariff discounts gave a chance to develop transportation by private rolling stock, which amounted to 30 thousand units in 2006. Now 180 companies operate their own rail cars and 40 of them operate over 200 units. In 2004, Kazakhstan Association of Carriers and Rail Cars Operators was formed. Nigmatzhan Isingarin headed this association. He pointed out that this organization was launched in order to assist in competition development in railway cargo transportation. Now it includes about 20 big companies. 	

In 2004 the new Programme of railway transport restructuring for the period of 2004-2006 was approved. This version envisaged in particular the creation of a competitive market for carriers, the financial separation of the national carrier and the main railway net operator, as well as daughter companies shares sale. Also, in 2004 the authorities officially announced the launch of first independent carriers on the basis of big enterprises of metallurgic and coal industries. Yury Lavrinenko, the first Vice-Minister of Transport and Communication, stated, «Thus, by now we have started to form a competitive surrounding where National Company Kazakhstan Temir Zholy JSC performs as an operator of the main railway net and as a carrier in the person of Kazzheldortrans JSC, while private rolling stock owners perform as private carriers». 

Now the official position of the Ministry of Transport and Kazakhstan railways maintains that the launch of independent operators who would work according to liberalized tariffs on the contractual base and compete with the public state carrier is impossible without a major destruction of stability and accessibility of railway transport. President of NC Kazakhstan Temir Zholy JSC Yerlan Atamkulov defines his corporation status in the near future in the following way, «The company will be a holding providing technological integrity and coordination of transportation process and perform as an operator of the main railway net. With this aim the company will consolidate all assets connected with access to the main net and safety control. Kazakhstan Temir Zholy will remain the only carrier with whom all the payment is implemented. In the near future it will remain the only public carrier who is to satisfy international agreements demands».

Awaiting Competition

As a result, one can state that at present Kazakhstan has managed to separate its non-core sector into a competitive area. The core activities have not undergone tariff liberalization for transportation or any of its components, thus, it makes no sense to wait for market mechanisms to be switched on. They are based on free prices fluctuations which motivate market participants to make decisions either of business, or managerial or innovative kind. We cannot state that problems of the former socialist system have been overcome: there is still a deficit in rolling stock, a serious degree of basic assets wear-and-tear etc. However, Y.Atamkulov said while commenting on the results achieved during the restructuring, «Restructuring resulted in a separation of basic activities from auxiliary ones and non-core enterprises went to the competitive market. The major goal was achieved and we created conditions that provide competition in transportation».

Now major hopes for competition development in Kazakhstan are laid upon giving rolling stock for cargo transportation, i.e. rail cars operators. In this respect efforts to develop a normative base for this sector were made. Thus, in 2004 Regulations for rail cars operators were developed and approved that defined relations of an operator company and its partners – cargo owner and carrier. However, the whole range of problems for this market segment is still unsolved. In N.Isingarin’s opinion, the Regulations should include a clause on issues «developed by the association offers and a proposal clarifying rail cars operator activities, basic forms of their participation in the process of transportation, contractual agreements with cargo consignors and carriers etc.» 

At the same time, N.Isingarin is against imposing an independent carriers market, since he believes this sector is not ready for restructuring. «Neither in Russia, nor in Kazakhstan proper organization-technical conditions exist for independent carrier functioning even in domestic transportation. To do this, we need new systems of documentation, information services etc.», believes one of the patriarchs of railway restructuring in Kazakhstan.

Andrey Guryev
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Reform as objective necessity 
All the railways of the CIS and Baltic region separated from the USSR transport system. What problems did they have to overcome after the empire collapsed? What are the reasons to state that sooner or later all countries of 1520 format are to carry out analogous reforms? 

In the Soviet era railway transport was an inseparable element of the unified plan-administrative system, i.e. an object of tough centralized planning, pricing, provision and control in general. Each management level of the system was objectively interested in being given the lowest production volume task possible with the widest resources possible to fulfill it. 

The mechanism of money flows movement was quite significant. Transportation documents made out by the cargo owner were forwarded for payment to the bank which transferred the sum required to the railway’s account. If the cargo owner did not have the money to settle the account, the bank paid for transportation anyway giving credit to the client. The Ministry of Railways depending on the profit and work implemented defined the average rate for the net and, with the help of differentiation, these funds were distributed via the net departments. «In fact, each railway received such a coefficient for profit acquiring from aggregate revenue that it guaranteed profit no matter how efficiently the work was done by this very railway», - Nigmatzhan Isingarin, former Deputy Transport Minister of the USSR and Transport Minister of Kazakhstan, stated. 

Thus, in general, the economic relations on railway transport of the 1980-s did not motivate the sector to turn into an efficient unit and to cut expenditures by creating less expensive services. 
«The tough centralized management system did not allow business activities and every initiative was suppressed. Any individual decision contradicting the accepted instructions and regulations was forbidden and punished», N.Isingarin emphasized. 

It is important to note that the USSR railway transport did not cope with its economic duties. Moreover, while analyzing railway sector trends during 1965-1990, the sector specialists noted negative tendencies, such as low speed of cargo transportation, unsatisfactory level of clients servicing compared to these abroad, exhaustion of carrying capacities on the major cargo routes, poor technical state of rolling stock etc. 

The major problem for railway transport was the permanent deficit of services. To buy a ticket was only possible via personal contacts or after long queuing. Cargo rail cars were in deficit as well and distributed by the transport department of the Communist Party of the Soviet Union.
 
It is quite natural that the radical restructuring of the economy and the transfer from socialist economic principles to competitive-market relations required significant change on railways. Objectively, the railway transport reform in the CIS was a must and was focused on the creation of the new system where the consumer dominated over manufacture, not vice versa. 

Theoretically, the restructuring essence envisaged such basic changes as follows: separation of the functions of the state control and economic activities, railway property complex privatization, different types of activities separation, independent transport services manufacturers’ arrival, and tariffs de-regulation. The launch of a competitive model for railways had to result in setting such market methods of economic activities that aimed at acquiring revenues, expenditure optimization, personal and corporate motivation etc. 

Real market yet to come
Kazakhstan is believed to be a pioneer in railway restructuring in the CIS. The problem of separation between the state regulation and economic activities was solved here in 1991 when the unified Ministry of Transport and Communication was formed, in comparison with Russia where two separate bodies were launched, i.e. the Ministry of Transport and the Ministry of Railways.

In Kazakhstan the property complex was given to three railways which were united in 1997 into Kazakstan Temir Zholy (Kazakhstan Railways). However, during the decade of the 1990-s no reforming steps were taken in Kazakhstan. In 1999 the transportation volume grew by 26%, compared to the results achieved in 1991; rail cars park decreased by one third and railway basic assets wear-and-tear made 60%. In 1999-2000 Kazakhstan welcomed industrial growth which accentuated the task of railway transport restructuring. 

In the late 1990-s the Concept of railway transport development for the period of 1999-2003 was worked out, as well as the programme of de-monopolization of Kazakhstan Temir Zholy state-run enterprise. In July-August 1999, on the basis of these two documents, the Kazakhstan Government approved two laws which envisaged separating into subsidiaries the units specializing in repair-auxiliary activities. The state-run enterprise Kazakhstan Temir Zholy also underwent restructuring, followed by the efforts to launch state-run enterprises «Infrastructure», «Locomotiv», and Cargo Transportation. The essence of these steps lies in the intention to transfer different types of activities into separate business units and to solve the problem of separate financial accounting, which is still a crucial problem for Russia, for example. Late in 2001 the law «On railway transport» was approved in Kazakhstan. According to this law, the main railway net had to be run by the state, though private operators were allowed to use railways and infrastructure objects, as well as rolling stock. The law separated railway transport activities into monopolistic, monopolistic-competitive and competitive sectors. The national company whose activities would cover the first and the second sectors was to be launched. This structure was to perform such functions as maintenance of the main railway net, transportation process management and providing infrastructure services as an operator of the main railway net, as well as implementing transportation itself. Together with the national company operating on the market, independent carriers were to be formed who would use the services of the main railway net on equal terms and compete with each other. Thus, the law officially announced the necessity of both the state regulation of the sector and competition development in transportation. In 2004 it was amended. In particular, amendments clarified the terms of such transportation market subjects as national carrier, car operator, operator of locomotive haulage, transportation process participant and forwarder. 

In 2001 the Government approved the Programme of Railway Transport Restructuring in Kazakhstan Republic for the period of 2001-2005. In 2002 the implementation of this programme resulted in the launch of a state-run company National Company Kazakhstan Temir Zholy JSC. In 2003, on the basis of this company’s locomotive park, JSC Locomotive was formed to provide services of locomotive haulage, and also JSC Kazzheldortrans (now Kaztemirtrans) was launched. Kaztemirtrans was given the whole inventory park of rail cars of 60 thousand units (46 thousand units functioning). It is important to stress that in Kazakhstan they were preparing to separate infrastructure and transportation by 2007, although within the limits of one holding.
Moreover, Passenger transportation JSC was launched. 

At the same time the institution of private rolling stock operators started to develop rapidly. In 2002 the Agency on Natural Monopolies Regulation defined the car component in the tariff and decreasing coefficients were set for rail cars run by juridical persons. The work on formation a cargo tariff with separated components was carried on afterwards. The ideology dictated to keep state regulation over the infrastructure part and to de-regulate the transportation part, including the car and locomotive components. 

Operator tariff discounts gave a chance to develop transportation by private rolling stock, which amounted to 30 thousand units in 2006. Now 180 companies operate their own rail cars and 40 of them operate over 200 units. In 2004, Kazakhstan Association of Carriers and Rail Cars Operators was formed. Nigmatzhan Isingarin headed this association. He pointed out that this organization was launched in order to assist in competition development in railway cargo transportation. Now it includes about 20 big companies. 	

In 2004 the new Programme of railway transport restructuring for the period of 2004-2006 was approved. This version envisaged in particular the creation of a competitive market for carriers, the financial separation of the national carrier and the main railway net operator, as well as daughter companies shares sale. Also, in 2004 the authorities officially announced the launch of first independent carriers on the basis of big enterprises of metallurgic and coal industries. Yury Lavrinenko, the first Vice-Minister of Transport and Communication, stated, «Thus, by now we have started to form a competitive surrounding where National Company Kazakhstan Temir Zholy JSC performs as an operator of the main railway net and as a carrier in the person of Kazzheldortrans JSC, while private rolling stock owners perform as private carriers». 

Now the official position of the Ministry of Transport and Kazakhstan railways maintains that the launch of independent operators who would work according to liberalized tariffs on the contractual base and compete with the public state carrier is impossible without a major destruction of stability and accessibility of railway transport. President of NC Kazakhstan Temir Zholy JSC Yerlan Atamkulov defines his corporation status in the near future in the following way, «The company will be a holding providing technological integrity and coordination of transportation process and perform as an operator of the main railway net. With this aim the company will consolidate all assets connected with access to the main net and safety control. Kazakhstan Temir Zholy will remain the only carrier with whom all the payment is implemented. In the near future it will remain the only public carrier who is to satisfy international agreements demands».

Awaiting Competition

As a result, one can state that at present Kazakhstan has managed to separate its non-core sector into a competitive area. The core activities have not undergone tariff liberalization for transportation or any of its components, thus, it makes no sense to wait for market mechanisms to be switched on. They are based on free prices fluctuations which motivate market participants to make decisions either of business, or managerial or innovative kind. We cannot state that problems of the former socialist system have been overcome: there is still a deficit in rolling stock, a serious degree of basic assets wear-and-tear etc. However, Y.Atamkulov said while commenting on the results achieved during the restructuring, «Restructuring resulted in a separation of basic activities from auxiliary ones and non-core enterprises went to the competitive market. The major goal was achieved and we created conditions that provide competition in transportation».

Now major hopes for competition development in Kazakhstan are laid upon giving rolling stock for cargo transportation, i.e. rail cars operators. In this respect efforts to develop a normative base for this sector were made. Thus, in 2004 Regulations for rail cars operators were developed and approved that defined relations of an operator company and its partners – cargo owner and carrier. However, the whole range of problems for this market segment is still unsolved. In N.Isingarin’s opinion, the Regulations should include a clause on issues «developed by the association offers and a proposal clarifying rail cars operator activities, basic forms of their participation in the process of transportation, contractual agreements with cargo consignors and carriers etc.» 

At the same time, N.Isingarin is against imposing an independent carriers market, since he believes this sector is not ready for restructuring. «Neither in Russia, nor in Kazakhstan proper organization-technical conditions exist for independent carrier functioning even in domestic transportation. To do this, we need new systems of documentation, information services etc.», believes one of the patriarchs of railway restructuring in Kazakhstan.

Andrey Guryev
    [~DETAIL_TEXT] => 
Reform as objective necessity 
All the railways of the CIS and Baltic region separated from the USSR transport system. What problems did they have to overcome after the empire collapsed? What are the reasons to state that sooner or later all countries of 1520 format are to carry out analogous reforms? 

In the Soviet era railway transport was an inseparable element of the unified plan-administrative system, i.e. an object of tough centralized planning, pricing, provision and control in general. Each management level of the system was objectively interested in being given the lowest production volume task possible with the widest resources possible to fulfill it. 

The mechanism of money flows movement was quite significant. Transportation documents made out by the cargo owner were forwarded for payment to the bank which transferred the sum required to the railway’s account. If the cargo owner did not have the money to settle the account, the bank paid for transportation anyway giving credit to the client. The Ministry of Railways depending on the profit and work implemented defined the average rate for the net and, with the help of differentiation, these funds were distributed via the net departments. «In fact, each railway received such a coefficient for profit acquiring from aggregate revenue that it guaranteed profit no matter how efficiently the work was done by this very railway», - Nigmatzhan Isingarin, former Deputy Transport Minister of the USSR and Transport Minister of Kazakhstan, stated. 

Thus, in general, the economic relations on railway transport of the 1980-s did not motivate the sector to turn into an efficient unit and to cut expenditures by creating less expensive services. 
«The tough centralized management system did not allow business activities and every initiative was suppressed. Any individual decision contradicting the accepted instructions and regulations was forbidden and punished», N.Isingarin emphasized. 

