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    [NAME] => Lianyungang – Almaty – Moscow: One More Corridor For Europe
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Container Express
The block train on the route Lianyungang – Almaty – Moscow was launched by AO Kaztransservice (Kazakhstan) in cooperation with a limited liability company specialising in multimodal transportation between Chinese Railways and China Shipping Group.
The train started in October 2007, when it left China on October 2 and arrived in Moscow on October 17. According to the information provided by Kaztransservice, it took the train 4 days 7 hours and 41 minutes to cross the territory of the Republic of Kazakhstan, where the average speed was 900 km per day (without taking stopovers into consideration). The first train was formed of 48 40-foot containers. Specialists from China Shipping Group say, when using the route the time of cargo transportation is 10 days shorter in comparison with when it is carried by Russian Transsiberian railway via the border crossing Zabaikalsk – Manchuria.
The new block train runs along one of the three main directions to be developed by China and the Republic of Kazakhstan (the states agreed to do it at a Bangkok summit devoted to Central Asia transit potential development in 2001). These directions are the port of Lianyungang – Almaty – the Russian Federation – Europe; Tientsin – Mongolia – the Russian Federation – Europe; South Korea – Democratic People’s Republic of Korea – China – Russia – Europe.
It is worth remembering that the maiden voyage of a block train between Lianyungang and Almaty took place on April 22-29, 2003. Transportation time was 174 hours and the average speed was 692 kilometres per day. Today the container trains of Kaztransservice run along the route.
Cheaper And Faster
To understand the prospects of the project, we need a detailed picture of the situation. According to data of the Kazakh Ministry of Transport, in 9 months of 2007 the volume of transported cargo grew by 28% year-on-year. For example, the train “Kazakh Vector” (Brest – Almaty, is formed at the Brest railway station and loaded with cargoes delivered by ‘Eastern Wind’ and Rotterdam – Malashevichi/ Brest trains) carried 6,988 TEU in 2006, and in 11 months of 2007 it transported 8,545 TEU (+22% year-on-year); “Mongolian Vector” train (Brest – Naushki – Ulan-Bator) carried 447 TEU in 11 months of 2006, during the same period of 2007 the train transported 605 TEU (+58%); “Baltica-Transit” train (the Baltic states – Kazakhstan/ Central Asia) carried 19,760 TEU. The figures are not very large, for example in 11 months of 2007 over 30,000 TEU was transported from the Nakhodka port to Moscow along the Transsib. Meanwhile, it is worth taking into consideration the fact of stable transit transportation volume growth. 
What is stimulating the development of onland transit corridors? The sea routes are overloaded, but they work without failure, and the rates can be forecast over a long-term period. Why do consignors more and more often prefer regular block trains?
What stimulates Chinese consignors is clear. First of all, it is the opportunity to deliver their goods faster to Russian as well as European consumers. Some cargo owners are ready to pay for the speed, meanwhile deep sea is and will be the cheapest way of transportation. Kazakhstan strives to take advantage of its geographical position by developing the state’s transit potential. And statistics shows that it has succeeded. According to the data of the Kazakhstan Strategic Research Institute, in 2006 the share of transit in the total transportation volume was 4% and in the total revenue from transportation it amounted to 14%. Besides, Kazakhstan Temir Zholy is preparing to launch a block train to service the Urumchi – Almaty line in order to transport cargo from Sintszyan–Uigur Autonomous Region.
To Widen The Bottle-Neck 
Any project has some certain risks and advantages. Experts say that the joint project of Kaztransservice, Chinese Railways and China Shipping Group has both. The weaknesses and strength of the train Lianyungang – Almaty – Moscow are caused by the level of Kazakh transport infrastructure development. 
“The most significant limitation for transit is the state of the infrastructure and service, which does not meet the level and status of transcontinental transport communication. As a result, Kazakh transport companies’ revenues from goods transit are just USD 500 million per annum, i.e. only 1% of the total transportation market between Europe and Asia,” claims Larisa Guseva, academic secretary of Kazakh Strategic Research Institute. “The net cost of railway transportation is very high because of the poor infrastructure: deteriorating wagons, insufficient electric locomotives and other technical problems. The idea of making Kazakhstan an attractive transit country can be realised only if the quality of the national railway infrastructure increases,” she says.
“Today the route via Kazakhstan is the only properly operating alternative to the Transsib for containerised cargo transportation from South-East Asia to the central part of Russia,” confirms Yury Yukin, Sales Director of Russian transport and logistic company Logika. “Meanwhile, the drawbacks of transportation via the route are insufficient capacity of the reloading sector as well as the railways on the west of China and in Kazakhstan, which bring limitations in terms of receiving rolling stock for goods transportation,” he adds.
At the same time a number of companies interacting with Kazakhstan Temir Zholy note that the level of services there is higher than in Russia. “When transporting freight via Kazakhstan, a cargo owner has no permanent fears that he will face a problem in dispatching a container, as often happens in interactions with OAO RZD. Besides, a cargo owner gets some opportunity to control transportation, which at container transportation from South-East Asia via the port of Vostochny there is always the threat of “getting stuck” waiting for flat wagons or completion of customs procedures.” Transporting cargo via Zabaikalsk-Manchuria, much time may be lost waiting for rolling stock. However strange it is, it is impossible to calculate the exact cost of transportation (cargo may be transported either on the flat wagons of OAO Transcontainer or in the inventory park of Russian Railways, and the cargo owner is notified after the cargo has been reloaded).  It applies especially to cargoes registered in one customs declaration and divided by it into consignments, if the declaration envisages using more than one container (some containers are transported earlier, the rest – later, and they are carried on different flat wagons). At transportation via the Dostyk railway station, containers are received from Chinese Railways without any hesitation, excluding the situation in which a single container is to be dispatched. In this case the container idles waiting for ‘a company’, but it happens very rarely and, as a rule, the idling time does not exceed 5-7 days. Meanwhile, the cargo owner can always get true information about the status of his container via his forwarder,” tells Mr Yukin.
Denis Zalevsky, Head of Business-Projects Department of STS – Logistics company, also considers that the Kazakh Railways are more attentive to clients. “We believe that the Kazakh authorities pay more attention to existing problems. Our company placed in the mass media information about the plans concerning an STS – Logistics project in Kazakhstan, and there we some problems mentioned that might arise during interaction with Kazakhstan Temir Zholy. Less than a week later a representative from Kazakh Railways called us and offered to discuss the possible problems to avoid them,” he said.
To do it justice, we should highlight that Kazakhstan strives to get rid of the disadvantages. As for infrastructure development, nowadays the Dostyk railway station (on the border with China) is being modernised; according to plans, its annual capacity is to amount to 25 million tons.
Besides, in May 2008 a concessionaire will be chosen to construct Zhetigen-Horgos railway (on the border with China, Almaty region). The Horgos railway station is supposed to become the second prospective station at the border with China. Its planned annual capacity is 25 million tons. Thus, the total capacity of the border crossings between Kazakhstan and China is to reach 50 million tons per annum by 2020.
According to the Transport Potential Development Strategy of the Republic of Kazakhstan, targeted at attracting transit to the railway by 2015, regional transport and logistics centres are to be launched in Astana, Almaty, Aktau, at the Dostyk railway station and in other industrial regions of the state. USD 144.2 million is to be invested in modernisation of the infrastructure in 2008. In future it is planned to build “straightening” railway lines on the territory of Kazakhstan by constructing lines binding the existing railways. This will allow the carrying capacity of transit corridors to increase to 100 million tons per annum in the directions to Turkmenistan, Iran, Turkey, and European states. New lines should be projected pending their future electrification.
Another priority project to increase the efficiency of using the transit potential of Kazakhstan, lies in part of the North corridor of the Transasian railway. It is a plan by the International Union of Railways (UIC) to develop the international transcontinental intermodal corridor (“N.E.W. – corridor”, China – Northern Europe – North America). The potential capacity of the container flow on this route will amount to 100,000 TEU in the first few years and later the annual transportation volume will reach 25 million tons.
Will The Transsib Be An Obstacle To The Chinese and Kazakh Project?  
Another factor that can influence the idea of the Lianyungang – Almaty – Moscow train launch is the Transsiberian railway and the intention of the Russian Ministry of Transport and OAO RZD to develop its transit potential.
The Transsib is now the most actively used onland route connecting the countries of the Asian and Pacific region and Europe. But in the last two years the volume of transit transportation along the main Russian railway fell because the through tariff rate was not able to compete with the sea routes. Other problems include the insufficient capacity of the Russian – Chinese and Russian – Mongolian border crossings, and red-tape difficulties.
Russian authorities and transport companies are taking measures to develop transit. For example, in autumn 2007, by a decree of the Coordinating Council on Transsiberian Transportation, the transit tariffs were stabilised and Russian-Chinese border crossings are being modernised.
Meanwhile, some experts consider the measures insufficient and they think that Kazakhstan has the best chance of attracting the maximum volume of cargo oriented at the Russian railway.
“Nowadays, the recommencement of the “Silk Road” is widely discussed”, notes Director of InfraNews research agency Alexey Bezborodov. “China has officially declared construction of two additional railway lines from Shendun (China) to the Dostyk railway station with a 1,435 mm-wide gauge. Thus, there appears the situation, in which from the Dalyan port to Orenburg import cargoes would be transported several times faster and serviced better than if they were carried along the Transsib. And in fact, the Transsib would be excluded from the transport schedule.”
The task of re-directing transit cargoes from the Transsib to the routes crossing Kazakhstan was mentioned in the Strategy of Transport Development of the Republic of Kazakhstan to 2015 (approved by the Kazakh President on April 11, 2006).
            
Resume
Does development of the Kazakh transit potential pose a threat to the Russian railway? In the opinion of Yury Scherbanin, Director for Scientific programmes of EATU Container Consult (a subdivision of Eurasian Transport Union), the volume of transportation via Kazakhstan will increase after construction of the industrial zone in the North-West of China is completed. Meanwhile, specialists including Gennady Bessonov, Secretary General of the Coordinating Council on TransSiberian Transportation, state that the industrial growth prospects for just the East of China will mean both routes will be loaded to capacity, so the Transsib will not have to compete with the Kazakhstan Temir Zholy. Anyway, the process of enlarging border stations has not been completed in either Russia or Kazakhstan and both countries require infrastructure modernisation. This means there is time to choose the route for cargo transportation… or to participate in its creation.

Anna Nezhinskaya 
viewpoint
Zhaksybeck Kulekeev,
President of OAO NC Kazakhstan Temir Zholy:
– To develop the transit potential of the Republic of Kazakhstan it is necessary to simplify customs procedures that control freight trains. It is especially important to develop container multimodal transportation on the route Asia – Europe – Asia, to implement new information technologies and equipment, open new border crossings to provide transportation growth and to provide a flexible tariff policy to attract international cargoes. Russia remains the most important partner of Kazakhstan in providing transportation, including transit. Out of the existing 15 border crossings, 11 connect Kazakhstan with Russia. Today, negotiations are being held to launch joint ventures for container and multimodal transportation development. In 2007, the volume of transit transportation via the territory of Kazakhstan to Russia grew by 1.6 times year-on-year, and from Russia to Kazakhstan by 1.4 times.     
viewpoint
Denis Zalevsky, 
Head of Business Projects Department of STS – Logistics company:
– Speaking about development of transportation via the territory of Kazakhstan, the experience of our company shows that today the major volume of transportation in the South-Asian regions is between the Republic of Kazakhstan and the Russian Federation. There is no significant increase of transit cargo volume on the routes. Lately, neither state has made efforts to solve the problem. In spite of the obvious advantage of transit transportation by railway (for example, the speed of delivery by railways is 50% faster than by sea), the flow of transit cargoes has not grown.
The reasons complicating transportation development are real for both states: today it is impossible to guarantee a definite transit time to clients; the lack of rolling stock; complicated customs clearance procedures; the lack of transport corridor promotion to the market, lack of flexibility and slow reaction to changes in the price formation mechanisms, i.e. tariffs.
Meanwhile, Russia Transsib is in a better situation than Kazakhstan, because the whole transit corridor is on the territory of one state, while Kazakhstan has to coordinate its transit policy with neighbouring states. Secondly, Russia has some positive experience in transit corridors: in the Soviet Epoque the Transsib worked successfully despite the fact that a lot of western countries were not interested in its development due to politic reasons. Besides, one should not forget that the simplest way out for the Kazakh transit route is via Russia. 
    [~DETAIL_TEXT] => 
Container Express
The block train on the route Lianyungang – Almaty – Moscow was launched by AO Kaztransservice (Kazakhstan) in cooperation with a limited liability company specialising in multimodal transportation between Chinese Railways and China Shipping Group.
The train started in October 2007, when it left China on October 2 and arrived in Moscow on October 17. According to the information provided by Kaztransservice, it took the train 4 days 7 hours and 41 minutes to cross the territory of the Republic of Kazakhstan, where the average speed was 900 km per day (without taking stopovers into consideration). The first train was formed of 48 40-foot containers. Specialists from China Shipping Group say, when using the route the time of cargo transportation is 10 days shorter in comparison with when it is carried by Russian Transsiberian railway via the border crossing Zabaikalsk – Manchuria.
The new block train runs along one of the three main directions to be developed by China and the Republic of Kazakhstan (the states agreed to do it at a Bangkok summit devoted to Central Asia transit potential development in 2001). These directions are the port of Lianyungang – Almaty – the Russian Federation – Europe; Tientsin – Mongolia – the Russian Federation – Europe; South Korea – Democratic People’s Republic of Korea – China – Russia – Europe.
It is worth remembering that the maiden voyage of a block train between Lianyungang and Almaty took place on April 22-29, 2003. Transportation time was 174 hours and the average speed was 692 kilometres per day. Today the container trains of Kaztransservice run along the route.
Cheaper And Faster
To understand the prospects of the project, we need a detailed picture of the situation. According to data of the Kazakh Ministry of Transport, in 9 months of 2007 the volume of transported cargo grew by 28% year-on-year. For example, the train “Kazakh Vector” (Brest – Almaty, is formed at the Brest railway station and loaded with cargoes delivered by ‘Eastern Wind’ and Rotterdam – Malashevichi/ Brest trains) carried 6,988 TEU in 2006, and in 11 months of 2007 it transported 8,545 TEU (+22% year-on-year); “Mongolian Vector” train (Brest – Naushki – Ulan-Bator) carried 447 TEU in 11 months of 2006, during the same period of 2007 the train transported 605 TEU (+58%); “Baltica-Transit” train (the Baltic states – Kazakhstan/ Central Asia) carried 19,760 TEU. The figures are not very large, for example in 11 months of 2007 over 30,000 TEU was transported from the Nakhodka port to Moscow along the Transsib. Meanwhile, it is worth taking into consideration the fact of stable transit transportation volume growth. 
What is stimulating the development of onland transit corridors? The sea routes are overloaded, but they work without failure, and the rates can be forecast over a long-term period. Why do consignors more and more often prefer regular block trains?
What stimulates Chinese consignors is clear. First of all, it is the opportunity to deliver their goods faster to Russian as well as European consumers. Some cargo owners are ready to pay for the speed, meanwhile deep sea is and will be the cheapest way of transportation. Kazakhstan strives to take advantage of its geographical position by developing the state’s transit potential. And statistics shows that it has succeeded. According to the data of the Kazakhstan Strategic Research Institute, in 2006 the share of transit in the total transportation volume was 4% and in the total revenue from transportation it amounted to 14%. Besides, Kazakhstan Temir Zholy is preparing to launch a block train to service the Urumchi – Almaty line in order to transport cargo from Sintszyan–Uigur Autonomous Region.
To Widen The Bottle-Neck 
Any project has some certain risks and advantages. Experts say that the joint project of Kaztransservice, Chinese Railways and China Shipping Group has both. The weaknesses and strength of the train Lianyungang – Almaty – Moscow are caused by the level of Kazakh transport infrastructure development. 
“The most significant limitation for transit is the state of the infrastructure and service, which does not meet the level and status of transcontinental transport communication. As a result, Kazakh transport companies’ revenues from goods transit are just USD 500 million per annum, i.e. only 1% of the total transportation market between Europe and Asia,” claims Larisa Guseva, academic secretary of Kazakh Strategic Research Institute. “The net cost of railway transportation is very high because of the poor infrastructure: deteriorating wagons, insufficient electric locomotives and other technical problems. The idea of making Kazakhstan an attractive transit country can be realised only if the quality of the national railway infrastructure increases,” she says.
“Today the route via Kazakhstan is the only properly operating alternative to the Transsib for containerised cargo transportation from South-East Asia to the central part of Russia,” confirms Yury Yukin, Sales Director of Russian transport and logistic company Logika. “Meanwhile, the drawbacks of transportation via the route are insufficient capacity of the reloading sector as well as the railways on the west of China and in Kazakhstan, which bring limitations in terms of receiving rolling stock for goods transportation,” he adds.
At the same time a number of companies interacting with Kazakhstan Temir Zholy note that the level of services there is higher than in Russia. “When transporting freight via Kazakhstan, a cargo owner has no permanent fears that he will face a problem in dispatching a container, as often happens in interactions with OAO RZD. Besides, a cargo owner gets some opportunity to control transportation, which at container transportation from South-East Asia via the port of Vostochny there is always the threat of “getting stuck” waiting for flat wagons or completion of customs procedures.” Transporting cargo via Zabaikalsk-Manchuria, much time may be lost waiting for rolling stock. However strange it is, it is impossible to calculate the exact cost of transportation (cargo may be transported either on the flat wagons of OAO Transcontainer or in the inventory park of Russian Railways, and the cargo owner is notified after the cargo has been reloaded).  It applies especially to cargoes registered in one customs declaration and divided by it into consignments, if the declaration envisages using more than one container (some containers are transported earlier, the rest – later, and they are carried on different flat wagons). At transportation via the Dostyk railway station, containers are received from Chinese Railways without any hesitation, excluding the situation in which a single container is to be dispatched. In this case the container idles waiting for ‘a company’, but it happens very rarely and, as a rule, the idling time does not exceed 5-7 days. Meanwhile, the cargo owner can always get true information about the status of his container via his forwarder,” tells Mr Yukin.
Denis Zalevsky, Head of Business-Projects Department of STS – Logistics company, also considers that the Kazakh Railways are more attentive to clients. “We believe that the Kazakh authorities pay more attention to existing problems. Our company placed in the mass media information about the plans concerning an STS – Logistics project in Kazakhstan, and there we some problems mentioned that might arise during interaction with Kazakhstan Temir Zholy. Less than a week later a representative from Kazakh Railways called us and offered to discuss the possible problems to avoid them,” he said.
To do it justice, we should highlight that Kazakhstan strives to get rid of the disadvantages. As for infrastructure development, nowadays the Dostyk railway station (on the border with China) is being modernised; according to plans, its annual capacity is to amount to 25 million tons.
Besides, in May 2008 a concessionaire will be chosen to construct Zhetigen-Horgos railway (on the border with China, Almaty region). The Horgos railway station is supposed to become the second prospective station at the border with China. Its planned annual capacity is 25 million tons. Thus, the total capacity of the border crossings between Kazakhstan and China is to reach 50 million tons per annum by 2020.
According to the Transport Potential Development Strategy of the Republic of Kazakhstan, targeted at attracting transit to the railway by 2015, regional transport and logistics centres are to be launched in Astana, Almaty, Aktau, at the Dostyk railway station and in other industrial regions of the state. USD 144.2 million is to be invested in modernisation of the infrastructure in 2008. In future it is planned to build “straightening” railway lines on the territory of Kazakhstan by constructing lines binding the existing railways. This will allow the carrying capacity of transit corridors to increase to 100 million tons per annum in the directions to Turkmenistan, Iran, Turkey, and European states. New lines should be projected pending their future electrification.
Another priority project to increase the efficiency of using the transit potential of Kazakhstan, lies in part of the North corridor of the Transasian railway. It is a plan by the International Union of Railways (UIC) to develop the international transcontinental intermodal corridor (“N.E.W. – corridor”, China – Northern Europe – North America). The potential capacity of the container flow on this route will amount to 100,000 TEU in the first few years and later the annual transportation volume will reach 25 million tons.
Will The Transsib Be An Obstacle To The Chinese and Kazakh Project?  
Another factor that can influence the idea of the Lianyungang – Almaty – Moscow train launch is the Transsiberian railway and the intention of the Russian Ministry of Transport and OAO RZD to develop its transit potential.
The Transsib is now the most actively used onland route connecting the countries of the Asian and Pacific region and Europe. But in the last two years the volume of transit transportation along the main Russian railway fell because the through tariff rate was not able to compete with the sea routes. Other problems include the insufficient capacity of the Russian – Chinese and Russian – Mongolian border crossings, and red-tape difficulties.
Russian authorities and transport companies are taking measures to develop transit. For example, in autumn 2007, by a decree of the Coordinating Council on Transsiberian Transportation, the transit tariffs were stabilised and Russian-Chinese border crossings are being modernised.
Meanwhile, some experts consider the measures insufficient and they think that Kazakhstan has the best chance of attracting the maximum volume of cargo oriented at the Russian railway.
“Nowadays, the recommencement of the “Silk Road” is widely discussed”, notes Director of InfraNews research agency Alexey Bezborodov. “China has officially declared construction of two additional railway lines from Shendun (China) to the Dostyk railway station with a 1,435 mm-wide gauge. Thus, there appears the situation, in which from the Dalyan port to Orenburg import cargoes would be transported several times faster and serviced better than if they were carried along the Transsib. And in fact, the Transsib would be excluded from the transport schedule.”
The task of re-directing transit cargoes from the Transsib to the routes crossing Kazakhstan was mentioned in the Strategy of Transport Development of the Republic of Kazakhstan to 2015 (approved by the Kazakh President on April 11, 2006).
            
Resume
Does development of the Kazakh transit potential pose a threat to the Russian railway? In the opinion of Yury Scherbanin, Director for Scientific programmes of EATU Container Consult (a subdivision of Eurasian Transport Union), the volume of transportation via Kazakhstan will increase after construction of the industrial zone in the North-West of China is completed. Meanwhile, specialists including Gennady Bessonov, Secretary General of the Coordinating Council on TransSiberian Transportation, state that the industrial growth prospects for just the East of China will mean both routes will be loaded to capacity, so the Transsib will not have to compete with the Kazakhstan Temir Zholy. Anyway, the process of enlarging border stations has not been completed in either Russia or Kazakhstan and both countries require infrastructure modernisation. This means there is time to choose the route for cargo transportation… or to participate in its creation.

Anna Nezhinskaya 
viewpoint
Zhaksybeck Kulekeev,
President of OAO NC Kazakhstan Temir Zholy:
– To develop the transit potential of the Republic of Kazakhstan it is necessary to simplify customs procedures that control freight trains. It is especially important to develop container multimodal transportation on the route Asia – Europe – Asia, to implement new information technologies and equipment, open new border crossings to provide transportation growth and to provide a flexible tariff policy to attract international cargoes. Russia remains the most important partner of Kazakhstan in providing transportation, including transit. Out of the existing 15 border crossings, 11 connect Kazakhstan with Russia. Today, negotiations are being held to launch joint ventures for container and multimodal transportation development. In 2007, the volume of transit transportation via the territory of Kazakhstan to Russia grew by 1.6 times year-on-year, and from Russia to Kazakhstan by 1.4 times.     
viewpoint
Denis Zalevsky, 
Head of Business Projects Department of STS – Logistics company:
– Speaking about development of transportation via the territory of Kazakhstan, the experience of our company shows that today the major volume of transportation in the South-Asian regions is between the Republic of Kazakhstan and the Russian Federation. There is no significant increase of transit cargo volume on the routes. Lately, neither state has made efforts to solve the problem. In spite of the obvious advantage of transit transportation by railway (for example, the speed of delivery by railways is 50% faster than by sea), the flow of transit cargoes has not grown.
The reasons complicating transportation development are real for both states: today it is impossible to guarantee a definite transit time to clients; the lack of rolling stock; complicated customs clearance procedures; the lack of transport corridor promotion to the market, lack of flexibility and slow reaction to changes in the price formation mechanisms, i.e. tariffs.
Meanwhile, Russia Transsib is in a better situation than Kazakhstan, because the whole transit corridor is on the territory of one state, while Kazakhstan has to coordinate its transit policy with neighbouring states. Secondly, Russia has some positive experience in transit corridors: in the Soviet Epoque the Transsib worked successfully despite the fact that a lot of western countries were not interested in its development due to politic reasons. Besides, one should not forget that the simplest way out for the Kazakh transit route is via Russia. 
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    [~PREVIEW_TEXT] => In autumn 2007 a transit block train was launched. It connected the port of Lianyungang and the Russian capital Moscow via the capital of Kazakhstan, Almaty. In fact, it is another transport corridor, targeted at providing qualitative and cheap transportation of goods from China to consumers in Central Asia, Russia, and perhaps, Europe. Analysis by The RZD-Partner International shows that the success of the project and the creation of one more convenient route from the "world factory" to European consignees depends on the readiness of Chinese infrastructure to service the planned cargo flows.
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            [SECTION_META_TITLE] => Lianyungang – Almaty – Moscow: One More Corridor For Europe
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/015.png" border="1" alt=" " hspace="5" width="140" height="110" align="left" />In autumn 2007 a transit block train was launched. It connected the port of Lianyungang and the Russian capital Moscow via the capital of Kazakhstan, Almaty. In fact, it is another transport corridor, targeted at providing qualitative and cheap transportation of goods from China to consumers in Central Asia, Russia, and perhaps, Europe. Analysis by The RZD-Partner International shows that the success of the project and the creation of one more convenient route from the &quot;world factory&quot; to European consignees depends on the readiness of Chinese infrastructure to service the planned cargo flows.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/015.png" border="1" alt=" " hspace="5" width="140" height="110" align="left" />In autumn 2007 a transit block train was launched. It connected the port of Lianyungang and the Russian capital Moscow via the capital of Kazakhstan, Almaty. In fact, it is another transport corridor, targeted at providing qualitative and cheap transportation of goods from China to consumers in Central Asia, Russia, and perhaps, Europe. Analysis by The RZD-Partner International shows that the success of the project and the creation of one more convenient route from the &quot;world factory&quot; to European consignees depends on the readiness of Chinese infrastructure to service the planned cargo flows.
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Container Express
The block train on the route Lianyungang – Almaty – Moscow was launched by AO Kaztransservice (Kazakhstan) in cooperation with a limited liability company specialising in multimodal transportation between Chinese Railways and China Shipping Group.
The train started in October 2007, when it left China on October 2 and arrived in Moscow on October 17. According to the information provided by Kaztransservice, it took the train 4 days 7 hours and 41 minutes to cross the territory of the Republic of Kazakhstan, where the average speed was 900 km per day (without taking stopovers into consideration). The first train was formed of 48 40-foot containers. Specialists from China Shipping Group say, when using the route the time of cargo transportation is 10 days shorter in comparison with when it is carried by Russian Transsiberian railway via the border crossing Zabaikalsk – Manchuria.
The new block train runs along one of the three main directions to be developed by China and the Republic of Kazakhstan (the states agreed to do it at a Bangkok summit devoted to Central Asia transit potential development in 2001). These directions are the port of Lianyungang – Almaty – the Russian Federation – Europe; Tientsin – Mongolia – the Russian Federation – Europe; South Korea – Democratic People’s Republic of Korea – China – Russia – Europe.
It is worth remembering that the maiden voyage of a block train between Lianyungang and Almaty took place on April 22-29, 2003. Transportation time was 174 hours and the average speed was 692 kilometres per day. Today the container trains of Kaztransservice run along the route.
Cheaper And Faster
To understand the prospects of the project, we need a detailed picture of the situation. According to data of the Kazakh Ministry of Transport, in 9 months of 2007 the volume of transported cargo grew by 28% year-on-year. For example, the train “Kazakh Vector” (Brest – Almaty, is formed at the Brest railway station and loaded with cargoes delivered by ‘Eastern Wind’ and Rotterdam – Malashevichi/ Brest trains) carried 6,988 TEU in 2006, and in 11 months of 2007 it transported 8,545 TEU (+22% year-on-year); “Mongolian Vector” train (Brest – Naushki – Ulan-Bator) carried 447 TEU in 11 months of 2006, during the same period of 2007 the train transported 605 TEU (+58%); “Baltica-Transit” train (the Baltic states – Kazakhstan/ Central Asia) carried 19,760 TEU. The figures are not very large, for example in 11 months of 2007 over 30,000 TEU was transported from the Nakhodka port to Moscow along the Transsib. Meanwhile, it is worth taking into consideration the fact of stable transit transportation volume growth. 
What is stimulating the development of onland transit corridors? The sea routes are overloaded, but they work without failure, and the rates can be forecast over a long-term period. Why do consignors more and more often prefer regular block trains?
What stimulates Chinese consignors is clear. First of all, it is the opportunity to deliver their goods faster to Russian as well as European consumers. Some cargo owners are ready to pay for the speed, meanwhile deep sea is and will be the cheapest way of transportation. Kazakhstan strives to take advantage of its geographical position by developing the state’s transit potential. And statistics shows that it has succeeded. According to the data of the Kazakhstan Strategic Research Institute, in 2006 the share of transit in the total transportation volume was 4% and in the total revenue from transportation it amounted to 14%. Besides, Kazakhstan Temir Zholy is preparing to launch a block train to service the Urumchi – Almaty line in order to transport cargo from Sintszyan–Uigur Autonomous Region.
To Widen The Bottle-Neck 
Any project has some certain risks and advantages. Experts say that the joint project of Kaztransservice, Chinese Railways and China Shipping Group has both. The weaknesses and strength of the train Lianyungang – Almaty – Moscow are caused by the level of Kazakh transport infrastructure development. 
“The most significant limitation for transit is the state of the infrastructure and service, which does not meet the level and status of transcontinental transport communication. As a result, Kazakh transport companies’ revenues from goods transit are just USD 500 million per annum, i.e. only 1% of the total transportation market between Europe and Asia,” claims Larisa Guseva, academic secretary of Kazakh Strategic Research Institute. “The net cost of railway transportation is very high because of the poor infrastructure: deteriorating wagons, insufficient electric locomotives and other technical problems. The idea of making Kazakhstan an attractive transit country can be realised only if the quality of the national railway infrastructure increases,” she says.
“Today the route via Kazakhstan is the only properly operating alternative to the Transsib for containerised cargo transportation from South-East Asia to the central part of Russia,” confirms Yury Yukin, Sales Director of Russian transport and logistic company Logika. “Meanwhile, the drawbacks of transportation via the route are insufficient capacity of the reloading sector as well as the railways on the west of China and in Kazakhstan, which bring limitations in terms of receiving rolling stock for goods transportation,” he adds.
At the same time a number of companies interacting with Kazakhstan Temir Zholy note that the level of services there is higher than in Russia. “When transporting freight via Kazakhstan, a cargo owner has no permanent fears that he will face a problem in dispatching a container, as often happens in interactions with OAO RZD. Besides, a cargo owner gets some opportunity to control transportation, which at container transportation from South-East Asia via the port of Vostochny there is always the threat of “getting stuck” waiting for flat wagons or completion of customs procedures.” Transporting cargo via Zabaikalsk-Manchuria, much time may be lost waiting for rolling stock. However strange it is, it is impossible to calculate the exact cost of transportation (cargo may be transported either on the flat wagons of OAO Transcontainer or in the inventory park of Russian Railways, and the cargo owner is notified after the cargo has been reloaded).  It applies especially to cargoes registered in one customs declaration and divided by it into consignments, if the declaration envisages using more than one container (some containers are transported earlier, the rest – later, and they are carried on different flat wagons). At transportation via the Dostyk railway station, containers are received from Chinese Railways without any hesitation, excluding the situation in which a single container is to be dispatched. In this case the container idles waiting for ‘a company’, but it happens very rarely and, as a rule, the idling time does not exceed 5-7 days. Meanwhile, the cargo owner can always get true information about the status of his container via his forwarder,” tells Mr Yukin.
Denis Zalevsky, Head of Business-Projects Department of STS – Logistics company, also considers that the Kazakh Railways are more attentive to clients. “We believe that the Kazakh authorities pay more attention to existing problems. Our company placed in the mass media information about the plans concerning an STS – Logistics project in Kazakhstan, and there we some problems mentioned that might arise during interaction with Kazakhstan Temir Zholy. Less than a week later a representative from Kazakh Railways called us and offered to discuss the possible problems to avoid them,” he said.
To do it justice, we should highlight that Kazakhstan strives to get rid of the disadvantages. As for infrastructure development, nowadays the Dostyk railway station (on the border with China) is being modernised; according to plans, its annual capacity is to amount to 25 million tons.
Besides, in May 2008 a concessionaire will be chosen to construct Zhetigen-Horgos railway (on the border with China, Almaty region). The Horgos railway station is supposed to become the second prospective station at the border with China. Its planned annual capacity is 25 million tons. Thus, the total capacity of the border crossings between Kazakhstan and China is to reach 50 million tons per annum by 2020.
According to the Transport Potential Development Strategy of the Republic of Kazakhstan, targeted at attracting transit to the railway by 2015, regional transport and logistics centres are to be launched in Astana, Almaty, Aktau, at the Dostyk railway station and in other industrial regions of the state. USD 144.2 million is to be invested in modernisation of the infrastructure in 2008. In future it is planned to build “straightening” railway lines on the territory of Kazakhstan by constructing lines binding the existing railways. This will allow the carrying capacity of transit corridors to increase to 100 million tons per annum in the directions to Turkmenistan, Iran, Turkey, and European states. New lines should be projected pending their future electrification.
Another priority project to increase the efficiency of using the transit potential of Kazakhstan, lies in part of the North corridor of the Transasian railway. It is a plan by the International Union of Railways (UIC) to develop the international transcontinental intermodal corridor (“N.E.W. – corridor”, China – Northern Europe – North America). The potential capacity of the container flow on this route will amount to 100,000 TEU in the first few years and later the annual transportation volume will reach 25 million tons.
Will The Transsib Be An Obstacle To The Chinese and Kazakh Project?  
Another factor that can influence the idea of the Lianyungang – Almaty – Moscow train launch is the Transsiberian railway and the intention of the Russian Ministry of Transport and OAO RZD to develop its transit potential.
The Transsib is now the most actively used onland route connecting the countries of the Asian and Pacific region and Europe. But in the last two years the volume of transit transportation along the main Russian railway fell because the through tariff rate was not able to compete with the sea routes. Other problems include the insufficient capacity of the Russian – Chinese and Russian – Mongolian border crossings, and red-tape difficulties.
Russian authorities and transport companies are taking measures to develop transit. For example, in autumn 2007, by a decree of the Coordinating Council on Transsiberian Transportation, the transit tariffs were stabilised and Russian-Chinese border crossings are being modernised.
Meanwhile, some experts consider the measures insufficient and they think that Kazakhstan has the best chance of attracting the maximum volume of cargo oriented at the Russian railway.
“Nowadays, the recommencement of the “Silk Road” is widely discussed”, notes Director of InfraNews research agency Alexey Bezborodov. “China has officially declared construction of two additional railway lines from Shendun (China) to the Dostyk railway station with a 1,435 mm-wide gauge. Thus, there appears the situation, in which from the Dalyan port to Orenburg import cargoes would be transported several times faster and serviced better than if they were carried along the Transsib. And in fact, the Transsib would be excluded from the transport schedule.”
The task of re-directing transit cargoes from the Transsib to the routes crossing Kazakhstan was mentioned in the Strategy of Transport Development of the Republic of Kazakhstan to 2015 (approved by the Kazakh President on April 11, 2006).
            
Resume
Does development of the Kazakh transit potential pose a threat to the Russian railway? In the opinion of Yury Scherbanin, Director for Scientific programmes of EATU Container Consult (a subdivision of Eurasian Transport Union), the volume of transportation via Kazakhstan will increase after construction of the industrial zone in the North-West of China is completed. Meanwhile, specialists including Gennady Bessonov, Secretary General of the Coordinating Council on TransSiberian Transportation, state that the industrial growth prospects for just the East of China will mean both routes will be loaded to capacity, so the Transsib will not have to compete with the Kazakhstan Temir Zholy. Anyway, the process of enlarging border stations has not been completed in either Russia or Kazakhstan and both countries require infrastructure modernisation. This means there is time to choose the route for cargo transportation… or to participate in its creation.

Anna Nezhinskaya 
viewpoint
Zhaksybeck Kulekeev,
President of OAO NC Kazakhstan Temir Zholy:
– To develop the transit potential of the Republic of Kazakhstan it is necessary to simplify customs procedures that control freight trains. It is especially important to develop container multimodal transportation on the route Asia – Europe – Asia, to implement new information technologies and equipment, open new border crossings to provide transportation growth and to provide a flexible tariff policy to attract international cargoes. Russia remains the most important partner of Kazakhstan in providing transportation, including transit. Out of the existing 15 border crossings, 11 connect Kazakhstan with Russia. Today, negotiations are being held to launch joint ventures for container and multimodal transportation development. In 2007, the volume of transit transportation via the territory of Kazakhstan to Russia grew by 1.6 times year-on-year, and from Russia to Kazakhstan by 1.4 times.     
viewpoint
Denis Zalevsky, 
Head of Business Projects Department of STS – Logistics company:
– Speaking about development of transportation via the territory of Kazakhstan, the experience of our company shows that today the major volume of transportation in the South-Asian regions is between the Republic of Kazakhstan and the Russian Federation. There is no significant increase of transit cargo volume on the routes. Lately, neither state has made efforts to solve the problem. In spite of the obvious advantage of transit transportation by railway (for example, the speed of delivery by railways is 50% faster than by sea), the flow of transit cargoes has not grown.
The reasons complicating transportation development are real for both states: today it is impossible to guarantee a definite transit time to clients; the lack of rolling stock; complicated customs clearance procedures; the lack of transport corridor promotion to the market, lack of flexibility and slow reaction to changes in the price formation mechanisms, i.e. tariffs.
Meanwhile, Russia Transsib is in a better situation than Kazakhstan, because the whole transit corridor is on the territory of one state, while Kazakhstan has to coordinate its transit policy with neighbouring states. Secondly, Russia has some positive experience in transit corridors: in the Soviet Epoque the Transsib worked successfully despite the fact that a lot of western countries were not interested in its development due to politic reasons. Besides, one should not forget that the simplest way out for the Kazakh transit route is via Russia. 
    [~DETAIL_TEXT] => 
Container Express
The block train on the route Lianyungang – Almaty – Moscow was launched by AO Kaztransservice (Kazakhstan) in cooperation with a limited liability company specialising in multimodal transportation between Chinese Railways and China Shipping Group.
The train started in October 2007, when it left China on October 2 and arrived in Moscow on October 17. According to the information provided by Kaztransservice, it took the train 4 days 7 hours and 41 minutes to cross the territory of the Republic of Kazakhstan, where the average speed was 900 km per day (without taking stopovers into consideration). The first train was formed of 48 40-foot containers. Specialists from China Shipping Group say, when using the route the time of cargo transportation is 10 days shorter in comparison with when it is carried by Russian Transsiberian railway via the border crossing Zabaikalsk – Manchuria.
The new block train runs along one of the three main directions to be developed by China and the Republic of Kazakhstan (the states agreed to do it at a Bangkok summit devoted to Central Asia transit potential development in 2001). These directions are the port of Lianyungang – Almaty – the Russian Federation – Europe; Tientsin – Mongolia – the Russian Federation – Europe; South Korea – Democratic People’s Republic of Korea – China – Russia – Europe.
It is worth remembering that the maiden voyage of a block train between Lianyungang and Almaty took place on April 22-29, 2003. Transportation time was 174 hours and the average speed was 692 kilometres per day. Today the container trains of Kaztransservice run along the route.
Cheaper And Faster
To understand the prospects of the project, we need a detailed picture of the situation. According to data of the Kazakh Ministry of Transport, in 9 months of 2007 the volume of transported cargo grew by 28% year-on-year. For example, the train “Kazakh Vector” (Brest – Almaty, is formed at the Brest railway station and loaded with cargoes delivered by ‘Eastern Wind’ and Rotterdam – Malashevichi/ Brest trains) carried 6,988 TEU in 2006, and in 11 months of 2007 it transported 8,545 TEU (+22% year-on-year); “Mongolian Vector” train (Brest – Naushki – Ulan-Bator) carried 447 TEU in 11 months of 2006, during the same period of 2007 the train transported 605 TEU (+58%); “Baltica-Transit” train (the Baltic states – Kazakhstan/ Central Asia) carried 19,760 TEU. The figures are not very large, for example in 11 months of 2007 over 30,000 TEU was transported from the Nakhodka port to Moscow along the Transsib. Meanwhile, it is worth taking into consideration the fact of stable transit transportation volume growth. 
What is stimulating the development of onland transit corridors? The sea routes are overloaded, but they work without failure, and the rates can be forecast over a long-term period. Why do consignors more and more often prefer regular block trains?
What stimulates Chinese consignors is clear. First of all, it is the opportunity to deliver their goods faster to Russian as well as European consumers. Some cargo owners are ready to pay for the speed, meanwhile deep sea is and will be the cheapest way of transportation. Kazakhstan strives to take advantage of its geographical position by developing the state’s transit potential. And statistics shows that it has succeeded. According to the data of the Kazakhstan Strategic Research Institute, in 2006 the share of transit in the total transportation volume was 4% and in the total revenue from transportation it amounted to 14%. Besides, Kazakhstan Temir Zholy is preparing to launch a block train to service the Urumchi – Almaty line in order to transport cargo from Sintszyan–Uigur Autonomous Region.
To Widen The Bottle-Neck 
Any project has some certain risks and advantages. Experts say that the joint project of Kaztransservice, Chinese Railways and China Shipping Group has both. The weaknesses and strength of the train Lianyungang – Almaty – Moscow are caused by the level of Kazakh transport infrastructure development. 
“The most significant limitation for transit is the state of the infrastructure and service, which does not meet the level and status of transcontinental transport communication. As a result, Kazakh transport companies’ revenues from goods transit are just USD 500 million per annum, i.e. only 1% of the total transportation market between Europe and Asia,” claims Larisa Guseva, academic secretary of Kazakh Strategic Research Institute. “The net cost of railway transportation is very high because of the poor infrastructure: deteriorating wagons, insufficient electric locomotives and other technical problems. The idea of making Kazakhstan an attractive transit country can be realised only if the quality of the national railway infrastructure increases,” she says.
“Today the route via Kazakhstan is the only properly operating alternative to the Transsib for containerised cargo transportation from South-East Asia to the central part of Russia,” confirms Yury Yukin, Sales Director of Russian transport and logistic company Logika. “Meanwhile, the drawbacks of transportation via the route are insufficient capacity of the reloading sector as well as the railways on the west of China and in Kazakhstan, which bring limitations in terms of receiving rolling stock for goods transportation,” he adds.
At the same time a number of companies interacting with Kazakhstan Temir Zholy note that the level of services there is higher than in Russia. “When transporting freight via Kazakhstan, a cargo owner has no permanent fears that he will face a problem in dispatching a container, as often happens in interactions with OAO RZD. Besides, a cargo owner gets some opportunity to control transportation, which at container transportation from South-East Asia via the port of Vostochny there is always the threat of “getting stuck” waiting for flat wagons or completion of customs procedures.” Transporting cargo via Zabaikalsk-Manchuria, much time may be lost waiting for rolling stock. However strange it is, it is impossible to calculate the exact cost of transportation (cargo may be transported either on the flat wagons of OAO Transcontainer or in the inventory park of Russian Railways, and the cargo owner is notified after the cargo has been reloaded).  It applies especially to cargoes registered in one customs declaration and divided by it into consignments, if the declaration envisages using more than one container (some containers are transported earlier, the rest – later, and they are carried on different flat wagons). At transportation via the Dostyk railway station, containers are received from Chinese Railways without any hesitation, excluding the situation in which a single container is to be dispatched. In this case the container idles waiting for ‘a company’, but it happens very rarely and, as a rule, the idling time does not exceed 5-7 days. Meanwhile, the cargo owner can always get true information about the status of his container via his forwarder,” tells Mr Yukin.
Denis Zalevsky, Head of Business-Projects Department of STS – Logistics company, also considers that the Kazakh Railways are more attentive to clients. “We believe that the Kazakh authorities pay more attention to existing problems. Our company placed in the mass media information about the plans concerning an STS – Logistics project in Kazakhstan, and there we some problems mentioned that might arise during interaction with Kazakhstan Temir Zholy. Less than a week later a representative from Kazakh Railways called us and offered to discuss the possible problems to avoid them,” he said.
To do it justice, we should highlight that Kazakhstan strives to get rid of the disadvantages. As for infrastructure development, nowadays the Dostyk railway station (on the border with China) is being modernised; according to plans, its annual capacity is to amount to 25 million tons.
Besides, in May 2008 a concessionaire will be chosen to construct Zhetigen-Horgos railway (on the border with China, Almaty region). The Horgos railway station is supposed to become the second prospective station at the border with China. Its planned annual capacity is 25 million tons. Thus, the total capacity of the border crossings between Kazakhstan and China is to reach 50 million tons per annum by 2020.
According to the Transport Potential Development Strategy of the Republic of Kazakhstan, targeted at attracting transit to the railway by 2015, regional transport and logistics centres are to be launched in Astana, Almaty, Aktau, at the Dostyk railway station and in other industrial regions of the state. USD 144.2 million is to be invested in modernisation of the infrastructure in 2008. In future it is planned to build “straightening” railway lines on the territory of Kazakhstan by constructing lines binding the existing railways. This will allow the carrying capacity of transit corridors to increase to 100 million tons per annum in the directions to Turkmenistan, Iran, Turkey, and European states. New lines should be projected pending their future electrification.
Another priority project to increase the efficiency of using the transit potential of Kazakhstan, lies in part of the North corridor of the Transasian railway. It is a plan by the International Union of Railways (UIC) to develop the international transcontinental intermodal corridor (“N.E.W. – corridor”, China – Northern Europe – North America). The potential capacity of the container flow on this route will amount to 100,000 TEU in the first few years and later the annual transportation volume will reach 25 million tons.
Will The Transsib Be An Obstacle To The Chinese and Kazakh Project?  
Another factor that can influence the idea of the Lianyungang – Almaty – Moscow train launch is the Transsiberian railway and the intention of the Russian Ministry of Transport and OAO RZD to develop its transit potential.
The Transsib is now the most actively used onland route connecting the countries of the Asian and Pacific region and Europe. But in the last two years the volume of transit transportation along the main Russian railway fell because the through tariff rate was not able to compete with the sea routes. Other problems include the insufficient capacity of the Russian – Chinese and Russian – Mongolian border crossings, and red-tape difficulties.
Russian authorities and transport companies are taking measures to develop transit. For example, in autumn 2007, by a decree of the Coordinating Council on Transsiberian Transportation, the transit tariffs were stabilised and Russian-Chinese border crossings are being modernised.
Meanwhile, some experts consider the measures insufficient and they think that Kazakhstan has the best chance of attracting the maximum volume of cargo oriented at the Russian railway.
“Nowadays, the recommencement of the “Silk Road” is widely discussed”, notes Director of InfraNews research agency Alexey Bezborodov. “China has officially declared construction of two additional railway lines from Shendun (China) to the Dostyk railway station with a 1,435 mm-wide gauge. Thus, there appears the situation, in which from the Dalyan port to Orenburg import cargoes would be transported several times faster and serviced better than if they were carried along the Transsib. And in fact, the Transsib would be excluded from the transport schedule.”
The task of re-directing transit cargoes from the Transsib to the routes crossing Kazakhstan was mentioned in the Strategy of Transport Development of the Republic of Kazakhstan to 2015 (approved by the Kazakh President on April 11, 2006).
            
Resume
Does development of the Kazakh transit potential pose a threat to the Russian railway? In the opinion of Yury Scherbanin, Director for Scientific programmes of EATU Container Consult (a subdivision of Eurasian Transport Union), the volume of transportation via Kazakhstan will increase after construction of the industrial zone in the North-West of China is completed. Meanwhile, specialists including Gennady Bessonov, Secretary General of the Coordinating Council on TransSiberian Transportation, state that the industrial growth prospects for just the East of China will mean both routes will be loaded to capacity, so the Transsib will not have to compete with the Kazakhstan Temir Zholy. Anyway, the process of enlarging border stations has not been completed in either Russia or Kazakhstan and both countries require infrastructure modernisation. This means there is time to choose the route for cargo transportation… or to participate in its creation.

Anna Nezhinskaya 
viewpoint
Zhaksybeck Kulekeev,
President of OAO NC Kazakhstan Temir Zholy:
– To develop the transit potential of the Republic of Kazakhstan it is necessary to simplify customs procedures that control freight trains. It is especially important to develop container multimodal transportation on the route Asia – Europe – Asia, to implement new information technologies and equipment, open new border crossings to provide transportation growth and to provide a flexible tariff policy to attract international cargoes. Russia remains the most important partner of Kazakhstan in providing transportation, including transit. Out of the existing 15 border crossings, 11 connect Kazakhstan with Russia. Today, negotiations are being held to launch joint ventures for container and multimodal transportation development. In 2007, the volume of transit transportation via the territory of Kazakhstan to Russia grew by 1.6 times year-on-year, and from Russia to Kazakhstan by 1.4 times.     
viewpoint
Denis Zalevsky, 
Head of Business Projects Department of STS – Logistics company:
– Speaking about development of transportation via the territory of Kazakhstan, the experience of our company shows that today the major volume of transportation in the South-Asian regions is between the Republic of Kazakhstan and the Russian Federation. There is no significant increase of transit cargo volume on the routes. Lately, neither state has made efforts to solve the problem. In spite of the obvious advantage of transit transportation by railway (for example, the speed of delivery by railways is 50% faster than by sea), the flow of transit cargoes has not grown.
The reasons complicating transportation development are real for both states: today it is impossible to guarantee a definite transit time to clients; the lack of rolling stock; complicated customs clearance procedures; the lack of transport corridor promotion to the market, lack of flexibility and slow reaction to changes in the price formation mechanisms, i.e. tariffs.
Meanwhile, Russia Transsib is in a better situation than Kazakhstan, because the whole transit corridor is on the territory of one state, while Kazakhstan has to coordinate its transit policy with neighbouring states. Secondly, Russia has some positive experience in transit corridors: in the Soviet Epoque the Transsib worked successfully despite the fact that a lot of western countries were not interested in its development due to politic reasons. Besides, one should not forget that the simplest way out for the Kazakh transit route is via Russia. 
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On the Rise
In 2007, against the background of favourable international and Russian market situation, the metallurgical sector of Russia, according to data of the RF Ministry of Industry and Energy, continued its progressive development and increased volumes of semi- and finished goods production. It is possible to state that last year no radical changes, such as downturns or upturns, price disproportions and bans on the freight supplies to any foreign markets took place in the sector.
Cast iron and blast-furnace ferroalloys production amounted to 42.8 million tons (-2.8% year-on-year), that of finished steel made 49.4 million tons (+2.5%), and steel pipes production rose to 7.4 million tons (+14.1%).
As for railway transportation, the figures seem to be positive. In 10 months of 2007, the volume of ferrous metals carried along Russian railway network made 84.621 million tons, a 7.5% growth in comparison with the same period of 2006.
In 10 months of 2007, the largest shares in the metallurgical cargoes were carried by Yuzhno-Uralskaya Railway (Southern Ural Railway – an affiliate of OAO RZD) – 26.1% (+0.4% year-on-year), Yugo-Vostochnaya Railway (South-Eastern Railway – an affiliate of OAO RZD) – 17.2% (-0.2%), Sevrdlovskaya Railway (Sverdlovsk Railway – an affiliate of OAO RZD) – 15.9% (+1.1%), Severnaya Railway (Northern Railway – an affiliate of OAO RZD), Zapadno-Sibirskaya Railway (West-Siberian Railway - an affiliate of OAO RZD) – 10.6% (-2.8%).
Interesting tendencies may be observed when analysing the structure of transportation. At first glance, changes can be noted in the total geography of supplies. Domestic transportation volume grew by 13%, import – by 38%, while export reduced by 5.1%. Another interesting thing is re-distribution of freight flows between ports and onland border crossings. 21.719 million tons was carried to stevedoring companies, 7.5% down year-on-year. Meanwhile, 16.541 million tons of export cargo was transported via onland border crossings (+18.5%). The figures are yet to be explained. 
Cargo Stays at Home
As for the growth of metallurgical cargo transportation inside the country, it is worth noting that in the opinion of Director of the Novaya Perevozochnaya Company Valery Shpakov, the increase is a long-term tendency and it is connected with the national economy”s development.
Infrastructure modernisation, stable growth of construction and engineering sectors led to the removal of consumption focus to the domestic market, although several years ago export was dominating. The tendency is influenced by long-term factors as well as short-term ones. Since the major part of export contracts envisages payment by dollars, the weakness of the dollar makes supplies to foreign states less profitable. Meanwhile, the countries of the Asian and Pacific region, China in particular, offer quality cheap steel, thus putting Russian metallurgical companies out of the world market.
Obviously, in the near future, the focus of consumption will continue to move to the domestic market, which will cause some changes in transportation technologies.
“Lately, a stable tendency of the domestic market share increasing has been observed in the segment of metallurgical cargo transportation. We reoriented at the Russian market at the beginning of 2006, when the demand for Russian metal fell in the Asian and Pacific region, due to which export transportation to the Far East became minimal. Today, Novaya Perevozochnaya Company successfully operates in domestic directions and uses its own trains, thus reducing wagon turnover and forming ring routes. Further growth of metal domestic transportation is expected as well as increase of ferrous metals imports via the ports of the Far East, Novorossiysk and Saint Petersburg because of the lack of some types of rolled metal in Russia”, notes Mr Shpakov.
Unlike domestic supplies, export deliveries via ports and border crossings are characterised by exact and clear logistics schemes, thus it is easier to find incidental cargo to load the wagons on their way back. Thus, servicing domestic transportation, operators have to make more efforts to reduce empty mileage and increase wagon turnover.
In the next 5-10 years, the so called “industrial zone”, which is now in the Ural region and Western Siberia, will start to move to Eastern Siberia – Krasnoyarsk and Chita regions and Yakutia as well as to the Far East, where new production clusters are being formed. 
Another significant factor influencing the geography of transportation is the Olympic Games in Sochi in 2014, envisaging a lot of construction in the Krasnodar regions, and consequently, the growth of metal production supplied there. Tariff distance increase will make a positive effect on - operator companies” economy of transportation, but simultaneously, the problems of back haulage and the lack of rolling stock will become worse. 
One more factor is caused by the increasing demand for ferrous metals in Russia and creation of new logistics schemes. It concerns the issues of scrap metal procurement and transportation. The average annual volume of the “output” of the most valuable raw materials for metallurgical companies slightly exceeds 30 million tons, out of which 8 million tons is exported, mainly via ports, and the rest is delivered to Russian steel-smelting enterprises. 
According to Head of the Production Department of ZAO Lomprom Alexander Devyatov, metal scrap makes carriers develop new multimodal schemes. So high is its price on the international market that the expenses on delivery never compensated before have become quite reasonable. Consequently, it is profitable now to gather scrap in distant regions, in Yakutia, for example, which had never happened before. But in the Republic of Yakutia their railway network is underdeveloped, so the purveyors had to use multimodal transportation, i.e. to carry raw materials at first by the Lena river to town Ust-Kut in the Irkutsk region, and then by railway to the destination point. Regardless of the international prices, there appears a situation, when all raw materials available from the transport standpoint have been already “mastered” by the purveyors. So, Mr Devyatov warns metallurgical works about the growth of transport expenses, and, consequently, the final price for metal scrap. Rolling stock operators and logisticians will have to think how they can reduce the negative consequences from the increasing tariff distances without making rolling stock operating less efficient (as well as in the situation with semi- and finished products transportation).
Via Ukraine: Further, But Cheaper
The situation of re-distribution of freight flows between ports and border crossings seems not to be a surprise. The stage-by-stage tariff unification, which is to be completed before 2009, does not leave any tariff advantages, implemented in 2001, to stevedoring companies. Naturally, under the conditions of underdeveloped port infrastructure, particularly railway stations near the ports, as highlighted by Chairman of the Board of Directors of ZAO TGI-Trans Mikhail Taran, cargo owners choose an alternative variant more and more often. Analysing the situation to find out where the cargo flows distributed to border crossings were destined for, we can see many details worth mentioning.
Let's have a look at the results of Russian ports in 10 months of 2007. As the research agency “Industrial Cargoes” notes, the port of Novorossiysk reduced throughput by 15.7% year-on-year to 6.29 million tons. The port reduced handling of pipes (-11.6% year-on-year), cast iron (59.5%), semi-finished products (-14.1%), and rolled metal (-13.6%). A similar situation was in the port of Tuapse, where the total volume of metal (semi-finished products) handling fell by 37.3% to 1.1 million tons. Terminals operating on the territory of the Big Port of Saint Petersburg reduced metal throughput by 20.1% to 2.45 million tons. Handling volume of pipes and rolled metal decreased by 34% and 47% respectively, that of cast iron fell by 18.4%, while semi-finished products volume grew by 28.2%.
Meanwhile, handling volume of the cargoes increased in Ukrainian ports. In particular, in the port of Ilyichevsk there was almost a fifteen-fold growth (from 19.1 thousand tons to 278.3 thousand tons); the port of Izmail increased metal throughput by 67.7% (from 44 thousand tons to 74.6 thousand tons). Well, the volumes serviced by Russian and Ukrainian stevedoring companies can hardly be compared, so it is too early to speak about any market redistribution. Nevertheless, the tendency is clearly seen. Comparing the diagrams of ferrous metals handling volumes in the ports of Ukraine, Novorossiysk, and Saint Petersburg in 2005-2007, one can easily detect that Russian stevedoring companies are losing the metals flow, while their competitors from neighboring states are handling more and more metallurgical cargoes.
Why do metallurgical companies prefer Ukrainian ports to Russian ones?
Analysts of InfraNews Agency explain it by the fact that, for example, the stevedoring companies operating in the port of Novorossiysk abolished the discounts on metals handling in 2007. Earlier there used to be 20-30% discount from the limiting tariffs, so that to form a single competitive rate on cargo transportation from the gates of this or that metallurgical works onto the board of a vessel. As InfraNews analysts say, “for some unknown reason, stevedores hoped that clients would agree with the new tariffs. Nevertheless, what happened later could be forecast easily: they left for the ports of neighbouring states”.
Ukrainian stevedores and railwaymen did an absolutely different thing. “Considering the fact that attractive tariff terms are to be created on the whole route of freight transportation to make a direction competitive, Ukrzaliznytsya (Ukrainian Railways) is holding intensive negotiations with the railway administrations from neighbouring states, sea ports and terminals to form competitive through rates on metallurgical cargoes transportation and handling in ports”, tells specialist of the Major Commercial Administration of Ukrzaliznytsya Vladislav Krasnozhon.     
Since the beginning of 2007, on transit transportation of ferrous metals and goods made out of them there is a discount of 20% from the base rate, 22% and 29% discounts were implemented on metal scrap and cast iron respectively. “The discounts are based on monitoring the main price-forming factors, including the level of tariffs formed in the previous years, transportation net cost, dynamics of a cargo transportation volume, international transport situation, and the level of tariffs on the directions alternative to the Ukrainian one”, explains Mr Krasnozhon.
It is no wonder that in 9 months of 2007, according to the data of Ukrzaliznytsya, the volume of ferrous metals carried via the territory of the country grew by 3.5% year-on-year. Besides, over 60% of the transit flow originated from Russia, in particular from OAO Tulachrmet, OAO Kosogorsky Metallurgical Works, OAO Novolipetsk Steel and OAO LMZ Free Hawk. The Association of Russian Commercial Sea Ports analysed transportation of basic export cargoes under the conditions of changing railway tariffs in 2005 – H1 of 2007. The analysis proved, there is an inevitable dependence on the amount of work stevedoring companies have from the cost of railway transportation. For example, transportation of one ton of ferrous metal from OAO Magnitogorsk Iron and Steel Works to the ports of Novorossiysk and Saint Petersburg was in 2005 cheaper than to the Russian border crossings on the border with Ukraine. In 2007 the situation was completely different – Ukraine turned out to be the price leader. And immediately it influenced the volumes of transportation to Ilyichevsk.
Resume: It Is Just The Beginning
There is one more important factor that must be taken into account – the strikes. In autumn, at the terminals in Russian ports, there were negotiations between dockers and employers about salaries. Often the situation became really tense, although there were no strikes. Protest actions took place only in OAO Commercial Sea Port of Tuapse and OAO Sea Port of Saint Petersburg.
The companies' management (by the way, both of them are affiliated to the major owner of OAO Novolipetsk Steel Vladimir Lisin) considered the actions as the wish of dockers to get better tariff rates before the elections to the State Duma. However, being quite in the know of the true motivation of dockers, we can suggest that it is far from the truth, and that the situation in the mentioned company may become worse in future. Maybe, the metallurgical cargo transportation sector will soon be surprised by one more piece of news. There are rumours that one of the largest stevedoring companies in Saint Petersburg, handling significant volumes of ferrous and non-ferrous metals produced by Russian companies, is going to construct VIP buildings on the territory of the terminal. It seems that some companies are wondering if they will survive after railway tariffs unification.

Ivan Stupachenko 
viewpoint
Mikhail Taran,
Chairman of the Board of Directors, ZAO TGI-Trans, Doctor of Technical Sciences: 
– National economy development stimulated development of many different projects, so there is the demand for pipe industry production as well as the services of specialised rolling stock operators. Nowadays TGI-Trans company successfully cooperates with the leading producers and large consumers of pipes. It is worth noting that the Russian industry stage-by-stage starts to produce the pipes never made in Russia before, which may lead to a decrease in import deliveries and re-orientating the transportation directions.
There are positive changes on the market, which may give some advantages to rolling stock operators. After the launch of OAO The First Cargo Company, the cargo owners, who used only the park of OAO RZD, may turn their attention to private companies.
What worries private rolling stock operators is the wagon constituent in the tariff for specialised rolling stock. If it was increased, the operation of the wagons for pipe transportation would become more efficient, which in its turn would reduce the number of gondola cars (the type of rolling stock in Russia that carries the biggest deficit now) used to carry pipes.
interview
“Well Balanced Tariff Policy in Part of Wagon Constituent Is Required” 
 Andrey Zhukov, Head of the Ore and Metallurgical Cargoes and Construction Materials Administration of OOO Firma Transgarant, told ‘The RZD-Partner International’ about the latest tendencies in metallurgical freight transportation.
– Mr. Zhukov, what changes may occur in the work of operator companies because of the tendency of increasing supplies to the domestic market and reducing export volumes?
– First of all, I would like to note that in 2007 the export volume decrease was explained by several factors. Firstly, the North Siberian Metallurgical Works was closed for repair in June – October, naturally, the factor influenced the volume of exported metallurgical production. The second reason for the decrease of metallurgical goods exports and the increase of their consumption in the RF is the price, i.e. the demand is growing owing to the national industrial manufacture growth, which allows increasing sale prices and making the domestic market more and more attractive in comparison with the international one. And there is the negative dynamics of the dollar falling against the rouble, because the currency of many export contracts is US dollars.
– What problems do operator companies face in metallurgical cargo transportation?
– One of the main problems is the VAT confirmation at zero rate at export transportation, because not all consignors are ready to provide the necessary pack of documents for the procedure. Another problem is frequent conventions and bans on freight reception in ports and, consequently, idling trains. As for expenses, the cost of empty wagon transportation after it has carried metallurgical production (usually it is considered cargo of the 3rd tariff class) is too high. Besides, today operators are not interested in metallurgical production transportation to the CIS, because the tariff policy envisaged by section 2 and section 3 of Tariff Regulation № 10-01 is different in part of the wagon constituent. For domestic transportation the wagon constituent is 30-40% of the OAO RZD tariff; while for transportation via the Russian border crossings the wagon constituent is only 15%. 
As for operational administration, it is much easier for operator companies to provide export transportation, because it is quite clear: as a rule the company knows the port and the forwarder, and the procedure of unloading and wagons registration is well regulated. This simplifies planning and rolling stock distribution for developed logistic schemes. The wagon turnover in always larger in export directions than in car loads inside the country. As for the latter, there are too many consignees, and the company has to work with each of them separately to cover operational issues, i.e. instructions, telegrams, and unloading control. Consequently, the efficiency of park management is higher in transportation for export than inside the country.
– In the near future, the industry of Eastern Siberia and the Far East will rise rapidly, which can’t but influence the geography of metallurgical cargo supplies. Did you consider the process when developing your company’s development strategy?
– Any transport company is interested in raw materials delivery to such industrial enterprises as well as in carrying finished products from there. The clusters being formed far away, that is why such routes are profitable for operators: the longer the distance, the larger the wagon constituent. In our opinion, the structure of transported cargoes will not change.
– Since 2005 the Federal Tariff Service of the Russian Federation has not changed tariff rates on metal transportation to Far Eastern ports, nevertheless, transportation volumes are falling. Meanwhile, OAO RZD counts on regular loading of its network.
– Metal transportation to the Far East means that the cargo will be then delivered to the states of the Asian and Pacific region. But today it is hard for the Russian metallurgical sector to compete with metal production exporters such as China, which is one of the leaders in the international market. It is impossible to beat the market, the same volume of metal will never be transported to the Far East. Sometimes there appears such a market situation, when no discounts are required by, for example, Ural enterprises. The Federal Tariff Service set a privileged tariff on methanol transportation via the ports connected with Dalnevostochnaya Railway (Far Eastern Railway, affiliate of OAO RZD), but the cargo has not been carried in this direction for three years already!
– What measures, in your opinion, should carriers, operators and authorities take to increase the efficiency of the metallurgical cargo transportation segment?
– A complex of measures is required to increase the efficiency, and the decisions are to be well-balanced. For example, at the beginning of 2007 the wagon constituent of tariff for gondola cars raised significantly, while the wagon constituent for the rest park increased in accordance with common indexation. The decision was made a year ago, and what is going on now? Have the volumes of transportation in this type of rolling stock grown? A little. Do companies purchase more gondola cars? Yes, but because of the large demand, the price for new gondola cars has increased. As a result, the decision turned out to be profitable for wagon-producing companies, but not for rolling stock operators, because the latter have to give the profit from the increase wagon constituent to the former. So, operators have nothing to do but to make a consignor to compensate for the expenses on wagons. As a result, the share of railway tariff in the final cost of the product has increased.
This tariff situation leads to an increase in transportation volume of different cargoes – timber, rolled briquettes, containers, large-diameter pipes, fertilisers packed in big bags, metal production etc. – in universal gondola cars instead of special rail cars for these cargoes transportation. As a result, there will be a constant shortage of gondola cars, and significant damage will be done to high-tech cargo transportation via special wagons.  
 