It is important to note that the USSR railway transport did not cope with its economic duties. Moreover, while analyzing railway sector trends during 1965-1990, the sector specialists noted negative tendencies, such as low speed of cargo transportation, unsatisfactory level of clients servicing compared to these abroad, exhaustion of carrying capacities on the major cargo routes, poor technical state of rolling stock etc. 

The major problem for railway transport was the permanent deficit of services. To buy a ticket was only possible via personal contacts or after long queuing. Cargo rail cars were in deficit as well and distributed by the transport department of the Communist Party of the Soviet Union.
 
It is quite natural that the radical restructuring of the economy and the transfer from socialist economic principles to competitive-market relations required significant change on railways. Objectively, the railway transport reform in the CIS was a must and was focused on the creation of the new system where the consumer dominated over manufacture, not vice versa. 

Theoretically, the restructuring essence envisaged such basic changes as follows: separation of the functions of the state control and economic activities, railway property complex privatization, different types of activities separation, independent transport services manufacturers’ arrival, and tariffs de-regulation. The launch of a competitive model for railways had to result in setting such market methods of economic activities that aimed at acquiring revenues, expenditure optimization, personal and corporate motivation etc. 

Real market yet to come
Kazakhstan is believed to be a pioneer in railway restructuring in the CIS. The problem of separation between the state regulation and economic activities was solved here in 1991 when the unified Ministry of Transport and Communication was formed, in comparison with Russia where two separate bodies were launched, i.e. the Ministry of Transport and the Ministry of Railways.

In Kazakhstan the property complex was given to three railways which were united in 1997 into Kazakstan Temir Zholy (Kazakhstan Railways). However, during the decade of the 1990-s no reforming steps were taken in Kazakhstan. In 1999 the transportation volume grew by 26%, compared to the results achieved in 1991; rail cars park decreased by one third and railway basic assets wear-and-tear made 60%. In 1999-2000 Kazakhstan welcomed industrial growth which accentuated the task of railway transport restructuring. 

In the late 1990-s the Concept of railway transport development for the period of 1999-2003 was worked out, as well as the programme of de-monopolization of Kazakhstan Temir Zholy state-run enterprise. In July-August 1999, on the basis of these two documents, the Kazakhstan Government approved two laws which envisaged separating into subsidiaries the units specializing in repair-auxiliary activities. The state-run enterprise Kazakhstan Temir Zholy also underwent restructuring, followed by the efforts to launch state-run enterprises «Infrastructure», «Locomotiv», and Cargo Transportation. The essence of these steps lies in the intention to transfer different types of activities into separate business units and to solve the problem of separate financial accounting, which is still a crucial problem for Russia, for example. Late in 2001 the law «On railway transport» was approved in Kazakhstan. According to this law, the main railway net had to be run by the state, though private operators were allowed to use railways and infrastructure objects, as well as rolling stock. The law separated railway transport activities into monopolistic, monopolistic-competitive and competitive sectors. The national company whose activities would cover the first and the second sectors was to be launched. This structure was to perform such functions as maintenance of the main railway net, transportation process management and providing infrastructure services as an operator of the main railway net, as well as implementing transportation itself. Together with the national company operating on the market, independent carriers were to be formed who would use the services of the main railway net on equal terms and compete with each other. Thus, the law officially announced the necessity of both the state regulation of the sector and competition development in transportation. In 2004 it was amended. In particular, amendments clarified the terms of such transportation market subjects as national carrier, car operator, operator of locomotive haulage, transportation process participant and forwarder. 

In 2001 the Government approved the Programme of Railway Transport Restructuring in Kazakhstan Republic for the period of 2001-2005. In 2002 the implementation of this programme resulted in the launch of a state-run company National Company Kazakhstan Temir Zholy JSC. In 2003, on the basis of this company’s locomotive park, JSC Locomotive was formed to provide services of locomotive haulage, and also JSC Kazzheldortrans (now Kaztemirtrans) was launched. Kaztemirtrans was given the whole inventory park of rail cars of 60 thousand units (46 thousand units functioning). It is important to stress that in Kazakhstan they were preparing to separate infrastructure and transportation by 2007, although within the limits of one holding.
Moreover, Passenger transportation JSC was launched. 

At the same time the institution of private rolling stock operators started to develop rapidly. In 2002 the Agency on Natural Monopolies Regulation defined the car component in the tariff and decreasing coefficients were set for rail cars run by juridical persons. The work on formation a cargo tariff with separated components was carried on afterwards. The ideology dictated to keep state regulation over the infrastructure part and to de-regulate the transportation part, including the car and locomotive components. 

Operator tariff discounts gave a chance to develop transportation by private rolling stock, which amounted to 30 thousand units in 2006. Now 180 companies operate their own rail cars and 40 of them operate over 200 units. In 2004, Kazakhstan Association of Carriers and Rail Cars Operators was formed. Nigmatzhan Isingarin headed this association. He pointed out that this organization was launched in order to assist in competition development in railway cargo transportation. Now it includes about 20 big companies. 	

In 2004 the new Programme of railway transport restructuring for the period of 2004-2006 was approved. This version envisaged in particular the creation of a competitive market for carriers, the financial separation of the national carrier and the main railway net operator, as well as daughter companies shares sale. Also, in 2004 the authorities officially announced the launch of first independent carriers on the basis of big enterprises of metallurgic and coal industries. Yury Lavrinenko, the first Vice-Minister of Transport and Communication, stated, «Thus, by now we have started to form a competitive surrounding where National Company Kazakhstan Temir Zholy JSC performs as an operator of the main railway net and as a carrier in the person of Kazzheldortrans JSC, while private rolling stock owners perform as private carriers». 

Now the official position of the Ministry of Transport and Kazakhstan railways maintains that the launch of independent operators who would work according to liberalized tariffs on the contractual base and compete with the public state carrier is impossible without a major destruction of stability and accessibility of railway transport. President of NC Kazakhstan Temir Zholy JSC Yerlan Atamkulov defines his corporation status in the near future in the following way, «The company will be a holding providing technological integrity and coordination of transportation process and perform as an operator of the main railway net. With this aim the company will consolidate all assets connected with access to the main net and safety control. Kazakhstan Temir Zholy will remain the only carrier with whom all the payment is implemented. In the near future it will remain the only public carrier who is to satisfy international agreements demands».

Awaiting Competition

As a result, one can state that at present Kazakhstan has managed to separate its non-core sector into a competitive area. The core activities have not undergone tariff liberalization for transportation or any of its components, thus, it makes no sense to wait for market mechanisms to be switched on. They are based on free prices fluctuations which motivate market participants to make decisions either of business, or managerial or innovative kind. We cannot state that problems of the former socialist system have been overcome: there is still a deficit in rolling stock, a serious degree of basic assets wear-and-tear etc. However, Y.Atamkulov said while commenting on the results achieved during the restructuring, «Restructuring resulted in a separation of basic activities from auxiliary ones and non-core enterprises went to the competitive market. The major goal was achieved and we created conditions that provide competition in transportation».

Now major hopes for competition development in Kazakhstan are laid upon giving rolling stock for cargo transportation, i.e. rail cars operators. In this respect efforts to develop a normative base for this sector were made. Thus, in 2004 Regulations for rail cars operators were developed and approved that defined relations of an operator company and its partners – cargo owner and carrier. However, the whole range of problems for this market segment is still unsolved. In N.Isingarin’s opinion, the Regulations should include a clause on issues «developed by the association offers and a proposal clarifying rail cars operator activities, basic forms of their participation in the process of transportation, contractual agreements with cargo consignors and carriers etc.» 

At the same time, N.Isingarin is against imposing an independent carriers market, since he believes this sector is not ready for restructuring. «Neither in Russia, nor in Kazakhstan proper organization-technical conditions exist for independent carrier functioning even in domestic transportation. To do this, we need new systems of documentation, information services etc.», believes one of the patriarchs of railway restructuring in Kazakhstan.

Andrey Guryev
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Return Transit to the Transsib
The RF Ministry of Transport plans to organize a Russian-Chinese working group specializing in transit issues before October 2007. Russian Minister of Transport Igor Levitin said about it at the briefing devoted to the results of the 11th meeting of Russian-Chinese Subcommission for Cooperation in the Transport Sector, Commission for Preparatory of regular meeting of Prime Ministers of Russia and China.

According to I.Levitin, from the Russian side the working group will be headed by Deputy Transport Minister Alexander Misharin.
 
The total throughput between the two countries increases, while the volume of transit transportation between Russia and China is insufficient. Thus, in Q1 of 2007
9.67 million tons of was transported, 11% up year-on-year. In particular, 9.1 million tons was transported from Russia to China (+10% year-on-year), and 0.57 million tons was carried from China to Russia (+27%). Meanwhile, only 0.031 million tons of transit cargoes was transported.
«Last year we failed to increase railway transit freight transportation from South-Eastern Asia to Europe,» summed up the results Igor Levitin. «Still, we believe that the Transsiberian railway can compete with the sea route. We have already decided on measures that can make our work more efficient.»

In particular, the RF Minister of Transport thinks that opening of two representative offices of OAO TransContainer in Beijing and Shanghai will make for freight attraction to the Transsib. From this standpoint, the opening of the railway ferry in the port of Ust-Luga, which prolongs the transit corridor China – Russia – Europe, is also very promising.

«The Chinese side understands that after the launch of the ferry, the railway route became a strong competitor to the sea one. Nowadays we hold negotiations with the Chinese side about providing clients with a competitive through rate, which would not be divided into a sea and railway ones», said Igor Levitin.   
Consortium to Be Launched to Join Transsib and TransKorean Railways	
«To carry out the project of joining the Transsib and the TransKorean railways, an international consortium will be launched», said President of OAO RZD Vladimir Yakunin during his visit to Tokyo. In his words, in 2007 the reconstruction of the sector Rajin (Republic of Korea) – Hasan (Russia), connecting the Transsib and the TransKorean railways, will start.

V.Yakunin stressed that «the Korean railway needs modernization badly, and at least USD 2 billion is to be invested in it. However, USD 7 billion is a more realistic sum, and the work will take from five to seven years».

In the words of the Head of OAO RZD, the Russian side has already prepared documents on the track structure, and a special track machine is ready, but no works are held on the sector. «To do it, a special consortium is to be launched. Freight carriers from different states (South Korea, Italy, Germany and Japan) may take part in it. In spite of the unfavourable political situation between the North and the South, lately contacts between North and South Korea have become more intensive. And our role in it is not the smallest. We speak as professionals», highlighted V. Yakunin.
Russian Railway Gauge May Be Prolonged to Europe
The railway with 1520 mm wide gauge may be prolonged to Europe, said President of OAO RZD Vladimir Yakunin after a meeting with the RF President devoted to Russian railways development.
The Head of OAO RZD said that such an offer was made by the company’s Western partners. «RF President Vladimir Putin and other participants of the meeting liked the idea», said V.Yakunin.    
Machine Building from Strategic Viewpoint
The First Vice-President of OAO RZD Vadim Morozov stated at the meeting of the Ministry of Industry and Energy, where the project of the Strategy of Transport Machine Building Development in the Russian Federation in 2007-2010 till 2015 was considered, that OAO RZD’s General Scheme of Development envisages purchase of equipment with the output capacity and technical and economic parameters meeting international standards. 

The term of complicated railway machinery development is up to 10 years, and the term of its use is up to 40 years. That is why the strategy of transport machine building development must be based on the ability of Russian producers to fulfill the demands of the railway transport for the next 25-30 years in conditions of tough competition with foreign companies. 

The First Vice Prime Minister of the RF Sergey Ivanov said at the meeting that «nowadays the problem is the increase of capacities. And if the rolling stock is re-equipped as fast as nowadays, the process will take 30-40 years».
Project of a Tunnel under the Bering Strait Presented
The global project of a transport network with a railway tunnel under the Bering Strait connecting Asia and America was presented in Moscow in April.

Viktor Razbegin, Deputy Chairman for Production Capacities Research of the Ministry of Economic Development and Trade said, «We are speaking about the construction of a transcontinental network on the route Yakutsk-Magadan-Anadyr-Alyaska with a tunnel under the Bering Strait». The network will unite a high speed railway, motorway, power transmission lines, gas- and oil pipelines, and fiber-optic lines». 

Having reminded that nowadays 90% of freight in the Asian and Pacific region is transported by sea, he stressed that «the new mainline will not only reduce the delivery time by two weeks, but it will also increase the transportation safety». According to the specialists of the Ministry of Economic Development and Trade, the project «with the cost of USD 50-60 billion is to recoup in 13-15 years after the freight flow reaches 70 million tons annually, and the economic effect will be not less than 10%».
RUR 60 bln into Road Network of the Perm Region
In 2007 all the 6 thousand kilometers of roads are to be diagnosed in the Perm region. 

The results of the research will help to distribute the financial resources between capital repair and road construction. Based on the scheme of Perm region transport infrastructure development, the road agency elaborated the transport strategy of the Perm region till 2036 and «The Program of development and improvement of the basic road network of the Perm region in 2006-2016».
 
According to the documents, the Perm region is to invest into the regional road network about RUB 130 billion, in order to build and reconstruct over 2.200 km of roads. In particular, by 2016 about 948 km of roads is to be built and reconstructed.
 
The total volume of capital investments is to make RUR 60.6 billion. Besides, the project «Agglomeration Perm» was included into «The Program of development and improvement of the basic road network of the Perm region in 2006-2016». It is targeted at providing the carrying capacity for the road transport within a radius of 50 km from Perm. 
OAO RZD: Ready for Pakistan
«OAO RZD is ready to take part in the construction of new railways in Pakistan, including the one destined to Iran», stated Vice-President of OAO RZD Alexey Mersiyanov, summing up the results of his visit to Pakistan, which took place in the framework of the RF Government Chairman Mikhail Fradkov’s trip to the country.
The Russian company is also interested in the projects of reconstruction of the existing railways in Pakistan, said A. Mersiyanov.
During the negotiations between M. Fradkov and the Prime Minister of Pakistan Shaukat Aziz, the sides discussed the prospects of cooperation between the two countries in the railway transport sector.
They discussed the possibility of OAO RZD’s participation in the elaboration of technical and economic bases for the mineral resources fields development in Pakistan. The specialists of the Russian company offered to make the evaluation of expenses for the construction and exploitation of railways to the fields.

Nowadays, OAO RZD participates in the tender to supply signalling, centralization and blocking systems for railways in Pakistan. According to the agreements, the company’s specialists are to make offers for Pakistani railway bridges modernization.

The possibility to supply Russian rolling stock, rails, and tracks is discussed.  

Specially launched in March 2007, OAO Trading House RZD will promote services, equipment and technologies of OAO RZD to the Pakistani market, as well as to other foreign markets. 
Byelorussia Will Create Trade and Logistic Centers in RF North-Western Region
Byelorussia offered the RF North-Western region to transfer from direct supplies of Byelorussian production to creation of Byelorussian trade and logistic centers on the territory of Russia.

According to the statement of Byelorussian Prime Minister Sergey Sidorsky made during his meeting with the RF President Plenipotentiary in the North-Western Federal Region Ilya Klebanov, the former believes that «it is necessary to create some infrastructure in the sector of trade between our states». The Prime Minister also underlined that Byelorussia had agreed to construct similar centers in Moscow. In particular, warehouses will be built and Byelorussian machinery will be placed there.

I. Klebanov supported the offer of the Byelorussian side and urged to work on the issues concerning organization of such centers in Saint-Petersburg and the Leningrad Region.
OAO KAMAZ Launches JV in Pakistan    
OAO KAMAZ and the Pakistani company Bibojee Services Ltd concluded an agreement about the launch of a joint venture that will sell and service KAMAZ vehicles in Pakistan. The agreement was signed in the framework of RF Prime Minister Mikhail Fradkov’s visit to Pakistan.

CEO of ZAO Foreign Trade Company KAMAZ Evgeny Pronin said that the process of the joint venture launch is to be completed by the end of 2007. The total volume of investments into the project will make USD 1.5-3 million. 

E. Pronin reminded that there is an assembling plant of KAMAZ vehicles in Pakistan, which works on the basis of a licensing agreement. 20 trucks have already been assembled there, and another 40 sets were delivered to Pakistan for assembling.

E. Pronin also said that it is planned to enlarge the KAMAZ assembling production in Pakistan. Its design capacity enables to increase it to 4.000 trucks annually. Besides, KAMAZ will increase the rate of production localization on the territory of Pakistan from current 15% to 40% by the end of the year.
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Return Transit to the Transsib
The RF Ministry of Transport plans to organize a Russian-Chinese working group specializing in transit issues before October 2007. Russian Minister of Transport Igor Levitin said about it at the briefing devoted to the results of the 11th meeting of Russian-Chinese Subcommission for Cooperation in the Transport Sector, Commission for Preparatory of regular meeting of Prime Ministers of Russia and China.

According to I.Levitin, from the Russian side the working group will be headed by Deputy Transport Minister Alexander Misharin.
 
The total throughput between the two countries increases, while the volume of transit transportation between Russia and China is insufficient. Thus, in Q1 of 2007
9.67 million tons of was transported, 11% up year-on-year. In particular, 9.1 million tons was transported from Russia to China (+10% year-on-year), and 0.57 million tons was carried from China to Russia (+27%). Meanwhile, only 0.031 million tons of transit cargoes was transported.
«Last year we failed to increase railway transit freight transportation from South-Eastern Asia to Europe,» summed up the results Igor Levitin. «Still, we believe that the Transsiberian railway can compete with the sea route. We have already decided on measures that can make our work more efficient.»

In particular, the RF Minister of Transport thinks that opening of two representative offices of OAO TransContainer in Beijing and Shanghai will make for freight attraction to the Transsib. From this standpoint, the opening of the railway ferry in the port of Ust-Luga, which prolongs the transit corridor China – Russia – Europe, is also very promising.

«The Chinese side understands that after the launch of the ferry, the railway route became a strong competitor to the sea one. Nowadays we hold negotiations with the Chinese side about providing clients with a competitive through rate, which would not be divided into a sea and railway ones», said Igor Levitin.   
Consortium to Be Launched to Join Transsib and TransKorean Railways	
«To carry out the project of joining the Transsib and the TransKorean railways, an international consortium will be launched», said President of OAO RZD Vladimir Yakunin during his visit to Tokyo. In his words, in 2007 the reconstruction of the sector Rajin (Republic of Korea) – Hasan (Russia), connecting the Transsib and the TransKorean railways, will start.

V.Yakunin stressed that «the Korean railway needs modernization badly, and at least USD 2 billion is to be invested in it. However, USD 7 billion is a more realistic sum, and the work will take from five to seven years».

In the words of the Head of OAO RZD, the Russian side has already prepared documents on the track structure, and a special track machine is ready, but no works are held on the sector. «To do it, a special consortium is to be launched. Freight carriers from different states (South Korea, Italy, Germany and Japan) may take part in it. In spite of the unfavourable political situation between the North and the South, lately contacts between North and South Korea have become more intensive. And our role in it is not the smallest. We speak as professionals», highlighted V. Yakunin.
Russian Railway Gauge May Be Prolonged to Europe
The railway with 1520 mm wide gauge may be prolonged to Europe, said President of OAO RZD Vladimir Yakunin after a meeting with the RF President devoted to Russian railways development.
The Head of OAO RZD said that such an offer was made by the company’s Western partners. «RF President Vladimir Putin and other participants of the meeting liked the idea», said V.Yakunin.    
Machine Building from Strategic Viewpoint
The First Vice-President of OAO RZD Vadim Morozov stated at the meeting of the Ministry of Industry and Energy, where the project of the Strategy of Transport Machine Building Development in the Russian Federation in 2007-2010 till 2015 was considered, that OAO RZD’s General Scheme of Development envisages purchase of equipment with the output capacity and technical and economic parameters meeting international standards. 

The term of complicated railway machinery development is up to 10 years, and the term of its use is up to 40 years. That is why the strategy of transport machine building development must be based on the ability of Russian producers to fulfill the demands of the railway transport for the next 25-30 years in conditions of tough competition with foreign companies. 

The First Vice Prime Minister of the RF Sergey Ivanov said at the meeting that «nowadays the problem is the increase of capacities. And if the rolling stock is re-equipped as fast as nowadays, the process will take 30-40 years».
Project of a Tunnel under the Bering Strait Presented
The global project of a transport network with a railway tunnel under the Bering Strait connecting Asia and America was presented in Moscow in April.

Viktor Razbegin, Deputy Chairman for Production Capacities Research of the Ministry of Economic Development and Trade said, «We are speaking about the construction of a transcontinental network on the route Yakutsk-Magadan-Anadyr-Alyaska with a tunnel under the Bering Strait». The network will unite a high speed railway, motorway, power transmission lines, gas- and oil pipelines, and fiber-optic lines». 

Having reminded that nowadays 90% of freight in the Asian and Pacific region is transported by sea, he stressed that «the new mainline will not only reduce the delivery time by two weeks, but it will also increase the transportation safety». According to the specialists of the Ministry of Economic Development and Trade, the project «with the cost of USD 50-60 billion is to recoup in 13-15 years after the freight flow reaches 70 million tons annually, and the economic effect will be not less than 10%».
RUR 60 bln into Road Network of the Perm Region
In 2007 all the 6 thousand kilometers of roads are to be diagnosed in the Perm region. 

The results of the research will help to distribute the financial resources between capital repair and road construction. Based on the scheme of Perm region transport infrastructure development, the road agency elaborated the transport strategy of the Perm region till 2036 and «The Program of development and improvement of the basic road network of the Perm region in 2006-2016».
 
According to the documents, the Perm region is to invest into the regional road network about RUB 130 billion, in order to build and reconstruct over 2.200 km of roads. In particular, by 2016 about 948 km of roads is to be built and reconstructed.
 
The total volume of capital investments is to make RUR 60.6 billion. Besides, the project «Agglomeration Perm» was included into «The Program of development and improvement of the basic road network of the Perm region in 2006-2016». It is targeted at providing the carrying capacity for the road transport within a radius of 50 km from Perm. 
OAO RZD: Ready for Pakistan
«OAO RZD is ready to take part in the construction of new railways in Pakistan, including the one destined to Iran», stated Vice-President of OAO RZD Alexey Mersiyanov, summing up the results of his visit to Pakistan, which took place in the framework of the RF Government Chairman Mikhail Fradkov’s trip to the country.
The Russian company is also interested in the projects of reconstruction of the existing railways in Pakistan, said A. Mersiyanov.
During the negotiations between M. Fradkov and the Prime Minister of Pakistan Shaukat Aziz, the sides discussed the prospects of cooperation between the two countries in the railway transport sector.
They discussed the possibility of OAO RZD’s participation in the elaboration of technical and economic bases for the mineral resources fields development in Pakistan. The specialists of the Russian company offered to make the evaluation of expenses for the construction and exploitation of railways to the fields.

Nowadays, OAO RZD participates in the tender to supply signalling, centralization and blocking systems for railways in Pakistan. According to the agreements, the company’s specialists are to make offers for Pakistani railway bridges modernization.

The possibility to supply Russian rolling stock, rails, and tracks is discussed.  

Specially launched in March 2007, OAO Trading House RZD will promote services, equipment and technologies of OAO RZD to the Pakistani market, as well as to other foreign markets. 
Byelorussia Will Create Trade and Logistic Centers in RF North-Western Region
Byelorussia offered the RF North-Western region to transfer from direct supplies of Byelorussian production to creation of Byelorussian trade and logistic centers on the territory of Russia.

According to the statement of Byelorussian Prime Minister Sergey Sidorsky made during his meeting with the RF President Plenipotentiary in the North-Western Federal Region Ilya Klebanov, the former believes that «it is necessary to create some infrastructure in the sector of trade between our states». The Prime Minister also underlined that Byelorussia had agreed to construct similar centers in Moscow. In particular, warehouses will be built and Byelorussian machinery will be placed there.

I. Klebanov supported the offer of the Byelorussian side and urged to work on the issues concerning organization of such centers in Saint-Petersburg and the Leningrad Region.
OAO KAMAZ Launches JV in Pakistan    
OAO KAMAZ and the Pakistani company Bibojee Services Ltd concluded an agreement about the launch of a joint venture that will sell and service KAMAZ vehicles in Pakistan. The agreement was signed in the framework of RF Prime Minister Mikhail Fradkov’s visit to Pakistan.

CEO of ZAO Foreign Trade Company KAMAZ Evgeny Pronin said that the process of the joint venture launch is to be completed by the end of 2007. The total volume of investments into the project will make USD 1.5-3 million. 

E. Pronin reminded that there is an assembling plant of KAMAZ vehicles in Pakistan, which works on the basis of a licensing agreement. 20 trucks have already been assembled there, and another 40 sets were delivered to Pakistan for assembling.

E. Pronin also said that it is planned to enlarge the KAMAZ assembling production in Pakistan. Its design capacity enables to increase it to 4.000 trucks annually. Besides, KAMAZ will increase the rate of production localization on the territory of Pakistan from current 15% to 40% by the end of the year.
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Consortium to Be Launched to Join Transsib and TransKorean Railways	

Machine Building from Strategic Viewpoint...
    [~PREVIEW_TEXT] => Return Transit to the Transsib

Consortium to Be Launched to Join Transsib and TransKorean Railways	

Machine Building from Strategic Viewpoint...
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Return Transit to the Transsib
The RF Ministry of Transport plans to organize a Russian-Chinese working group specializing in transit issues before October 2007. Russian Minister of Transport Igor Levitin said about it at the briefing devoted to the results of the 11th meeting of Russian-Chinese Subcommission for Cooperation in the Transport Sector, Commission for Preparatory of regular meeting of Prime Ministers of Russia and China.

According to I.Levitin, from the Russian side the working group will be headed by Deputy Transport Minister Alexander Misharin.
 
The total throughput between the two countries increases, while the volume of transit transportation between Russia and China is insufficient. Thus, in Q1 of 2007
9.67 million tons of was transported, 11% up year-on-year. In particular, 9.1 million tons was transported from Russia to China (+10% year-on-year), and 0.57 million tons was carried from China to Russia (+27%). Meanwhile, only 0.031 million tons of transit cargoes was transported.
«Last year we failed to increase railway transit freight transportation from South-Eastern Asia to Europe,» summed up the results Igor Levitin. «Still, we believe that the Transsiberian railway can compete with the sea route. We have already decided on measures that can make our work more efficient.»

In particular, the RF Minister of Transport thinks that opening of two representative offices of OAO TransContainer in Beijing and Shanghai will make for freight attraction to the Transsib. From this standpoint, the opening of the railway ferry in the port of Ust-Luga, which prolongs the transit corridor China – Russia – Europe, is also very promising.

«The Chinese side understands that after the launch of the ferry, the railway route became a strong competitor to the sea one. Nowadays we hold negotiations with the Chinese side about providing clients with a competitive through rate, which would not be divided into a sea and railway ones», said Igor Levitin.   
Consortium to Be Launched to Join Transsib and TransKorean Railways	
«To carry out the project of joining the Transsib and the TransKorean railways, an international consortium will be launched», said President of OAO RZD Vladimir Yakunin during his visit to Tokyo. In his words, in 2007 the reconstruction of the sector Rajin (Republic of Korea) – Hasan (Russia), connecting the Transsib and the TransKorean railways, will start.

V.Yakunin stressed that «the Korean railway needs modernization badly, and at least USD 2 billion is to be invested in it. However, USD 7 billion is a more realistic sum, and the work will take from five to seven years».