    [~DETAIL_TEXT] => 
On the Rise
In 2007, against the background of favourable international and Russian market situation, the metallurgical sector of Russia, according to data of the RF Ministry of Industry and Energy, continued its progressive development and increased volumes of semi- and finished goods production. It is possible to state that last year no radical changes, such as downturns or upturns, price disproportions and bans on the freight supplies to any foreign markets took place in the sector.
Cast iron and blast-furnace ferroalloys production amounted to 42.8 million tons (-2.8% year-on-year), that of finished steel made 49.4 million tons (+2.5%), and steel pipes production rose to 7.4 million tons (+14.1%).
As for railway transportation, the figures seem to be positive. In 10 months of 2007, the volume of ferrous metals carried along Russian railway network made 84.621 million tons, a 7.5% growth in comparison with the same period of 2006.
In 10 months of 2007, the largest shares in the metallurgical cargoes were carried by Yuzhno-Uralskaya Railway (Southern Ural Railway – an affiliate of OAO RZD) – 26.1% (+0.4% year-on-year), Yugo-Vostochnaya Railway (South-Eastern Railway – an affiliate of OAO RZD) – 17.2% (-0.2%), Sevrdlovskaya Railway (Sverdlovsk Railway – an affiliate of OAO RZD) – 15.9% (+1.1%), Severnaya Railway (Northern Railway – an affiliate of OAO RZD), Zapadno-Sibirskaya Railway (West-Siberian Railway - an affiliate of OAO RZD) – 10.6% (-2.8%).
Interesting tendencies may be observed when analysing the structure of transportation. At first glance, changes can be noted in the total geography of supplies. Domestic transportation volume grew by 13%, import – by 38%, while export reduced by 5.1%. Another interesting thing is re-distribution of freight flows between ports and onland border crossings. 21.719 million tons was carried to stevedoring companies, 7.5% down year-on-year. Meanwhile, 16.541 million tons of export cargo was transported via onland border crossings (+18.5%). The figures are yet to be explained. 
Cargo Stays at Home
As for the growth of metallurgical cargo transportation inside the country, it is worth noting that in the opinion of Director of the Novaya Perevozochnaya Company Valery Shpakov, the increase is a long-term tendency and it is connected with the national economy”s development.
Infrastructure modernisation, stable growth of construction and engineering sectors led to the removal of consumption focus to the domestic market, although several years ago export was dominating. The tendency is influenced by long-term factors as well as short-term ones. Since the major part of export contracts envisages payment by dollars, the weakness of the dollar makes supplies to foreign states less profitable. Meanwhile, the countries of the Asian and Pacific region, China in particular, offer quality cheap steel, thus putting Russian metallurgical companies out of the world market.
Obviously, in the near future, the focus of consumption will continue to move to the domestic market, which will cause some changes in transportation technologies.
“Lately, a stable tendency of the domestic market share increasing has been observed in the segment of metallurgical cargo transportation. We reoriented at the Russian market at the beginning of 2006, when the demand for Russian metal fell in the Asian and Pacific region, due to which export transportation to the Far East became minimal. Today, Novaya Perevozochnaya Company successfully operates in domestic directions and uses its own trains, thus reducing wagon turnover and forming ring routes. Further growth of metal domestic transportation is expected as well as increase of ferrous metals imports via the ports of the Far East, Novorossiysk and Saint Petersburg because of the lack of some types of rolled metal in Russia”, notes Mr Shpakov.
Unlike domestic supplies, export deliveries via ports and border crossings are characterised by exact and clear logistics schemes, thus it is easier to find incidental cargo to load the wagons on their way back. Thus, servicing domestic transportation, operators have to make more efforts to reduce empty mileage and increase wagon turnover.
In the next 5-10 years, the so called “industrial zone”, which is now in the Ural region and Western Siberia, will start to move to Eastern Siberia – Krasnoyarsk and Chita regions and Yakutia as well as to the Far East, where new production clusters are being formed. 
Another significant factor influencing the geography of transportation is the Olympic Games in Sochi in 2014, envisaging a lot of construction in the Krasnodar regions, and consequently, the growth of metal production supplied there. Tariff distance increase will make a positive effect on - operator companies” economy of transportation, but simultaneously, the problems of back haulage and the lack of rolling stock will become worse. 
One more factor is caused by the increasing demand for ferrous metals in Russia and creation of new logistics schemes. It concerns the issues of scrap metal procurement and transportation. The average annual volume of the “output” of the most valuable raw materials for metallurgical companies slightly exceeds 30 million tons, out of which 8 million tons is exported, mainly via ports, and the rest is delivered to Russian steel-smelting enterprises. 
According to Head of the Production Department of ZAO Lomprom Alexander Devyatov, metal scrap makes carriers develop new multimodal schemes. So high is its price on the international market that the expenses on delivery never compensated before have become quite reasonable. Consequently, it is profitable now to gather scrap in distant regions, in Yakutia, for example, which had never happened before. But in the Republic of Yakutia their railway network is underdeveloped, so the purveyors had to use multimodal transportation, i.e. to carry raw materials at first by the Lena river to town Ust-Kut in the Irkutsk region, and then by railway to the destination point. Regardless of the international prices, there appears a situation, when all raw materials available from the transport standpoint have been already “mastered” by the purveyors. So, Mr Devyatov warns metallurgical works about the growth of transport expenses, and, consequently, the final price for metal scrap. Rolling stock operators and logisticians will have to think how they can reduce the negative consequences from the increasing tariff distances without making rolling stock operating less efficient (as well as in the situation with semi- and finished products transportation).
Via Ukraine: Further, But Cheaper
The situation of re-distribution of freight flows between ports and border crossings seems not to be a surprise. The stage-by-stage tariff unification, which is to be completed before 2009, does not leave any tariff advantages, implemented in 2001, to stevedoring companies. Naturally, under the conditions of underdeveloped port infrastructure, particularly railway stations near the ports, as highlighted by Chairman of the Board of Directors of ZAO TGI-Trans Mikhail Taran, cargo owners choose an alternative variant more and more often. Analysing the situation to find out where the cargo flows distributed to border crossings were destined for, we can see many details worth mentioning.
Let's have a look at the results of Russian ports in 10 months of 2007. As the research agency “Industrial Cargoes” notes, the port of Novorossiysk reduced throughput by 15.7% year-on-year to 6.29 million tons. The port reduced handling of pipes (-11.6% year-on-year), cast iron (59.5%), semi-finished products (-14.1%), and rolled metal (-13.6%). A similar situation was in the port of Tuapse, where the total volume of metal (semi-finished products) handling fell by 37.3% to 1.1 million tons. Terminals operating on the territory of the Big Port of Saint Petersburg reduced metal throughput by 20.1% to 2.45 million tons. Handling volume of pipes and rolled metal decreased by 34% and 47% respectively, that of cast iron fell by 18.4%, while semi-finished products volume grew by 28.2%.
Meanwhile, handling volume of the cargoes increased in Ukrainian ports. In particular, in the port of Ilyichevsk there was almost a fifteen-fold growth (from 19.1 thousand tons to 278.3 thousand tons); the port of Izmail increased metal throughput by 67.7% (from 44 thousand tons to 74.6 thousand tons). Well, the volumes serviced by Russian and Ukrainian stevedoring companies can hardly be compared, so it is too early to speak about any market redistribution. Nevertheless, the tendency is clearly seen. Comparing the diagrams of ferrous metals handling volumes in the ports of Ukraine, Novorossiysk, and Saint Petersburg in 2005-2007, one can easily detect that Russian stevedoring companies are losing the metals flow, while their competitors from neighboring states are handling more and more metallurgical cargoes.
Why do metallurgical companies prefer Ukrainian ports to Russian ones?
Analysts of InfraNews Agency explain it by the fact that, for example, the stevedoring companies operating in the port of Novorossiysk abolished the discounts on metals handling in 2007. Earlier there used to be 20-30% discount from the limiting tariffs, so that to form a single competitive rate on cargo transportation from the gates of this or that metallurgical works onto the board of a vessel. As InfraNews analysts say, “for some unknown reason, stevedores hoped that clients would agree with the new tariffs. Nevertheless, what happened later could be forecast easily: they left for the ports of neighbouring states”.
Ukrainian stevedores and railwaymen did an absolutely different thing. “Considering the fact that attractive tariff terms are to be created on the whole route of freight transportation to make a direction competitive, Ukrzaliznytsya (Ukrainian Railways) is holding intensive negotiations with the railway administrations from neighbouring states, sea ports and terminals to form competitive through rates on metallurgical cargoes transportation and handling in ports”, tells specialist of the Major Commercial Administration of Ukrzaliznytsya Vladislav Krasnozhon.     
Since the beginning of 2007, on transit transportation of ferrous metals and goods made out of them there is a discount of 20% from the base rate, 22% and 29% discounts were implemented on metal scrap and cast iron respectively. “The discounts are based on monitoring the main price-forming factors, including the level of tariffs formed in the previous years, transportation net cost, dynamics of a cargo transportation volume, international transport situation, and the level of tariffs on the directions alternative to the Ukrainian one”, explains Mr Krasnozhon.
It is no wonder that in 9 months of 2007, according to the data of Ukrzaliznytsya, the volume of ferrous metals carried via the territory of the country grew by 3.5% year-on-year. Besides, over 60% of the transit flow originated from Russia, in particular from OAO Tulachrmet, OAO Kosogorsky Metallurgical Works, OAO Novolipetsk Steel and OAO LMZ Free Hawk. The Association of Russian Commercial Sea Ports analysed transportation of basic export cargoes under the conditions of changing railway tariffs in 2005 – H1 of 2007. The analysis proved, there is an inevitable dependence on the amount of work stevedoring companies have from the cost of railway transportation. For example, transportation of one ton of ferrous metal from OAO Magnitogorsk Iron and Steel Works to the ports of Novorossiysk and Saint Petersburg was in 2005 cheaper than to the Russian border crossings on the border with Ukraine. In 2007 the situation was completely different – Ukraine turned out to be the price leader. And immediately it influenced the volumes of transportation to Ilyichevsk.
Resume: It Is Just The Beginning
There is one more important factor that must be taken into account – the strikes. In autumn, at the terminals in Russian ports, there were negotiations between dockers and employers about salaries. Often the situation became really tense, although there were no strikes. Protest actions took place only in OAO Commercial Sea Port of Tuapse and OAO Sea Port of Saint Petersburg.
The companies' management (by the way, both of them are affiliated to the major owner of OAO Novolipetsk Steel Vladimir Lisin) considered the actions as the wish of dockers to get better tariff rates before the elections to the State Duma. However, being quite in the know of the true motivation of dockers, we can suggest that it is far from the truth, and that the situation in the mentioned company may become worse in future. Maybe, the metallurgical cargo transportation sector will soon be surprised by one more piece of news. There are rumours that one of the largest stevedoring companies in Saint Petersburg, handling significant volumes of ferrous and non-ferrous metals produced by Russian companies, is going to construct VIP buildings on the territory of the terminal. It seems that some companies are wondering if they will survive after railway tariffs unification.

Ivan Stupachenko 
viewpoint
Mikhail Taran,
Chairman of the Board of Directors, ZAO TGI-Trans, Doctor of Technical Sciences: 
– National economy development stimulated development of many different projects, so there is the demand for pipe industry production as well as the services of specialised rolling stock operators. Nowadays TGI-Trans company successfully cooperates with the leading producers and large consumers of pipes. It is worth noting that the Russian industry stage-by-stage starts to produce the pipes never made in Russia before, which may lead to a decrease in import deliveries and re-orientating the transportation directions.
There are positive changes on the market, which may give some advantages to rolling stock operators. After the launch of OAO The First Cargo Company, the cargo owners, who used only the park of OAO RZD, may turn their attention to private companies.
What worries private rolling stock operators is the wagon constituent in the tariff for specialised rolling stock. If it was increased, the operation of the wagons for pipe transportation would become more efficient, which in its turn would reduce the number of gondola cars (the type of rolling stock in Russia that carries the biggest deficit now) used to carry pipes.
interview
“Well Balanced Tariff Policy in Part of Wagon Constituent Is Required” 
 Andrey Zhukov, Head of the Ore and Metallurgical Cargoes and Construction Materials Administration of OOO Firma Transgarant, told ‘The RZD-Partner International’ about the latest tendencies in metallurgical freight transportation.
– Mr. Zhukov, what changes may occur in the work of operator companies because of the tendency of increasing supplies to the domestic market and reducing export volumes?
– First of all, I would like to note that in 2007 the export volume decrease was explained by several factors. Firstly, the North Siberian Metallurgical Works was closed for repair in June – October, naturally, the factor influenced the volume of exported metallurgical production. The second reason for the decrease of metallurgical goods exports and the increase of their consumption in the RF is the price, i.e. the demand is growing owing to the national industrial manufacture growth, which allows increasing sale prices and making the domestic market more and more attractive in comparison with the international one. And there is the negative dynamics of the dollar falling against the rouble, because the currency of many export contracts is US dollars.
– What problems do operator companies face in metallurgical cargo transportation?
– One of the main problems is the VAT confirmation at zero rate at export transportation, because not all consignors are ready to provide the necessary pack of documents for the procedure. Another problem is frequent conventions and bans on freight reception in ports and, consequently, idling trains. As for expenses, the cost of empty wagon transportation after it has carried metallurgical production (usually it is considered cargo of the 3rd tariff class) is too high. Besides, today operators are not interested in metallurgical production transportation to the CIS, because the tariff policy envisaged by section 2 and section 3 of Tariff Regulation № 10-01 is different in part of the wagon constituent. For domestic transportation the wagon constituent is 30-40% of the OAO RZD tariff; while for transportation via the Russian border crossings the wagon constituent is only 15%. 
As for operational administration, it is much easier for operator companies to provide export transportation, because it is quite clear: as a rule the company knows the port and the forwarder, and the procedure of unloading and wagons registration is well regulated. This simplifies planning and rolling stock distribution for developed logistic schemes. The wagon turnover in always larger in export directions than in car loads inside the country. As for the latter, there are too many consignees, and the company has to work with each of them separately to cover operational issues, i.e. instructions, telegrams, and unloading control. Consequently, the efficiency of park management is higher in transportation for export than inside the country.
– In the near future, the industry of Eastern Siberia and the Far East will rise rapidly, which can’t but influence the geography of metallurgical cargo supplies. Did you consider the process when developing your company’s development strategy?
– Any transport company is interested in raw materials delivery to such industrial enterprises as well as in carrying finished products from there. The clusters being formed far away, that is why such routes are profitable for operators: the longer the distance, the larger the wagon constituent. In our opinion, the structure of transported cargoes will not change.
– Since 2005 the Federal Tariff Service of the Russian Federation has not changed tariff rates on metal transportation to Far Eastern ports, nevertheless, transportation volumes are falling. Meanwhile, OAO RZD counts on regular loading of its network.
– Metal transportation to the Far East means that the cargo will be then delivered to the states of the Asian and Pacific region. But today it is hard for the Russian metallurgical sector to compete with metal production exporters such as China, which is one of the leaders in the international market. It is impossible to beat the market, the same volume of metal will never be transported to the Far East. Sometimes there appears such a market situation, when no discounts are required by, for example, Ural enterprises. The Federal Tariff Service set a privileged tariff on methanol transportation via the ports connected with Dalnevostochnaya Railway (Far Eastern Railway, affiliate of OAO RZD), but the cargo has not been carried in this direction for three years already!
– What measures, in your opinion, should carriers, operators and authorities take to increase the efficiency of the metallurgical cargo transportation segment?
– A complex of measures is required to increase the efficiency, and the decisions are to be well-balanced. For example, at the beginning of 2007 the wagon constituent of tariff for gondola cars raised significantly, while the wagon constituent for the rest park increased in accordance with common indexation. The decision was made a year ago, and what is going on now? Have the volumes of transportation in this type of rolling stock grown? A little. Do companies purchase more gondola cars? Yes, but because of the large demand, the price for new gondola cars has increased. As a result, the decision turned out to be profitable for wagon-producing companies, but not for rolling stock operators, because the latter have to give the profit from the increase wagon constituent to the former. So, operators have nothing to do but to make a consignor to compensate for the expenses on wagons. As a result, the share of railway tariff in the final cost of the product has increased.
This tariff situation leads to an increase in transportation volume of different cargoes – timber, rolled briquettes, containers, large-diameter pipes, fertilisers packed in big bags, metal production etc. – in universal gondola cars instead of special rail cars for these cargoes transportation. As a result, there will be a constant shortage of gondola cars, and significant damage will be done to high-tech cargo transportation via special wagons.  
 
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    [~PREVIEW_TEXT] => The national economy growth, weakness of the dollar and competent tariff policy of neighbouring states caused in 2007 significant changes in the routes along which Russian ferrous metallurgy production is transported. Russian portmen will have to think over how they can keep the cargo from being re-directed to competitors and onland border crossings; and rolling stock operators will have to decide on how to use universal and special parks more efficiently.
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On the Rise
In 2007, against the background of favourable international and Russian market situation, the metallurgical sector of Russia, according to data of the RF Ministry of Industry and Energy, continued its progressive development and increased volumes of semi- and finished goods production. It is possible to state that last year no radical changes, such as downturns or upturns, price disproportions and bans on the freight supplies to any foreign markets took place in the sector.
Cast iron and blast-furnace ferroalloys production amounted to 42.8 million tons (-2.8% year-on-year), that of finished steel made 49.4 million tons (+2.5%), and steel pipes production rose to 7.4 million tons (+14.1%).
As for railway transportation, the figures seem to be positive. In 10 months of 2007, the volume of ferrous metals carried along Russian railway network made 84.621 million tons, a 7.5% growth in comparison with the same period of 2006.
In 10 months of 2007, the largest shares in the metallurgical cargoes were carried by Yuzhno-Uralskaya Railway (Southern Ural Railway – an affiliate of OAO RZD) – 26.1% (+0.4% year-on-year), Yugo-Vostochnaya Railway (South-Eastern Railway – an affiliate of OAO RZD) – 17.2% (-0.2%), Sevrdlovskaya Railway (Sverdlovsk Railway – an affiliate of OAO RZD) – 15.9% (+1.1%), Severnaya Railway (Northern Railway – an affiliate of OAO RZD), Zapadno-Sibirskaya Railway (West-Siberian Railway - an affiliate of OAO RZD) – 10.6% (-2.8%).
Interesting tendencies may be observed when analysing the structure of transportation. At first glance, changes can be noted in the total geography of supplies. Domestic transportation volume grew by 13%, import – by 38%, while export reduced by 5.1%. Another interesting thing is re-distribution of freight flows between ports and onland border crossings. 21.719 million tons was carried to stevedoring companies, 7.5% down year-on-year. Meanwhile, 16.541 million tons of export cargo was transported via onland border crossings (+18.5%). The figures are yet to be explained. 
Cargo Stays at Home
As for the growth of metallurgical cargo transportation inside the country, it is worth noting that in the opinion of Director of the Novaya Perevozochnaya Company Valery Shpakov, the increase is a long-term tendency and it is connected with the national economy”s development.
Infrastructure modernisation, stable growth of construction and engineering sectors led to the removal of consumption focus to the domestic market, although several years ago export was dominating. The tendency is influenced by long-term factors as well as short-term ones. Since the major part of export contracts envisages payment by dollars, the weakness of the dollar makes supplies to foreign states less profitable. Meanwhile, the countries of the Asian and Pacific region, China in particular, offer quality cheap steel, thus putting Russian metallurgical companies out of the world market.
Obviously, in the near future, the focus of consumption will continue to move to the domestic market, which will cause some changes in transportation technologies.
“Lately, a stable tendency of the domestic market share increasing has been observed in the segment of metallurgical cargo transportation. We reoriented at the Russian market at the beginning of 2006, when the demand for Russian metal fell in the Asian and Pacific region, due to which export transportation to the Far East became minimal. Today, Novaya Perevozochnaya Company successfully operates in domestic directions and uses its own trains, thus reducing wagon turnover and forming ring routes. Further growth of metal domestic transportation is expected as well as increase of ferrous metals imports via the ports of the Far East, Novorossiysk and Saint Petersburg because of the lack of some types of rolled metal in Russia”, notes Mr Shpakov.
Unlike domestic supplies, export deliveries via ports and border crossings are characterised by exact and clear logistics schemes, thus it is easier to find incidental cargo to load the wagons on their way back. Thus, servicing domestic transportation, operators have to make more efforts to reduce empty mileage and increase wagon turnover.
In the next 5-10 years, the so called “industrial zone”, which is now in the Ural region and Western Siberia, will start to move to Eastern Siberia – Krasnoyarsk and Chita regions and Yakutia as well as to the Far East, where new production clusters are being formed. 
Another significant factor influencing the geography of transportation is the Olympic Games in Sochi in 2014, envisaging a lot of construction in the Krasnodar regions, and consequently, the growth of metal production supplied there. Tariff distance increase will make a positive effect on - operator companies” economy of transportation, but simultaneously, the problems of back haulage and the lack of rolling stock will become worse. 
One more factor is caused by the increasing demand for ferrous metals in Russia and creation of new logistics schemes. It concerns the issues of scrap metal procurement and transportation. The average annual volume of the “output” of the most valuable raw materials for metallurgical companies slightly exceeds 30 million tons, out of which 8 million tons is exported, mainly via ports, and the rest is delivered to Russian steel-smelting enterprises. 
According to Head of the Production Department of ZAO Lomprom Alexander Devyatov, metal scrap makes carriers develop new multimodal schemes. So high is its price on the international market that the expenses on delivery never compensated before have become quite reasonable. Consequently, it is profitable now to gather scrap in distant regions, in Yakutia, for example, which had never happened before. But in the Republic of Yakutia their railway network is underdeveloped, so the purveyors had to use multimodal transportation, i.e. to carry raw materials at first by the Lena river to town Ust-Kut in the Irkutsk region, and then by railway to the destination point. Regardless of the international prices, there appears a situation, when all raw materials available from the transport standpoint have been already “mastered” by the purveyors. So, Mr Devyatov warns metallurgical works about the growth of transport expenses, and, consequently, the final price for metal scrap. Rolling stock operators and logisticians will have to think how they can reduce the negative consequences from the increasing tariff distances without making rolling stock operating less efficient (as well as in the situation with semi- and finished products transportation).
Via Ukraine: Further, But Cheaper
The situation of re-distribution of freight flows between ports and border crossings seems not to be a surprise. The stage-by-stage tariff unification, which is to be completed before 2009, does not leave any tariff advantages, implemented in 2001, to stevedoring companies. Naturally, under the conditions of underdeveloped port infrastructure, particularly railway stations near the ports, as highlighted by Chairman of the Board of Directors of ZAO TGI-Trans Mikhail Taran, cargo owners choose an alternative variant more and more often. Analysing the situation to find out where the cargo flows distributed to border crossings were destined for, we can see many details worth mentioning.
Let's have a look at the results of Russian ports in 10 months of 2007. As the research agency “Industrial Cargoes” notes, the port of Novorossiysk reduced throughput by 15.7% year-on-year to 6.29 million tons. The port reduced handling of pipes (-11.6% year-on-year), cast iron (59.5%), semi-finished products (-14.1%), and rolled metal (-13.6%). A similar situation was in the port of Tuapse, where the total volume of metal (semi-finished products) handling fell by 37.3% to 1.1 million tons. Terminals operating on the territory of the Big Port of Saint Petersburg reduced metal throughput by 20.1% to 2.45 million tons. Handling volume of pipes and rolled metal decreased by 34% and 47% respectively, that of cast iron fell by 18.4%, while semi-finished products volume grew by 28.2%.
Meanwhile, handling volume of the cargoes increased in Ukrainian ports. In particular, in the port of Ilyichevsk there was almost a fifteen-fold growth (from 19.1 thousand tons to 278.3 thousand tons); the port of Izmail increased metal throughput by 67.7% (from 44 thousand tons to 74.6 thousand tons). Well, the volumes serviced by Russian and Ukrainian stevedoring companies can hardly be compared, so it is too early to speak about any market redistribution. Nevertheless, the tendency is clearly seen. Comparing the diagrams of ferrous metals handling volumes in the ports of Ukraine, Novorossiysk, and Saint Petersburg in 2005-2007, one can easily detect that Russian stevedoring companies are losing the metals flow, while their competitors from neighboring states are handling more and more metallurgical cargoes.
Why do metallurgical companies prefer Ukrainian ports to Russian ones?
Analysts of InfraNews Agency explain it by the fact that, for example, the stevedoring companies operating in the port of Novorossiysk abolished the discounts on metals handling in 2007. Earlier there used to be 20-30% discount from the limiting tariffs, so that to form a single competitive rate on cargo transportation from the gates of this or that metallurgical works onto the board of a vessel. As InfraNews analysts say, “for some unknown reason, stevedores hoped that clients would agree with the new tariffs. Nevertheless, what happened later could be forecast easily: they left for the ports of neighbouring states”.
Ukrainian stevedores and railwaymen did an absolutely different thing. “Considering the fact that attractive tariff terms are to be created on the whole route of freight transportation to make a direction competitive, Ukrzaliznytsya (Ukrainian Railways) is holding intensive negotiations with the railway administrations from neighbouring states, sea ports and terminals to form competitive through rates on metallurgical cargoes transportation and handling in ports”, tells specialist of the Major Commercial Administration of Ukrzaliznytsya Vladislav Krasnozhon.     
Since the beginning of 2007, on transit transportation of ferrous metals and goods made out of them there is a discount of 20% from the base rate, 22% and 29% discounts were implemented on metal scrap and cast iron respectively. “The discounts are based on monitoring the main price-forming factors, including the level of tariffs formed in the previous years, transportation net cost, dynamics of a cargo transportation volume, international transport situation, and the level of tariffs on the directions alternative to the Ukrainian one”, explains Mr Krasnozhon.
It is no wonder that in 9 months of 2007, according to the data of Ukrzaliznytsya, the volume of ferrous metals carried via the territory of the country grew by 3.5% year-on-year. Besides, over 60% of the transit flow originated from Russia, in particular from OAO Tulachrmet, OAO Kosogorsky Metallurgical Works, OAO Novolipetsk Steel and OAO LMZ Free Hawk. The Association of Russian Commercial Sea Ports analysed transportation of basic export cargoes under the conditions of changing railway tariffs in 2005 – H1 of 2007. The analysis proved, there is an inevitable dependence on the amount of work stevedoring companies have from the cost of railway transportation. For example, transportation of one ton of ferrous metal from OAO Magnitogorsk Iron and Steel Works to the ports of Novorossiysk and Saint Petersburg was in 2005 cheaper than to the Russian border crossings on the border with Ukraine. In 2007 the situation was completely different – Ukraine turned out to be the price leader. And immediately it influenced the volumes of transportation to Ilyichevsk.
Resume: It Is Just The Beginning
There is one more important factor that must be taken into account – the strikes. In autumn, at the terminals in Russian ports, there were negotiations between dockers and employers about salaries. Often the situation became really tense, although there were no strikes. Protest actions took place only in OAO Commercial Sea Port of Tuapse and OAO Sea Port of Saint Petersburg.
The companies' management (by the way, both of them are affiliated to the major owner of OAO Novolipetsk Steel Vladimir Lisin) considered the actions as the wish of dockers to get better tariff rates before the elections to the State Duma. However, being quite in the know of the true motivation of dockers, we can suggest that it is far from the truth, and that the situation in the mentioned company may become worse in future. Maybe, the metallurgical cargo transportation sector will soon be surprised by one more piece of news. There are rumours that one of the largest stevedoring companies in Saint Petersburg, handling significant volumes of ferrous and non-ferrous metals produced by Russian companies, is going to construct VIP buildings on the territory of the terminal. It seems that some companies are wondering if they will survive after railway tariffs unification.

Ivan Stupachenko 
viewpoint
Mikhail Taran,
Chairman of the Board of Directors, ZAO TGI-Trans, Doctor of Technical Sciences: 
– National economy development stimulated development of many different projects, so there is the demand for pipe industry production as well as the services of specialised rolling stock operators. Nowadays TGI-Trans company successfully cooperates with the leading producers and large consumers of pipes. It is worth noting that the Russian industry stage-by-stage starts to produce the pipes never made in Russia before, which may lead to a decrease in import deliveries and re-orientating the transportation directions.
There are positive changes on the market, which may give some advantages to rolling stock operators. After the launch of OAO The First Cargo Company, the cargo owners, who used only the park of OAO RZD, may turn their attention to private companies.
What worries private rolling stock operators is the wagon constituent in the tariff for specialised rolling stock. If it was increased, the operation of the wagons for pipe transportation would become more efficient, which in its turn would reduce the number of gondola cars (the type of rolling stock in Russia that carries the biggest deficit now) used to carry pipes.
interview
“Well Balanced Tariff Policy in Part of Wagon Constituent Is Required” 
 Andrey Zhukov, Head of the Ore and Metallurgical Cargoes and Construction Materials Administration of OOO Firma Transgarant, told ‘The RZD-Partner International’ about the latest tendencies in metallurgical freight transportation.
– Mr. Zhukov, what changes may occur in the work of operator companies because of the tendency of increasing supplies to the domestic market and reducing export volumes?
– First of all, I would like to note that in 2007 the export volume decrease was explained by several factors. Firstly, the North Siberian Metallurgical Works was closed for repair in June – October, naturally, the factor influenced the volume of exported metallurgical production. The second reason for the decrease of metallurgical goods exports and the increase of their consumption in the RF is the price, i.e. the demand is growing owing to the national industrial manufacture growth, which allows increasing sale prices and making the domestic market more and more attractive in comparison with the international one. And there is the negative dynamics of the dollar falling against the rouble, because the currency of many export contracts is US dollars.
– What problems do operator companies face in metallurgical cargo transportation?
– One of the main problems is the VAT confirmation at zero rate at export transportation, because not all consignors are ready to provide the necessary pack of documents for the procedure. Another problem is frequent conventions and bans on freight reception in ports and, consequently, idling trains. As for expenses, the cost of empty wagon transportation after it has carried metallurgical production (usually it is considered cargo of the 3rd tariff class) is too high. Besides, today operators are not interested in metallurgical production transportation to the CIS, because the tariff policy envisaged by section 2 and section 3 of Tariff Regulation № 10-01 is different in part of the wagon constituent. For domestic transportation the wagon constituent is 30-40% of the OAO RZD tariff; while for transportation via the Russian border crossings the wagon constituent is only 15%. 
As for operational administration, it is much easier for operator companies to provide export transportation, because it is quite clear: as a rule the company knows the port and the forwarder, and the procedure of unloading and wagons registration is well regulated. This simplifies planning and rolling stock distribution for developed logistic schemes. The wagon turnover in always larger in export directions than in car loads inside the country. As for the latter, there are too many consignees, and the company has to work with each of them separately to cover operational issues, i.e. instructions, telegrams, and unloading control. Consequently, the efficiency of park management is higher in transportation for export than inside the country.
– In the near future, the industry of Eastern Siberia and the Far East will rise rapidly, which can’t but influence the geography of metallurgical cargo supplies. Did you consider the process when developing your company’s development strategy?
– Any transport company is interested in raw materials delivery to such industrial enterprises as well as in carrying finished products from there. The clusters being formed far away, that is why such routes are profitable for operators: the longer the distance, the larger the wagon constituent. In our opinion, the structure of transported cargoes will not change.
– Since 2005 the Federal Tariff Service of the Russian Federation has not changed tariff rates on metal transportation to Far Eastern ports, nevertheless, transportation volumes are falling. Meanwhile, OAO RZD counts on regular loading of its network.
– Metal transportation to the Far East means that the cargo will be then delivered to the states of the Asian and Pacific region. But today it is hard for the Russian metallurgical sector to compete with metal production exporters such as China, which is one of the leaders in the international market. It is impossible to beat the market, the same volume of metal will never be transported to the Far East. Sometimes there appears such a market situation, when no discounts are required by, for example, Ural enterprises. The Federal Tariff Service set a privileged tariff on methanol transportation via the ports connected with Dalnevostochnaya Railway (Far Eastern Railway, affiliate of OAO RZD), but the cargo has not been carried in this direction for three years already!
– What measures, in your opinion, should carriers, operators and authorities take to increase the efficiency of the metallurgical cargo transportation segment?
– A complex of measures is required to increase the efficiency, and the decisions are to be well-balanced. For example, at the beginning of 2007 the wagon constituent of tariff for gondola cars raised significantly, while the wagon constituent for the rest park increased in accordance with common indexation. The decision was made a year ago, and what is going on now? Have the volumes of transportation in this type of rolling stock grown? A little. Do companies purchase more gondola cars? Yes, but because of the large demand, the price for new gondola cars has increased. As a result, the decision turned out to be profitable for wagon-producing companies, but not for rolling stock operators, because the latter have to give the profit from the increase wagon constituent to the former. So, operators have nothing to do but to make a consignor to compensate for the expenses on wagons. As a result, the share of railway tariff in the final cost of the product has increased.
This tariff situation leads to an increase in transportation volume of different cargoes – timber, rolled briquettes, containers, large-diameter pipes, fertilisers packed in big bags, metal production etc. – in universal gondola cars instead of special rail cars for these cargoes transportation. As a result, there will be a constant shortage of gondola cars, and significant damage will be done to high-tech cargo transportation via special wagons.  
 