In the words of the Head of OAO RZD, the Russian side has already prepared documents on the track structure, and a special track machine is ready, but no works are held on the sector. «To do it, a special consortium is to be launched. Freight carriers from different states (South Korea, Italy, Germany and Japan) may take part in it. In spite of the unfavourable political situation between the North and the South, lately contacts between North and South Korea have become more intensive. And our role in it is not the smallest. We speak as professionals», highlighted V. Yakunin.
Russian Railway Gauge May Be Prolonged to Europe
The railway with 1520 mm wide gauge may be prolonged to Europe, said President of OAO RZD Vladimir Yakunin after a meeting with the RF President devoted to Russian railways development.
The Head of OAO RZD said that such an offer was made by the company’s Western partners. «RF President Vladimir Putin and other participants of the meeting liked the idea», said V.Yakunin.    
Machine Building from Strategic Viewpoint
The First Vice-President of OAO RZD Vadim Morozov stated at the meeting of the Ministry of Industry and Energy, where the project of the Strategy of Transport Machine Building Development in the Russian Federation in 2007-2010 till 2015 was considered, that OAO RZD’s General Scheme of Development envisages purchase of equipment with the output capacity and technical and economic parameters meeting international standards. 

The term of complicated railway machinery development is up to 10 years, and the term of its use is up to 40 years. That is why the strategy of transport machine building development must be based on the ability of Russian producers to fulfill the demands of the railway transport for the next 25-30 years in conditions of tough competition with foreign companies. 

The First Vice Prime Minister of the RF Sergey Ivanov said at the meeting that «nowadays the problem is the increase of capacities. And if the rolling stock is re-equipped as fast as nowadays, the process will take 30-40 years».
Project of a Tunnel under the Bering Strait Presented
The global project of a transport network with a railway tunnel under the Bering Strait connecting Asia and America was presented in Moscow in April.

Viktor Razbegin, Deputy Chairman for Production Capacities Research of the Ministry of Economic Development and Trade said, «We are speaking about the construction of a transcontinental network on the route Yakutsk-Magadan-Anadyr-Alyaska with a tunnel under the Bering Strait». The network will unite a high speed railway, motorway, power transmission lines, gas- and oil pipelines, and fiber-optic lines». 

Having reminded that nowadays 90% of freight in the Asian and Pacific region is transported by sea, he stressed that «the new mainline will not only reduce the delivery time by two weeks, but it will also increase the transportation safety». According to the specialists of the Ministry of Economic Development and Trade, the project «with the cost of USD 50-60 billion is to recoup in 13-15 years after the freight flow reaches 70 million tons annually, and the economic effect will be not less than 10%».
RUR 60 bln into Road Network of the Perm Region
In 2007 all the 6 thousand kilometers of roads are to be diagnosed in the Perm region. 

The results of the research will help to distribute the financial resources between capital repair and road construction. Based on the scheme of Perm region transport infrastructure development, the road agency elaborated the transport strategy of the Perm region till 2036 and «The Program of development and improvement of the basic road network of the Perm region in 2006-2016».
 
According to the documents, the Perm region is to invest into the regional road network about RUB 130 billion, in order to build and reconstruct over 2.200 km of roads. In particular, by 2016 about 948 km of roads is to be built and reconstructed.
 
The total volume of capital investments is to make RUR 60.6 billion. Besides, the project «Agglomeration Perm» was included into «The Program of development and improvement of the basic road network of the Perm region in 2006-2016». It is targeted at providing the carrying capacity for the road transport within a radius of 50 km from Perm. 
OAO RZD: Ready for Pakistan
«OAO RZD is ready to take part in the construction of new railways in Pakistan, including the one destined to Iran», stated Vice-President of OAO RZD Alexey Mersiyanov, summing up the results of his visit to Pakistan, which took place in the framework of the RF Government Chairman Mikhail Fradkov’s trip to the country.
The Russian company is also interested in the projects of reconstruction of the existing railways in Pakistan, said A. Mersiyanov.
During the negotiations between M. Fradkov and the Prime Minister of Pakistan Shaukat Aziz, the sides discussed the prospects of cooperation between the two countries in the railway transport sector.
They discussed the possibility of OAO RZD’s participation in the elaboration of technical and economic bases for the mineral resources fields development in Pakistan. The specialists of the Russian company offered to make the evaluation of expenses for the construction and exploitation of railways to the fields.

Nowadays, OAO RZD participates in the tender to supply signalling, centralization and blocking systems for railways in Pakistan. According to the agreements, the company’s specialists are to make offers for Pakistani railway bridges modernization.

The possibility to supply Russian rolling stock, rails, and tracks is discussed.  

Specially launched in March 2007, OAO Trading House RZD will promote services, equipment and technologies of OAO RZD to the Pakistani market, as well as to other foreign markets. 
Byelorussia Will Create Trade and Logistic Centers in RF North-Western Region
Byelorussia offered the RF North-Western region to transfer from direct supplies of Byelorussian production to creation of Byelorussian trade and logistic centers on the territory of Russia.

According to the statement of Byelorussian Prime Minister Sergey Sidorsky made during his meeting with the RF President Plenipotentiary in the North-Western Federal Region Ilya Klebanov, the former believes that «it is necessary to create some infrastructure in the sector of trade between our states». The Prime Minister also underlined that Byelorussia had agreed to construct similar centers in Moscow. In particular, warehouses will be built and Byelorussian machinery will be placed there.

I. Klebanov supported the offer of the Byelorussian side and urged to work on the issues concerning organization of such centers in Saint-Petersburg and the Leningrad Region.
OAO KAMAZ Launches JV in Pakistan    
OAO KAMAZ and the Pakistani company Bibojee Services Ltd concluded an agreement about the launch of a joint venture that will sell and service KAMAZ vehicles in Pakistan. The agreement was signed in the framework of RF Prime Minister Mikhail Fradkov’s visit to Pakistan.

CEO of ZAO Foreign Trade Company KAMAZ Evgeny Pronin said that the process of the joint venture launch is to be completed by the end of 2007. The total volume of investments into the project will make USD 1.5-3 million. 

E. Pronin reminded that there is an assembling plant of KAMAZ vehicles in Pakistan, which works on the basis of a licensing agreement. 20 trucks have already been assembled there, and another 40 sets were delivered to Pakistan for assembling.

E. Pronin also said that it is planned to enlarge the KAMAZ assembling production in Pakistan. Its design capacity enables to increase it to 4.000 trucks annually. Besides, KAMAZ will increase the rate of production localization on the territory of Pakistan from current 15% to 40% by the end of the year.
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Return Transit to the Transsib
The RF Ministry of Transport plans to organize a Russian-Chinese working group specializing in transit issues before October 2007. Russian Minister of Transport Igor Levitin said about it at the briefing devoted to the results of the 11th meeting of Russian-Chinese Subcommission for Cooperation in the Transport Sector, Commission for Preparatory of regular meeting of Prime Ministers of Russia and China.

According to I.Levitin, from the Russian side the working group will be headed by Deputy Transport Minister Alexander Misharin.
 
The total throughput between the two countries increases, while the volume of transit transportation between Russia and China is insufficient. Thus, in Q1 of 2007
9.67 million tons of was transported, 11% up year-on-year. In particular, 9.1 million tons was transported from Russia to China (+10% year-on-year), and 0.57 million tons was carried from China to Russia (+27%). Meanwhile, only 0.031 million tons of transit cargoes was transported.
«Last year we failed to increase railway transit freight transportation from South-Eastern Asia to Europe,» summed up the results Igor Levitin. «Still, we believe that the Transsiberian railway can compete with the sea route. We have already decided on measures that can make our work more efficient.»

In particular, the RF Minister of Transport thinks that opening of two representative offices of OAO TransContainer in Beijing and Shanghai will make for freight attraction to the Transsib. From this standpoint, the opening of the railway ferry in the port of Ust-Luga, which prolongs the transit corridor China – Russia – Europe, is also very promising.

«The Chinese side understands that after the launch of the ferry, the railway route became a strong competitor to the sea one. Nowadays we hold negotiations with the Chinese side about providing clients with a competitive through rate, which would not be divided into a sea and railway ones», said Igor Levitin.   
Consortium to Be Launched to Join Transsib and TransKorean Railways	
«To carry out the project of joining the Transsib and the TransKorean railways, an international consortium will be launched», said President of OAO RZD Vladimir Yakunin during his visit to Tokyo. In his words, in 2007 the reconstruction of the sector Rajin (Republic of Korea) – Hasan (Russia), connecting the Transsib and the TransKorean railways, will start.

V.Yakunin stressed that «the Korean railway needs modernization badly, and at least USD 2 billion is to be invested in it. However, USD 7 billion is a more realistic sum, and the work will take from five to seven years».

In the words of the Head of OAO RZD, the Russian side has already prepared documents on the track structure, and a special track machine is ready, but no works are held on the sector. «To do it, a special consortium is to be launched. Freight carriers from different states (South Korea, Italy, Germany and Japan) may take part in it. In spite of the unfavourable political situation between the North and the South, lately contacts between North and South Korea have become more intensive. And our role in it is not the smallest. We speak as professionals», highlighted V. Yakunin.
Russian Railway Gauge May Be Prolonged to Europe
The railway with 1520 mm wide gauge may be prolonged to Europe, said President of OAO RZD Vladimir Yakunin after a meeting with the RF President devoted to Russian railways development.
The Head of OAO RZD said that such an offer was made by the company’s Western partners. «RF President Vladimir Putin and other participants of the meeting liked the idea», said V.Yakunin.    
Machine Building from Strategic Viewpoint
The First Vice-President of OAO RZD Vadim Morozov stated at the meeting of the Ministry of Industry and Energy, where the project of the Strategy of Transport Machine Building Development in the Russian Federation in 2007-2010 till 2015 was considered, that OAO RZD’s General Scheme of Development envisages purchase of equipment with the output capacity and technical and economic parameters meeting international standards. 

The term of complicated railway machinery development is up to 10 years, and the term of its use is up to 40 years. That is why the strategy of transport machine building development must be based on the ability of Russian producers to fulfill the demands of the railway transport for the next 25-30 years in conditions of tough competition with foreign companies. 

The First Vice Prime Minister of the RF Sergey Ivanov said at the meeting that «nowadays the problem is the increase of capacities. And if the rolling stock is re-equipped as fast as nowadays, the process will take 30-40 years».
Project of a Tunnel under the Bering Strait Presented
The global project of a transport network with a railway tunnel under the Bering Strait connecting Asia and America was presented in Moscow in April.

Viktor Razbegin, Deputy Chairman for Production Capacities Research of the Ministry of Economic Development and Trade said, «We are speaking about the construction of a transcontinental network on the route Yakutsk-Magadan-Anadyr-Alyaska with a tunnel under the Bering Strait». The network will unite a high speed railway, motorway, power transmission lines, gas- and oil pipelines, and fiber-optic lines». 

Having reminded that nowadays 90% of freight in the Asian and Pacific region is transported by sea, he stressed that «the new mainline will not only reduce the delivery time by two weeks, but it will also increase the transportation safety». According to the specialists of the Ministry of Economic Development and Trade, the project «with the cost of USD 50-60 billion is to recoup in 13-15 years after the freight flow reaches 70 million tons annually, and the economic effect will be not less than 10%».
RUR 60 bln into Road Network of the Perm Region
In 2007 all the 6 thousand kilometers of roads are to be diagnosed in the Perm region. 

The results of the research will help to distribute the financial resources between capital repair and road construction. Based on the scheme of Perm region transport infrastructure development, the road agency elaborated the transport strategy of the Perm region till 2036 and «The Program of development and improvement of the basic road network of the Perm region in 2006-2016».
 
According to the documents, the Perm region is to invest into the regional road network about RUB 130 billion, in order to build and reconstruct over 2.200 km of roads. In particular, by 2016 about 948 km of roads is to be built and reconstructed.
 
The total volume of capital investments is to make RUR 60.6 billion. Besides, the project «Agglomeration Perm» was included into «The Program of development and improvement of the basic road network of the Perm region in 2006-2016». It is targeted at providing the carrying capacity for the road transport within a radius of 50 km from Perm. 
OAO RZD: Ready for Pakistan
«OAO RZD is ready to take part in the construction of new railways in Pakistan, including the one destined to Iran», stated Vice-President of OAO RZD Alexey Mersiyanov, summing up the results of his visit to Pakistan, which took place in the framework of the RF Government Chairman Mikhail Fradkov’s trip to the country.
The Russian company is also interested in the projects of reconstruction of the existing railways in Pakistan, said A. Mersiyanov.
During the negotiations between M. Fradkov and the Prime Minister of Pakistan Shaukat Aziz, the sides discussed the prospects of cooperation between the two countries in the railway transport sector.
They discussed the possibility of OAO RZD’s participation in the elaboration of technical and economic bases for the mineral resources fields development in Pakistan. The specialists of the Russian company offered to make the evaluation of expenses for the construction and exploitation of railways to the fields.

Nowadays, OAO RZD participates in the tender to supply signalling, centralization and blocking systems for railways in Pakistan. According to the agreements, the company’s specialists are to make offers for Pakistani railway bridges modernization.

The possibility to supply Russian rolling stock, rails, and tracks is discussed.  

Specially launched in March 2007, OAO Trading House RZD will promote services, equipment and technologies of OAO RZD to the Pakistani market, as well as to other foreign markets. 
Byelorussia Will Create Trade and Logistic Centers in RF North-Western Region
Byelorussia offered the RF North-Western region to transfer from direct supplies of Byelorussian production to creation of Byelorussian trade and logistic centers on the territory of Russia.

According to the statement of Byelorussian Prime Minister Sergey Sidorsky made during his meeting with the RF President Plenipotentiary in the North-Western Federal Region Ilya Klebanov, the former believes that «it is necessary to create some infrastructure in the sector of trade between our states». The Prime Minister also underlined that Byelorussia had agreed to construct similar centers in Moscow. In particular, warehouses will be built and Byelorussian machinery will be placed there.

I. Klebanov supported the offer of the Byelorussian side and urged to work on the issues concerning organization of such centers in Saint-Petersburg and the Leningrad Region.
OAO KAMAZ Launches JV in Pakistan    
OAO KAMAZ and the Pakistani company Bibojee Services Ltd concluded an agreement about the launch of a joint venture that will sell and service KAMAZ vehicles in Pakistan. The agreement was signed in the framework of RF Prime Minister Mikhail Fradkov’s visit to Pakistan.