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On the Rise
In 2007, against the background of favourable international and Russian market situation, the metallurgical sector of Russia, according to data of the RF Ministry of Industry and Energy, continued its progressive development and increased volumes of semi- and finished goods production. It is possible to state that last year no radical changes, such as downturns or upturns, price disproportions and bans on the freight supplies to any foreign markets took place in the sector.
Cast iron and blast-furnace ferroalloys production amounted to 42.8 million tons (-2.8% year-on-year), that of finished steel made 49.4 million tons (+2.5%), and steel pipes production rose to 7.4 million tons (+14.1%).
As for railway transportation, the figures seem to be positive. In 10 months of 2007, the volume of ferrous metals carried along Russian railway network made 84.621 million tons, a 7.5% growth in comparison with the same period of 2006.
In 10 months of 2007, the largest shares in the metallurgical cargoes were carried by Yuzhno-Uralskaya Railway (Southern Ural Railway – an affiliate of OAO RZD) – 26.1% (+0.4% year-on-year), Yugo-Vostochnaya Railway (South-Eastern Railway – an affiliate of OAO RZD) – 17.2% (-0.2%), Sevrdlovskaya Railway (Sverdlovsk Railway – an affiliate of OAO RZD) – 15.9% (+1.1%), Severnaya Railway (Northern Railway – an affiliate of OAO RZD), Zapadno-Sibirskaya Railway (West-Siberian Railway - an affiliate of OAO RZD) – 10.6% (-2.8%).
Interesting tendencies may be observed when analysing the structure of transportation. At first glance, changes can be noted in the total geography of supplies. Domestic transportation volume grew by 13%, import – by 38%, while export reduced by 5.1%. Another interesting thing is re-distribution of freight flows between ports and onland border crossings. 21.719 million tons was carried to stevedoring companies, 7.5% down year-on-year. Meanwhile, 16.541 million tons of export cargo was transported via onland border crossings (+18.5%). The figures are yet to be explained. 
Cargo Stays at Home
As for the growth of metallurgical cargo transportation inside the country, it is worth noting that in the opinion of Director of the Novaya Perevozochnaya Company Valery Shpakov, the increase is a long-term tendency and it is connected with the national economy”s development.
Infrastructure modernisation, stable growth of construction and engineering sectors led to the removal of consumption focus to the domestic market, although several years ago export was dominating. The tendency is influenced by long-term factors as well as short-term ones. Since the major part of export contracts envisages payment by dollars, the weakness of the dollar makes supplies to foreign states less profitable. Meanwhile, the countries of the Asian and Pacific region, China in particular, offer quality cheap steel, thus putting Russian metallurgical companies out of the world market.
Obviously, in the near future, the focus of consumption will continue to move to the domestic market, which will cause some changes in transportation technologies.
“Lately, a stable tendency of the domestic market share increasing has been observed in the segment of metallurgical cargo transportation. We reoriented at the Russian market at the beginning of 2006, when the demand for Russian metal fell in the Asian and Pacific region, due to which export transportation to the Far East became minimal. Today, Novaya Perevozochnaya Company successfully operates in domestic directions and uses its own trains, thus reducing wagon turnover and forming ring routes. Further growth of metal domestic transportation is expected as well as increase of ferrous metals imports via the ports of the Far East, Novorossiysk and Saint Petersburg because of the lack of some types of rolled metal in Russia”, notes Mr Shpakov.
Unlike domestic supplies, export deliveries via ports and border crossings are characterised by exact and clear logistics schemes, thus it is easier to find incidental cargo to load the wagons on their way back. Thus, servicing domestic transportation, operators have to make more efforts to reduce empty mileage and increase wagon turnover.
In the next 5-10 years, the so called “industrial zone”, which is now in the Ural region and Western Siberia, will start to move to Eastern Siberia – Krasnoyarsk and Chita regions and Yakutia as well as to the Far East, where new production clusters are being formed. 
Another significant factor influencing the geography of transportation is the Olympic Games in Sochi in 2014, envisaging a lot of construction in the Krasnodar regions, and consequently, the growth of metal production supplied there. Tariff distance increase will make a positive effect on - operator companies” economy of transportation, but simultaneously, the problems of back haulage and the lack of rolling stock will become worse. 
One more factor is caused by the increasing demand for ferrous metals in Russia and creation of new logistics schemes. It concerns the issues of scrap metal procurement and transportation. The average annual volume of the “output” of the most valuable raw materials for metallurgical companies slightly exceeds 30 million tons, out of which 8 million tons is exported, mainly via ports, and the rest is delivered to Russian steel-smelting enterprises. 
According to Head of the Production Department of ZAO Lomprom Alexander Devyatov, metal scrap makes carriers develop new multimodal schemes. So high is its price on the international market that the expenses on delivery never compensated before have become quite reasonable. Consequently, it is profitable now to gather scrap in distant regions, in Yakutia, for example, which had never happened before. But in the Republic of Yakutia their railway network is underdeveloped, so the purveyors had to use multimodal transportation, i.e. to carry raw materials at first by the Lena river to town Ust-Kut in the Irkutsk region, and then by railway to the destination point. Regardless of the international prices, there appears a situation, when all raw materials available from the transport standpoint have been already “mastered” by the purveyors. So, Mr Devyatov warns metallurgical works about the growth of transport expenses, and, consequently, the final price for metal scrap. Rolling stock operators and logisticians will have to think how they can reduce the negative consequences from the increasing tariff distances without making rolling stock operating less efficient (as well as in the situation with semi- and finished products transportation).
Via Ukraine: Further, But Cheaper
The situation of re-distribution of freight flows between ports and border crossings seems not to be a surprise. The stage-by-stage tariff unification, which is to be completed before 2009, does not leave any tariff advantages, implemented in 2001, to stevedoring companies. Naturally, under the conditions of underdeveloped port infrastructure, particularly railway stations near the ports, as highlighted by Chairman of the Board of Directors of ZAO TGI-Trans Mikhail Taran, cargo owners choose an alternative variant more and more often. Analysing the situation to find out where the cargo flows distributed to border crossings were destined for, we can see many details worth mentioning.
Let's have a look at the results of Russian ports in 10 months of 2007. As the research agency “Industrial Cargoes” notes, the port of Novorossiysk reduced throughput by 15.7% year-on-year to 6.29 million tons. The port reduced handling of pipes (-11.6% year-on-year), cast iron (59.5%), semi-finished products (-14.1%), and rolled metal (-13.6%). A similar situation was in the port of Tuapse, where the total volume of metal (semi-finished products) handling fell by 37.3% to 1.1 million tons. Terminals operating on the territory of the Big Port of Saint Petersburg reduced metal throughput by 20.1% to 2.45 million tons. Handling volume of pipes and rolled metal decreased by 34% and 47% respectively, that of cast iron fell by 18.4%, while semi-finished products volume grew by 28.2%.
Meanwhile, handling volume of the cargoes increased in Ukrainian ports. In particular, in the port of Ilyichevsk there was almost a fifteen-fold growth (from 19.1 thousand tons to 278.3 thousand tons); the port of Izmail increased metal throughput by 67.7% (from 44 thousand tons to 74.6 thousand tons). Well, the volumes serviced by Russian and Ukrainian stevedoring companies can hardly be compared, so it is too early to speak about any market redistribution. Nevertheless, the tendency is clearly seen. Comparing the diagrams of ferrous metals handling volumes in the ports of Ukraine, Novorossiysk, and Saint Petersburg in 2005-2007, one can easily detect that Russian stevedoring companies are losing the metals flow, while their competitors from neighboring states are handling more and more metallurgical cargoes.
Why do metallurgical companies prefer Ukrainian ports to Russian ones?
Analysts of InfraNews Agency explain it by the fact that, for example, the stevedoring companies operating in the port of Novorossiysk abolished the discounts on metals handling in 2007. Earlier there used to be 20-30% discount from the limiting tariffs, so that to form a single competitive rate on cargo transportation from the gates of this or that metallurgical works onto the board of a vessel. As InfraNews analysts say, “for some unknown reason, stevedores hoped that clients would agree with the new tariffs. Nevertheless, what happened later could be forecast easily: they left for the ports of neighbouring states”.
Ukrainian stevedores and railwaymen did an absolutely different thing. “Considering the fact that attractive tariff terms are to be created on the whole route of freight transportation to make a direction competitive, Ukrzaliznytsya (Ukrainian Railways) is holding intensive negotiations with the railway administrations from neighbouring states, sea ports and terminals to form competitive through rates on metallurgical cargoes transportation and handling in ports”, tells specialist of the Major Commercial Administration of Ukrzaliznytsya Vladislav Krasnozhon.     
Since the beginning of 2007, on transit transportation of ferrous metals and goods made out of them there is a discount of 20% from the base rate, 22% and 29% discounts were implemented on metal scrap and cast iron respectively. “The discounts are based on monitoring the main price-forming factors, including the level of tariffs formed in the previous years, transportation net cost, dynamics of a cargo transportation volume, international transport situation, and the level of tariffs on the directions alternative to the Ukrainian one”, explains Mr Krasnozhon.
It is no wonder that in 9 months of 2007, according to the data of Ukrzaliznytsya, the volume of ferrous metals carried via the territory of the country grew by 3.5% year-on-year. Besides, over 60% of the transit flow originated from Russia, in particular from OAO Tulachrmet, OAO Kosogorsky Metallurgical Works, OAO Novolipetsk Steel and OAO LMZ Free Hawk. The Association of Russian Commercial Sea Ports analysed transportation of basic export cargoes under the conditions of changing railway tariffs in 2005 – H1 of 2007. The analysis proved, there is an inevitable dependence on the amount of work stevedoring companies have from the cost of railway transportation. For example, transportation of one ton of ferrous metal from OAO Magnitogorsk Iron and Steel Works to the ports of Novorossiysk and Saint Petersburg was in 2005 cheaper than to the Russian border crossings on the border with Ukraine. In 2007 the situation was completely different – Ukraine turned out to be the price leader. And immediately it influenced the volumes of transportation to Ilyichevsk.
Resume: It Is Just The Beginning
There is one more important factor that must be taken into account – the strikes. In autumn, at the terminals in Russian ports, there were negotiations between dockers and employers about salaries. Often the situation became really tense, although there were no strikes. Protest actions took place only in OAO Commercial Sea Port of Tuapse and OAO Sea Port of Saint Petersburg.
The companies' management (by the way, both of them are affiliated to the major owner of OAO Novolipetsk Steel Vladimir Lisin) considered the actions as the wish of dockers to get better tariff rates before the elections to the State Duma. However, being quite in the know of the true motivation of dockers, we can suggest that it is far from the truth, and that the situation in the mentioned company may become worse in future. Maybe, the metallurgical cargo transportation sector will soon be surprised by one more piece of news. There are rumours that one of the largest stevedoring companies in Saint Petersburg, handling significant volumes of ferrous and non-ferrous metals produced by Russian companies, is going to construct VIP buildings on the territory of the terminal. It seems that some companies are wondering if they will survive after railway tariffs unification.

Ivan Stupachenko 
viewpoint
Mikhail Taran,
Chairman of the Board of Directors, ZAO TGI-Trans, Doctor of Technical Sciences: 
– National economy development stimulated development of many different projects, so there is the demand for pipe industry production as well as the services of specialised rolling stock operators. Nowadays TGI-Trans company successfully cooperates with the leading producers and large consumers of pipes. It is worth noting that the Russian industry stage-by-stage starts to produce the pipes never made in Russia before, which may lead to a decrease in import deliveries and re-orientating the transportation directions.
There are positive changes on the market, which may give some advantages to rolling stock operators. After the launch of OAO The First Cargo Company, the cargo owners, who used only the park of OAO RZD, may turn their attention to private companies.
What worries private rolling stock operators is the wagon constituent in the tariff for specialised rolling stock. If it was increased, the operation of the wagons for pipe transportation would become more efficient, which in its turn would reduce the number of gondola cars (the type of rolling stock in Russia that carries the biggest deficit now) used to carry pipes.
interview
“Well Balanced Tariff Policy in Part of Wagon Constituent Is Required” 
 Andrey Zhukov, Head of the Ore and Metallurgical Cargoes and Construction Materials Administration of OOO Firma Transgarant, told ‘The RZD-Partner International’ about the latest tendencies in metallurgical freight transportation.
– Mr. Zhukov, what changes may occur in the work of operator companies because of the tendency of increasing supplies to the domestic market and reducing export volumes?
– First of all, I would like to note that in 2007 the export volume decrease was explained by several factors. Firstly, the North Siberian Metallurgical Works was closed for repair in June – October, naturally, the factor influenced the volume of exported metallurgical production. The second reason for the decrease of metallurgical goods exports and the increase of their consumption in the RF is the price, i.e. the demand is growing owing to the national industrial manufacture growth, which allows increasing sale prices and making the domestic market more and more attractive in comparison with the international one. And there is the negative dynamics of the dollar falling against the rouble, because the currency of many export contracts is US dollars.
– What problems do operator companies face in metallurgical cargo transportation?
– One of the main problems is the VAT confirmation at zero rate at export transportation, because not all consignors are ready to provide the necessary pack of documents for the procedure. Another problem is frequent conventions and bans on freight reception in ports and, consequently, idling trains. As for expenses, the cost of empty wagon transportation after it has carried metallurgical production (usually it is considered cargo of the 3rd tariff class) is too high. Besides, today operators are not interested in metallurgical production transportation to the CIS, because the tariff policy envisaged by section 2 and section 3 of Tariff Regulation № 10-01 is different in part of the wagon constituent. For domestic transportation the wagon constituent is 30-40% of the OAO RZD tariff; while for transportation via the Russian border crossings the wagon constituent is only 15%. 
As for operational administration, it is much easier for operator companies to provide export transportation, because it is quite clear: as a rule the company knows the port and the forwarder, and the procedure of unloading and wagons registration is well regulated. This simplifies planning and rolling stock distribution for developed logistic schemes. The wagon turnover in always larger in export directions than in car loads inside the country. As for the latter, there are too many consignees, and the company has to work with each of them separately to cover operational issues, i.e. instructions, telegrams, and unloading control. Consequently, the efficiency of park management is higher in transportation for export than inside the country.
– In the near future, the industry of Eastern Siberia and the Far East will rise rapidly, which can’t but influence the geography of metallurgical cargo supplies. Did you consider the process when developing your company’s development strategy?
– Any transport company is interested in raw materials delivery to such industrial enterprises as well as in carrying finished products from there. The clusters being formed far away, that is why such routes are profitable for operators: the longer the distance, the larger the wagon constituent. In our opinion, the structure of transported cargoes will not change.
– Since 2005 the Federal Tariff Service of the Russian Federation has not changed tariff rates on metal transportation to Far Eastern ports, nevertheless, transportation volumes are falling. Meanwhile, OAO RZD counts on regular loading of its network.
– Metal transportation to the Far East means that the cargo will be then delivered to the states of the Asian and Pacific region. But today it is hard for the Russian metallurgical sector to compete with metal production exporters such as China, which is one of the leaders in the international market. It is impossible to beat the market, the same volume of metal will never be transported to the Far East. Sometimes there appears such a market situation, when no discounts are required by, for example, Ural enterprises. The Federal Tariff Service set a privileged tariff on methanol transportation via the ports connected with Dalnevostochnaya Railway (Far Eastern Railway, affiliate of OAO RZD), but the cargo has not been carried in this direction for three years already!
– What measures, in your opinion, should carriers, operators and authorities take to increase the efficiency of the metallurgical cargo transportation segment?
– A complex of measures is required to increase the efficiency, and the decisions are to be well-balanced. For example, at the beginning of 2007 the wagon constituent of tariff for gondola cars raised significantly, while the wagon constituent for the rest park increased in accordance with common indexation. The decision was made a year ago, and what is going on now? Have the volumes of transportation in this type of rolling stock grown? A little. Do companies purchase more gondola cars? Yes, but because of the large demand, the price for new gondola cars has increased. As a result, the decision turned out to be profitable for wagon-producing companies, but not for rolling stock operators, because the latter have to give the profit from the increase wagon constituent to the former. So, operators have nothing to do but to make a consignor to compensate for the expenses on wagons. As a result, the share of railway tariff in the final cost of the product has increased.
This tariff situation leads to an increase in transportation volume of different cargoes – timber, rolled briquettes, containers, large-diameter pipes, fertilisers packed in big bags, metal production etc. – in universal gondola cars instead of special rail cars for these cargoes transportation. As a result, there will be a constant shortage of gondola cars, and significant damage will be done to high-tech cargo transportation via special wagons.  
 
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    [~PREVIEW_TEXT] => The national economy growth, weakness of the dollar and competent tariff policy of neighbouring states caused in 2007 significant changes in the routes along which Russian ferrous metallurgy production is transported. Russian portmen will have to think over how they can keep the cargo from being re-directed to competitors and onland border crossings; and rolling stock operators will have to decide on how to use universal and special parks more efficiently.
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Armenian Railways Carried 2.97 Million Tons in 2007
Last year the revenue of the 10 companies which are in charge of the Armenian Ministry of Transport and Communication amounted to USD 51million, up 4.9% year-on-year. 
On December 27 at a press conference, Andranik Manukyan, Minister of Transport and Communication of Armenia, said that in 2007 the freight transportation volume of ZAO Armenian Railways grew by 9% year-on-year to 2.97 million tons. 
Last year, USD 58.94 million was invested from the Armenian State Budget into motorways and other transport object repair. At the state’s expense, 280km of roads was reconstructed, including a 38.2 km-long sector of Martuni-Vardenis road, and a 6.8 km-long section of Berkanush-Dvin motorway. In 2007, a new 6.3 km stretch of motorway connecting Voskepar and Baganis was built and 15 bridges were repaired. Also, an alternative road connecting Iran and Armenia Kapan-Shikaoh-Megri was put into operation. Its length is 91 km.
The Minister noted that in 2007 the realisation of the “Challenges of the Millennium” programme started. It envisages investments of USD 61 million into reconstruction and repair of 273 km of rural roads over a five-year term. In accordance with the agreement with America, in five years Armenia is to repair about 500 km of rural roads at the state’s expense. In 2008-2009, USD 30.6 million loaned from the Asian Bank of Development will be spent on road repairs in 2008-2009. 223 km of roads will be repaired from the credit in four regions of the country. 
Containers Still Run Along the Transsib 
The total transportation of container cargo along the TransSiberian railway amounted to 554,102 TEU in January-November of 2007. The year-on-year increase was 49%. In 11 months of 2006 only 372,625 TEU was carried via the railway.
According to the information of the Coordinating Council for TransSiberian Transportation, in January-October 2007, 181,149 TEU was transported between Russia and China. During 10 months of 2006, 123,271 TEU was carried there.
The majority of container transportation is carried by block trains.
Carrying Coal for Export
Steam coal volume carried along the Russian railway network for export grew by 7.3% in 11 months of 2007. Meanwhile, according to official OAO RZD statistics, the domestic transportation of cargo fell by 3.5% during the period.
On the whole, the volume of coal transportation in the RF and for export increased slightly - by 0.2% only in January-November 2007. 
In particular, transportation of coal extracted at the Eastern Donbass grew by 1.7 times, the ones extracted at Kuzbass increased by 6.3%, Kansko-Achinsk coals by 24.8% and East Siberian ones by 2.4%. Meanwhile, export transportation of coals from Pechora fell by 4.9%, and the ones extracted in the Far Eastern region and Yakutia dropped by 2.7%.
Throughput of Ukrainian Transport Enterprises: +3.7%    
Ukrainian transport enterprises increased throughput by 3.7% year-on-year to 496.4 billion ton-kilometers, reported the State Statistics Service.
Meanwhile, cargo transportation volume grew by 5.4% to 902.7 million tons.
According to the statistics data, air transport throughput increased by 21.3% and  those of road and railway transport rose by 18.3% and 9.1% respectively.
Freight transportation by railway grew by 7.1% to 512.5 million tons, cargo volume carried by road hauliers and by air amounted to 169.7 million tons (+12.6%) and 102.6 thousand tons (+3.7%).
Last year, Ukrainian sea and river commercial fleet increased cargo transportation by 5.6% year-in-year; 24.3 million tons of freight was delivered to customers.
Cargo volume carried by river transport enterprises increased by 5.8% in comparison with 2006, those using sea transport grew by 5.3%. International freight transportation by sea and river fell by 5.2% and 11% respectively.
Commercial and fishing ports and sea and river industrial terminals handled 176.4 million tons (+12%). Handling of import increased by 19.9%, while transit and domestic freight grew by 31% and 19.5% respectively. Handling volume of export reduced by 5.9%.
196.1 million tons of cargo was carried by pipelines, 3.8% down year-on-year. Gas and ammonia transportation reduced by 8.6% and 7.1% year-on-year. Oil transportation volume grew by 13.4%. Oil transit increased by 19.9%, while transit of gas and ammonia fell by 10.4% and 3.7% respectively.
OAO RZD Increased Transportation Volume by 4.2% in January-November 2007     
In January-November 2007, OAO RZD increased cargo transportation volume by 4.2% year-on-year to 1,364,692,000 tons.
According to Russian Railways, the domestic transportation volume carried by the company grew by 2.4% to 895.1 million tons, and international transportation volume increased by 7.8% to 469.5 million tons.
Transportation of transit cargo rose by 30.4% to 24.2 million tons. The major flow of cargo is carried via onland border crossings.
Kazakhstan Increased Throughput
In Kazakhstan, the throughput (taking into account the throughput of non-transport organisations and entrepreneurs specializing in commercial transportation) amounted to 350,449.7 million ton-kilometers, 6.7% up year-on-year.
In particular, the throughput of the railway transport grew by 5.1% to 201,080.8 million ton-kilometers and road haulages amounted to 61,443.6 million ton-kilometers (+14.1%). In 2007, the throughput of Kazakh main pipelines was 87,783.5 million ton-kilometers (+5.4%), including oil pipelines – 42.281 billion ton-kilometers (+6%), and gas pipelines – 45,502.5 million ton-kilometers (+4.8%).
River transport throughput increased 31% year-on-year to 52,299.5 thousand ton-kilometers, air transport throughput grew by 28.8% to 85,747.1 thousand ton-kilometers.
The passenger turnover in the Republic amounted to 123,888.8 million passenger-kilometers, a 4.3% increase in comparison with 2006.  
Russian Sea Ports Increased Throughput By 7.2% 
Last year the total throughput of Russian ports exceeded 451 million tons, up 7.2% (+30 million tons) year-on-year, reported the Association of Commercial Sea Ports.
The share of liquid bulk was over 58% of the total volume. In 2007 Russian ports handled 264.4 million tons of liquid bulk (+7.4%) and 186.6 million tons of solid bulk (+7%). The RF ports located in the north-western basin serviced 46.5% of the total volume; the ports in the southern basin reduced throughput to 35.9% of the total volume, and the Far Eastern ports increased handling slightly to 17.6%.
The ports of Russian North-West increased throughput by 9% (+17 million tons) year-on-year to 209.5 million tons. The ports of the region handled 82.4 million tons of solid bulk (+10.7%) and over 127 million tons of liquid bulk (+8%).
The dynamics of Russian southern ports’ throughput growth slowed down in 2007. The ports increased handling volume by 2.1 million tons only (1.3%) to 161.8 million tons, including 50.7 million tons of solid bulk (+7%) and 111.1 million tons of liquid bulk (-1.2%). Over 80% of the volume was serviced in the ports of Novorossiysk and Tuapse.
The throughput of Russian ports in the Far eastern region grew by 15% year-on-year to 79.7 million tons. The ports handled 53.4 million tons of solid bulk (+1.3%) and 26 million tons of liquid bulk (+60%).  
Direct Ferry Line to Connect Ports of Kavkaz and Varna 
On January 18, 2008, Igor Levitin, Russian Minister of Transport and Petar Mutafchiev, Bulgarian Transport Minister signed the Agreement on the establishment of a direct international railway ferry line between the Russian port of Kavkaz and the Bulgarian port of Varna.
The Agreement envisages cooperation and necessary mutual support to organise and develop combined railway and ferry cargo transportation via the ports of Kavkaz and Varna. 
The parties are going to carry out a coordinated tariff policy to make the railway ferry line efficient.
Third parties can join the Agreement concluded by Russia and Bulgaria. 
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Armenian Railways Carried 2.97 Million Tons in 2007
Last year the revenue of the 10 companies which are in charge of the Armenian Ministry of Transport and Communication amounted to USD 51million, up 4.9% year-on-year. 
On December 27 at a press conference, Andranik Manukyan, Minister of Transport and Communication of Armenia, said that in 2007 the freight transportation volume of ZAO Armenian Railways grew by 9% year-on-year to 2.97 million tons. 
Last year, USD 58.94 million was invested from the Armenian State Budget into motorways and other transport object repair. At the state’s expense, 280km of roads was reconstructed, including a 38.2 km-long sector of Martuni-Vardenis road, and a 6.8 km-long section of Berkanush-Dvin motorway. In 2007, a new 6.3 km stretch of motorway connecting Voskepar and Baganis was built and 15 bridges were repaired. Also, an alternative road connecting Iran and Armenia Kapan-Shikaoh-Megri was put into operation. Its length is 91 km.
The Minister noted that in 2007 the realisation of the “Challenges of the Millennium” programme started. It envisages investments of USD 61 million into reconstruction and repair of 273 km of rural roads over a five-year term. In accordance with the agreement with America, in five years Armenia is to repair about 500 km of rural roads at the state’s expense. In 2008-2009, USD 30.6 million loaned from the Asian Bank of Development will be spent on road repairs in 2008-2009. 223 km of roads will be repaired from the credit in four regions of the country. 
Containers Still Run Along the Transsib 
The total transportation of container cargo along the TransSiberian railway amounted to 554,102 TEU in January-November of 2007. The year-on-year increase was 49%. In 11 months of 2006 only 372,625 TEU was carried via the railway.
According to the information of the Coordinating Council for TransSiberian Transportation, in January-October 2007, 181,149 TEU was transported between Russia and China. During 10 months of 2006, 123,271 TEU was carried there.
The majority of container transportation is carried by block trains.
Carrying Coal for Export
Steam coal volume carried along the Russian railway network for export grew by 7.3% in 11 months of 2007. Meanwhile, according to official OAO RZD statistics, the domestic transportation of cargo fell by 3.5% during the period.
On the whole, the volume of coal transportation in the RF and for export increased slightly - by 0.2% only in January-November 2007. 
In particular, transportation of coal extracted at the Eastern Donbass grew by 1.7 times, the ones extracted at Kuzbass increased by 6.3%, Kansko-Achinsk coals by 24.8% and East Siberian ones by 2.4%. Meanwhile, export transportation of coals from Pechora fell by 4.9%, and the ones extracted in the Far Eastern region and Yakutia dropped by 2.7%.
Throughput of Ukrainian Transport Enterprises: +3.7%    
Ukrainian transport enterprises increased throughput by 3.7% year-on-year to 496.4 billion ton-kilometers, reported the State Statistics Service.
Meanwhile, cargo transportation volume grew by 5.4% to 902.7 million tons.
According to the statistics data, air transport throughput increased by 21.3% and  those of road and railway transport rose by 18.3% and 9.1% respectively.
Freight transportation by railway grew by 7.1% to 512.5 million tons, cargo volume carried by road hauliers and by air amounted to 169.7 million tons (+12.6%) and 102.6 thousand tons (+3.7%).
Last year, Ukrainian sea and river commercial fleet increased cargo transportation by 5.6% year-in-year; 24.3 million tons of freight was delivered to customers.
Cargo volume carried by river transport enterprises increased by 5.8% in comparison with 2006, those using sea transport grew by 5.3%. International freight transportation by sea and river fell by 5.2% and 11% respectively.
Commercial and fishing ports and sea and river industrial terminals handled 176.4 million tons (+12%). Handling of import increased by 19.9%, while transit and domestic freight grew by 31% and 19.5% respectively. Handling volume of export reduced by 5.9%.
196.1 million tons of cargo was carried by pipelines, 3.8% down year-on-year. Gas and ammonia transportation reduced by 8.6% and 7.1% year-on-year. Oil transportation volume grew by 13.4%. Oil transit increased by 19.9%, while transit of gas and ammonia fell by 10.4% and 3.7% respectively.
OAO RZD Increased Transportation Volume by 4.2% in January-November 2007     
In January-November 2007, OAO RZD increased cargo transportation volume by 4.2% year-on-year to 1,364,692,000 tons.
According to Russian Railways, the domestic transportation volume carried by the company grew by 2.4% to 895.1 million tons, and international transportation volume increased by 7.8% to 469.5 million tons.
Transportation of transit cargo rose by 30.4% to 24.2 million tons. The major flow of cargo is carried via onland border crossings.
Kazakhstan Increased Throughput
In Kazakhstan, the throughput (taking into account the throughput of non-transport organisations and entrepreneurs specializing in commercial transportation) amounted to 350,449.7 million ton-kilometers, 6.7% up year-on-year.
In particular, the throughput of the railway transport grew by 5.1% to 201,080.8 million ton-kilometers and road haulages amounted to 61,443.6 million ton-kilometers (+14.1%). In 2007, the throughput of Kazakh main pipelines was 87,783.5 million ton-kilometers (+5.4%), including oil pipelines – 42.281 billion ton-kilometers (+6%), and gas pipelines – 45,502.5 million ton-kilometers (+4.8%).
River transport throughput increased 31% year-on-year to 52,299.5 thousand ton-kilometers, air transport throughput grew by 28.8% to 85,747.1 thousand ton-kilometers.
The passenger turnover in the Republic amounted to 123,888.8 million passenger-kilometers, a 4.3% increase in comparison with 2006.  
Russian Sea Ports Increased Throughput By 7.2% 
Last year the total throughput of Russian ports exceeded 451 million tons, up 7.2% (+30 million tons) year-on-year, reported the Association of Commercial Sea Ports.
The share of liquid bulk was over 58% of the total volume. In 2007 Russian ports handled 264.4 million tons of liquid bulk (+7.4%) and 186.6 million tons of solid bulk (+7%). The RF ports located in the north-western basin serviced 46.5% of the total volume; the ports in the southern basin reduced throughput to 35.9% of the total volume, and the Far Eastern ports increased handling slightly to 17.6%.
The ports of Russian North-West increased throughput by 9% (+17 million tons) year-on-year to 209.5 million tons. The ports of the region handled 82.4 million tons of solid bulk (+10.7%) and over 127 million tons of liquid bulk (+8%).
The dynamics of Russian southern ports’ throughput growth slowed down in 2007. The ports increased handling volume by 2.1 million tons only (1.3%) to 161.8 million tons, including 50.7 million tons of solid bulk (+7%) and 111.1 million tons of liquid bulk (-1.2%). Over 80% of the volume was serviced in the ports of Novorossiysk and Tuapse.
The throughput of Russian ports in the Far eastern region grew by 15% year-on-year to 79.7 million tons. The ports handled 53.4 million tons of solid bulk (+1.3%) and 26 million tons of liquid bulk (+60%).  
Direct Ferry Line to Connect Ports of Kavkaz and Varna 
On January 18, 2008, Igor Levitin, Russian Minister of Transport and Petar Mutafchiev, Bulgarian Transport Minister signed the Agreement on the establishment of a direct international railway ferry line between the Russian port of Kavkaz and the Bulgarian port of Varna.
The Agreement envisages cooperation and necessary mutual support to organise and develop combined railway and ferry cargo transportation via the ports of Kavkaz and Varna. 
The parties are going to carry out a coordinated tariff policy to make the railway ferry line efficient.
Third parties can join the Agreement concluded by Russia and Bulgaria. 
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Armenian Railways Carried 2.97 Million Tons in 2007
Last year the revenue of the 10 companies which are in charge of the Armenian Ministry of Transport and Communication amounted to USD 51million, up 4.9% year-on-year. 
On December 27 at a press conference, Andranik Manukyan, Minister of Transport and Communication of Armenia, said that in 2007 the freight transportation volume of ZAO Armenian Railways grew by 9% year-on-year to 2.97 million tons. 
Last year, USD 58.94 million was invested from the Armenian State Budget into motorways and other transport object repair. At the state’s expense, 280km of roads was reconstructed, including a 38.2 km-long sector of Martuni-Vardenis road, and a 6.8 km-long section of Berkanush-Dvin motorway. In 2007, a new 6.3 km stretch of motorway connecting Voskepar and Baganis was built and 15 bridges were repaired. Also, an alternative road connecting Iran and Armenia Kapan-Shikaoh-Megri was put into operation. Its length is 91 km.
The Minister noted that in 2007 the realisation of the “Challenges of the Millennium” programme started. It envisages investments of USD 61 million into reconstruction and repair of 273 km of rural roads over a five-year term. In accordance with the agreement with America, in five years Armenia is to repair about 500 km of rural roads at the state’s expense. In 2008-2009, USD 30.6 million loaned from the Asian Bank of Development will be spent on road repairs in 2008-2009. 223 km of roads will be repaired from the credit in four regions of the country. 
Containers Still Run Along the Transsib 
The total transportation of container cargo along the TransSiberian railway amounted to 554,102 TEU in January-November of 2007. The year-on-year increase was 49%. In 11 months of 2006 only 372,625 TEU was carried via the railway.
According to the information of the Coordinating Council for TransSiberian Transportation, in January-October 2007, 181,149 TEU was transported between Russia and China. During 10 months of 2006, 123,271 TEU was carried there.
The majority of container transportation is carried by block trains.
Carrying Coal for Export
Steam coal volume carried along the Russian railway network for export grew by 7.3% in 11 months of 2007. Meanwhile, according to official OAO RZD statistics, the domestic transportation of cargo fell by 3.5% during the period.
On the whole, the volume of coal transportation in the RF and for export increased slightly - by 0.2% only in January-November 2007. 
In particular, transportation of coal extracted at the Eastern Donbass grew by 1.7 times, the ones extracted at Kuzbass increased by 6.3%, Kansko-Achinsk coals by 24.8% and East Siberian ones by 2.4%. Meanwhile, export transportation of coals from Pechora fell by 4.9%, and the ones extracted in the Far Eastern region and Yakutia dropped by 2.7%.
Throughput of Ukrainian Transport Enterprises: +3.7%    
Ukrainian transport enterprises increased throughput by 3.7% year-on-year to 496.4 billion ton-kilometers, reported the State Statistics Service.
Meanwhile, cargo transportation volume grew by 5.4% to 902.7 million tons.
According to the statistics data, air transport throughput increased by 21.3% and  those of road and railway transport rose by 18.3% and 9.1% respectively.
Freight transportation by railway grew by 7.1% to 512.5 million tons, cargo volume carried by road hauliers and by air amounted to 169.7 million tons (+12.6%) and 102.6 thousand tons (+3.7%).
Last year, Ukrainian sea and river commercial fleet increased cargo transportation by 5.6% year-in-year; 24.3 million tons of freight was delivered to customers.
Cargo volume carried by river transport enterprises increased by 5.8% in comparison with 2006, those using sea transport grew by 5.3%. International freight transportation by sea and river fell by 5.2% and 11% respectively.
Commercial and fishing ports and sea and river industrial terminals handled 176.4 million tons (+12%). Handling of import increased by 19.9%, while transit and domestic freight grew by 31% and 19.5% respectively. Handling volume of export reduced by 5.9%.
196.1 million tons of cargo was carried by pipelines, 3.8% down year-on-year. Gas and ammonia transportation reduced by 8.6% and 7.1% year-on-year. Oil transportation volume grew by 13.4%. Oil transit increased by 19.9%, while transit of gas and ammonia fell by 10.4% and 3.7% respectively.
OAO RZD Increased Transportation Volume by 4.2% in January-November 2007     
In January-November 2007, OAO RZD increased cargo transportation volume by 4.2% year-on-year to 1,364,692,000 tons.
According to Russian Railways, the domestic transportation volume carried by the company grew by 2.4% to 895.1 million tons, and international transportation volume increased by 7.8% to 469.5 million tons.
Transportation of transit cargo rose by 30.4% to 24.2 million tons. The major flow of cargo is carried via onland border crossings.
Kazakhstan Increased Throughput
In Kazakhstan, the throughput (taking into account the throughput of non-transport organisations and entrepreneurs specializing in commercial transportation) amounted to 350,449.7 million ton-kilometers, 6.7% up year-on-year.
In particular, the throughput of the railway transport grew by 5.1% to 201,080.8 million ton-kilometers and road haulages amounted to 61,443.6 million ton-kilometers (+14.1%). In 2007, the throughput of Kazakh main pipelines was 87,783.5 million ton-kilometers (+5.4%), including oil pipelines – 42.281 billion ton-kilometers (+6%), and gas pipelines – 45,502.5 million ton-kilometers (+4.8%).
River transport throughput increased 31% year-on-year to 52,299.5 thousand ton-kilometers, air transport throughput grew by 28.8% to 85,747.1 thousand ton-kilometers.
The passenger turnover in the Republic amounted to 123,888.8 million passenger-kilometers, a 4.3% increase in comparison with 2006.  
Russian Sea Ports Increased Throughput By 7.2% 
Last year the total throughput of Russian ports exceeded 451 million tons, up 7.2% (+30 million tons) year-on-year, reported the Association of Commercial Sea Ports.
The share of liquid bulk was over 58% of the total volume. In 2007 Russian ports handled 264.4 million tons of liquid bulk (+7.4%) and 186.6 million tons of solid bulk (+7%). The RF ports located in the north-western basin serviced 46.5% of the total volume; the ports in the southern basin reduced throughput to 35.9% of the total volume, and the Far Eastern ports increased handling slightly to 17.6%.
The ports of Russian North-West increased throughput by 9% (+17 million tons) year-on-year to 209.5 million tons. The ports of the region handled 82.4 million tons of solid bulk (+10.7%) and over 127 million tons of liquid bulk (+8%).
The dynamics of Russian southern ports’ throughput growth slowed down in 2007. The ports increased handling volume by 2.1 million tons only (1.3%) to 161.8 million tons, including 50.7 million tons of solid bulk (+7%) and 111.1 million tons of liquid bulk (-1.2%). Over 80% of the volume was serviced in the ports of Novorossiysk and Tuapse.
The throughput of Russian ports in the Far eastern region grew by 15% year-on-year to 79.7 million tons. The ports handled 53.4 million tons of solid bulk (+1.3%) and 26 million tons of liquid bulk (+60%).  
Direct Ferry Line to Connect Ports of Kavkaz and Varna 
On January 18, 2008, Igor Levitin, Russian Minister of Transport and Petar Mutafchiev, Bulgarian Transport Minister signed the Agreement on the establishment of a direct international railway ferry line between the Russian port of Kavkaz and the Bulgarian port of Varna.
The Agreement envisages cooperation and necessary mutual support to organise and develop combined railway and ferry cargo transportation via the ports of Kavkaz and Varna. 
The parties are going to carry out a coordinated tariff policy to make the railway ferry line efficient.
Third parties can join the Agreement concluded by Russia and Bulgaria. 
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Armenian Railways Carried 2.97 Million Tons in 2007
Last year the revenue of the 10 companies which are in charge of the Armenian Ministry of Transport and Communication amounted to USD 51million, up 4.9% year-on-year. 
On December 27 at a press conference, Andranik Manukyan, Minister of Transport and Communication of Armenia, said that in 2007 the freight transportation volume of ZAO Armenian Railways grew by 9% year-on-year to 2.97 million tons. 
Last year, USD 58.94 million was invested from the Armenian State Budget into motorways and other transport object repair. At the state’s expense, 280km of roads was reconstructed, including a 38.2 km-long sector of Martuni-Vardenis road, and a 6.8 km-long section of Berkanush-Dvin motorway. In 2007, a new 6.3 km stretch of motorway connecting Voskepar and Baganis was built and 15 bridges were repaired. Also, an alternative road connecting Iran and Armenia Kapan-Shikaoh-Megri was put into operation. Its length is 91 km.
The Minister noted that in 2007 the realisation of the “Challenges of the Millennium” programme started. It envisages investments of USD 61 million into reconstruction and repair of 273 km of rural roads over a five-year term. In accordance with the agreement with America, in five years Armenia is to repair about 500 km of rural roads at the state’s expense. In 2008-2009, USD 30.6 million loaned from the Asian Bank of Development will be spent on road repairs in 2008-2009. 223 km of roads will be repaired from the credit in four regions of the country. 
Containers Still Run Along the Transsib 
The total transportation of container cargo along the TransSiberian railway amounted to 554,102 TEU in January-November of 2007. The year-on-year increase was 49%. In 11 months of 2006 only 372,625 TEU was carried via the railway.
According to the information of the Coordinating Council for TransSiberian Transportation, in January-October 2007, 181,149 TEU was transported between Russia and China. During 10 months of 2006, 123,271 TEU was carried there.
The majority of container transportation is carried by block trains.
Carrying Coal for Export
Steam coal volume carried along the Russian railway network for export grew by 7.3% in 11 months of 2007. Meanwhile, according to official OAO RZD statistics, the domestic transportation of cargo fell by 3.5% during the period.
On the whole, the volume of coal transportation in the RF and for export increased slightly - by 0.2% only in January-November 2007. 
In particular, transportation of coal extracted at the Eastern Donbass grew by 1.7 times, the ones extracted at Kuzbass increased by 6.3%, Kansko-Achinsk coals by 24.8% and East Siberian ones by 2.4%. Meanwhile, export transportation of coals from Pechora fell by 4.9%, and the ones extracted in the Far Eastern region and Yakutia dropped by 2.7%.
Throughput of Ukrainian Transport Enterprises: +3.7%    
Ukrainian transport enterprises increased throughput by 3.7% year-on-year to 496.4 billion ton-kilometers, reported the State Statistics Service.
Meanwhile, cargo transportation volume grew by 5.4% to 902.7 million tons.
According to the statistics data, air transport throughput increased by 21.3% and  those of road and railway transport rose by 18.3% and 9.1% respectively.
Freight transportation by railway grew by 7.1% to 512.5 million tons, cargo volume carried by road hauliers and by air amounted to 169.7 million tons (+12.6%) and 102.6 thousand tons (+3.7%).
Last year, Ukrainian sea and river commercial fleet increased cargo transportation by 5.6% year-in-year; 24.3 million tons of freight was delivered to customers.
Cargo volume carried by river transport enterprises increased by 5.8% in comparison with 2006, those using sea transport grew by 5.3%. International freight transportation by sea and river fell by 5.2% and 11% respectively.
Commercial and fishing ports and sea and river industrial terminals handled 176.4 million tons (+12%). Handling of import increased by 19.9%, while transit and domestic freight grew by 31% and 19.5% respectively. Handling volume of export reduced by 5.9%.
196.1 million tons of cargo was carried by pipelines, 3.8% down year-on-year. Gas and ammonia transportation reduced by 8.6% and 7.1% year-on-year. Oil transportation volume grew by 13.4%. Oil transit increased by 19.9%, while transit of gas and ammonia fell by 10.4% and 3.7% respectively.
OAO RZD Increased Transportation Volume by 4.2% in January-November 2007     
In January-November 2007, OAO RZD increased cargo transportation volume by 4.2% year-on-year to 1,364,692,000 tons.
According to Russian Railways, the domestic transportation volume carried by the company grew by 2.4% to 895.1 million tons, and international transportation volume increased by 7.8% to 469.5 million tons.
Transportation of transit cargo rose by 30.4% to 24.2 million tons. The major flow of cargo is carried via onland border crossings.
Kazakhstan Increased Throughput
In Kazakhstan, the throughput (taking into account the throughput of non-transport organisations and entrepreneurs specializing in commercial transportation) amounted to 350,449.7 million ton-kilometers, 6.7% up year-on-year.
In particular, the throughput of the railway transport grew by 5.1% to 201,080.8 million ton-kilometers and road haulages amounted to 61,443.6 million ton-kilometers (+14.1%). In 2007, the throughput of Kazakh main pipelines was 87,783.5 million ton-kilometers (+5.4%), including oil pipelines – 42.281 billion ton-kilometers (+6%), and gas pipelines – 45,502.5 million ton-kilometers (+4.8%).
River transport throughput increased 31% year-on-year to 52,299.5 thousand ton-kilometers, air transport throughput grew by 28.8% to 85,747.1 thousand ton-kilometers.
The passenger turnover in the Republic amounted to 123,888.8 million passenger-kilometers, a 4.3% increase in comparison with 2006.  
Russian Sea Ports Increased Throughput By 7.2% 
Last year the total throughput of Russian ports exceeded 451 million tons, up 7.2% (+30 million tons) year-on-year, reported the Association of Commercial Sea Ports.
The share of liquid bulk was over 58% of the total volume. In 2007 Russian ports handled 264.4 million tons of liquid bulk (+7.4%) and 186.6 million tons of solid bulk (+7%). The RF ports located in the north-western basin serviced 46.5% of the total volume; the ports in the southern basin reduced throughput to 35.9% of the total volume, and the Far Eastern ports increased handling slightly to 17.6%.
The ports of Russian North-West increased throughput by 9% (+17 million tons) year-on-year to 209.5 million tons. The ports of the region handled 82.4 million tons of solid bulk (+10.7%) and over 127 million tons of liquid bulk (+8%).
The dynamics of Russian southern ports’ throughput growth slowed down in 2007. The ports increased handling volume by 2.1 million tons only (1.3%) to 161.8 million tons, including 50.7 million tons of solid bulk (+7%) and 111.1 million tons of liquid bulk (-1.2%). Over 80% of the volume was serviced in the ports of Novorossiysk and Tuapse.
The throughput of Russian ports in the Far eastern region grew by 15% year-on-year to 79.7 million tons. The ports handled 53.4 million tons of solid bulk (+1.3%) and 26 million tons of liquid bulk (+60%).  
Direct Ferry Line to Connect Ports of Kavkaz and Varna 
On January 18, 2008, Igor Levitin, Russian Minister of Transport and Petar Mutafchiev, Bulgarian Transport Minister signed the Agreement on the establishment of a direct international railway ferry line between the Russian port of Kavkaz and the Bulgarian port of Varna.
The Agreement envisages cooperation and necessary mutual support to organise and develop combined railway and ferry cargo transportation via the ports of Kavkaz and Varna. 
The parties are going to carry out a coordinated tariff policy to make the railway ferry line efficient.
Third parties can join the Agreement concluded by Russia and Bulgaria. 
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The Transsib or the Sea: Which to Choose?
– Mr. Hafer, you control the operation of Deutsche Bahn in Russia, Eastern Europe and Asia. Which countries are considered by DB the most important to cooperate with?
– I would like to add that we work in China too. We see the Eurasian market as a whole market, so we do not regard any state as a strategically important one. One part of it is cooperation between Deutsche Bahn and Russia, especially OAO RZD, and the other part is cooperation between Deutsche Bahn and China. Deutsche Bahn made a key decision to invest money into the terminal network for intermodal traffic in China. And the Chinese made a decision to increase the intermodal traffic from 2 million TEU to 10 million TEU by 2011. To cope with this increase, 18 terminals are being built in the country. Deutsche Bahn is one of the shareholders of China United International Railway Container Services, a Chinese-French-German joint venture, which will own the terminal network. The share of DB is 8%. Of course, we have a long-term interest in shipping goods, especially containers, between China and the European Union. So, it is necessary that we develop our business with OAO RZD, and we have now established several areas of cooperation. 
– As far as I understand, Deutsche Bahn is going to carry freight from China to the EU using the route, which is an alternative to sea. Do you mean the Transsib or another transport corridor?
– We will have to deal with the competition with sea carriers. And DB has significant advantages. Firstly, more and more manufactures are located in the North-West of China. If cargo is transported from the region to ports, for example Shanghai, and then to Europe by sea, much time is lost. It is more reasonable to build terminals near the border, to form block trains there, and then to transport them by railway to Russian consignees as well as to European markets. Meanwhile, the route to transport containers is to be chosen by our Russian colleagues. They will decide whether it will be the Transsib or not.
– What does DB plan to do to carry out the transportation?
– We plan to establish norms and standards of transportation. For example, it is necessary to decide whether containers of enlarged capacity will be used, because in Russia there are often difficulties with using the European standard pallets. Besides, the transshipment standards, as well as the ones of storing containers in the terminals, are to be developed. A separate issue is the development of norms and standards in IT. It would be wonderful if we managed to implement a single standard in IT in Europe, Russia and China. We have made the first steps on the way to it. IT used in China is similar to the one applied in Germany. If Russia joins it, the transportation will be carried out using the same information technology and unified technical standards.
Consequently, the transit route along Russian railways will become competitive and we will be able to attract the clients who nowadays prefer transportation by sea. It is not a secret that onland routes have an absolute competitive advantage – delivery terms. Just compare: 12-15 days from China to Berlin, while 30-40 days are required to carry freight by sea.
– Will the speed help to compensate for the difference in price?
– Where goods are transported regularly, the cost of transportation means much, and cargo owners prefer sea routes. Meanwhile, there are cargoes for which delivery time is very important, and its reduction by 20-30 days is a definite advantage.
Besides, nowadays, there is a tendency towards heavier containers, which makes their handling in ports more complicated. And the total weight of carried cargo is limited for a ship. While sea carriers implement limitations on the size and weight of a container, transportation of heavy ‘boxes’ is not a problem for railwaymen. And it is another advantage of onland routes.   
The Time of Norms and Standards Has Come
– Could you please comment on the cooperation with Russian enterprises?
– We have already got a number of joint projects. For example, in 2007 a joint venture was launched. ZAO EurasiaRailLogistics will specialise in cargo door-to-door transportation from the EU to the Asian and Pacific region via Russia. In a second project, the participants are OAO TransContainer, Byelorusian Railway, Polskie Koleje Panstwowe (РКР, Polish Railway) and DB. They are organising a regular block container train on the route Moscow – Berlin. Still, there is one problem familiar to many people – the time taken by customs formalities. Nevertheless, we believe that the container train will make five trips a week, and delivery time will be three days only. 
– Is the different size of the gauge a problem?
– I think it is not. Due to modern technologies, containerised cargo may be moved from one gauge to the other and it only takes two hours. This time is quite tolerable. If rolling stock must be moved to the other gauge, it is more complicated, because the bogie has to be changed. However, it is no problem either.
– Is it then reasonable to construct railways following a new gauge standard, i.e. the European gauge on the 1520 area as well as 1520 gauge in Europe?
– This issue is actively discussed now due to the project of Rail Baltica railway construction from the Baltic States to Europe. There are serious discussions concerning the standards following which the railway must be built. Meanwhile, the countries are to use the resources they have. 1520 gauge connects Riga and Klaipeda and Vladivostok. Why are the standards to be changed? It is a significant advantage – the railways are already integrated into the transport system. So, speaking about transit transportation, there is no need to construct additional railways with another gauge width.     
– Does the holding company plan to operate more actively on the Russian market?
– Yes, and not only in the cargo transportation sector. Our company has worked in the high-speed railway transportation sector for thirty years, and now we working actively with OAO RZD to modernise the Russian railroad infrastructure. We consult Russian colleagues and help to develop standards. We also took part in development of the overall concept of preparing tracks for the announced speed of 250 kph. 
– As for transit transportation using sea routes, nowadays the system of carrying loaded railway rolling stock by ferries is being put into operation at the Baltic Sea. Is it competitive?
– We use railway-ferry transportation on the route Sassnitz – Muuga – Baltiysk – Ust-Luga, and the company is interested in development of the line, which provides direct communication with Russia. At the same time, we traditionally cooperate with the port of Klaipeda, and most cargo is still carried via there. Some freight is transported via Finnish ports. Nevertheless, Russian projects are very interesting. On the whole, we believe that Russia has enough opportunities to develop its own port infrastructure and approaches to its ports on the Baltic Sea. 
– Does your company plan to purchase warehouses, transport and other assets on foreign markets?
– It depends on the country. In some states there is sense in purchasing assets, in others it is more reasonable for them to be owned by residents and launch joint ventures instead.
– And what about Russia?
– Schenker company came to Russia before the revolution. Now the company’s position on the market is pretty strong, with its first warehouse opened in the Moscow region. Later, we are going to develop the logistics and railway transportation network in cooperation with OAO RZD. 
– Is Deutsche Bahn interested in purchasing shares of OAO RZD’s daughter companies, in particular OAO TransContainer?
– I believe that nowadays we must take efforts to develop the projects and companies we launched in cooperation with Russian colleagues. It is especially important, when we think of transportation from China to Europe along the onland routes. It is high time we developed norms and standards for transportation.
    [~DETAIL_TEXT] => 
The Transsib or the Sea: Which to Choose?
– Mr. Hafer, you control the operation of Deutsche Bahn in Russia, Eastern Europe and Asia. Which countries are considered by DB the most important to cooperate with?
– I would like to add that we work in China too. We see the Eurasian market as a whole market, so we do not regard any state as a strategically important one. One part of it is cooperation between Deutsche Bahn and Russia, especially OAO RZD, and the other part is cooperation between Deutsche Bahn and China. Deutsche Bahn made a key decision to invest money into the terminal network for intermodal traffic in China. And the Chinese made a decision to increase the intermodal traffic from 2 million TEU to 10 million TEU by 2011. To cope with this increase, 18 terminals are being built in the country. Deutsche Bahn is one of the shareholders of China United International Railway Container Services, a Chinese-French-German joint venture, which will own the terminal network. The share of DB is 8%. Of course, we have a long-term interest in shipping goods, especially containers, between China and the European Union. So, it is necessary that we develop our business with OAO RZD, and we have now established several areas of cooperation. 
– As far as I understand, Deutsche Bahn is going to carry freight from China to the EU using the route, which is an alternative to sea. Do you mean the Transsib or another transport corridor?
– We will have to deal with the competition with sea carriers. And DB has significant advantages. Firstly, more and more manufactures are located in the North-West of China. If cargo is transported from the region to ports, for example Shanghai, and then to Europe by sea, much time is lost. It is more reasonable to build terminals near the border, to form block trains there, and then to transport them by railway to Russian consignees as well as to European markets. Meanwhile, the route to transport containers is to be chosen by our Russian colleagues. They will decide whether it will be the Transsib or not.
– What does DB plan to do to carry out the transportation?
– We plan to establish norms and standards of transportation. For example, it is necessary to decide whether containers of enlarged capacity will be used, because in Russia there are often difficulties with using the European standard pallets. Besides, the transshipment standards, as well as the ones of storing containers in the terminals, are to be developed. A separate issue is the development of norms and standards in IT. It would be wonderful if we managed to implement a single standard in IT in Europe, Russia and China. We have made the first steps on the way to it. IT used in China is similar to the one applied in Germany. If Russia joins it, the transportation will be carried out using the same information technology and unified technical standards.
Consequently, the transit route along Russian railways will become competitive and we will be able to attract the clients who nowadays prefer transportation by sea. It is not a secret that onland routes have an absolute competitive advantage – delivery terms. Just compare: 12-15 days from China to Berlin, while 30-40 days are required to carry freight by sea.
– Will the speed help to compensate for the difference in price?
– Where goods are transported regularly, the cost of transportation means much, and cargo owners prefer sea routes. Meanwhile, there are cargoes for which delivery time is very important, and its reduction by 20-30 days is a definite advantage.
Besides, nowadays, there is a tendency towards heavier containers, which makes their handling in ports more complicated. And the total weight of carried cargo is limited for a ship. While sea carriers implement limitations on the size and weight of a container, transportation of heavy ‘boxes’ is not a problem for railwaymen. And it is another advantage of onland routes.   
The Time of Norms and Standards Has Come
– Could you please comment on the cooperation with Russian enterprises?
– We have already got a number of joint projects. For example, in 2007 a joint venture was launched. ZAO EurasiaRailLogistics will specialise in cargo door-to-door transportation from the EU to the Asian and Pacific region via Russia. In a second project, the participants are OAO TransContainer, Byelorusian Railway, Polskie Koleje Panstwowe (РКР, Polish Railway) and DB. They are organising a regular block container train on the route Moscow – Berlin. Still, there is one problem familiar to many people – the time taken by customs formalities. Nevertheless, we believe that the container train will make five trips a week, and delivery time will be three days only. 
– Is the different size of the gauge a problem?
– I think it is not. Due to modern technologies, containerised cargo may be moved from one gauge to the other and it only takes two hours. This time is quite tolerable. If rolling stock must be moved to the other gauge, it is more complicated, because the bogie has to be changed. However, it is no problem either.
– Is it then reasonable to construct railways following a new gauge standard, i.e. the European gauge on the 1520 area as well as 1520 gauge in Europe?
– This issue is actively discussed now due to the project of Rail Baltica railway construction from the Baltic States to Europe. There are serious discussions concerning the standards following which the railway must be built. Meanwhile, the countries are to use the resources they have. 1520 gauge connects Riga and Klaipeda and Vladivostok. Why are the standards to be changed? It is a significant advantage – the railways are already integrated into the transport system. So, speaking about transit transportation, there is no need to construct additional railways with another gauge width.     
– Does the holding company plan to operate more actively on the Russian market?
– Yes, and not only in the cargo transportation sector. Our company has worked in the high-speed railway transportation sector for thirty years, and now we working actively with OAO RZD to modernise the Russian railroad infrastructure. We consult Russian colleagues and help to develop standards. We also took part in development of the overall concept of preparing tracks for the announced speed of 250 kph. 
– As for transit transportation using sea routes, nowadays the system of carrying loaded railway rolling stock by ferries is being put into operation at the Baltic Sea. Is it competitive?
– We use railway-ferry transportation on the route Sassnitz – Muuga – Baltiysk – Ust-Luga, and the company is interested in development of the line, which provides direct communication with Russia. At the same time, we traditionally cooperate with the port of Klaipeda, and most cargo is still carried via there. Some freight is transported via Finnish ports. Nevertheless, Russian projects are very interesting. On the whole, we believe that Russia has enough opportunities to develop its own port infrastructure and approaches to its ports on the Baltic Sea. 
– Does your company plan to purchase warehouses, transport and other assets on foreign markets?
– It depends on the country. In some states there is sense in purchasing assets, in others it is more reasonable for them to be owned by residents and launch joint ventures instead.
– And what about Russia?
– Schenker company came to Russia before the revolution. Now the company’s position on the market is pretty strong, with its first warehouse opened in the Moscow region. Later, we are going to develop the logistics and railway transportation network in cooperation with OAO RZD. 
– Is Deutsche Bahn interested in purchasing shares of OAO RZD’s daughter companies, in particular OAO TransContainer?
– I believe that nowadays we must take efforts to develop the projects and companies we launched in cooperation with Russian colleagues. It is especially important, when we think of transportation from China to Europe along the onland routes. It is high time we developed norms and standards for transportation.
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            [ELEMENT_META_TITLE] => The Time  of Transsib Has Come
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The Transsib or the Sea: Which to Choose?
– Mr. Hafer, you control the operation of Deutsche Bahn in Russia, Eastern Europe and Asia. Which countries are considered by DB the most important to cooperate with?
– I would like to add that we work in China too. We see the Eurasian market as a whole market, so we do not regard any state as a strategically important one. One part of it is cooperation between Deutsche Bahn and Russia, especially OAO RZD, and the other part is cooperation between Deutsche Bahn and China. Deutsche Bahn made a key decision to invest money into the terminal network for intermodal traffic in China. And the Chinese made a decision to increase the intermodal traffic from 2 million TEU to 10 million TEU by 2011. To cope with this increase, 18 terminals are being built in the country. Deutsche Bahn is one of the shareholders of China United International Railway Container Services, a Chinese-French-German joint venture, which will own the terminal network. The share of DB is 8%. Of course, we have a long-term interest in shipping goods, especially containers, between China and the European Union. So, it is necessary that we develop our business with OAO RZD, and we have now established several areas of cooperation. 
– As far as I understand, Deutsche Bahn is going to carry freight from China to the EU using the route, which is an alternative to sea. Do you mean the Transsib or another transport corridor?
– We will have to deal with the competition with sea carriers. And DB has significant advantages. Firstly, more and more manufactures are located in the North-West of China. If cargo is transported from the region to ports, for example Shanghai, and then to Europe by sea, much time is lost. It is more reasonable to build terminals near the border, to form block trains there, and then to transport them by railway to Russian consignees as well as to European markets. Meanwhile, the route to transport containers is to be chosen by our Russian colleagues. They will decide whether it will be the Transsib or not.
– What does DB plan to do to carry out the transportation?
– We plan to establish norms and standards of transportation. For example, it is necessary to decide whether containers of enlarged capacity will be used, because in Russia there are often difficulties with using the European standard pallets. Besides, the transshipment standards, as well as the ones of storing containers in the terminals, are to be developed. A separate issue is the development of norms and standards in IT. It would be wonderful if we managed to implement a single standard in IT in Europe, Russia and China. We have made the first steps on the way to it. IT used in China is similar to the one applied in Germany. If Russia joins it, the transportation will be carried out using the same information technology and unified technical standards.
Consequently, the transit route along Russian railways will become competitive and we will be able to attract the clients who nowadays prefer transportation by sea. It is not a secret that onland routes have an absolute competitive advantage – delivery terms. Just compare: 12-15 days from China to Berlin, while 30-40 days are required to carry freight by sea.
– Will the speed help to compensate for the difference in price?
– Where goods are transported regularly, the cost of transportation means much, and cargo owners prefer sea routes. Meanwhile, there are cargoes for which delivery time is very important, and its reduction by 20-30 days is a definite advantage.
Besides, nowadays, there is a tendency towards heavier containers, which makes their handling in ports more complicated. And the total weight of carried cargo is limited for a ship. While sea carriers implement limitations on the size and weight of a container, transportation of heavy ‘boxes’ is not a problem for railwaymen. And it is another advantage of onland routes.   
The Time of Norms and Standards Has Come
– Could you please comment on the cooperation with Russian enterprises?
– We have already got a number of joint projects. For example, in 2007 a joint venture was launched. ZAO EurasiaRailLogistics will specialise in cargo door-to-door transportation from the EU to the Asian and Pacific region via Russia. In a second project, the participants are OAO TransContainer, Byelorusian Railway, Polskie Koleje Panstwowe (РКР, Polish Railway) and DB. They are organising a regular block container train on the route Moscow – Berlin. Still, there is one problem familiar to many people – the time taken by customs formalities. Nevertheless, we believe that the container train will make five trips a week, and delivery time will be three days only. 
– Is the different size of the gauge a problem?
– I think it is not. Due to modern technologies, containerised cargo may be moved from one gauge to the other and it only takes two hours. This time is quite tolerable. If rolling stock must be moved to the other gauge, it is more complicated, because the bogie has to be changed. However, it is no problem either.
– Is it then reasonable to construct railways following a new gauge standard, i.e. the European gauge on the 1520 area as well as 1520 gauge in Europe?
– This issue is actively discussed now due to the project of Rail Baltica railway construction from the Baltic States to Europe. There are serious discussions concerning the standards following which the railway must be built. Meanwhile, the countries are to use the resources they have. 1520 gauge connects Riga and Klaipeda and Vladivostok. Why are the standards to be changed? It is a significant advantage – the railways are already integrated into the transport system. So, speaking about transit transportation, there is no need to construct additional railways with another gauge width.     
– Does the holding company plan to operate more actively on the Russian market?
– Yes, and not only in the cargo transportation sector. Our company has worked in the high-speed railway transportation sector for thirty years, and now we working actively with OAO RZD to modernise the Russian railroad infrastructure. We consult Russian colleagues and help to develop standards. We also took part in development of the overall concept of preparing tracks for the announced speed of 250 kph. 
– As for transit transportation using sea routes, nowadays the system of carrying loaded railway rolling stock by ferries is being put into operation at the Baltic Sea. Is it competitive?
– We use railway-ferry transportation on the route Sassnitz – Muuga – Baltiysk – Ust-Luga, and the company is interested in development of the line, which provides direct communication with Russia. At the same time, we traditionally cooperate with the port of Klaipeda, and most cargo is still carried via there. Some freight is transported via Finnish ports. Nevertheless, Russian projects are very interesting. On the whole, we believe that Russia has enough opportunities to develop its own port infrastructure and approaches to its ports on the Baltic Sea. 
– Does your company plan to purchase warehouses, transport and other assets on foreign markets?
– It depends on the country. In some states there is sense in purchasing assets, in others it is more reasonable for them to be owned by residents and launch joint ventures instead.
– And what about Russia?
– Schenker company came to Russia before the revolution. Now the company’s position on the market is pretty strong, with its first warehouse opened in the Moscow region. Later, we are going to develop the logistics and railway transportation network in cooperation with OAO RZD. 
– Is Deutsche Bahn interested in purchasing shares of OAO RZD’s daughter companies, in particular OAO TransContainer?
– I believe that nowadays we must take efforts to develop the projects and companies we launched in cooperation with Russian colleagues. It is especially important, when we think of transportation from China to Europe along the onland routes. It is high time we developed norms and standards for transportation.
    [~DETAIL_TEXT] => 
The Transsib or the Sea: Which to Choose?
– Mr. Hafer, you control the operation of Deutsche Bahn in Russia, Eastern Europe and Asia. Which countries are considered by DB the most important to cooperate with?
– I would like to add that we work in China too. We see the Eurasian market as a whole market, so we do not regard any state as a strategically important one. One part of it is cooperation between Deutsche Bahn and Russia, especially OAO RZD, and the other part is cooperation between Deutsche Bahn and China. Deutsche Bahn made a key decision to invest money into the terminal network for intermodal traffic in China. And the Chinese made a decision to increase the intermodal traffic from 2 million TEU to 10 million TEU by 2011. To cope with this increase, 18 terminals are being built in the country. Deutsche Bahn is one of the shareholders of China United International Railway Container Services, a Chinese-French-German joint venture, which will own the terminal network. The share of DB is 8%. Of course, we have a long-term interest in shipping goods, especially containers, between China and the European Union. So, it is necessary that we develop our business with OAO RZD, and we have now established several areas of cooperation. 
– As far as I understand, Deutsche Bahn is going to carry freight from China to the EU using the route, which is an alternative to sea. Do you mean the Transsib or another transport corridor?
– We will have to deal with the competition with sea carriers. And DB has significant advantages. Firstly, more and more manufactures are located in the North-West of China. If cargo is transported from the region to ports, for example Shanghai, and then to Europe by sea, much time is lost. It is more reasonable to build terminals near the border, to form block trains there, and then to transport them by railway to Russian consignees as well as to European markets. Meanwhile, the route to transport containers is to be chosen by our Russian colleagues. They will decide whether it will be the Transsib or not.
– What does DB plan to do to carry out the transportation?
– We plan to establish norms and standards of transportation. For example, it is necessary to decide whether containers of enlarged capacity will be used, because in Russia there are often difficulties with using the European standard pallets. Besides, the transshipment standards, as well as the ones of storing containers in the terminals, are to be developed. A separate issue is the development of norms and standards in IT. It would be wonderful if we managed to implement a single standard in IT in Europe, Russia and China. We have made the first steps on the way to it. IT used in China is similar to the one applied in Germany. If Russia joins it, the transportation will be carried out using the same information technology and unified technical standards.
Consequently, the transit route along Russian railways will become competitive and we will be able to attract the clients who nowadays prefer transportation by sea. It is not a secret that onland routes have an absolute competitive advantage – delivery terms. Just compare: 12-15 days from China to Berlin, while 30-40 days are required to carry freight by sea.
– Will the speed help to compensate for the difference in price?
– Where goods are transported regularly, the cost of transportation means much, and cargo owners prefer sea routes. Meanwhile, there are cargoes for which delivery time is very important, and its reduction by 20-30 days is a definite advantage.
Besides, nowadays, there is a tendency towards heavier containers, which makes their handling in ports more complicated. And the total weight of carried cargo is limited for a ship. While sea carriers implement limitations on the size and weight of a container, transportation of heavy ‘boxes’ is not a problem for railwaymen. And it is another advantage of onland routes.   
The Time of Norms and Standards Has Come
– Could you please comment on the cooperation with Russian enterprises?
– We have already got a number of joint projects. For example, in 2007 a joint venture was launched. ZAO EurasiaRailLogistics will specialise in cargo door-to-door transportation from the EU to the Asian and Pacific region via Russia. In a second project, the participants are OAO TransContainer, Byelorusian Railway, Polskie Koleje Panstwowe (РКР, Polish Railway) and DB. They are organising a regular block container train on the route Moscow – Berlin. Still, there is one problem familiar to many people – the time taken by customs formalities. Nevertheless, we believe that the container train will make five trips a week, and delivery time will be three days only. 
– Is the different size of the gauge a problem?
– I think it is not. Due to modern technologies, containerised cargo may be moved from one gauge to the other and it only takes two hours. This time is quite tolerable. If rolling stock must be moved to the other gauge, it is more complicated, because the bogie has to be changed. However, it is no problem either.
– Is it then reasonable to construct railways following a new gauge standard, i.e. the European gauge on the 1520 area as well as 1520 gauge in Europe?
– This issue is actively discussed now due to the project of Rail Baltica railway construction from the Baltic States to Europe. There are serious discussions concerning the standards following which the railway must be built. Meanwhile, the countries are to use the resources they have. 1520 gauge connects Riga and Klaipeda and Vladivostok. Why are the standards to be changed? It is a significant advantage – the railways are already integrated into the transport system. So, speaking about transit transportation, there is no need to construct additional railways with another gauge width.     
– Does the holding company plan to operate more actively on the Russian market?
– Yes, and not only in the cargo transportation sector. Our company has worked in the high-speed railway transportation sector for thirty years, and now we working actively with OAO RZD to modernise the Russian railroad infrastructure. We consult Russian colleagues and help to develop standards. We also took part in development of the overall concept of preparing tracks for the announced speed of 250 kph. 
– As for transit transportation using sea routes, nowadays the system of carrying loaded railway rolling stock by ferries is being put into operation at the Baltic Sea. Is it competitive?
– We use railway-ferry transportation on the route Sassnitz – Muuga – Baltiysk – Ust-Luga, and the company is interested in development of the line, which provides direct communication with Russia. At the same time, we traditionally cooperate with the port of Klaipeda, and most cargo is still carried via there. Some freight is transported via Finnish ports. Nevertheless, Russian projects are very interesting. On the whole, we believe that Russia has enough opportunities to develop its own port infrastructure and approaches to its ports on the Baltic Sea. 
– Does your company plan to purchase warehouses, transport and other assets on foreign markets?
– It depends on the country. In some states there is sense in purchasing assets, in others it is more reasonable for them to be owned by residents and launch joint ventures instead.
– And what about Russia?
– Schenker company came to Russia before the revolution. Now the company’s position on the market is pretty strong, with its first warehouse opened in the Moscow region. Later, we are going to develop the logistics and railway transportation network in cooperation with OAO RZD. 
– Is Deutsche Bahn interested in purchasing shares of OAO RZD’s daughter companies, in particular OAO TransContainer?
– I believe that nowadays we must take efforts to develop the projects and companies we launched in cooperation with Russian colleagues. It is especially important, when we think of transportation from China to Europe along the onland routes. It is high time we developed norms and standards for transportation.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/012.png" border="1" alt="Gebhard Hafer" title="Gebhard Hafer" hspace="5" width="110" height="140" align="left" />Nowadays, Deutsche Bahn develops its presence on the international markets, in particular on Russian and Chinese ones. Gebhard Hafer, Director of Europe (East) and CIS, DB International GmbH and former Director of the company’s Logistic Department, commented on the potential attractiveness of the Transsiberian railway and the prospects of his company’s operation in Russia.
            [SECTION_PICTURE_FILE_ALT] => The Time  of Transsib Has Come
            [SECTION_PICTURE_FILE_TITLE] => The Time  of Transsib Has Come
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            [SECTION_DETAIL_PICTURE_FILE_TITLE] => The Time  of Transsib Has Come
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            [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => The Time  of Transsib Has Come
            [ELEMENT_DETAIL_PICTURE_FILE_ALT] => The Time  of Transsib Has Come
            [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => The Time  of Transsib Has Come
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Mutual Interest
The railway infrastructure deterioration and the lack of railway communication in some regions of India restrains the country’s economic development. To improve the situation, Indian Railways (IR, the company is owned by the state) is going to invest about USD 65.8 billion before 2012 into development of transport corridors, modernisation of railway stations and private freight trains for container transportation. Naturally, India may become a large consumer on the international market.
The starting point of Russian and Indian cooperation in the railways sector is a Memorandum of Understanding signed by the Ministry of Railways of the Republic of India and OAO RZD on March 25, 2006. This document defines the major issues of the parties’ cooperation to develop railways: supplies of railway transport equipment, diagnostic facilities, rolling stock, automation and telemechanics equipment, implementation of advanced technologies and HR training.
In spring 2007 a special company, JSC RZD Trading Company, was founded. It represents the interests of OAO RZD and its daughter companies outside Russia; it is responsible for the holding company’s participation in tenders and examination of the offers made by foreign partners. Nowadays, JSC RZD Trading Company is engaged in promotion of Russian technologies in the Indian market. 
One of the most important events for the development of cooperation between OAO RZD and Indian Railways was a railway technologies exhibition called “India Rail Tech 2007”, held in New Delhi last September. JSC RZD Trading Company presented there the production of the Russian Research Development and Planning Institute for Railway Information Technology, Automation and Telecommunication (VNIIAS), Project-Construction-Technological Bureau of Railway Automation and Telemechanics (PKTB CSh), OAO Promelectronics and scientific production enterprise Geocosmos.
Top managers of Indian Railways, the Urban Construction Ministry of the Indian Government, a project subsidiary of Indian Railway, Rail Vikas Nigam Limited and RITES Limited (state companies, owned by IR) as well as the representatives of Indian regional railways, and private companies operating in the railway sector visited the Russian stand at the exhibition. Moreover, at the exhibition there was a meeting of OAO RZD President Vladimir Yakunin and Chairman of IR Board of Directors K. C. Jena, during which the practical issues of the parties’ cooperation considering the launch of  JSC RZD Trading Company were discussed.
It’s Just The Beginning!
Today OAO RZD is ready to participate in carrying out railway infrastructure projects, to supply automation and telemechanics systems, track machines and equipment, locomotive engines, to provide technologies for tracks and railway object diagnostics and to fulfil works in other segments of Indian railway sector.
To enter the market, it is necessary to certify Russian production in accordance with Indian standards, which is now being done by OAO RZD. Today RDSO (Research Designs and Standards Organisation under Indian Ministry of Railways) is certifying the microprocessor-based automatic block systems with tone track circuits and a complex of locomotive control safety devices “KLUB-U”. Besides, the documents on certification of “Track Monitoring System Using Axle Counters Method”, are being adapted to Indian weather conditions, in particular to temperature and humidity.  
Ant it is just the beginning. Until 2012 Indian Railways is going to install automation and telemechanics systems widely. In particular, in the next 5 years the signalling systems implemented on the main lines of IR are to be modernised. There is a special Programme envisaging replacement of the outdated signalling systems by modern ones using track circuits and controlling systems set on locomotives with blocking systems. According to plans, the new automated signalling systems will be set in the “middle level” stations located at 31 sectors of the Indian Railways. The work is estimated at USD 34 million. 
Another important issue envisaged by the Programme is switching the signalling and blocking systems to the track circuits. Such devices are to be implemented on all Indian railways tracks, including railway approaches to ports. In particular, before 2012, nine projects of installation of such signalling systems are to be carried out. Their total cost is USD 9.7 million. Most of the sum (USD 5.24 million) is to be invested into setting up the system in the Northern railways of India; USD 2.13 million in the Western railways, and USD 1.27 million in the North-Eastern border railway sectors.
Today, in most stations of Indian Railways, trains and train sections movement is controlled manually. However, Indian specialists believe that if traffic becomes more intensive, manual control will be too complicated. That is why IR is going to put into operation blocking systems using Block Proving by Axle Counters sensors (BPAC), which provide automatic train traffic control. In 2008, ten projects of BPAC installation are to be carried out, their total cost is USD 6.47 million. Five projects out of them will be realised in the South-western railways of India.
To extend the signalling systems’ life-time as well as their reliability and efficiency, IR will carry out 16 projects to replace the usual lamps with LED ones. USD 8.7 million will be invested into it. In 2008 the lams will be changed on the South-Eastern railways (2 projects, USD 1.27 million), the Northern railways (3 projects, USD 2.11 million), and the North-East of India (3 projects, USD 1.42 million).
Besides, OAO RZD offered Indian Railways the opportunity to implement automated data collection systems, providing fast analysis of signalling systems, and integrated power supply systems (IPS), allowing an uninterrupted supply of power to the signalling systems. Implementation of the former will cost USD 8.7 million (15 projects), and of the latter USD 10.24 million (16 projects).
Large Step
OAO RZD is also ready to participate in the projects of building and reconstruction of the Indian railway infrastructure. In particular, the matter concerns the state programme of railway development in India, envisaging construction of two railway lines Calcutta – Delhi and Mumbai – Delhi. 
Meanwhile, the Indian Ministry of railways (via Rail Vikas Nigam Ltd company) asked the Russian party to examine the condition of 100 km of tracks and one railway bridge using modern laser scanning systems. Nowadays, preliminary works are being held. 
Having received documents from IR, JSC RZD Trading Company is now examining and developing documents for the company’s participation in five tenders (including couplers and wheel billet supplies). Commercial offers and specimen products have been sent to partner companies to see if they can be put into operation in India.
In 2007, the basis for long-term development of partner relations between OAO RZD and the Ministry of railways of India was created. Moreover, during its meetings with representatives of Indian companies, specialists in Indian legislation, and employees of Russian companies operating in the Indian market, JSC RZD Trading Company learnt the practice of entering the market as well as the normative base regulating the launch and functioning of foreign representative offices and joint ventures in the state.  On the whole, as experts of OAO RZD forecast, cooperation with Indian Railways and private companies in the sector of railway production may be fruitful for Russian Railways from the standpoint of market capacity (up to USD 1.5 billion annually) as well as of enlarging the company’s export programme, developing advanced technologies and cooperation in manufacture. Another of OAO RZD’s planned large steps into the Indian market is the presentation of Russian railway industry’s export opportunities. By the way, it was Chairman of IR Board of Directors K.C. Jena, who asked Russian Railways to organise the presentation.   
By Olga Gorbunova
viewpoint
Vladimir Yakunin,
 President of OAO RZD: 
– Prospects for railway cooperation with India are very promising when taking into account the developing economy of India, the current condition of its railway’s demand for scaled investments in infrastructure. And Russian Railways, I think, is very experienced in construction of electrified railway lines; we have a well-developed network, new locomotives and new rolling stock. Lately we have been actively negotiating with our Indian partners on possible cooperation, in particular, we want to supply our safety systems to IR. And they are interested in it. Besides, we hope to supply them with traffic control technologies.