CEO of ZAO Foreign Trade Company KAMAZ Evgeny Pronin said that the process of the joint venture launch is to be completed by the end of 2007. The total volume of investments into the project will make USD 1.5-3 million. 

E. Pronin reminded that there is an assembling plant of KAMAZ vehicles in Pakistan, which works on the basis of a licensing agreement. 20 trucks have already been assembled there, and another 40 sets were delivered to Pakistan for assembling.

E. Pronin also said that it is planned to enlarge the KAMAZ assembling production in Pakistan. Its design capacity enables to increase it to 4.000 trucks annually. Besides, KAMAZ will increase the rate of production localization on the territory of Pakistan from current 15% to 40% by the end of the year.
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Consortium to Be Launched to Join Transsib and TransKorean Railways	

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    [DETAIL_TEXT] => FROM SURVIVAL TO DEVELOPMENT 

– Mr.Levitin, at the session of the Ministry of Transport you stated that the results achieved in 2006 show that the national transport complex goes from the survival stage to renewal and development. In this respect, what is your view on the investment climate in the sector, considering the fact that last year the mechanism of investment within state-and-private partnership was launched? 

– I think, in the last few years we’ve managed to create the basis for modernization. What are the reasons to state this? Currently we operate two infrastructures which are free for carriers; they are motor ways and domestic water ways. Respective decisions have been made and we transfer to the mode when we can totally finance its maintenance. 

Speaking of railway transport, this problem will be solved considering the fact that we supported the campaign on tariffs increase for the period of 2008-2010. As a result, ОАО RZD obtained a serious rise in tariff. Moreover, this year the Federal Budget envisages subsidies for passenger complex worth RUR 10.9 bln. 

When issues on current maintenance have been approved by the Government, we can start infrastructure development. In this respect the new federal target programme will be called «Development of the RF transport system». The financial volumes for 2008–2010 prove the idea that this programme did not receive its title accidentally. 

Speaking of state-and-private partnership for the transport sector, I have to confess, this was the most important task for the RF Transport Ministry. When the national projects were being implemented, it became clear that the present day volume of budget subsidies is the maximum and we can not get more than that. This is the reason why we should attract private investment. 

However, everybody knows how these processes unfold in Russia. Typically, it takes five years from conceiving the idea to construct an infrastructure object to its implementation. Of course, we do our best to launch these projects as fast as we can. I do hope that this year we’ll start to implement projects with involved private investment that were planned in 2005. If this happens, – I mean the real implementation of one of them starts, – this will be the best thing to dream about, considering our specific conditions. 

– What are the priority projects?

– Everything is priority for us. Currently the projects of the toll road «Western Speed Diameter» in Saint-Petersburg, a new access to Moscow ring road from the federal motor way Moscow – Minsk (Odintsovo bypass), as well as the first main sector of the speed motor way Moscow – Saint-Petersburg and railway in Chita regions, are practically ready. 

– Speaking of prospects, everyone knows the story of the high-speed railway construction between Moscow and Saint-Petersburg. What’s going on with this project? 

– I still believe it is impossible to construct a high-speed railway on the basis of the present-day railway. It is an unreal thing to do. It will turn into the route which won’t correspond to modern safety regulations and many of the electric and cargo trains will be taken away from the railway. Thus, we won’t get anything special in view of efficiency and, moreover, we’ll have to sort out the problems with passengers who go by suburban trains on this route. New railway infrastructure is to be constructed. 

– Speaking of the projects offered within state-and-private partnership are there typical mistakes and failures made by private investors? What can you advise them?

– Several years ago only a few could believe that someone in Russia would invest into a motor way. We did not expect it to be an investment of national companies, since they do not have respective conditions for credit resources attraction. We counted on foreign investors. The experience of tender held for the Western Speed Diameter construction confirmed our initial forecasts. The consortium includes Russian business, though it is supported by foreign finances. Foreign investors will not construct themselves: they will bring here technologies and management who will be capable to provide efficient work for investment, and this is very important for us. 

– What is your view of investment dynamics within port terminals development? What is your opinion of the offer made by the RF Transport Ministry to postpone railway tariffs unification for two years? As far as I remember, you supported this idea some time ago...

– It is true; I supported this initiative two years ago. However, nobody could predict at that time that the approval of laws «On sea ports» and «On special economic zones of port types» would take us as long as two years. We expected we could get the Duma’s approval in 2006. Due to the fact we did not manage to do this in time (I’d better restrain from commenting on what the reasons were), there are no conditions created in the ports for stevedoring companies to compete with foreign ports. That is why I think that the process of tariffs unification should go in parallel with competitive conditions creation in the ports. 

– According to last year results, in 2006 export revenue from transport services grew by 10% year-on-year. What is the reason for such growth? Do you take it as significant? What sectors demonstrate it? 

– First of all, the share of railway cargo transportation has grown, as well as handling in the ports. The volume of passenger transportation by air transport has boosted as well. Moreover, the number of Russian truck hauliers has been increasing: in the last three years the share of the Russian companies on this market has grown from 18% tо 40%. All in all, this has made for a 10% increase. However, this is not the best result to be guided by further on. We think, in future transport services export is to become the developing segment of the Russian economy.

TO APPROVE AND IMPLEMENT 

– During our conversation we have mentioned the names of different normative documents. What is your view of the present-day normative-and-legislative base for the transport sector? What new documents are to be approved first? As you have already noted, the market has been waiting for some of them for many years...

– Speaking of the railway transport, the basic documents have been developed, though they are to be amended seriously. Thus, the federal law «On railway transport in the RF» and «RF Railway Transport Code» should be amended. We decided to develop all amendments and approve them as a whole. Speaking of sea transport, the crucial law for this sector is the law «On Sea Ports». 

This year we carried on drafting this law, and in March it was approved by the Government. 
However, it is not enough to approve, the law is to be implemented properly. This has to do with the law «On International Sea Register». We managed to get the approval of the Duma and the Council of Federation, but it still doesn’t function. The problem is we do not need subordinate legislation, but the customs bodies do. In this respect, negotiations with the Ministry of Justice and the Federal Customs Service were initiated and are underway now. Moreover, a great number of issues concerning conventions regarding staff hiring for Russian vessels and foreign vessels servicing are to be solved. 

Speaking of motor transport we faced a dead state. During a long period we could not get approval for the law «On motor ways», until the RF President Vladimir Putin personally ordered to develop and approve it. Now this document is being approved by the Ministry of Justice. The second law «On toll roads» has already been approved by the Government. 

The situation with the normative-and-legislative base for air transport is much worse. Now the Air Code of 1997 functions: of course, it needs to be seriously amended. Also, we believe the law «On airports» must be developed. 

In my opinion, last year the RF Ministry of Transport has laid a solid foundation for the future. In particular, we approved the law «On transport safety» within the shortest period. I think, this is a good result considering our conditions. 

– What are the prospects of the law «On special economic port zones»? 

– It was approved by the Government and will be considered by the RF Duma in the near future.

– Considering Russia’s plan to join the WTO, the problem of global competition with foreign manufacturers is getting more and more crucial. Thus, Russian airlines stood against the protectionist policy within the sector of the national aircraft construction in the view of the fact that expenditures on aircrafts purchase and maintenance grow tremendously. What do you think about this and how this situation can develop? Are there analogous problems in other transport sectors? 

– Only our air and motor transport suffer tough global competition. Other modes of transport haven’t faced this competition at full-scale yet. Foreign rail cars and locomotives will not be here soon. 

It is true that airlines have to survive in tough conditions. First of all, it can be explained by the fact that the airlines who operated foreign aircrafts and who got the whole range of services from aircrafts manufacturers cannot now go back to the Russian machinery. Buying an aircraft, the company should care itself about servicing, repair and purchase of necessary components. That is why we support their demand to the Unified Aircraft Construction Corporation which envisages the terms under which the company acquires an aircraft and services it for the whole life cycle of the vessel. In case the national manufacturer is ready to provide post-servicing of the aircrafts, airlines will buy vessels. We plan to launch the same mechanism for transport vessels purchase for all modes of transport. 

– It is no secret that the logistic service in Russia is developed improperly. Can foreign players’ arrival change the situation? 

– I think, logistic service will appear in the country after the arrival of big net retail companies and when the Russian cargo consignors stop to transport their cargo in bulk by cargo rail cars. In the world any cargo is baled up and transported by container. This sort of cargo can be taken by truck, aircraft, sea vessel, i.e. it is universal cargo, but to carry on this policy we need logistic centers where it can be handled. 

Containerization is not developed in Russia yet and our cargo owners haven’t transferred to modern methods of cargo dispatch, but it is near future for our country. I think, logistics is a great business for Russia and only a few can imagine how wide-scaled it can be. We insist on systemic development with the use of all modes of transport. 

STABILITY AND COMPETITION 

– Late in March the project of the Target model of railway transport services market was approved by the Government. What is your view of this document? 

– In fact, it was a model developed for transition period, since the third stage of the reform finishes in 2010, and now we evaluate the present-day situation. Moreover, the targets of the first and the second stages were not fully achieved. First of all, we failed with the separation of the locomotive component in the tariff and didn’t separate repair base into a competitive sector. The same happened with separation of the passenger complex. Everything we haven’t achieved within the first two stages we are to fulfill at the third stage. 

I’d like to emphasize that it was a heated discussion. We expected that and took this step deliberately, since railway transport is crucially important for the country and we gave a chance to express opinions to everybody: cargo owners, carriers, operators and forwarders. 

What are the basics of the document? First of all, a developed target model gives an opportunity to keep rates of investment into railway transport stable. Secondly, it does not allow OAO RZD to set a monopolistic business area in respect of rail cars operation. Thirdly, this model provides stability for the sector, its competitiveness and opportunity to improve the situation while the reform is unfolding.

Not everybody is pleased with the target model, but it is actually impossible to please everyone. First of all, it was developed to demonstrate the state policy and the interests of every single transportation process participant will be taken into consideration during the model implementation. 

– The market made a decision to separate two operator Cargo companies from OAO RZD ambiguously. 

– While making this decision we were guided by the following reasons. First, it is the progressive reform unfolding. Separation of the rail cars park from OAO RZD is an inevitable thing. In this respect, at the beginning, half of the park is to be separated: this is a step-by-step method which has been used for five years during the railway transport reform. At the first stage, specialized rolling stock will be separated, as well as part of the universal rail cars park of the company. The volume and structure of the latter will be defined by the federal bodies and ОАО RZD. 

When the first Cargo company is formed and placed at IPO the second Cargo company will be separated. By this moment we’ll see what is going on on the transportation market. 

– Private operators frequently ask if equal access to infrastructure will be given. 

– We’ve considered this. We have the regulations on giving carriers access to infrastructure. However, they do not function now, mostly because OAO RZD refuses to accept the idea that the market can allow other carriers but OAO RZD. Now we’ve postponed the consideration of this problem. 

In the near future the mechanism of giving access to infrastructure for an operator company will be worked out. This must be developed by the RF Ministry of Transport, the Ministry of Economic Development and Trade, Federal Antimonopoly Service, Federal Railway Transport Agency and ОАО RZD. 

– It is known that the Cargo company will function as an operator, consequently, private companies believe that the agreement regulating relations between OAO RZD and its daughter company must be set as that between OAO RZD and a private company...

– Of course, this agreement will be unified both for the railway operator company and the private company. Actually, two Cargo companies launch is aimed at the de-regulation of the car component. In this respect the type of transported cargo influences the speed of this plan fulfillment in practice. For example, for oil transportation the car component can be regulated already now. The situation is practically the same for metal, fertilizers and some other cargo. 

– It is no secret that there is no proper normative base regulating operator activities nowadays. There is only a record of such economic subject existence. In this respect how successful do you think IPO can be, considering the unclear juridical status of the company?

– It was one of the major questions asked while discussing the target market model. We are sure that currently we should work out a normative-and-legislative base similar to the one we developed for carriers. They are to be delegated all the necessary commissions, otherwise it will be an unfinished project. 

Moreover, we should clarify the functions of a railway carrier once again. Why, for example, does OAO RZD believe nobody but itself can perform as a carrier? The basic reason is that transportation is a public type of activity and the company owing only one rail car can not be public. To authorize the company with this status, it must work on the whole railway network and not only in Moscow and Saint-Petersburg. 

No other mode of transport shows such strict demands to the carrier as railway does. Actually, we set unequal conditions for truck hauliers and railway business. Truck hauliers can refuse transportation, or alternatively ask for any cost for provided services (tariff is not regulated); moreover, they use free infrastructure. If we speak of the competition between different modes of transport, it is to be equal for everybody. Of course, this does not have to do with this very target market model, though we should start to think this problem over in a very serious way. 

TO DO GOOD 

– What priority tasks does the RF Ministry of Transport have for 2007? 

– First of all, this is the year when we start to implement projects of state-and-private partnership approved by the Investment Commission. Secondly, this year such important for the transport sector laws as «On sea ports», «On motor ways» etc. will be approved. 

The state programme of flight safety will be worked out, which is aimed to eliminate failures in the system of flights safety control and strengthen airlines responsibility. In the railway sector we plan to develop projects for strategic perspective. Of course, the major result of 2007 is to be the new Federal target programme of transport infrastructure development for 2010–2015.

Moreover, we plan to hold the International Transport Forum and Exhibition of projects «Transport of Russia – 2007» in Sochi on May 31 - June 3, which will become the meeting point for regional representatives, state transport bodies, building companies, operators and investors. 

Also, issues on international activities are to be sorted out. Thus, the transport dialogue Russia – the EU will be continued. In particular, the EU has offered to carry out the first air summit where the key airlines and aircrafts manufacturers of Russia and the EU can meet. Moreover, the RF Ministry of Transport will participate in the meeting of European Ministers of Transport in Sofia on May 30-31.