Anatoly Volodin,
Director General of JSC RZD Trading Company:
– There is a high demand for locomotives, wagons, traffic control systems, and safety systems in the Indian market. The Indian party is also interested in the advanced technologies of traffic control. Everyone knows that Russian systems of automation and telemechanics are of high quality, efficient and reliable. I believe our Indian clients will like it. An obligatory term of entering the Indian market is certification of the products in India. That is why OAO Trading House RZD is actively organising this procedure in Indian Research Design and Standards Organisation (RDSO). Since there is a system of tenders in India - and it is the only way to export goods, services and technologies into the country - we are carefully examining the terms of entering the Indian market with Russian goods. 
    [~DETAIL_TEXT] => 
Mutual Interest
The railway infrastructure deterioration and the lack of railway communication in some regions of India restrains the country’s economic development. To improve the situation, Indian Railways (IR, the company is owned by the state) is going to invest about USD 65.8 billion before 2012 into development of transport corridors, modernisation of railway stations and private freight trains for container transportation. Naturally, India may become a large consumer on the international market.
The starting point of Russian and Indian cooperation in the railways sector is a Memorandum of Understanding signed by the Ministry of Railways of the Republic of India and OAO RZD on March 25, 2006. This document defines the major issues of the parties’ cooperation to develop railways: supplies of railway transport equipment, diagnostic facilities, rolling stock, automation and telemechanics equipment, implementation of advanced technologies and HR training.
In spring 2007 a special company, JSC RZD Trading Company, was founded. It represents the interests of OAO RZD and its daughter companies outside Russia; it is responsible for the holding company’s participation in tenders and examination of the offers made by foreign partners. Nowadays, JSC RZD Trading Company is engaged in promotion of Russian technologies in the Indian market. 
One of the most important events for the development of cooperation between OAO RZD and Indian Railways was a railway technologies exhibition called “India Rail Tech 2007”, held in New Delhi last September. JSC RZD Trading Company presented there the production of the Russian Research Development and Planning Institute for Railway Information Technology, Automation and Telecommunication (VNIIAS), Project-Construction-Technological Bureau of Railway Automation and Telemechanics (PKTB CSh), OAO Promelectronics and scientific production enterprise Geocosmos.
Top managers of Indian Railways, the Urban Construction Ministry of the Indian Government, a project subsidiary of Indian Railway, Rail Vikas Nigam Limited and RITES Limited (state companies, owned by IR) as well as the representatives of Indian regional railways, and private companies operating in the railway sector visited the Russian stand at the exhibition. Moreover, at the exhibition there was a meeting of OAO RZD President Vladimir Yakunin and Chairman of IR Board of Directors K. C. Jena, during which the practical issues of the parties’ cooperation considering the launch of  JSC RZD Trading Company were discussed.
It’s Just The Beginning!
Today OAO RZD is ready to participate in carrying out railway infrastructure projects, to supply automation and telemechanics systems, track machines and equipment, locomotive engines, to provide technologies for tracks and railway object diagnostics and to fulfil works in other segments of Indian railway sector.
To enter the market, it is necessary to certify Russian production in accordance with Indian standards, which is now being done by OAO RZD. Today RDSO (Research Designs and Standards Organisation under Indian Ministry of Railways) is certifying the microprocessor-based automatic block systems with tone track circuits and a complex of locomotive control safety devices “KLUB-U”. Besides, the documents on certification of “Track Monitoring System Using Axle Counters Method”, are being adapted to Indian weather conditions, in particular to temperature and humidity.  
Ant it is just the beginning. Until 2012 Indian Railways is going to install automation and telemechanics systems widely. In particular, in the next 5 years the signalling systems implemented on the main lines of IR are to be modernised. There is a special Programme envisaging replacement of the outdated signalling systems by modern ones using track circuits and controlling systems set on locomotives with blocking systems. According to plans, the new automated signalling systems will be set in the “middle level” stations located at 31 sectors of the Indian Railways. The work is estimated at USD 34 million. 
Another important issue envisaged by the Programme is switching the signalling and blocking systems to the track circuits. Such devices are to be implemented on all Indian railways tracks, including railway approaches to ports. In particular, before 2012, nine projects of installation of such signalling systems are to be carried out. Their total cost is USD 9.7 million. Most of the sum (USD 5.24 million) is to be invested into setting up the system in the Northern railways of India; USD 2.13 million in the Western railways, and USD 1.27 million in the North-Eastern border railway sectors.
Today, in most stations of Indian Railways, trains and train sections movement is controlled manually. However, Indian specialists believe that if traffic becomes more intensive, manual control will be too complicated. That is why IR is going to put into operation blocking systems using Block Proving by Axle Counters sensors (BPAC), which provide automatic train traffic control. In 2008, ten projects of BPAC installation are to be carried out, their total cost is USD 6.47 million. Five projects out of them will be realised in the South-western railways of India.
To extend the signalling systems’ life-time as well as their reliability and efficiency, IR will carry out 16 projects to replace the usual lamps with LED ones. USD 8.7 million will be invested into it. In 2008 the lams will be changed on the South-Eastern railways (2 projects, USD 1.27 million), the Northern railways (3 projects, USD 2.11 million), and the North-East of India (3 projects, USD 1.42 million).
Besides, OAO RZD offered Indian Railways the opportunity to implement automated data collection systems, providing fast analysis of signalling systems, and integrated power supply systems (IPS), allowing an uninterrupted supply of power to the signalling systems. Implementation of the former will cost USD 8.7 million (15 projects), and of the latter USD 10.24 million (16 projects).
Large Step
OAO RZD is also ready to participate in the projects of building and reconstruction of the Indian railway infrastructure. In particular, the matter concerns the state programme of railway development in India, envisaging construction of two railway lines Calcutta – Delhi and Mumbai – Delhi. 
Meanwhile, the Indian Ministry of railways (via Rail Vikas Nigam Ltd company) asked the Russian party to examine the condition of 100 km of tracks and one railway bridge using modern laser scanning systems. Nowadays, preliminary works are being held. 
Having received documents from IR, JSC RZD Trading Company is now examining and developing documents for the company’s participation in five tenders (including couplers and wheel billet supplies). Commercial offers and specimen products have been sent to partner companies to see if they can be put into operation in India.
In 2007, the basis for long-term development of partner relations between OAO RZD and the Ministry of railways of India was created. Moreover, during its meetings with representatives of Indian companies, specialists in Indian legislation, and employees of Russian companies operating in the Indian market, JSC RZD Trading Company learnt the practice of entering the market as well as the normative base regulating the launch and functioning of foreign representative offices and joint ventures in the state.  On the whole, as experts of OAO RZD forecast, cooperation with Indian Railways and private companies in the sector of railway production may be fruitful for Russian Railways from the standpoint of market capacity (up to USD 1.5 billion annually) as well as of enlarging the company’s export programme, developing advanced technologies and cooperation in manufacture. Another of OAO RZD’s planned large steps into the Indian market is the presentation of Russian railway industry’s export opportunities. By the way, it was Chairman of IR Board of Directors K.C. Jena, who asked Russian Railways to organise the presentation.   
By Olga Gorbunova
viewpoint
Vladimir Yakunin,
 President of OAO RZD: 
– Prospects for railway cooperation with India are very promising when taking into account the developing economy of India, the current condition of its railway’s demand for scaled investments in infrastructure. And Russian Railways, I think, is very experienced in construction of electrified railway lines; we have a well-developed network, new locomotives and new rolling stock. Lately we have been actively negotiating with our Indian partners on possible cooperation, in particular, we want to supply our safety systems to IR. And they are interested in it. Besides, we hope to supply them with traffic control technologies.

Anatoly Volodin,
Director General of JSC RZD Trading Company:
– There is a high demand for locomotives, wagons, traffic control systems, and safety systems in the Indian market. The Indian party is also interested in the advanced technologies of traffic control. Everyone knows that Russian systems of automation and telemechanics are of high quality, efficient and reliable. I believe our Indian clients will like it. An obligatory term of entering the Indian market is certification of the products in India. That is why OAO Trading House RZD is actively organising this procedure in Indian Research Design and Standards Organisation (RDSO). Since there is a system of tenders in India - and it is the only way to export goods, services and technologies into the country - we are carefully examining the terms of entering the Indian market with Russian goods. 
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    [PREVIEW_TEXT] => Lately, OAO RZD has actively been promoting its developments in the international transport market and shown much interest in participation with foreign infrastructure projects. In the company’s sphere of interest there are such states as Cuba, Bulgaria, North Korea, Syria, Libya, Saudi Arabia, Algeria, and Venezuela. But one of the most prospective is the Indian railway infrastructure market along with rolling stock construction and modernisation, believe experts.
    [~PREVIEW_TEXT] => Lately, OAO RZD has actively been promoting its developments in the international transport market and shown much interest in participation with foreign infrastructure projects. In the company’s sphere of interest there are such states as Cuba, Bulgaria, North Korea, Syria, Libya, Saudi Arabia, Algeria, and Venezuela. But one of the most prospective is the Indian railway infrastructure market along with rolling stock construction and modernisation, believe experts.
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Mutual Interest
The railway infrastructure deterioration and the lack of railway communication in some regions of India restrains the country’s economic development. To improve the situation, Indian Railways (IR, the company is owned by the state) is going to invest about USD 65.8 billion before 2012 into development of transport corridors, modernisation of railway stations and private freight trains for container transportation. Naturally, India may become a large consumer on the international market.
The starting point of Russian and Indian cooperation in the railways sector is a Memorandum of Understanding signed by the Ministry of Railways of the Republic of India and OAO RZD on March 25, 2006. This document defines the major issues of the parties’ cooperation to develop railways: supplies of railway transport equipment, diagnostic facilities, rolling stock, automation and telemechanics equipment, implementation of advanced technologies and HR training.
In spring 2007 a special company, JSC RZD Trading Company, was founded. It represents the interests of OAO RZD and its daughter companies outside Russia; it is responsible for the holding company’s participation in tenders and examination of the offers made by foreign partners. Nowadays, JSC RZD Trading Company is engaged in promotion of Russian technologies in the Indian market. 
One of the most important events for the development of cooperation between OAO RZD and Indian Railways was a railway technologies exhibition called “India Rail Tech 2007”, held in New Delhi last September. JSC RZD Trading Company presented there the production of the Russian Research Development and Planning Institute for Railway Information Technology, Automation and Telecommunication (VNIIAS), Project-Construction-Technological Bureau of Railway Automation and Telemechanics (PKTB CSh), OAO Promelectronics and scientific production enterprise Geocosmos.
Top managers of Indian Railways, the Urban Construction Ministry of the Indian Government, a project subsidiary of Indian Railway, Rail Vikas Nigam Limited and RITES Limited (state companies, owned by IR) as well as the representatives of Indian regional railways, and private companies operating in the railway sector visited the Russian stand at the exhibition. Moreover, at the exhibition there was a meeting of OAO RZD President Vladimir Yakunin and Chairman of IR Board of Directors K. C. Jena, during which the practical issues of the parties’ cooperation considering the launch of  JSC RZD Trading Company were discussed.
It’s Just The Beginning!
Today OAO RZD is ready to participate in carrying out railway infrastructure projects, to supply automation and telemechanics systems, track machines and equipment, locomotive engines, to provide technologies for tracks and railway object diagnostics and to fulfil works in other segments of Indian railway sector.
To enter the market, it is necessary to certify Russian production in accordance with Indian standards, which is now being done by OAO RZD. Today RDSO (Research Designs and Standards Organisation under Indian Ministry of Railways) is certifying the microprocessor-based automatic block systems with tone track circuits and a complex of locomotive control safety devices “KLUB-U”. Besides, the documents on certification of “Track Monitoring System Using Axle Counters Method”, are being adapted to Indian weather conditions, in particular to temperature and humidity.  
Ant it is just the beginning. Until 2012 Indian Railways is going to install automation and telemechanics systems widely. In particular, in the next 5 years the signalling systems implemented on the main lines of IR are to be modernised. There is a special Programme envisaging replacement of the outdated signalling systems by modern ones using track circuits and controlling systems set on locomotives with blocking systems. According to plans, the new automated signalling systems will be set in the “middle level” stations located at 31 sectors of the Indian Railways. The work is estimated at USD 34 million. 
Another important issue envisaged by the Programme is switching the signalling and blocking systems to the track circuits. Such devices are to be implemented on all Indian railways tracks, including railway approaches to ports. In particular, before 2012, nine projects of installation of such signalling systems are to be carried out. Their total cost is USD 9.7 million. Most of the sum (USD 5.24 million) is to be invested into setting up the system in the Northern railways of India; USD 2.13 million in the Western railways, and USD 1.27 million in the North-Eastern border railway sectors.
Today, in most stations of Indian Railways, trains and train sections movement is controlled manually. However, Indian specialists believe that if traffic becomes more intensive, manual control will be too complicated. That is why IR is going to put into operation blocking systems using Block Proving by Axle Counters sensors (BPAC), which provide automatic train traffic control. In 2008, ten projects of BPAC installation are to be carried out, their total cost is USD 6.47 million. Five projects out of them will be realised in the South-western railways of India.
To extend the signalling systems’ life-time as well as their reliability and efficiency, IR will carry out 16 projects to replace the usual lamps with LED ones. USD 8.7 million will be invested into it. In 2008 the lams will be changed on the South-Eastern railways (2 projects, USD 1.27 million), the Northern railways (3 projects, USD 2.11 million), and the North-East of India (3 projects, USD 1.42 million).
Besides, OAO RZD offered Indian Railways the opportunity to implement automated data collection systems, providing fast analysis of signalling systems, and integrated power supply systems (IPS), allowing an uninterrupted supply of power to the signalling systems. Implementation of the former will cost USD 8.7 million (15 projects), and of the latter USD 10.24 million (16 projects).
Large Step
OAO RZD is also ready to participate in the projects of building and reconstruction of the Indian railway infrastructure. In particular, the matter concerns the state programme of railway development in India, envisaging construction of two railway lines Calcutta – Delhi and Mumbai – Delhi. 
Meanwhile, the Indian Ministry of railways (via Rail Vikas Nigam Ltd company) asked the Russian party to examine the condition of 100 km of tracks and one railway bridge using modern laser scanning systems. Nowadays, preliminary works are being held. 
Having received documents from IR, JSC RZD Trading Company is now examining and developing documents for the company’s participation in five tenders (including couplers and wheel billet supplies). Commercial offers and specimen products have been sent to partner companies to see if they can be put into operation in India.
In 2007, the basis for long-term development of partner relations between OAO RZD and the Ministry of railways of India was created. Moreover, during its meetings with representatives of Indian companies, specialists in Indian legislation, and employees of Russian companies operating in the Indian market, JSC RZD Trading Company learnt the practice of entering the market as well as the normative base regulating the launch and functioning of foreign representative offices and joint ventures in the state.  On the whole, as experts of OAO RZD forecast, cooperation with Indian Railways and private companies in the sector of railway production may be fruitful for Russian Railways from the standpoint of market capacity (up to USD 1.5 billion annually) as well as of enlarging the company’s export programme, developing advanced technologies and cooperation in manufacture. Another of OAO RZD’s planned large steps into the Indian market is the presentation of Russian railway industry’s export opportunities. By the way, it was Chairman of IR Board of Directors K.C. Jena, who asked Russian Railways to organise the presentation.   
By Olga Gorbunova
viewpoint
Vladimir Yakunin,
 President of OAO RZD: 
– Prospects for railway cooperation with India are very promising when taking into account the developing economy of India, the current condition of its railway’s demand for scaled investments in infrastructure. And Russian Railways, I think, is very experienced in construction of electrified railway lines; we have a well-developed network, new locomotives and new rolling stock. Lately we have been actively negotiating with our Indian partners on possible cooperation, in particular, we want to supply our safety systems to IR. And they are interested in it. Besides, we hope to supply them with traffic control technologies.

Anatoly Volodin,
Director General of JSC RZD Trading Company:
– There is a high demand for locomotives, wagons, traffic control systems, and safety systems in the Indian market. The Indian party is also interested in the advanced technologies of traffic control. Everyone knows that Russian systems of automation and telemechanics are of high quality, efficient and reliable. I believe our Indian clients will like it. An obligatory term of entering the Indian market is certification of the products in India. That is why OAO Trading House RZD is actively organising this procedure in Indian Research Design and Standards Organisation (RDSO). Since there is a system of tenders in India - and it is the only way to export goods, services and technologies into the country - we are carefully examining the terms of entering the Indian market with Russian goods. 
    [~DETAIL_TEXT] => 
Mutual Interest
The railway infrastructure deterioration and the lack of railway communication in some regions of India restrains the country’s economic development. To improve the situation, Indian Railways (IR, the company is owned by the state) is going to invest about USD 65.8 billion before 2012 into development of transport corridors, modernisation of railway stations and private freight trains for container transportation. Naturally, India may become a large consumer on the international market.
The starting point of Russian and Indian cooperation in the railways sector is a Memorandum of Understanding signed by the Ministry of Railways of the Republic of India and OAO RZD on March 25, 2006. This document defines the major issues of the parties’ cooperation to develop railways: supplies of railway transport equipment, diagnostic facilities, rolling stock, automation and telemechanics equipment, implementation of advanced technologies and HR training.
In spring 2007 a special company, JSC RZD Trading Company, was founded. It represents the interests of OAO RZD and its daughter companies outside Russia; it is responsible for the holding company’s participation in tenders and examination of the offers made by foreign partners. Nowadays, JSC RZD Trading Company is engaged in promotion of Russian technologies in the Indian market. 
One of the most important events for the development of cooperation between OAO RZD and Indian Railways was a railway technologies exhibition called “India Rail Tech 2007”, held in New Delhi last September. JSC RZD Trading Company presented there the production of the Russian Research Development and Planning Institute for Railway Information Technology, Automation and Telecommunication (VNIIAS), Project-Construction-Technological Bureau of Railway Automation and Telemechanics (PKTB CSh), OAO Promelectronics and scientific production enterprise Geocosmos.
Top managers of Indian Railways, the Urban Construction Ministry of the Indian Government, a project subsidiary of Indian Railway, Rail Vikas Nigam Limited and RITES Limited (state companies, owned by IR) as well as the representatives of Indian regional railways, and private companies operating in the railway sector visited the Russian stand at the exhibition. Moreover, at the exhibition there was a meeting of OAO RZD President Vladimir Yakunin and Chairman of IR Board of Directors K. C. Jena, during which the practical issues of the parties’ cooperation considering the launch of  JSC RZD Trading Company were discussed.
It’s Just The Beginning!
Today OAO RZD is ready to participate in carrying out railway infrastructure projects, to supply automation and telemechanics systems, track machines and equipment, locomotive engines, to provide technologies for tracks and railway object diagnostics and to fulfil works in other segments of Indian railway sector.
To enter the market, it is necessary to certify Russian production in accordance with Indian standards, which is now being done by OAO RZD. Today RDSO (Research Designs and Standards Organisation under Indian Ministry of Railways) is certifying the microprocessor-based automatic block systems with tone track circuits and a complex of locomotive control safety devices “KLUB-U”. Besides, the documents on certification of “Track Monitoring System Using Axle Counters Method”, are being adapted to Indian weather conditions, in particular to temperature and humidity.  
Ant it is just the beginning. Until 2012 Indian Railways is going to install automation and telemechanics systems widely. In particular, in the next 5 years the signalling systems implemented on the main lines of IR are to be modernised. There is a special Programme envisaging replacement of the outdated signalling systems by modern ones using track circuits and controlling systems set on locomotives with blocking systems. According to plans, the new automated signalling systems will be set in the “middle level” stations located at 31 sectors of the Indian Railways. The work is estimated at USD 34 million. 
Another important issue envisaged by the Programme is switching the signalling and blocking systems to the track circuits. Such devices are to be implemented on all Indian railways tracks, including railway approaches to ports. In particular, before 2012, nine projects of installation of such signalling systems are to be carried out. Their total cost is USD 9.7 million. Most of the sum (USD 5.24 million) is to be invested into setting up the system in the Northern railways of India; USD 2.13 million in the Western railways, and USD 1.27 million in the North-Eastern border railway sectors.
Today, in most stations of Indian Railways, trains and train sections movement is controlled manually. However, Indian specialists believe that if traffic becomes more intensive, manual control will be too complicated. That is why IR is going to put into operation blocking systems using Block Proving by Axle Counters sensors (BPAC), which provide automatic train traffic control. In 2008, ten projects of BPAC installation are to be carried out, their total cost is USD 6.47 million. Five projects out of them will be realised in the South-western railways of India.
To extend the signalling systems’ life-time as well as their reliability and efficiency, IR will carry out 16 projects to replace the usual lamps with LED ones. USD 8.7 million will be invested into it. In 2008 the lams will be changed on the South-Eastern railways (2 projects, USD 1.27 million), the Northern railways (3 projects, USD 2.11 million), and the North-East of India (3 projects, USD 1.42 million).
Besides, OAO RZD offered Indian Railways the opportunity to implement automated data collection systems, providing fast analysis of signalling systems, and integrated power supply systems (IPS), allowing an uninterrupted supply of power to the signalling systems. Implementation of the former will cost USD 8.7 million (15 projects), and of the latter USD 10.24 million (16 projects).
Large Step
OAO RZD is also ready to participate in the projects of building and reconstruction of the Indian railway infrastructure. In particular, the matter concerns the state programme of railway development in India, envisaging construction of two railway lines Calcutta – Delhi and Mumbai – Delhi. 
Meanwhile, the Indian Ministry of railways (via Rail Vikas Nigam Ltd company) asked the Russian party to examine the condition of 100 km of tracks and one railway bridge using modern laser scanning systems. Nowadays, preliminary works are being held. 
Having received documents from IR, JSC RZD Trading Company is now examining and developing documents for the company’s participation in five tenders (including couplers and wheel billet supplies). Commercial offers and specimen products have been sent to partner companies to see if they can be put into operation in India.
In 2007, the basis for long-term development of partner relations between OAO RZD and the Ministry of railways of India was created. Moreover, during its meetings with representatives of Indian companies, specialists in Indian legislation, and employees of Russian companies operating in the Indian market, JSC RZD Trading Company learnt the practice of entering the market as well as the normative base regulating the launch and functioning of foreign representative offices and joint ventures in the state.  On the whole, as experts of OAO RZD forecast, cooperation with Indian Railways and private companies in the sector of railway production may be fruitful for Russian Railways from the standpoint of market capacity (up to USD 1.5 billion annually) as well as of enlarging the company’s export programme, developing advanced technologies and cooperation in manufacture. Another of OAO RZD’s planned large steps into the Indian market is the presentation of Russian railway industry’s export opportunities. By the way, it was Chairman of IR Board of Directors K.C. Jena, who asked Russian Railways to organise the presentation.   
By Olga Gorbunova
viewpoint
Vladimir Yakunin,
 President of OAO RZD: 
– Prospects for railway cooperation with India are very promising when taking into account the developing economy of India, the current condition of its railway’s demand for scaled investments in infrastructure. And Russian Railways, I think, is very experienced in construction of electrified railway lines; we have a well-developed network, new locomotives and new rolling stock. Lately we have been actively negotiating with our Indian partners on possible cooperation, in particular, we want to supply our safety systems to IR. And they are interested in it. Besides, we hope to supply them with traffic control technologies.

Anatoly Volodin,
Director General of JSC RZD Trading Company:
– There is a high demand for locomotives, wagons, traffic control systems, and safety systems in the Indian market. The Indian party is also interested in the advanced technologies of traffic control. Everyone knows that Russian systems of automation and telemechanics are of high quality, efficient and reliable. I believe our Indian clients will like it. An obligatory term of entering the Indian market is certification of the products in India. That is why OAO Trading House RZD is actively organising this procedure in Indian Research Design and Standards Organisation (RDSO). Since there is a system of tenders in India - and it is the only way to export goods, services and technologies into the country - we are carefully examining the terms of entering the Indian market with Russian goods. 
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    [~PREVIEW_TEXT] => Lately, OAO RZD has actively been promoting its developments in the international transport market and shown much interest in participation with foreign infrastructure projects. In the company’s sphere of interest there are such states as Cuba, Bulgaria, North Korea, Syria, Libya, Saudi Arabia, Algeria, and Venezuela. But one of the most prospective is the Indian railway infrastructure market along with rolling stock construction and modernisation, believe experts.
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    [NAME] => Special Canal for Caspian Oil Transportation Estimated at USD 5 Billion
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Ambiguous Variant
Eurasia canal will cross Kumo-Manycheskaya valley, thus connecting the Azov and the Black Seas with the Caspian one (see map). The length is 700 km, the canal depth is 5.5 m, the carrying capacity of a river vessel is 8,000 – 10,000 tons. According to developers, to put the first stage in operation for vessels of river-sea type and a port in Divny, USD 2-2.7 billion is required. Construction will take 6-8 years.
The launch of the canal is supposed to solve the problem of the insufficient capacity of the current Volgo-Don channel, and create the depths sufficient for vessels flying foreign flags. The canal’s best prospect is for hydrocarbon transportation. It may also stimulate development of the Stavropol region and Kalmykia. The developers of Eurasia suppose that the canal will allow the servicing of some of the container flow between Iran and the Mediterranean. The volume of the freight that is inclined to use the canal is difficult to evaluate at the moment. For example, if we take into consideration the volume of oil extracted at the Caspian Sea, the maximum freight flow may amount to 60 million tons. 
The first feasibility study of Eurasia canal construction was developed in the Soviet Union. In 1936-1941 three waterworks facilities were built on the territory. Together with water storage basins they made a locked 329 km-long waterway. 
The idea of the canal construction was revived in 2004-2006, when a few companies developed the project of a canal targeted at carrying Caspian oil and oil products. At that time the initiative perplexed most market players: the forecasted cargo flow would not compensate for the construction. In particular, specialists of LUKOIL company, the major developer of the Caspian oil fields, shrugged their shoulders: there was enough transport to carry oil then.
Eurasia canal seemed to become one of the ideas that would never be realised until RF President Vladimir Putin spoke about it recently. “This canal would be 1,000 km shorter than Volgo-Don, and it could become a powerful corridor for the whole of Central Asia to get access to seas via Russian territory”, said Vladimir Putin at the Saint Petersburg Economic Forum in June 2007. “In 1936, the USSR Council of People’s Commissars prepared a feasibility study and a concept of the canal that has not been carried out yet. Having studied it seriously, we should turn to the idea of redirecting a part of Siberian river flows to Kazakhstan and Middle Asia.” The idea of the canal construction was supported by Nursultan Nazarbaev, the President of Kazakhstan.
After that the project received support from international institutions. In August 2007, the Council of the European Bank of Reconstruction and Development approved appropriation for assessing the technical and economic characteristics of the project. In November, a Protocol of Intention was signed, envisaging the launch of a Russian and Indian engineering centre that will participate in the canal project and its construction.
“Today potential investors have formed a Russian-English investment club, uniting a number of financial organisations”, explains Roman Tkachev, Director General of Special Scientific and Production Union Ecohydrotechnicka, a general contractor. “Private companies are ready to invest the whole sum necessary, but the state will never let them control and manage the canal”, he says. The names of investors are kept secret.
Paradoxes
Meanwhile, there is reason for the doubts of businessmen about the canal construction and the chance of Eurasia’s creation is rather small, at least from economic and ecological standpoints.
Today, the current problem for Russia is the insufficient capacity of Volgo-Don river canal. With Eurasia, there are two ways to solve the problem: construction of a sea canal Kazak via the Terek, the Kuma and the Kuban rivers; construction of the second lock branches at the Volgo-Don channel and the possible connection of them with the Kuban river and the Black Sea.
The second variant is estimated at RUR 60 billion (about USD 2.5 billion), and no water supply is required. 18 locks are to be constructed. The length of the waterway will be 1,500 km. The Russian Agency of the Sea and River Transport considers the project more realistic. Its construction was started but, in 1994, it was laid up.
“Volgo-Don waterway is considered more prospective in comparison with other ways of connecting the Caspian, Azov and Black seas (Eurasia and Kazak canals) due to a number of factors such as the results of the preliminary economic study, water supply in the region, geological and hydrological data, availability of developed industrial and civil infrastructure, etc” states Igor Zlobin, Head of Inner Waterways Administration, Russian Federal Agency of Sea and River Transport. “But in any case, construction of a second line in the Volgo-Don canal will be cheaper than the Eurasia canal”, claimed Igor Levitin, the RF Transport Minister.
In turn, ecologists seem to be ready to speak of the drawbacks of the Eurasia canal. According to preliminary estimations, the lack of infrastructure and a supply of drinking water will make the construction much more expensive and, because of the lack of water, the canal may be empty.
“The main problem is obvious”, states Viktor Danilov-Danilyan, Director of the Water Problems Institute of the Russian Academy of Sciences. “The Stavropol region, where the canal is planned to be built, has little fresh water, thus it is dangerous to take water for the canal”. In his opinion, as well as constructing the canal, means will be required to build additional facilities to make it full of water. Moreover, the canal crosses the territory of three national parks, included on the UNESCO list. However, regulation of the ecological situation is more often based on economic and/or political interests than the need to preserve the territories where construction is held.
Thus, there appears a paradox: the canal is unprofitable from economic and ecological standpoints, nevertheless, it is supported by the authorities of Russia and Kazakhstan. What is the reason? The answer is simple: its popularity is rooted in policy.
Kazakhstan Strives for Access to Seas
“This project is more political than commercial. Kazakhstan strives for access to the sea and, obviously, it is necessary for Russia to establish good relations with the state. Besides, it is profitable for administration of the regions, where immense sums will be spent on construction”, states Laslo Sabov, Director of a group of transport companies BSS Shipping Group. “The length of the existing route via Volgo-Don canal differs slightly from the one of the proposed Eurasia canal. It is more reasonable to optimise railway freight transportation between deep-sea ports and the Caspian region by increasing the wagon park and creating a proper logistic system”, he says. Moreover, the statement that the canal construction is a political idea is proved by the fact that it is politicians who are eager to realise it.
Representatives of Kazakhstan do not deny that they want to get a share of the flow of transit cargo. “Kazakhstan would like to become a sea power. Nowadays we have direct access to the Azov and the Black Sea basin, but it is not enough”, said Berek Uandykov, Head of the Water Transport Department at the Transport Ministry of the Kazakhstan Republic. “Today China carries enormous cargo volumes via the ocean. I think that a shorter route is profitable from an economic standpoint as well as that of transport infrastructure development in the countries interested in attracting Chinese cargo flow. Kazakhstan is interested in increasing cargo flows to the Black Sea basin. Alternative routes for cargo transportation cannot but cause interest”.
Russia is interested in making partner relations in the area of the former Soviet Union. “The only motivating power behind any – not just economic, but also integrating – process is Russia”, says Dmitry Pikul, Deputy President of the Fund of Assistance to Sovereignity Institutions. “This policy will be continued, as President Vladimir Putin has been emphasising lately. The former Soviet space is a priority direction of Russian foreign policy. And it is quite logical – one can hardly defend national interests in conflicts on the territory of other countries (Iran, Kosovo, Middle East, etc), without having strengthened one’s own border”. 
Resume
Canals which make routes shorter traditionally become an object of political bargains. However, in this case the transport attractiveness of the project is ambiguous: A 5-metre-deep Eurasia canal will not be able to service vessels of a better class than river-sea, thus its main advantage will be transportation terms only. Practice shows that goods requiring fast delivery are still more often carried along ocean routes, rather than alternative ones, such as the Transsib, for example. Is it worth attaching importance to the promises of politicians? 

By Anna  Nezhinskaya
    [~DETAIL_TEXT] => 
Ambiguous Variant
Eurasia canal will cross Kumo-Manycheskaya valley, thus connecting the Azov and the Black Seas with the Caspian one (see map). The length is 700 km, the canal depth is 5.5 m, the carrying capacity of a river vessel is 8,000 – 10,000 tons. According to developers, to put the first stage in operation for vessels of river-sea type and a port in Divny, USD 2-2.7 billion is required. Construction will take 6-8 years.
The launch of the canal is supposed to solve the problem of the insufficient capacity of the current Volgo-Don channel, and create the depths sufficient for vessels flying foreign flags. The canal’s best prospect is for hydrocarbon transportation. It may also stimulate development of the Stavropol region and Kalmykia. The developers of Eurasia suppose that the canal will allow the servicing of some of the container flow between Iran and the Mediterranean. The volume of the freight that is inclined to use the canal is difficult to evaluate at the moment. For example, if we take into consideration the volume of oil extracted at the Caspian Sea, the maximum freight flow may amount to 60 million tons. 
The first feasibility study of Eurasia canal construction was developed in the Soviet Union. In 1936-1941 three waterworks facilities were built on the territory. Together with water storage basins they made a locked 329 km-long waterway. 
The idea of the canal construction was revived in 2004-2006, when a few companies developed the project of a canal targeted at carrying Caspian oil and oil products. At that time the initiative perplexed most market players: the forecasted cargo flow would not compensate for the construction. In particular, specialists of LUKOIL company, the major developer of the Caspian oil fields, shrugged their shoulders: there was enough transport to carry oil then.
Eurasia canal seemed to become one of the ideas that would never be realised until RF President Vladimir Putin spoke about it recently. “This canal would be 1,000 km shorter than Volgo-Don, and it could become a powerful corridor for the whole of Central Asia to get access to seas via Russian territory”, said Vladimir Putin at the Saint Petersburg Economic Forum in June 2007. “In 1936, the USSR Council of People’s Commissars prepared a feasibility study and a concept of the canal that has not been carried out yet. Having studied it seriously, we should turn to the idea of redirecting a part of Siberian river flows to Kazakhstan and Middle Asia.” The idea of the canal construction was supported by Nursultan Nazarbaev, the President of Kazakhstan.
After that the project received support from international institutions. In August 2007, the Council of the European Bank of Reconstruction and Development approved appropriation for assessing the technical and economic characteristics of the project. In November, a Protocol of Intention was signed, envisaging the launch of a Russian and Indian engineering centre that will participate in the canal project and its construction.
“Today potential investors have formed a Russian-English investment club, uniting a number of financial organisations”, explains Roman Tkachev, Director General of Special Scientific and Production Union Ecohydrotechnicka, a general contractor. “Private companies are ready to invest the whole sum necessary, but the state will never let them control and manage the canal”, he says. The names of investors are kept secret.
Paradoxes
Meanwhile, there is reason for the doubts of businessmen about the canal construction and the chance of Eurasia’s creation is rather small, at least from economic and ecological standpoints.
Today, the current problem for Russia is the insufficient capacity of Volgo-Don river canal. With Eurasia, there are two ways to solve the problem: construction of a sea canal Kazak via the Terek, the Kuma and the Kuban rivers; construction of the second lock branches at the Volgo-Don channel and the possible connection of them with the Kuban river and the Black Sea.
The second variant is estimated at RUR 60 billion (about USD 2.5 billion), and no water supply is required. 18 locks are to be constructed. The length of the waterway will be 1,500 km. The Russian Agency of the Sea and River Transport considers the project more realistic. Its construction was started but, in 1994, it was laid up.
“Volgo-Don waterway is considered more prospective in comparison with other ways of connecting the Caspian, Azov and Black seas (Eurasia and Kazak canals) due to a number of factors such as the results of the preliminary economic study, water supply in the region, geological and hydrological data, availability of developed industrial and civil infrastructure, etc” states Igor Zlobin, Head of Inner Waterways Administration, Russian Federal Agency of Sea and River Transport. “But in any case, construction of a second line in the Volgo-Don canal will be cheaper than the Eurasia canal”, claimed Igor Levitin, the RF Transport Minister.
In turn, ecologists seem to be ready to speak of the drawbacks of the Eurasia canal. According to preliminary estimations, the lack of infrastructure and a supply of drinking water will make the construction much more expensive and, because of the lack of water, the canal may be empty.
“The main problem is obvious”, states Viktor Danilov-Danilyan, Director of the Water Problems Institute of the Russian Academy of Sciences. “The Stavropol region, where the canal is planned to be built, has little fresh water, thus it is dangerous to take water for the canal”. In his opinion, as well as constructing the canal, means will be required to build additional facilities to make it full of water. Moreover, the canal crosses the territory of three national parks, included on the UNESCO list. However, regulation of the ecological situation is more often based on economic and/or political interests than the need to preserve the territories where construction is held.
Thus, there appears a paradox: the canal is unprofitable from economic and ecological standpoints, nevertheless, it is supported by the authorities of Russia and Kazakhstan. What is the reason? The answer is simple: its popularity is rooted in policy.
Kazakhstan Strives for Access to Seas
“This project is more political than commercial. Kazakhstan strives for access to the sea and, obviously, it is necessary for Russia to establish good relations with the state. Besides, it is profitable for administration of the regions, where immense sums will be spent on construction”, states Laslo Sabov, Director of a group of transport companies BSS Shipping Group. “The length of the existing route via Volgo-Don canal differs slightly from the one of the proposed Eurasia canal. It is more reasonable to optimise railway freight transportation between deep-sea ports and the Caspian region by increasing the wagon park and creating a proper logistic system”, he says. Moreover, the statement that the canal construction is a political idea is proved by the fact that it is politicians who are eager to realise it.
Representatives of Kazakhstan do not deny that they want to get a share of the flow of transit cargo. “Kazakhstan would like to become a sea power. Nowadays we have direct access to the Azov and the Black Sea basin, but it is not enough”, said Berek Uandykov, Head of the Water Transport Department at the Transport Ministry of the Kazakhstan Republic. “Today China carries enormous cargo volumes via the ocean. I think that a shorter route is profitable from an economic standpoint as well as that of transport infrastructure development in the countries interested in attracting Chinese cargo flow. Kazakhstan is interested in increasing cargo flows to the Black Sea basin. Alternative routes for cargo transportation cannot but cause interest”.
Russia is interested in making partner relations in the area of the former Soviet Union. “The only motivating power behind any – not just economic, but also integrating – process is Russia”, says Dmitry Pikul, Deputy President of the Fund of Assistance to Sovereignity Institutions. “This policy will be continued, as President Vladimir Putin has been emphasising lately. The former Soviet space is a priority direction of Russian foreign policy. And it is quite logical – one can hardly defend national interests in conflicts on the territory of other countries (Iran, Kosovo, Middle East, etc), without having strengthened one’s own border”. 
Resume
Canals which make routes shorter traditionally become an object of political bargains. However, in this case the transport attractiveness of the project is ambiguous: A 5-metre-deep Eurasia canal will not be able to service vessels of a better class than river-sea, thus its main advantage will be transportation terms only. Practice shows that goods requiring fast delivery are still more often carried along ocean routes, rather than alternative ones, such as the Transsib, for example. Is it worth attaching importance to the promises of politicians? 

By Anna  Nezhinskaya
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/008.png" border="1" alt=" " hspace="5" width="110" height="140" align="left" />Russia and Kazakhstan initiated construction of a navigation canal connecting the Caspian Sea and the Black Sea. The new waterway, &quot;Eurasia&quot;, is supposed to be used to transport oil extracted at the Caspian oil fields and, perhaps, containers. Experts say that the effect of the project, estimated at USD 5.4 billion, will be first of all political, not economic.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/008.png" border="1" alt=" " hspace="5" width="110" height="140" align="left" />Russia and Kazakhstan initiated construction of a navigation canal connecting the Caspian Sea and the Black Sea. The new waterway, &quot;Eurasia&quot;, is supposed to be used to transport oil extracted at the Caspian oil fields and, perhaps, containers. Experts say that the effect of the project, estimated at USD 5.4 billion, will be first of all political, not economic.
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Ambiguous Variant
Eurasia canal will cross Kumo-Manycheskaya valley, thus connecting the Azov and the Black Seas with the Caspian one (see map). The length is 700 km, the canal depth is 5.5 m, the carrying capacity of a river vessel is 8,000 – 10,000 tons. According to developers, to put the first stage in operation for vessels of river-sea type and a port in Divny, USD 2-2.7 billion is required. Construction will take 6-8 years.
The launch of the canal is supposed to solve the problem of the insufficient capacity of the current Volgo-Don channel, and create the depths sufficient for vessels flying foreign flags. The canal’s best prospect is for hydrocarbon transportation. It may also stimulate development of the Stavropol region and Kalmykia. The developers of Eurasia suppose that the canal will allow the servicing of some of the container flow between Iran and the Mediterranean. The volume of the freight that is inclined to use the canal is difficult to evaluate at the moment. For example, if we take into consideration the volume of oil extracted at the Caspian Sea, the maximum freight flow may amount to 60 million tons. 
The first feasibility study of Eurasia canal construction was developed in the Soviet Union. In 1936-1941 three waterworks facilities were built on the territory. Together with water storage basins they made a locked 329 km-long waterway. 
The idea of the canal construction was revived in 2004-2006, when a few companies developed the project of a canal targeted at carrying Caspian oil and oil products. At that time the initiative perplexed most market players: the forecasted cargo flow would not compensate for the construction. In particular, specialists of LUKOIL company, the major developer of the Caspian oil fields, shrugged their shoulders: there was enough transport to carry oil then.
Eurasia canal seemed to become one of the ideas that would never be realised until RF President Vladimir Putin spoke about it recently. “This canal would be 1,000 km shorter than Volgo-Don, and it could become a powerful corridor for the whole of Central Asia to get access to seas via Russian territory”, said Vladimir Putin at the Saint Petersburg Economic Forum in June 2007. “In 1936, the USSR Council of People’s Commissars prepared a feasibility study and a concept of the canal that has not been carried out yet. Having studied it seriously, we should turn to the idea of redirecting a part of Siberian river flows to Kazakhstan and Middle Asia.” The idea of the canal construction was supported by Nursultan Nazarbaev, the President of Kazakhstan.
After that the project received support from international institutions. In August 2007, the Council of the European Bank of Reconstruction and Development approved appropriation for assessing the technical and economic characteristics of the project. In November, a Protocol of Intention was signed, envisaging the launch of a Russian and Indian engineering centre that will participate in the canal project and its construction.
“Today potential investors have formed a Russian-English investment club, uniting a number of financial organisations”, explains Roman Tkachev, Director General of Special Scientific and Production Union Ecohydrotechnicka, a general contractor. “Private companies are ready to invest the whole sum necessary, but the state will never let them control and manage the canal”, he says. The names of investors are kept secret.
Paradoxes
Meanwhile, there is reason for the doubts of businessmen about the canal construction and the chance of Eurasia’s creation is rather small, at least from economic and ecological standpoints.
Today, the current problem for Russia is the insufficient capacity of Volgo-Don river canal. With Eurasia, there are two ways to solve the problem: construction of a sea canal Kazak via the Terek, the Kuma and the Kuban rivers; construction of the second lock branches at the Volgo-Don channel and the possible connection of them with the Kuban river and the Black Sea.
The second variant is estimated at RUR 60 billion (about USD 2.5 billion), and no water supply is required. 18 locks are to be constructed. The length of the waterway will be 1,500 km. The Russian Agency of the Sea and River Transport considers the project more realistic. Its construction was started but, in 1994, it was laid up.
“Volgo-Don waterway is considered more prospective in comparison with other ways of connecting the Caspian, Azov and Black seas (Eurasia and Kazak canals) due to a number of factors such as the results of the preliminary economic study, water supply in the region, geological and hydrological data, availability of developed industrial and civil infrastructure, etc” states Igor Zlobin, Head of Inner Waterways Administration, Russian Federal Agency of Sea and River Transport. “But in any case, construction of a second line in the Volgo-Don canal will be cheaper than the Eurasia canal”, claimed Igor Levitin, the RF Transport Minister.
In turn, ecologists seem to be ready to speak of the drawbacks of the Eurasia canal. According to preliminary estimations, the lack of infrastructure and a supply of drinking water will make the construction much more expensive and, because of the lack of water, the canal may be empty.
“The main problem is obvious”, states Viktor Danilov-Danilyan, Director of the Water Problems Institute of the Russian Academy of Sciences. “The Stavropol region, where the canal is planned to be built, has little fresh water, thus it is dangerous to take water for the canal”. In his opinion, as well as constructing the canal, means will be required to build additional facilities to make it full of water. Moreover, the canal crosses the territory of three national parks, included on the UNESCO list. However, regulation of the ecological situation is more often based on economic and/or political interests than the need to preserve the territories where construction is held.
Thus, there appears a paradox: the canal is unprofitable from economic and ecological standpoints, nevertheless, it is supported by the authorities of Russia and Kazakhstan. What is the reason? The answer is simple: its popularity is rooted in policy.
Kazakhstan Strives for Access to Seas
“This project is more political than commercial. Kazakhstan strives for access to the sea and, obviously, it is necessary for Russia to establish good relations with the state. Besides, it is profitable for administration of the regions, where immense sums will be spent on construction”, states Laslo Sabov, Director of a group of transport companies BSS Shipping Group. “The length of the existing route via Volgo-Don canal differs slightly from the one of the proposed Eurasia canal. It is more reasonable to optimise railway freight transportation between deep-sea ports and the Caspian region by increasing the wagon park and creating a proper logistic system”, he says. Moreover, the statement that the canal construction is a political idea is proved by the fact that it is politicians who are eager to realise it.
Representatives of Kazakhstan do not deny that they want to get a share of the flow of transit cargo. “Kazakhstan would like to become a sea power. Nowadays we have direct access to the Azov and the Black Sea basin, but it is not enough”, said Berek Uandykov, Head of the Water Transport Department at the Transport Ministry of the Kazakhstan Republic. “Today China carries enormous cargo volumes via the ocean. I think that a shorter route is profitable from an economic standpoint as well as that of transport infrastructure development in the countries interested in attracting Chinese cargo flow. Kazakhstan is interested in increasing cargo flows to the Black Sea basin. Alternative routes for cargo transportation cannot but cause interest”.
Russia is interested in making partner relations in the area of the former Soviet Union. “The only motivating power behind any – not just economic, but also integrating – process is Russia”, says Dmitry Pikul, Deputy President of the Fund of Assistance to Sovereignity Institutions. “This policy will be continued, as President Vladimir Putin has been emphasising lately. The former Soviet space is a priority direction of Russian foreign policy. And it is quite logical – one can hardly defend national interests in conflicts on the territory of other countries (Iran, Kosovo, Middle East, etc), without having strengthened one’s own border”. 
Resume
Canals which make routes shorter traditionally become an object of political bargains. However, in this case the transport attractiveness of the project is ambiguous: A 5-metre-deep Eurasia canal will not be able to service vessels of a better class than river-sea, thus its main advantage will be transportation terms only. Practice shows that goods requiring fast delivery are still more often carried along ocean routes, rather than alternative ones, such as the Transsib, for example. Is it worth attaching importance to the promises of politicians? 