Interviewed by Alexander Retyunin



Biography
Igor Levitin 
Was born on February 21, 1952 in Odessa region (Tsebrikovo settlement). In 1973 graduated from the military college of railways and communication in Leningrad. In 1983 graduated from the Military Academy of rear services and transport as transport engineer. In 1970 joined the USSR armed forces. From 1973 to 1976 served in Odessa military district at Transdnestrian railway. From 1976 to 1980 served in the Southern troops. From 1983 to 1985 held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). Participated in «Golden Link» joining. From 1985 to 1994 held the post of Railway Transportation Officer at Moscowskaya railway, later took the post of Deputy Head of military communication. From 1996 to 2004 worked for ZAO Severstaltrans, in 1998 took the post of Deputy General Director of the company. Was responsible for transport engineering, railway transportation and sea commercial ports sector. Was a member of the Public Committee under the Government Commission on railway transport reform. 

On March 9, 2004 was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 was appointed the RF Minister of Transport.


    [~DETAIL_TEXT] => FROM SURVIVAL TO DEVELOPMENT 

– Mr.Levitin, at the session of the Ministry of Transport you stated that the results achieved in 2006 show that the national transport complex goes from the survival stage to renewal and development. In this respect, what is your view on the investment climate in the sector, considering the fact that last year the mechanism of investment within state-and-private partnership was launched? 

– I think, in the last few years we’ve managed to create the basis for modernization. What are the reasons to state this? Currently we operate two infrastructures which are free for carriers; they are motor ways and domestic water ways. Respective decisions have been made and we transfer to the mode when we can totally finance its maintenance. 

Speaking of railway transport, this problem will be solved considering the fact that we supported the campaign on tariffs increase for the period of 2008-2010. As a result, ОАО RZD obtained a serious rise in tariff. Moreover, this year the Federal Budget envisages subsidies for passenger complex worth RUR 10.9 bln. 

When issues on current maintenance have been approved by the Government, we can start infrastructure development. In this respect the new federal target programme will be called «Development of the RF transport system». The financial volumes for 2008–2010 prove the idea that this programme did not receive its title accidentally. 

Speaking of state-and-private partnership for the transport sector, I have to confess, this was the most important task for the RF Transport Ministry. When the national projects were being implemented, it became clear that the present day volume of budget subsidies is the maximum and we can not get more than that. This is the reason why we should attract private investment. 

However, everybody knows how these processes unfold in Russia. Typically, it takes five years from conceiving the idea to construct an infrastructure object to its implementation. Of course, we do our best to launch these projects as fast as we can. I do hope that this year we’ll start to implement projects with involved private investment that were planned in 2005. If this happens, – I mean the real implementation of one of them starts, – this will be the best thing to dream about, considering our specific conditions. 

– What are the priority projects?

– Everything is priority for us. Currently the projects of the toll road «Western Speed Diameter» in Saint-Petersburg, a new access to Moscow ring road from the federal motor way Moscow – Minsk (Odintsovo bypass), as well as the first main sector of the speed motor way Moscow – Saint-Petersburg and railway in Chita regions, are practically ready. 

– Speaking of prospects, everyone knows the story of the high-speed railway construction between Moscow and Saint-Petersburg. What’s going on with this project? 

– I still believe it is impossible to construct a high-speed railway on the basis of the present-day railway. It is an unreal thing to do. It will turn into the route which won’t correspond to modern safety regulations and many of the electric and cargo trains will be taken away from the railway. Thus, we won’t get anything special in view of efficiency and, moreover, we’ll have to sort out the problems with passengers who go by suburban trains on this route. New railway infrastructure is to be constructed. 

– Speaking of the projects offered within state-and-private partnership are there typical mistakes and failures made by private investors? What can you advise them?

– Several years ago only a few could believe that someone in Russia would invest into a motor way. We did not expect it to be an investment of national companies, since they do not have respective conditions for credit resources attraction. We counted on foreign investors. The experience of tender held for the Western Speed Diameter construction confirmed our initial forecasts. The consortium includes Russian business, though it is supported by foreign finances. Foreign investors will not construct themselves: they will bring here technologies and management who will be capable to provide efficient work for investment, and this is very important for us. 

– What is your view of investment dynamics within port terminals development? What is your opinion of the offer made by the RF Transport Ministry to postpone railway tariffs unification for two years? As far as I remember, you supported this idea some time ago...

– It is true; I supported this initiative two years ago. However, nobody could predict at that time that the approval of laws «On sea ports» and «On special economic zones of port types» would take us as long as two years. We expected we could get the Duma’s approval in 2006. Due to the fact we did not manage to do this in time (I’d better restrain from commenting on what the reasons were), there are no conditions created in the ports for stevedoring companies to compete with foreign ports. That is why I think that the process of tariffs unification should go in parallel with competitive conditions creation in the ports. 

– According to last year results, in 2006 export revenue from transport services grew by 10% year-on-year. What is the reason for such growth? Do you take it as significant? What sectors demonstrate it? 

– First of all, the share of railway cargo transportation has grown, as well as handling in the ports. The volume of passenger transportation by air transport has boosted as well. Moreover, the number of Russian truck hauliers has been increasing: in the last three years the share of the Russian companies on this market has grown from 18% tо 40%. All in all, this has made for a 10% increase. However, this is not the best result to be guided by further on. We think, in future transport services export is to become the developing segment of the Russian economy.

TO APPROVE AND IMPLEMENT 

– During our conversation we have mentioned the names of different normative documents. What is your view of the present-day normative-and-legislative base for the transport sector? What new documents are to be approved first? As you have already noted, the market has been waiting for some of them for many years...

– Speaking of the railway transport, the basic documents have been developed, though they are to be amended seriously. Thus, the federal law «On railway transport in the RF» and «RF Railway Transport Code» should be amended. We decided to develop all amendments and approve them as a whole. Speaking of sea transport, the crucial law for this sector is the law «On Sea Ports». 

This year we carried on drafting this law, and in March it was approved by the Government. 
However, it is not enough to approve, the law is to be implemented properly. This has to do with the law «On International Sea Register». We managed to get the approval of the Duma and the Council of Federation, but it still doesn’t function. The problem is we do not need subordinate legislation, but the customs bodies do. In this respect, negotiations with the Ministry of Justice and the Federal Customs Service were initiated and are underway now. Moreover, a great number of issues concerning conventions regarding staff hiring for Russian vessels and foreign vessels servicing are to be solved. 

Speaking of motor transport we faced a dead state. During a long period we could not get approval for the law «On motor ways», until the RF President Vladimir Putin personally ordered to develop and approve it. Now this document is being approved by the Ministry of Justice. The second law «On toll roads» has already been approved by the Government. 

The situation with the normative-and-legislative base for air transport is much worse. Now the Air Code of 1997 functions: of course, it needs to be seriously amended. Also, we believe the law «On airports» must be developed. 

In my opinion, last year the RF Ministry of Transport has laid a solid foundation for the future. In particular, we approved the law «On transport safety» within the shortest period. I think, this is a good result considering our conditions. 

– What are the prospects of the law «On special economic port zones»? 

– It was approved by the Government and will be considered by the RF Duma in the near future.

– Considering Russia’s plan to join the WTO, the problem of global competition with foreign manufacturers is getting more and more crucial. Thus, Russian airlines stood against the protectionist policy within the sector of the national aircraft construction in the view of the fact that expenditures on aircrafts purchase and maintenance grow tremendously. What do you think about this and how this situation can develop? Are there analogous problems in other transport sectors? 

– Only our air and motor transport suffer tough global competition. Other modes of transport haven’t faced this competition at full-scale yet. Foreign rail cars and locomotives will not be here soon. 

It is true that airlines have to survive in tough conditions. First of all, it can be explained by the fact that the airlines who operated foreign aircrafts and who got the whole range of services from aircrafts manufacturers cannot now go back to the Russian machinery. Buying an aircraft, the company should care itself about servicing, repair and purchase of necessary components. That is why we support their demand to the Unified Aircraft Construction Corporation which envisages the terms under which the company acquires an aircraft and services it for the whole life cycle of the vessel. In case the national manufacturer is ready to provide post-servicing of the aircrafts, airlines will buy vessels. We plan to launch the same mechanism for transport vessels purchase for all modes of transport. 

– It is no secret that the logistic service in Russia is developed improperly. Can foreign players’ arrival change the situation? 

– I think, logistic service will appear in the country after the arrival of big net retail companies and when the Russian cargo consignors stop to transport their cargo in bulk by cargo rail cars. In the world any cargo is baled up and transported by container. This sort of cargo can be taken by truck, aircraft, sea vessel, i.e. it is universal cargo, but to carry on this policy we need logistic centers where it can be handled. 

Containerization is not developed in Russia yet and our cargo owners haven’t transferred to modern methods of cargo dispatch, but it is near future for our country. I think, logistics is a great business for Russia and only a few can imagine how wide-scaled it can be. We insist on systemic development with the use of all modes of transport. 

STABILITY AND COMPETITION 

– Late in March the project of the Target model of railway transport services market was approved by the Government. What is your view of this document? 

– In fact, it was a model developed for transition period, since the third stage of the reform finishes in 2010, and now we evaluate the present-day situation. Moreover, the targets of the first and the second stages were not fully achieved. First of all, we failed with the separation of the locomotive component in the tariff and didn’t separate repair base into a competitive sector. The same happened with separation of the passenger complex. Everything we haven’t achieved within the first two stages we are to fulfill at the third stage. 

I’d like to emphasize that it was a heated discussion. We expected that and took this step deliberately, since railway transport is crucially important for the country and we gave a chance to express opinions to everybody: cargo owners, carriers, operators and forwarders. 

What are the basics of the document? First of all, a developed target model gives an opportunity to keep rates of investment into railway transport stable. Secondly, it does not allow OAO RZD to set a monopolistic business area in respect of rail cars operation. Thirdly, this model provides stability for the sector, its competitiveness and opportunity to improve the situation while the reform is unfolding.

Not everybody is pleased with the target model, but it is actually impossible to please everyone. First of all, it was developed to demonstrate the state policy and the interests of every single transportation process participant will be taken into consideration during the model implementation. 

– The market made a decision to separate two operator Cargo companies from OAO RZD ambiguously. 

– While making this decision we were guided by the following reasons. First, it is the progressive reform unfolding. Separation of the rail cars park from OAO RZD is an inevitable thing. In this respect, at the beginning, half of the park is to be separated: this is a step-by-step method which has been used for five years during the railway transport reform. At the first stage, specialized rolling stock will be separated, as well as part of the universal rail cars park of the company. The volume and structure of the latter will be defined by the federal bodies and ОАО RZD. 

When the first Cargo company is formed and placed at IPO the second Cargo company will be separated. By this moment we’ll see what is going on on the transportation market. 

– Private operators frequently ask if equal access to infrastructure will be given. 

– We’ve considered this. We have the regulations on giving carriers access to infrastructure. However, they do not function now, mostly because OAO RZD refuses to accept the idea that the market can allow other carriers but OAO RZD. Now we’ve postponed the consideration of this problem. 

In the near future the mechanism of giving access to infrastructure for an operator company will be worked out. This must be developed by the RF Ministry of Transport, the Ministry of Economic Development and Trade, Federal Antimonopoly Service, Federal Railway Transport Agency and ОАО RZD. 

– It is known that the Cargo company will function as an operator, consequently, private companies believe that the agreement regulating relations between OAO RZD and its daughter company must be set as that between OAO RZD and a private company...

– Of course, this agreement will be unified both for the railway operator company and the private company. Actually, two Cargo companies launch is aimed at the de-regulation of the car component. In this respect the type of transported cargo influences the speed of this plan fulfillment in practice. For example, for oil transportation the car component can be regulated already now. The situation is practically the same for metal, fertilizers and some other cargo. 

– It is no secret that there is no proper normative base regulating operator activities nowadays. There is only a record of such economic subject existence. In this respect how successful do you think IPO can be, considering the unclear juridical status of the company?

– It was one of the major questions asked while discussing the target market model. We are sure that currently we should work out a normative-and-legislative base similar to the one we developed for carriers. They are to be delegated all the necessary commissions, otherwise it will be an unfinished project. 

Moreover, we should clarify the functions of a railway carrier once again. Why, for example, does OAO RZD believe nobody but itself can perform as a carrier? The basic reason is that transportation is a public type of activity and the company owing only one rail car can not be public. To authorize the company with this status, it must work on the whole railway network and not only in Moscow and Saint-Petersburg. 

No other mode of transport shows such strict demands to the carrier as railway does. Actually, we set unequal conditions for truck hauliers and railway business. Truck hauliers can refuse transportation, or alternatively ask for any cost for provided services (tariff is not regulated); moreover, they use free infrastructure. If we speak of the competition between different modes of transport, it is to be equal for everybody. Of course, this does not have to do with this very target market model, though we should start to think this problem over in a very serious way. 

TO DO GOOD 

– What priority tasks does the RF Ministry of Transport have for 2007? 

– First of all, this is the year when we start to implement projects of state-and-private partnership approved by the Investment Commission. Secondly, this year such important for the transport sector laws as «On sea ports», «On motor ways» etc. will be approved. 

The state programme of flight safety will be worked out, which is aimed to eliminate failures in the system of flights safety control and strengthen airlines responsibility. In the railway sector we plan to develop projects for strategic perspective. Of course, the major result of 2007 is to be the new Federal target programme of transport infrastructure development for 2010–2015.

Moreover, we plan to hold the International Transport Forum and Exhibition of projects «Transport of Russia – 2007» in Sochi on May 31 - June 3, which will become the meeting point for regional representatives, state transport bodies, building companies, operators and investors. 

Also, issues on international activities are to be sorted out. Thus, the transport dialogue Russia – the EU will be continued. In particular, the EU has offered to carry out the first air summit where the key airlines and aircrafts manufacturers of Russia and the EU can meet. Moreover, the RF Ministry of Transport will participate in the meeting of European Ministers of Transport in Sofia on May 30-31.

Interviewed by Alexander Retyunin



Biography
Igor Levitin 
Was born on February 21, 1952 in Odessa region (Tsebrikovo settlement). In 1973 graduated from the military college of railways and communication in Leningrad. In 1983 graduated from the Military Academy of rear services and transport as transport engineer. In 1970 joined the USSR armed forces. From 1973 to 1976 served in Odessa military district at Transdnestrian railway. From 1976 to 1980 served in the Southern troops. From 1983 to 1985 held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). Participated in «Golden Link» joining. From 1985 to 1994 held the post of Railway Transportation Officer at Moscowskaya railway, later took the post of Deputy Head of military communication. From 1996 to 2004 worked for ZAO Severstaltrans, in 1998 took the post of Deputy General Director of the company. Was responsible for transport engineering, railway transportation and sea commercial ports sector. Was a member of the Public Committee under the Government Commission on railway transport reform. 

On March 9, 2004 was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 was appointed the RF Minister of Transport.


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– Mr.Levitin, at the session of the Ministry of Transport you stated that the results achieved in 2006 show that the national transport complex goes from the survival stage to renewal and development. In this respect, what is your view on the investment climate in the sector, considering the fact that last year the mechanism of investment within state-and-private partnership was launched? 

– I think, in the last few years we’ve managed to create the basis for modernization. What are the reasons to state this? Currently we operate two infrastructures which are free for carriers; they are motor ways and domestic water ways. Respective decisions have been made and we transfer to the mode when we can totally finance its maintenance. 

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When issues on current maintenance have been approved by the Government, we can start infrastructure development. In this respect the new federal target programme will be called «Development of the RF transport system». The financial volumes for 2008–2010 prove the idea that this programme did not receive its title accidentally. 

Speaking of state-and-private partnership for the transport sector, I have to confess, this was the most important task for the RF Transport Ministry. When the national projects were being implemented, it became clear that the present day volume of budget subsidies is the maximum and we can not get more than that. This is the reason why we should attract private investment. 

However, everybody knows how these processes unfold in Russia. Typically, it takes five years from conceiving the idea to construct an infrastructure object to its implementation. Of course, we do our best to launch these projects as fast as we can. I do hope that this year we’ll start to implement projects with involved private investment that were planned in 2005. If this happens, – I mean the real implementation of one of them starts, – this will be the best thing to dream about, considering our specific conditions. 

– What are the priority projects?

– Everything is priority for us. Currently the projects of the toll road «Western Speed Diameter» in Saint-Petersburg, a new access to Moscow ring road from the federal motor way Moscow – Minsk (Odintsovo bypass), as well as the first main sector of the speed motor way Moscow – Saint-Petersburg and railway in Chita regions, are practically ready. 

– Speaking of prospects, everyone knows the story of the high-speed railway construction between Moscow and Saint-Petersburg. What’s going on with this project? 

– I still believe it is impossible to construct a high-speed railway on the basis of the present-day railway. It is an unreal thing to do. It will turn into the route which won’t correspond to modern safety regulations and many of the electric and cargo trains will be taken away from the railway. Thus, we won’t get anything special in view of efficiency and, moreover, we’ll have to sort out the problems with passengers who go by suburban trains on this route. New railway infrastructure is to be constructed. 

– Speaking of the projects offered within state-and-private partnership are there typical mistakes and failures made by private investors? What can you advise them?

– Several years ago only a few could believe that someone in Russia would invest into a motor way. We did not expect it to be an investment of national companies, since they do not have respective conditions for credit resources attraction. We counted on foreign investors. The experience of tender held for the Western Speed Diameter construction confirmed our initial forecasts. The consortium includes Russian business, though it is supported by foreign finances. Foreign investors will not construct themselves: they will bring here technologies and management who will be capable to provide efficient work for investment, and this is very important for us. 

– What is your view of investment dynamics within port terminals development? What is your opinion of the offer made by the RF Transport Ministry to postpone railway tariffs unification for two years? As far as I remember, you supported this idea some time ago...

– It is true; I supported this initiative two years ago. However, nobody could predict at that time that the approval of laws «On sea ports» and «On special economic zones of port types» would take us as long as two years. We expected we could get the Duma’s approval in 2006. Due to the fact we did not manage to do this in time (I’d better restrain from commenting on what the reasons were), there are no conditions created in the ports for stevedoring companies to compete with foreign ports. That is why I think that the process of tariffs unification should go in parallel with competitive conditions creation in the ports. 

– According to last year results, in 2006 export revenue from transport services grew by 10% year-on-year. What is the reason for such growth? Do you take it as significant? What sectors demonstrate it? 

– First of all, the share of railway cargo transportation has grown, as well as handling in the ports. The volume of passenger transportation by air transport has boosted as well. Moreover, the number of Russian truck hauliers has been increasing: in the last three years the share of the Russian companies on this market has grown from 18% tо 40%. All in all, this has made for a 10% increase. However, this is not the best result to be guided by further on. We think, in future transport services export is to become the developing segment of the Russian economy.

TO APPROVE AND IMPLEMENT 

– During our conversation we have mentioned the names of different normative documents. What is your view of the present-day normative-and-legislative base for the transport sector? What new documents are to be approved first? As you have already noted, the market has been waiting for some of them for many years...

– Speaking of the railway transport, the basic documents have been developed, though they are to be amended seriously. Thus, the federal law «On railway transport in the RF» and «RF Railway Transport Code» should be amended. We decided to develop all amendments and approve them as a whole. Speaking of sea transport, the crucial law for this sector is the law «On Sea Ports». 

This year we carried on drafting this law, and in March it was approved by the Government. 
However, it is not enough to approve, the law is to be implemented properly. This has to do with the law «On International Sea Register». We managed to get the approval of the Duma and the Council of Federation, but it still doesn’t function. The problem is we do not need subordinate legislation, but the customs bodies do. In this respect, negotiations with the Ministry of Justice and the Federal Customs Service were initiated and are underway now. Moreover, a great number of issues concerning conventions regarding staff hiring for Russian vessels and foreign vessels servicing are to be solved. 

Speaking of motor transport we faced a dead state. During a long period we could not get approval for the law «On motor ways», until the RF President Vladimir Putin personally ordered to develop and approve it. Now this document is being approved by the Ministry of Justice. The second law «On toll roads» has already been approved by the Government. 

The situation with the normative-and-legislative base for air transport is much worse. Now the Air Code of 1997 functions: of course, it needs to be seriously amended. Also, we believe the law «On airports» must be developed. 

In my opinion, last year the RF Ministry of Transport has laid a solid foundation for the future. In particular, we approved the law «On transport safety» within the shortest period. I think, this is a good result considering our conditions. 

– What are the prospects of the law «On special economic port zones»? 

– It was approved by the Government and will be considered by the RF Duma in the near future.

– Considering Russia’s plan to join the WTO, the problem of global competition with foreign manufacturers is getting more and more crucial. Thus, Russian airlines stood against the protectionist policy within the sector of the national aircraft construction in the view of the fact that expenditures on aircrafts purchase and maintenance grow tremendously. What do you think about this and how this situation can develop? Are there analogous problems in other transport sectors? 

– Only our air and motor transport suffer tough global competition. Other modes of transport haven’t faced this competition at full-scale yet. Foreign rail cars and locomotives will not be here soon. 

It is true that airlines have to survive in tough conditions. First of all, it can be explained by the fact that the airlines who operated foreign aircrafts and who got the whole range of services from aircrafts manufacturers cannot now go back to the Russian machinery. Buying an aircraft, the company should care itself about servicing, repair and purchase of necessary components. That is why we support their demand to the Unified Aircraft Construction Corporation which envisages the terms under which the company acquires an aircraft and services it for the whole life cycle of the vessel. In case the national manufacturer is ready to provide post-servicing of the aircrafts, airlines will buy vessels. We plan to launch the same mechanism for transport vessels purchase for all modes of transport. 

– It is no secret that the logistic service in Russia is developed improperly. Can foreign players’ arrival change the situation? 

– I think, logistic service will appear in the country after the arrival of big net retail companies and when the Russian cargo consignors stop to transport their cargo in bulk by cargo rail cars. In the world any cargo is baled up and transported by container. This sort of cargo can be taken by truck, aircraft, sea vessel, i.e. it is universal cargo, but to carry on this policy we need logistic centers where it can be handled. 

Containerization is not developed in Russia yet and our cargo owners haven’t transferred to modern methods of cargo dispatch, but it is near future for our country. I think, logistics is a great business for Russia and only a few can imagine how wide-scaled it can be. We insist on systemic development with the use of all modes of transport. 

STABILITY AND COMPETITION 

– Late in March the project of the Target model of railway transport services market was approved by the Government. What is your view of this document? 

– In fact, it was a model developed for transition period, since the third stage of the reform finishes in 2010, and now we evaluate the present-day situation. Moreover, the targets of the first and the second stages were not fully achieved. First of all, we failed with the separation of the locomotive component in the tariff and didn’t separate repair base into a competitive sector. The same happened with separation of the passenger complex. Everything we haven’t achieved within the first two stages we are to fulfill at the third stage. 

I’d like to emphasize that it was a heated discussion. We expected that and took this step deliberately, since railway transport is crucially important for the country and we gave a chance to express opinions to everybody: cargo owners, carriers, operators and forwarders. 

What are the basics of the document? First of all, a developed target model gives an opportunity to keep rates of investment into railway transport stable. Secondly, it does not allow OAO RZD to set a monopolistic business area in respect of rail cars operation. Thirdly, this model provides stability for the sector, its competitiveness and opportunity to improve the situation while the reform is unfolding.

Not everybody is pleased with the target model, but it is actually impossible to please everyone. First of all, it was developed to demonstrate the state policy and the interests of every single transportation process participant will be taken into consideration during the model implementation. 

– The market made a decision to separate two operator Cargo companies from OAO RZD ambiguously. 

– While making this decision we were guided by the following reasons. First, it is the progressive reform unfolding. Separation of the rail cars park from OAO RZD is an inevitable thing. In this respect, at the beginning, half of the park is to be separated: this is a step-by-step method which has been used for five years during the railway transport reform. At the first stage, specialized rolling stock will be separated, as well as part of the universal rail cars park of the company. The volume and structure of the latter will be defined by the federal bodies and ОАО RZD. 

When the first Cargo company is formed and placed at IPO the second Cargo company will be separated. By this moment we’ll see what is going on on the transportation market. 

– Private operators frequently ask if equal access to infrastructure will be given. 

– We’ve considered this. We have the regulations on giving carriers access to infrastructure. However, they do not function now, mostly because OAO RZD refuses to accept the idea that the market can allow other carriers but OAO RZD. Now we’ve postponed the consideration of this problem. 

In the near future the mechanism of giving access to infrastructure for an operator company will be worked out. This must be developed by the RF Ministry of Transport, the Ministry of Economic Development and Trade, Federal Antimonopoly Service, Federal Railway Transport Agency and ОАО RZD. 

– It is known that the Cargo company will function as an operator, consequently, private companies believe that the agreement regulating relations between OAO RZD and its daughter company must be set as that between OAO RZD and a private company...

– Of course, this agreement will be unified both for the railway operator company and the private company. Actually, two Cargo companies launch is aimed at the de-regulation of the car component. In this respect the type of transported cargo influences the speed of this plan fulfillment in practice. For example, for oil transportation the car component can be regulated already now. The situation is practically the same for metal, fertilizers and some other cargo. 

– It is no secret that there is no proper normative base regulating operator activities nowadays. There is only a record of such economic subject existence. In this respect how successful do you think IPO can be, considering the unclear juridical status of the company?

– It was one of the major questions asked while discussing the target market model. We are sure that currently we should work out a normative-and-legislative base similar to the one we developed for carriers. They are to be delegated all the necessary commissions, otherwise it will be an unfinished project. 

Moreover, we should clarify the functions of a railway carrier once again. Why, for example, does OAO RZD believe nobody but itself can perform as a carrier? The basic reason is that transportation is a public type of activity and the company owing only one rail car can not be public. To authorize the company with this status, it must work on the whole railway network and not only in Moscow and Saint-Petersburg. 

No other mode of transport shows such strict demands to the carrier as railway does. Actually, we set unequal conditions for truck hauliers and railway business. Truck hauliers can refuse transportation, or alternatively ask for any cost for provided services (tariff is not regulated); moreover, they use free infrastructure. If we speak of the competition between different modes of transport, it is to be equal for everybody. Of course, this does not have to do with this very target market model, though we should start to think this problem over in a very serious way. 

TO DO GOOD 

– What priority tasks does the RF Ministry of Transport have for 2007? 

– First of all, this is the year when we start to implement projects of state-and-private partnership approved by the Investment Commission. Secondly, this year such important for the transport sector laws as «On sea ports», «On motor ways» etc. will be approved. 

The state programme of flight safety will be worked out, which is aimed to eliminate failures in the system of flights safety control and strengthen airlines responsibility. In the railway sector we plan to develop projects for strategic perspective. Of course, the major result of 2007 is to be the new Federal target programme of transport infrastructure development for 2010–2015.

Moreover, we plan to hold the International Transport Forum and Exhibition of projects «Transport of Russia – 2007» in Sochi on May 31 - June 3, which will become the meeting point for regional representatives, state transport bodies, building companies, operators and investors. 

Also, issues on international activities are to be sorted out. Thus, the transport dialogue Russia – the EU will be continued. In particular, the EU has offered to carry out the first air summit where the key airlines and aircrafts manufacturers of Russia and the EU can meet. Moreover, the RF Ministry of Transport will participate in the meeting of European Ministers of Transport in Sofia on May 30-31.

Interviewed by Alexander Retyunin



Biography
Igor Levitin 
Was born on February 21, 1952 in Odessa region (Tsebrikovo settlement). In 1973 graduated from the military college of railways and communication in Leningrad. In 1983 graduated from the Military Academy of rear services and transport as transport engineer. In 1970 joined the USSR armed forces. From 1973 to 1976 served in Odessa military district at Transdnestrian railway. From 1976 to 1980 served in the Southern troops. From 1983 to 1985 held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). Participated in «Golden Link» joining. From 1985 to 1994 held the post of Railway Transportation Officer at Moscowskaya railway, later took the post of Deputy Head of military communication. From 1996 to 2004 worked for ZAO Severstaltrans, in 1998 took the post of Deputy General Director of the company. Was responsible for transport engineering, railway transportation and sea commercial ports sector. Was a member of the Public Committee under the Government Commission on railway transport reform. 

On March 9, 2004 was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 was appointed the RF Minister of Transport.


    [~DETAIL_TEXT] => FROM SURVIVAL TO DEVELOPMENT 

– Mr.Levitin, at the session of the Ministry of Transport you stated that the results achieved in 2006 show that the national transport complex goes from the survival stage to renewal and development. In this respect, what is your view on the investment climate in the sector, considering the fact that last year the mechanism of investment within state-and-private partnership was launched? 

– I think, in the last few years we’ve managed to create the basis for modernization. What are the reasons to state this? Currently we operate two infrastructures which are free for carriers; they are motor ways and domestic water ways. Respective decisions have been made and we transfer to the mode when we can totally finance its maintenance. 

Speaking of railway transport, this problem will be solved considering the fact that we supported the campaign on tariffs increase for the period of 2008-2010. As a result, ОАО RZD obtained a serious rise in tariff. Moreover, this year the Federal Budget envisages subsidies for passenger complex worth RUR 10.9 bln. 

When issues on current maintenance have been approved by the Government, we can start infrastructure development. In this respect the new federal target programme will be called «Development of the RF transport system». The financial volumes for 2008–2010 prove the idea that this programme did not receive its title accidentally. 

Speaking of state-and-private partnership for the transport sector, I have to confess, this was the most important task for the RF Transport Ministry. When the national projects were being implemented, it became clear that the present day volume of budget subsidies is the maximum and we can not get more than that. This is the reason why we should attract private investment. 

However, everybody knows how these processes unfold in Russia. Typically, it takes five years from conceiving the idea to construct an infrastructure object to its implementation. Of course, we do our best to launch these projects as fast as we can. I do hope that this year we’ll start to implement projects with involved private investment that were planned in 2005. If this happens, – I mean the real implementation of one of them starts, – this will be the best thing to dream about, considering our specific conditions. 

– What are the priority projects?

– Everything is priority for us. Currently the projects of the toll road «Western Speed Diameter» in Saint-Petersburg, a new access to Moscow ring road from the federal motor way Moscow – Minsk (Odintsovo bypass), as well as the first main sector of the speed motor way Moscow – Saint-Petersburg and railway in Chita regions, are practically ready. 

– Speaking of prospects, everyone knows the story of the high-speed railway construction between Moscow and Saint-Petersburg. What’s going on with this project? 

– I still believe it is impossible to construct a high-speed railway on the basis of the present-day railway. It is an unreal thing to do. It will turn into the route which won’t correspond to modern safety regulations and many of the electric and cargo trains will be taken away from the railway. Thus, we won’t get anything special in view of efficiency and, moreover, we’ll have to sort out the problems with passengers who go by suburban trains on this route. New railway infrastructure is to be constructed. 

– Speaking of the projects offered within state-and-private partnership are there typical mistakes and failures made by private investors? What can you advise them?

– Several years ago only a few could believe that someone in Russia would invest into a motor way. We did not expect it to be an investment of national companies, since they do not have respective conditions for credit resources attraction. We counted on foreign investors. The experience of tender held for the Western Speed Diameter construction confirmed our initial forecasts. The consortium includes Russian business, though it is supported by foreign finances. Foreign investors will not construct themselves: they will bring here technologies and management who will be capable to provide efficient work for investment, and this is very important for us. 

– What is your view of investment dynamics within port terminals development? What is your opinion of the offer made by the RF Transport Ministry to postpone railway tariffs unification for two years? As far as I remember, you supported this idea some time ago...

– It is true; I supported this initiative two years ago. However, nobody could predict at that time that the approval of laws «On sea ports» and «On special economic zones of port types» would take us as long as two years. We expected we could get the Duma’s approval in 2006. Due to the fact we did not manage to do this in time (I’d better restrain from commenting on what the reasons were), there are no conditions created in the ports for stevedoring companies to compete with foreign ports. That is why I think that the process of tariffs unification should go in parallel with competitive conditions creation in the ports. 

– According to last year results, in 2006 export revenue from transport services grew by 10% year-on-year. What is the reason for such growth? Do you take it as significant? What sectors demonstrate it? 

– First of all, the share of railway cargo transportation has grown, as well as handling in the ports. The volume of passenger transportation by air transport has boosted as well. Moreover, the number of Russian truck hauliers has been increasing: in the last three years the share of the Russian companies on this market has grown from 18% tо 40%. All in all, this has made for a 10% increase. However, this is not the best result to be guided by further on. We think, in future transport services export is to become the developing segment of the Russian economy.

TO APPROVE AND IMPLEMENT 

– During our conversation we have mentioned the names of different normative documents. What is your view of the present-day normative-and-legislative base for the transport sector? What new documents are to be approved first? As you have already noted, the market has been waiting for some of them for many years...

– Speaking of the railway transport, the basic documents have been developed, though they are to be amended seriously. Thus, the federal law «On railway transport in the RF» and «RF Railway Transport Code» should be amended. We decided to develop all amendments and approve them as a whole. Speaking of sea transport, the crucial law for this sector is the law «On Sea Ports». 

This year we carried on drafting this law, and in March it was approved by the Government. 
However, it is not enough to approve, the law is to be implemented properly. This has to do with the law «On International Sea Register». We managed to get the approval of the Duma and the Council of Federation, but it still doesn’t function. The problem is we do not need subordinate legislation, but the customs bodies do. In this respect, negotiations with the Ministry of Justice and the Federal Customs Service were initiated and are underway now. Moreover, a great number of issues concerning conventions regarding staff hiring for Russian vessels and foreign vessels servicing are to be solved. 

Speaking of motor transport we faced a dead state. During a long period we could not get approval for the law «On motor ways», until the RF President Vladimir Putin personally ordered to develop and approve it. Now this document is being approved by the Ministry of Justice. The second law «On toll roads» has already been approved by the Government. 

The situation with the normative-and-legislative base for air transport is much worse. Now the Air Code of 1997 functions: of course, it needs to be seriously amended. Also, we believe the law «On airports» must be developed. 

In my opinion, last year the RF Ministry of Transport has laid a solid foundation for the future. In particular, we approved the law «On transport safety» within the shortest period. I think, this is a good result considering our conditions. 

– What are the prospects of the law «On special economic port zones»? 

– It was approved by the Government and will be considered by the RF Duma in the near future.

– Considering Russia’s plan to join the WTO, the problem of global competition with foreign manufacturers is getting more and more crucial. Thus, Russian airlines stood against the protectionist policy within the sector of the national aircraft construction in the view of the fact that expenditures on aircrafts purchase and maintenance grow tremendously. What do you think about this and how this situation can develop? Are there analogous problems in other transport sectors? 

– Only our air and motor transport suffer tough global competition. Other modes of transport haven’t faced this competition at full-scale yet. Foreign rail cars and locomotives will not be here soon. 

It is true that airlines have to survive in tough conditions. First of all, it can be explained by the fact that the airlines who operated foreign aircrafts and who got the whole range of services from aircrafts manufacturers cannot now go back to the Russian machinery. Buying an aircraft, the company should care itself about servicing, repair and purchase of necessary components. That is why we support their demand to the Unified Aircraft Construction Corporation which envisages the terms under which the company acquires an aircraft and services it for the whole life cycle of the vessel. In case the national manufacturer is ready to provide post-servicing of the aircrafts, airlines will buy vessels. We plan to launch the same mechanism for transport vessels purchase for all modes of transport. 

– It is no secret that the logistic service in Russia is developed improperly. Can foreign players’ arrival change the situation? 

– I think, logistic service will appear in the country after the arrival of big net retail companies and when the Russian cargo consignors stop to transport their cargo in bulk by cargo rail cars. In the world any cargo is baled up and transported by container. This sort of cargo can be taken by truck, aircraft, sea vessel, i.e. it is universal cargo, but to carry on this policy we need logistic centers where it can be handled. 

Containerization is not developed in Russia yet and our cargo owners haven’t transferred to modern methods of cargo dispatch, but it is near future for our country. I think, logistics is a great business for Russia and only a few can imagine how wide-scaled it can be. We insist on systemic development with the use of all modes of transport. 

STABILITY AND COMPETITION 

– Late in March the project of the Target model of railway transport services market was approved by the Government. What is your view of this document? 

– In fact, it was a model developed for transition period, since the third stage of the reform finishes in 2010, and now we evaluate the present-day situation. Moreover, the targets of the first and the second stages were not fully achieved. First of all, we failed with the separation of the locomotive component in the tariff and didn’t separate repair base into a competitive sector. The same happened with separation of the passenger complex. Everything we haven’t achieved within the first two stages we are to fulfill at the third stage. 

I’d like to emphasize that it was a heated discussion. We expected that and took this step deliberately, since railway transport is crucially important for the country and we gave a chance to express opinions to everybody: cargo owners, carriers, operators and forwarders. 

What are the basics of the document? First of all, a developed target model gives an opportunity to keep rates of investment into railway transport stable. Secondly, it does not allow OAO RZD to set a monopolistic business area in respect of rail cars operation. Thirdly, this model provides stability for the sector, its competitiveness and opportunity to improve the situation while the reform is unfolding.

Not everybody is pleased with the target model, but it is actually impossible to please everyone. First of all, it was developed to demonstrate the state policy and the interests of every single transportation process participant will be taken into consideration during the model implementation. 

– The market made a decision to separate two operator Cargo companies from OAO RZD ambiguously. 

– While making this decision we were guided by the following reasons. First, it is the progressive reform unfolding. Separation of the rail cars park from OAO RZD is an inevitable thing. In this respect, at the beginning, half of the park is to be separated: this is a step-by-step method which has been used for five years during the railway transport reform. At the first stage, specialized rolling stock will be separated, as well as part of the universal rail cars park of the company. The volume and structure of the latter will be defined by the federal bodies and ОАО RZD. 

When the first Cargo company is formed and placed at IPO the second Cargo company will be separated. By this moment we’ll see what is going on on the transportation market. 

– Private operators frequently ask if equal access to infrastructure will be given. 

– We’ve considered this. We have the regulations on giving carriers access to infrastructure. However, they do not function now, mostly because OAO RZD refuses to accept the idea that the market can allow other carriers but OAO RZD. Now we’ve postponed the consideration of this problem. 

In the near future the mechanism of giving access to infrastructure for an operator company will be worked out. This must be developed by the RF Ministry of Transport, the Ministry of Economic Development and Trade, Federal Antimonopoly Service, Federal Railway Transport Agency and ОАО RZD. 

– It is known that the Cargo company will function as an operator, consequently, private companies believe that the agreement regulating relations between OAO RZD and its daughter company must be set as that between OAO RZD and a private company...

– Of course, this agreement will be unified both for the railway operator company and the private company. Actually, two Cargo companies launch is aimed at the de-regulation of the car component. In this respect the type of transported cargo influences the speed of this plan fulfillment in practice. For example, for oil transportation the car component can be regulated already now. The situation is practically the same for metal, fertilizers and some other cargo. 

– It is no secret that there is no proper normative base regulating operator activities nowadays. There is only a record of such economic subject existence. In this respect how successful do you think IPO can be, considering the unclear juridical status of the company?

– It was one of the major questions asked while discussing the target market model. We are sure that currently we should work out a normative-and-legislative base similar to the one we developed for carriers. They are to be delegated all the necessary commissions, otherwise it will be an unfinished project. 

Moreover, we should clarify the functions of a railway carrier once again. Why, for example, does OAO RZD believe nobody but itself can perform as a carrier? The basic reason is that transportation is a public type of activity and the company owing only one rail car can not be public. To authorize the company with this status, it must work on the whole railway network and not only in Moscow and Saint-Petersburg. 

No other mode of transport shows such strict demands to the carrier as railway does. Actually, we set unequal conditions for truck hauliers and railway business. Truck hauliers can refuse transportation, or alternatively ask for any cost for provided services (tariff is not regulated); moreover, they use free infrastructure. If we speak of the competition between different modes of transport, it is to be equal for everybody. Of course, this does not have to do with this very target market model, though we should start to think this problem over in a very serious way. 

TO DO GOOD 

– What priority tasks does the RF Ministry of Transport have for 2007? 

– First of all, this is the year when we start to implement projects of state-and-private partnership approved by the Investment Commission. Secondly, this year such important for the transport sector laws as «On sea ports», «On motor ways» etc. will be approved. 

The state programme of flight safety will be worked out, which is aimed to eliminate failures in the system of flights safety control and strengthen airlines responsibility. In the railway sector we plan to develop projects for strategic perspective. Of course, the major result of 2007 is to be the new Federal target programme of transport infrastructure development for 2010–2015.

Moreover, we plan to hold the International Transport Forum and Exhibition of projects «Transport of Russia – 2007» in Sochi on May 31 - June 3, which will become the meeting point for regional representatives, state transport bodies, building companies, operators and investors. 

Also, issues on international activities are to be sorted out. Thus, the transport dialogue Russia – the EU will be continued. In particular, the EU has offered to carry out the first air summit where the key airlines and aircrafts manufacturers of Russia and the EU can meet. Moreover, the RF Ministry of Transport will participate in the meeting of European Ministers of Transport in Sofia on May 30-31.

Interviewed by Alexander Retyunin



Biography
Igor Levitin 
Was born on February 21, 1952 in Odessa region (Tsebrikovo settlement). In 1973 graduated from the military college of railways and communication in Leningrad. In 1983 graduated from the Military Academy of rear services and transport as transport engineer. In 1970 joined the USSR armed forces. From 1973 to 1976 served in Odessa military district at Transdnestrian railway. From 1976 to 1980 served in the Southern troops. From 1983 to 1985 held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). Participated in «Golden Link» joining. From 1985 to 1994 held the post of Railway Transportation Officer at Moscowskaya railway, later took the post of Deputy Head of military communication. From 1996 to 2004 worked for ZAO Severstaltrans, in 1998 took the post of Deputy General Director of the company. Was responsible for transport engineering, railway transportation and sea commercial ports sector. Was a member of the Public Committee under the Government Commission on railway transport reform. 

On March 9, 2004 was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 was appointed the RF Minister of Transport.


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