By Anna  Nezhinskaya
    [~DETAIL_TEXT] => 
Ambiguous Variant
Eurasia canal will cross Kumo-Manycheskaya valley, thus connecting the Azov and the Black Seas with the Caspian one (see map). The length is 700 km, the canal depth is 5.5 m, the carrying capacity of a river vessel is 8,000 – 10,000 tons. According to developers, to put the first stage in operation for vessels of river-sea type and a port in Divny, USD 2-2.7 billion is required. Construction will take 6-8 years.
The launch of the canal is supposed to solve the problem of the insufficient capacity of the current Volgo-Don channel, and create the depths sufficient for vessels flying foreign flags. The canal’s best prospect is for hydrocarbon transportation. It may also stimulate development of the Stavropol region and Kalmykia. The developers of Eurasia suppose that the canal will allow the servicing of some of the container flow between Iran and the Mediterranean. The volume of the freight that is inclined to use the canal is difficult to evaluate at the moment. For example, if we take into consideration the volume of oil extracted at the Caspian Sea, the maximum freight flow may amount to 60 million tons. 
The first feasibility study of Eurasia canal construction was developed in the Soviet Union. In 1936-1941 three waterworks facilities were built on the territory. Together with water storage basins they made a locked 329 km-long waterway. 
The idea of the canal construction was revived in 2004-2006, when a few companies developed the project of a canal targeted at carrying Caspian oil and oil products. At that time the initiative perplexed most market players: the forecasted cargo flow would not compensate for the construction. In particular, specialists of LUKOIL company, the major developer of the Caspian oil fields, shrugged their shoulders: there was enough transport to carry oil then.
Eurasia canal seemed to become one of the ideas that would never be realised until RF President Vladimir Putin spoke about it recently. “This canal would be 1,000 km shorter than Volgo-Don, and it could become a powerful corridor for the whole of Central Asia to get access to seas via Russian territory”, said Vladimir Putin at the Saint Petersburg Economic Forum in June 2007. “In 1936, the USSR Council of People’s Commissars prepared a feasibility study and a concept of the canal that has not been carried out yet. Having studied it seriously, we should turn to the idea of redirecting a part of Siberian river flows to Kazakhstan and Middle Asia.” The idea of the canal construction was supported by Nursultan Nazarbaev, the President of Kazakhstan.
After that the project received support from international institutions. In August 2007, the Council of the European Bank of Reconstruction and Development approved appropriation for assessing the technical and economic characteristics of the project. In November, a Protocol of Intention was signed, envisaging the launch of a Russian and Indian engineering centre that will participate in the canal project and its construction.
“Today potential investors have formed a Russian-English investment club, uniting a number of financial organisations”, explains Roman Tkachev, Director General of Special Scientific and Production Union Ecohydrotechnicka, a general contractor. “Private companies are ready to invest the whole sum necessary, but the state will never let them control and manage the canal”, he says. The names of investors are kept secret.
Paradoxes
Meanwhile, there is reason for the doubts of businessmen about the canal construction and the chance of Eurasia’s creation is rather small, at least from economic and ecological standpoints.
Today, the current problem for Russia is the insufficient capacity of Volgo-Don river canal. With Eurasia, there are two ways to solve the problem: construction of a sea canal Kazak via the Terek, the Kuma and the Kuban rivers; construction of the second lock branches at the Volgo-Don channel and the possible connection of them with the Kuban river and the Black Sea.
The second variant is estimated at RUR 60 billion (about USD 2.5 billion), and no water supply is required. 18 locks are to be constructed. The length of the waterway will be 1,500 km. The Russian Agency of the Sea and River Transport considers the project more realistic. Its construction was started but, in 1994, it was laid up.
“Volgo-Don waterway is considered more prospective in comparison with other ways of connecting the Caspian, Azov and Black seas (Eurasia and Kazak canals) due to a number of factors such as the results of the preliminary economic study, water supply in the region, geological and hydrological data, availability of developed industrial and civil infrastructure, etc” states Igor Zlobin, Head of Inner Waterways Administration, Russian Federal Agency of Sea and River Transport. “But in any case, construction of a second line in the Volgo-Don canal will be cheaper than the Eurasia canal”, claimed Igor Levitin, the RF Transport Minister.
In turn, ecologists seem to be ready to speak of the drawbacks of the Eurasia canal. According to preliminary estimations, the lack of infrastructure and a supply of drinking water will make the construction much more expensive and, because of the lack of water, the canal may be empty.
“The main problem is obvious”, states Viktor Danilov-Danilyan, Director of the Water Problems Institute of the Russian Academy of Sciences. “The Stavropol region, where the canal is planned to be built, has little fresh water, thus it is dangerous to take water for the canal”. In his opinion, as well as constructing the canal, means will be required to build additional facilities to make it full of water. Moreover, the canal crosses the territory of three national parks, included on the UNESCO list. However, regulation of the ecological situation is more often based on economic and/or political interests than the need to preserve the territories where construction is held.
Thus, there appears a paradox: the canal is unprofitable from economic and ecological standpoints, nevertheless, it is supported by the authorities of Russia and Kazakhstan. What is the reason? The answer is simple: its popularity is rooted in policy.
Kazakhstan Strives for Access to Seas
“This project is more political than commercial. Kazakhstan strives for access to the sea and, obviously, it is necessary for Russia to establish good relations with the state. Besides, it is profitable for administration of the regions, where immense sums will be spent on construction”, states Laslo Sabov, Director of a group of transport companies BSS Shipping Group. “The length of the existing route via Volgo-Don canal differs slightly from the one of the proposed Eurasia canal. It is more reasonable to optimise railway freight transportation between deep-sea ports and the Caspian region by increasing the wagon park and creating a proper logistic system”, he says. Moreover, the statement that the canal construction is a political idea is proved by the fact that it is politicians who are eager to realise it.
Representatives of Kazakhstan do not deny that they want to get a share of the flow of transit cargo. “Kazakhstan would like to become a sea power. Nowadays we have direct access to the Azov and the Black Sea basin, but it is not enough”, said Berek Uandykov, Head of the Water Transport Department at the Transport Ministry of the Kazakhstan Republic. “Today China carries enormous cargo volumes via the ocean. I think that a shorter route is profitable from an economic standpoint as well as that of transport infrastructure development in the countries interested in attracting Chinese cargo flow. Kazakhstan is interested in increasing cargo flows to the Black Sea basin. Alternative routes for cargo transportation cannot but cause interest”.
Russia is interested in making partner relations in the area of the former Soviet Union. “The only motivating power behind any – not just economic, but also integrating – process is Russia”, says Dmitry Pikul, Deputy President of the Fund of Assistance to Sovereignity Institutions. “This policy will be continued, as President Vladimir Putin has been emphasising lately. The former Soviet space is a priority direction of Russian foreign policy. And it is quite logical – one can hardly defend national interests in conflicts on the territory of other countries (Iran, Kosovo, Middle East, etc), without having strengthened one’s own border”. 
Resume
Canals which make routes shorter traditionally become an object of political bargains. However, in this case the transport attractiveness of the project is ambiguous: A 5-metre-deep Eurasia canal will not be able to service vessels of a better class than river-sea, thus its main advantage will be transportation terms only. Practice shows that goods requiring fast delivery are still more often carried along ocean routes, rather than alternative ones, such as the Transsib, for example. Is it worth attaching importance to the promises of politicians? 

By Anna  Nezhinskaya
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/008.png" border="1" alt=" " hspace="5" width="110" height="140" align="left" />Russia and Kazakhstan initiated construction of a navigation canal connecting the Caspian Sea and the Black Sea. The new waterway, &quot;Eurasia&quot;, is supposed to be used to transport oil extracted at the Caspian oil fields and, perhaps, containers. Experts say that the effect of the project, estimated at USD 5.4 billion, will be first of all political, not economic.
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    [DETAIL_TEXT] => 
Tariff Regulation № 10-01: Tariff Unification Needed
The tariff regulation system developed by now and the methods to determine the tariffs have allowed to reach the targets of the first two stages of the railway transport structural reform.
In particular, on August 28, 2003, new Tariff Regulation № 10-01 “Tariffs on Freight Transportation And Infrastructure Services Provided by Russian Railways” came into force.
According to the tariff, the wagon constituent (on average 15.4%) was separated off, which allowed for efficient use of private wagons regardless of the class of cargo carried in them. Conditions were created for the growth of investment into construction and modernisation of private rolling stock, the park of which now amounts to 322,400 units (34% of the total wagon park in Russia; as large as 51% of OAO RZD’s park).
Over RUR 15 billion of private investments is attracted annually to renew cargo railway rolling stock in Russia.
In new Tariff Regulation № 10-01, the “tariff rates – distance of transportation” relationship was revised. As a result, the tariffs on cargo transportation for long distances were reduced and additional declining rates were put into operation for some cargoes and empty wagons. These rates are applied for destinations further away than the threshold limit. 
It is especially important for cargo deliveries to the northern and other distant regions of the Russian Federation. Thus, prerequisites were created for levelling the transport and economic terms of work of the enterprises situated in different RF regions, but producing and consuming similar production. 
Besides, the new Tariff Regulation № 10-01 envisages a more flexible differentiation of tariffs according to the size of the cargo consignment and the type of freight rail cars in use; the minimum weigh standards were changed for some cargoes that cannot be loaded so that the full carrying capacity of a wagon was used; and more profitable economic terms for so-called ring-routes were provided.
Thus, a single Tariff Regulation was developed. It combines two methods of tariff formation – on freight domestic and international transportation via Russian ports, and on international cargo transportation via onland border crossings. As a result, the second stage of tariff unification for all types of transportation was fulfilled.
Target Market Model As The Main Guiding Line
In May 2007, the RF Government adopted the Target model of the railway transportation services market at the third stage of the structural reform, which made for formation of the basic principles of legislative and technological interaction between the market players. All this allowed development of the main ways to improve state tariff regulation and the methods of tariff formation on the basis of the adjusted targets for public railway transport reform.
To get rid of the shortage of investment in wagon park renewal, the launch of OAO First Cargo Company – a daughter company of OAO RZD is very important. The status of the company is “railway rolling stock operator”. This measure helps attract investments in rolling stock as well as reach the target of increasing the production of new wagons and locomotives, implementing new equipment and modern technologies (it may be done by managing an IPO). The solution will also help increase the profitability of assets of the First Cargo Company as well as the figures of OAO RZD’s capitalisation.
One of the main targets to be reached in forming and carrying out state tariff policy in the railway sector is reduction of cross-subsiding.
In public railway transport there is a problem of cross-subsiding in the freight transportation sector according to the type (domestic or international) of transportation (the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 differ by 2.7 times); the class of cargo carried (the tariff rates for the 1st and the 3rd class cargoes differ by 2 times), and the passenger transportation sector (losses exceed RUR 50 billion).
Several variants were discussed regarding the transfer to a single system for forming tariffs on cargo international and domestic transportation and the convergence of tariff rates according to type of transportation.
It was decided that the best of them was the variant envisaging step-by-step convergence of the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 by indexing the rates of the 2nd part on the basis of the average admissible tariff increase. The latter was defined in accordance with the forecast of the state social and economic development figures in 2008-2010. The chosen variant envisages keeping the 3rd part of the Tariff Regulation and its rates the same as they were in 2004. Thus, the transfer to a single tariff level regardless of the type of transportation will be provided without sudden changing of tariff loading on the railway service consumers. The forecast of transport expenses changing in the long-term is provided to industrial enterprises. 
This variant envisages the transfer to a single order of tariff calculation in accordance with the 2nd part of Tariff Regulation № 10-01 in 2009. To compensate for losses from tariff unification, an additional 1.88% indexation of the unified tariff level is required.
That is why in 2005-2007, after the differentiated indexation of tariffs on cargo domestic and international transportation, the ratio of tariffs from Part 3 and Part 2 of Tariff Regulation № 10-01 decreased from 3.37 in 2005 to 2.69 in 2007.
Meanwhile, taking into account the real level of tariffs on cargo railway transportation, since 2006 measures have been taken to unify tariffs on freight transportation in separate segments of the railway transportation market.
A decision was made to unify tariffs on grain transportation via border transfer stations regardless of the direction of transportation. To do it, amendments were put into Tariff Regulation № 10-01 applying a 0.89 coefficient for grain transportation to foreign ports and border crossings to the Baltic States and Finland. Also, work was continued on converging tariffs on methanol transportation via border transfer stations regardless of the direction of transportation. In particular, amendments were put into Tariff Regulation № 10-01: coefficients, corresponding to indexation of tariffs by 8%, were changed for the Finnish direction, if the transportation distance is 1,700-2,600 km and over 4,000 km, as well as for the direction to the CIS, if the transportation distance is 1,001-2,000 km.    
Today, the state is holding to a tough tariff policy to restrain the growth of tariffs on railway transportation. Meanwhile, because of the shortage of investment to purchase gondola cars and the lack of resources to repair rolling stock, on the network of Russian the normative life time of a gondola car is 22 years, the average age of a gondola car owned by OAO RZD is 18.7 years, and the life time of 29.9% of the public inventory park of gondola cars in use is spent.
So, the Federal Tariff Service made a decision on differentiated indexation of tariffs on freight transportation in gondola cars according to the ownership of the wagons. As a result, the attractiveness of private investment in purchasing this type of rolling stock will be provided by decreasing the term of a gondola car pay-off period from 10-12 to 7-8 years. 
Useful Privileges 
One of the instruments to carry out a flexible tariff policy is the privileged (considering the special terms of transportation) tariffs on cargo transportation set by the Federal Tariff Service. It is aimed at providing a competitive Russian transport system and producing national producers on the foreign and domestic markets, as well as stimulating development of new technologies in railway transport. For example, the average rate for coal transportation by railway is USD 19-21 per ton, if the exclusive tariffs are applied. Meanwhile, the cost of coal handling in Russian ports is USD 10-14 per ton. And OAO RZD’s losses from giving privileged tariffs on coal transportation amounted to RUR 1 billion in 2006. Naturally, it required additional indexation of tariffs on cargo railway transportation and caused an overall increase of tariff loading on the national economy.
The efficiency of the state tariff policy realisation in the cargo railway transportation sector is proved by the stable dynamics of transportation volume growth and the increase of Russian goods producers” competitiveness in the domestic and international markets, which is reflected in the stable dynamics of the reduction of the transport constituent in the price of transported cargo. Thus, in 2003-2006, the prices for industrial production grew by 80.9%, while the tariffs on cargo railway transportation (but transit) increased by 41.8% on average. During the period, the transport constituent in the price of the cargo fell from 16.8% to 12.8% on average; in the fuel industry it reduced from 52.1% to 30.5%; in the oil refining industry – from 7.9% to 5%; in the ore industry – from 19.5% to 12.3%, in the metallurgy – from 5.5% to 3.5%, and in the chemical industry – from 7% to 5.5%.
    
Indexation and investments
At the third stage of railway transport reform, the shortage of investment resources is to be overcome, and the development of railway infrastructure and rolling stock is to get ahead of the dynamics of the growth of demand for railway transportation and requirements as to their quality.
To do this, it is necessary to use a complex approach when examining the parameters of indexation of tariffs on railway transportation. Using this approach, one must take into consideration that the changes of the tariffs are to coincide with the target parameters of inflation as well as fulfil railway transport”s need for investment. There must be a multiplying effect from increasing the level of technical and technological equipment of the railways.
The RF Government approved the parameters of indexation of tariffs on cargo railway transportation in 2008-2010. They allow optimising the financial opportunities of the company to provide the reproduction of the basic funds and realisation of investment programmes. In particular, in 2008, the planned growth of the investment budget is 51.7% year-on-year, and in 2009 the figure is to increase by another 10.1%. In 2010, the investment budget of OAO RZD will grow by 70.2% in comparison with 2007.
Meanwhile, the demand for investment exceeds the possible volumes of investment project financing from OAO RZD’s own means. To carry out the projects of new railway line construction and high-speed railway communication development, it is necessary to attract external investment, especially from the Federal budget. The development of competition in the sector of rolling stock supplies will solve the problem from the standpoint of technical and technological improvement of railway rolling stock.
So, the most important task is to adjust the structure of the sources to finance the investment projects envisaged by the Strategy of Railway Transport Development to 2030.  
By Vitaly Evdokimenko, Deputy Head of the Federal Tariff Service
    [~DETAIL_TEXT] => 
Tariff Regulation № 10-01: Tariff Unification Needed
The tariff regulation system developed by now and the methods to determine the tariffs have allowed to reach the targets of the first two stages of the railway transport structural reform.
In particular, on August 28, 2003, new Tariff Regulation № 10-01 “Tariffs on Freight Transportation And Infrastructure Services Provided by Russian Railways” came into force.
According to the tariff, the wagon constituent (on average 15.4%) was separated off, which allowed for efficient use of private wagons regardless of the class of cargo carried in them. Conditions were created for the growth of investment into construction and modernisation of private rolling stock, the park of which now amounts to 322,400 units (34% of the total wagon park in Russia; as large as 51% of OAO RZD’s park).
Over RUR 15 billion of private investments is attracted annually to renew cargo railway rolling stock in Russia.
In new Tariff Regulation № 10-01, the “tariff rates – distance of transportation” relationship was revised. As a result, the tariffs on cargo transportation for long distances were reduced and additional declining rates were put into operation for some cargoes and empty wagons. These rates are applied for destinations further away than the threshold limit. 
It is especially important for cargo deliveries to the northern and other distant regions of the Russian Federation. Thus, prerequisites were created for levelling the transport and economic terms of work of the enterprises situated in different RF regions, but producing and consuming similar production. 
Besides, the new Tariff Regulation № 10-01 envisages a more flexible differentiation of tariffs according to the size of the cargo consignment and the type of freight rail cars in use; the minimum weigh standards were changed for some cargoes that cannot be loaded so that the full carrying capacity of a wagon was used; and more profitable economic terms for so-called ring-routes were provided.
Thus, a single Tariff Regulation was developed. It combines two methods of tariff formation – on freight domestic and international transportation via Russian ports, and on international cargo transportation via onland border crossings. As a result, the second stage of tariff unification for all types of transportation was fulfilled.
Target Market Model As The Main Guiding Line
In May 2007, the RF Government adopted the Target model of the railway transportation services market at the third stage of the structural reform, which made for formation of the basic principles of legislative and technological interaction between the market players. All this allowed development of the main ways to improve state tariff regulation and the methods of tariff formation on the basis of the adjusted targets for public railway transport reform.
To get rid of the shortage of investment in wagon park renewal, the launch of OAO First Cargo Company – a daughter company of OAO RZD is very important. The status of the company is “railway rolling stock operator”. This measure helps attract investments in rolling stock as well as reach the target of increasing the production of new wagons and locomotives, implementing new equipment and modern technologies (it may be done by managing an IPO). The solution will also help increase the profitability of assets of the First Cargo Company as well as the figures of OAO RZD’s capitalisation.
One of the main targets to be reached in forming and carrying out state tariff policy in the railway sector is reduction of cross-subsiding.
In public railway transport there is a problem of cross-subsiding in the freight transportation sector according to the type (domestic or international) of transportation (the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 differ by 2.7 times); the class of cargo carried (the tariff rates for the 1st and the 3rd class cargoes differ by 2 times), and the passenger transportation sector (losses exceed RUR 50 billion).
Several variants were discussed regarding the transfer to a single system for forming tariffs on cargo international and domestic transportation and the convergence of tariff rates according to type of transportation.
It was decided that the best of them was the variant envisaging step-by-step convergence of the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 by indexing the rates of the 2nd part on the basis of the average admissible tariff increase. The latter was defined in accordance with the forecast of the state social and economic development figures in 2008-2010. The chosen variant envisages keeping the 3rd part of the Tariff Regulation and its rates the same as they were in 2004. Thus, the transfer to a single tariff level regardless of the type of transportation will be provided without sudden changing of tariff loading on the railway service consumers. The forecast of transport expenses changing in the long-term is provided to industrial enterprises. 
This variant envisages the transfer to a single order of tariff calculation in accordance with the 2nd part of Tariff Regulation № 10-01 in 2009. To compensate for losses from tariff unification, an additional 1.88% indexation of the unified tariff level is required.
That is why in 2005-2007, after the differentiated indexation of tariffs on cargo domestic and international transportation, the ratio of tariffs from Part 3 and Part 2 of Tariff Regulation № 10-01 decreased from 3.37 in 2005 to 2.69 in 2007.
Meanwhile, taking into account the real level of tariffs on cargo railway transportation, since 2006 measures have been taken to unify tariffs on freight transportation in separate segments of the railway transportation market.
A decision was made to unify tariffs on grain transportation via border transfer stations regardless of the direction of transportation. To do it, amendments were put into Tariff Regulation № 10-01 applying a 0.89 coefficient for grain transportation to foreign ports and border crossings to the Baltic States and Finland. Also, work was continued on converging tariffs on methanol transportation via border transfer stations regardless of the direction of transportation. In particular, amendments were put into Tariff Regulation № 10-01: coefficients, corresponding to indexation of tariffs by 8%, were changed for the Finnish direction, if the transportation distance is 1,700-2,600 km and over 4,000 km, as well as for the direction to the CIS, if the transportation distance is 1,001-2,000 km.    
Today, the state is holding to a tough tariff policy to restrain the growth of tariffs on railway transportation. Meanwhile, because of the shortage of investment to purchase gondola cars and the lack of resources to repair rolling stock, on the network of Russian the normative life time of a gondola car is 22 years, the average age of a gondola car owned by OAO RZD is 18.7 years, and the life time of 29.9% of the public inventory park of gondola cars in use is spent.
So, the Federal Tariff Service made a decision on differentiated indexation of tariffs on freight transportation in gondola cars according to the ownership of the wagons. As a result, the attractiveness of private investment in purchasing this type of rolling stock will be provided by decreasing the term of a gondola car pay-off period from 10-12 to 7-8 years. 
Useful Privileges 
One of the instruments to carry out a flexible tariff policy is the privileged (considering the special terms of transportation) tariffs on cargo transportation set by the Federal Tariff Service. It is aimed at providing a competitive Russian transport system and producing national producers on the foreign and domestic markets, as well as stimulating development of new technologies in railway transport. For example, the average rate for coal transportation by railway is USD 19-21 per ton, if the exclusive tariffs are applied. Meanwhile, the cost of coal handling in Russian ports is USD 10-14 per ton. And OAO RZD’s losses from giving privileged tariffs on coal transportation amounted to RUR 1 billion in 2006. Naturally, it required additional indexation of tariffs on cargo railway transportation and caused an overall increase of tariff loading on the national economy.
The efficiency of the state tariff policy realisation in the cargo railway transportation sector is proved by the stable dynamics of transportation volume growth and the increase of Russian goods producers” competitiveness in the domestic and international markets, which is reflected in the stable dynamics of the reduction of the transport constituent in the price of transported cargo. Thus, in 2003-2006, the prices for industrial production grew by 80.9%, while the tariffs on cargo railway transportation (but transit) increased by 41.8% on average. During the period, the transport constituent in the price of the cargo fell from 16.8% to 12.8% on average; in the fuel industry it reduced from 52.1% to 30.5%; in the oil refining industry – from 7.9% to 5%; in the ore industry – from 19.5% to 12.3%, in the metallurgy – from 5.5% to 3.5%, and in the chemical industry – from 7% to 5.5%.
    
Indexation and investments
At the third stage of railway transport reform, the shortage of investment resources is to be overcome, and the development of railway infrastructure and rolling stock is to get ahead of the dynamics of the growth of demand for railway transportation and requirements as to their quality.
To do this, it is necessary to use a complex approach when examining the parameters of indexation of tariffs on railway transportation. Using this approach, one must take into consideration that the changes of the tariffs are to coincide with the target parameters of inflation as well as fulfil railway transport”s need for investment. There must be a multiplying effect from increasing the level of technical and technological equipment of the railways.
The RF Government approved the parameters of indexation of tariffs on cargo railway transportation in 2008-2010. They allow optimising the financial opportunities of the company to provide the reproduction of the basic funds and realisation of investment programmes. In particular, in 2008, the planned growth of the investment budget is 51.7% year-on-year, and in 2009 the figure is to increase by another 10.1%. In 2010, the investment budget of OAO RZD will grow by 70.2% in comparison with 2007.
Meanwhile, the demand for investment exceeds the possible volumes of investment project financing from OAO RZD’s own means. To carry out the projects of new railway line construction and high-speed railway communication development, it is necessary to attract external investment, especially from the Federal budget. The development of competition in the sector of rolling stock supplies will solve the problem from the standpoint of technical and technological improvement of railway rolling stock.
So, the most important task is to adjust the structure of the sources to finance the investment projects envisaged by the Strategy of Railway Transport Development to 2030.  
By Vitaly Evdokimenko, Deputy Head of the Federal Tariff Service
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    [DETAIL_TEXT] => 
Tariff Regulation № 10-01: Tariff Unification Needed
The tariff regulation system developed by now and the methods to determine the tariffs have allowed to reach the targets of the first two stages of the railway transport structural reform.
In particular, on August 28, 2003, new Tariff Regulation № 10-01 “Tariffs on Freight Transportation And Infrastructure Services Provided by Russian Railways” came into force.
According to the tariff, the wagon constituent (on average 15.4%) was separated off, which allowed for efficient use of private wagons regardless of the class of cargo carried in them. Conditions were created for the growth of investment into construction and modernisation of private rolling stock, the park of which now amounts to 322,400 units (34% of the total wagon park in Russia; as large as 51% of OAO RZD’s park).
Over RUR 15 billion of private investments is attracted annually to renew cargo railway rolling stock in Russia.
In new Tariff Regulation № 10-01, the “tariff rates – distance of transportation” relationship was revised. As a result, the tariffs on cargo transportation for long distances were reduced and additional declining rates were put into operation for some cargoes and empty wagons. These rates are applied for destinations further away than the threshold limit. 
It is especially important for cargo deliveries to the northern and other distant regions of the Russian Federation. Thus, prerequisites were created for levelling the transport and economic terms of work of the enterprises situated in different RF regions, but producing and consuming similar production. 
Besides, the new Tariff Regulation № 10-01 envisages a more flexible differentiation of tariffs according to the size of the cargo consignment and the type of freight rail cars in use; the minimum weigh standards were changed for some cargoes that cannot be loaded so that the full carrying capacity of a wagon was used; and more profitable economic terms for so-called ring-routes were provided.
Thus, a single Tariff Regulation was developed. It combines two methods of tariff formation – on freight domestic and international transportation via Russian ports, and on international cargo transportation via onland border crossings. As a result, the second stage of tariff unification for all types of transportation was fulfilled.
Target Market Model As The Main Guiding Line
In May 2007, the RF Government adopted the Target model of the railway transportation services market at the third stage of the structural reform, which made for formation of the basic principles of legislative and technological interaction between the market players. All this allowed development of the main ways to improve state tariff regulation and the methods of tariff formation on the basis of the adjusted targets for public railway transport reform.
To get rid of the shortage of investment in wagon park renewal, the launch of OAO First Cargo Company – a daughter company of OAO RZD is very important. The status of the company is “railway rolling stock operator”. This measure helps attract investments in rolling stock as well as reach the target of increasing the production of new wagons and locomotives, implementing new equipment and modern technologies (it may be done by managing an IPO). The solution will also help increase the profitability of assets of the First Cargo Company as well as the figures of OAO RZD’s capitalisation.
One of the main targets to be reached in forming and carrying out state tariff policy in the railway sector is reduction of cross-subsiding.
In public railway transport there is a problem of cross-subsiding in the freight transportation sector according to the type (domestic or international) of transportation (the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 differ by 2.7 times); the class of cargo carried (the tariff rates for the 1st and the 3rd class cargoes differ by 2 times), and the passenger transportation sector (losses exceed RUR 50 billion).
Several variants were discussed regarding the transfer to a single system for forming tariffs on cargo international and domestic transportation and the convergence of tariff rates according to type of transportation.
It was decided that the best of them was the variant envisaging step-by-step convergence of the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 by indexing the rates of the 2nd part on the basis of the average admissible tariff increase. The latter was defined in accordance with the forecast of the state social and economic development figures in 2008-2010. The chosen variant envisages keeping the 3rd part of the Tariff Regulation and its rates the same as they were in 2004. Thus, the transfer to a single tariff level regardless of the type of transportation will be provided without sudden changing of tariff loading on the railway service consumers. The forecast of transport expenses changing in the long-term is provided to industrial enterprises. 
This variant envisages the transfer to a single order of tariff calculation in accordance with the 2nd part of Tariff Regulation № 10-01 in 2009. To compensate for losses from tariff unification, an additional 1.88% indexation of the unified tariff level is required.
That is why in 2005-2007, after the differentiated indexation of tariffs on cargo domestic and international transportation, the ratio of tariffs from Part 3 and Part 2 of Tariff Regulation № 10-01 decreased from 3.37 in 2005 to 2.69 in 2007.
Meanwhile, taking into account the real level of tariffs on cargo railway transportation, since 2006 measures have been taken to unify tariffs on freight transportation in separate segments of the railway transportation market.
A decision was made to unify tariffs on grain transportation via border transfer stations regardless of the direction of transportation. To do it, amendments were put into Tariff Regulation № 10-01 applying a 0.89 coefficient for grain transportation to foreign ports and border crossings to the Baltic States and Finland. Also, work was continued on converging tariffs on methanol transportation via border transfer stations regardless of the direction of transportation. In particular, amendments were put into Tariff Regulation № 10-01: coefficients, corresponding to indexation of tariffs by 8%, were changed for the Finnish direction, if the transportation distance is 1,700-2,600 km and over 4,000 km, as well as for the direction to the CIS, if the transportation distance is 1,001-2,000 km.    
Today, the state is holding to a tough tariff policy to restrain the growth of tariffs on railway transportation. Meanwhile, because of the shortage of investment to purchase gondola cars and the lack of resources to repair rolling stock, on the network of Russian the normative life time of a gondola car is 22 years, the average age of a gondola car owned by OAO RZD is 18.7 years, and the life time of 29.9% of the public inventory park of gondola cars in use is spent.
So, the Federal Tariff Service made a decision on differentiated indexation of tariffs on freight transportation in gondola cars according to the ownership of the wagons. As a result, the attractiveness of private investment in purchasing this type of rolling stock will be provided by decreasing the term of a gondola car pay-off period from 10-12 to 7-8 years. 
Useful Privileges 
One of the instruments to carry out a flexible tariff policy is the privileged (considering the special terms of transportation) tariffs on cargo transportation set by the Federal Tariff Service. It is aimed at providing a competitive Russian transport system and producing national producers on the foreign and domestic markets, as well as stimulating development of new technologies in railway transport. For example, the average rate for coal transportation by railway is USD 19-21 per ton, if the exclusive tariffs are applied. Meanwhile, the cost of coal handling in Russian ports is USD 10-14 per ton. And OAO RZD’s losses from giving privileged tariffs on coal transportation amounted to RUR 1 billion in 2006. Naturally, it required additional indexation of tariffs on cargo railway transportation and caused an overall increase of tariff loading on the national economy.
The efficiency of the state tariff policy realisation in the cargo railway transportation sector is proved by the stable dynamics of transportation volume growth and the increase of Russian goods producers” competitiveness in the domestic and international markets, which is reflected in the stable dynamics of the reduction of the transport constituent in the price of transported cargo. Thus, in 2003-2006, the prices for industrial production grew by 80.9%, while the tariffs on cargo railway transportation (but transit) increased by 41.8% on average. During the period, the transport constituent in the price of the cargo fell from 16.8% to 12.8% on average; in the fuel industry it reduced from 52.1% to 30.5%; in the oil refining industry – from 7.9% to 5%; in the ore industry – from 19.5% to 12.3%, in the metallurgy – from 5.5% to 3.5%, and in the chemical industry – from 7% to 5.5%.
    
Indexation and investments
At the third stage of railway transport reform, the shortage of investment resources is to be overcome, and the development of railway infrastructure and rolling stock is to get ahead of the dynamics of the growth of demand for railway transportation and requirements as to their quality.
To do this, it is necessary to use a complex approach when examining the parameters of indexation of tariffs on railway transportation. Using this approach, one must take into consideration that the changes of the tariffs are to coincide with the target parameters of inflation as well as fulfil railway transport”s need for investment. There must be a multiplying effect from increasing the level of technical and technological equipment of the railways.
The RF Government approved the parameters of indexation of tariffs on cargo railway transportation in 2008-2010. They allow optimising the financial opportunities of the company to provide the reproduction of the basic funds and realisation of investment programmes. In particular, in 2008, the planned growth of the investment budget is 51.7% year-on-year, and in 2009 the figure is to increase by another 10.1%. In 2010, the investment budget of OAO RZD will grow by 70.2% in comparison with 2007.
Meanwhile, the demand for investment exceeds the possible volumes of investment project financing from OAO RZD’s own means. To carry out the projects of new railway line construction and high-speed railway communication development, it is necessary to attract external investment, especially from the Federal budget. The development of competition in the sector of rolling stock supplies will solve the problem from the standpoint of technical and technological improvement of railway rolling stock.
So, the most important task is to adjust the structure of the sources to finance the investment projects envisaged by the Strategy of Railway Transport Development to 2030.  
By Vitaly Evdokimenko, Deputy Head of the Federal Tariff Service
    [~DETAIL_TEXT] => 
Tariff Regulation № 10-01: Tariff Unification Needed
The tariff regulation system developed by now and the methods to determine the tariffs have allowed to reach the targets of the first two stages of the railway transport structural reform.
In particular, on August 28, 2003, new Tariff Regulation № 10-01 “Tariffs on Freight Transportation And Infrastructure Services Provided by Russian Railways” came into force.
According to the tariff, the wagon constituent (on average 15.4%) was separated off, which allowed for efficient use of private wagons regardless of the class of cargo carried in them. Conditions were created for the growth of investment into construction and modernisation of private rolling stock, the park of which now amounts to 322,400 units (34% of the total wagon park in Russia; as large as 51% of OAO RZD’s park).
Over RUR 15 billion of private investments is attracted annually to renew cargo railway rolling stock in Russia.
In new Tariff Regulation № 10-01, the “tariff rates – distance of transportation” relationship was revised. As a result, the tariffs on cargo transportation for long distances were reduced and additional declining rates were put into operation for some cargoes and empty wagons. These rates are applied for destinations further away than the threshold limit. 
It is especially important for cargo deliveries to the northern and other distant regions of the Russian Federation. Thus, prerequisites were created for levelling the transport and economic terms of work of the enterprises situated in different RF regions, but producing and consuming similar production. 
Besides, the new Tariff Regulation № 10-01 envisages a more flexible differentiation of tariffs according to the size of the cargo consignment and the type of freight rail cars in use; the minimum weigh standards were changed for some cargoes that cannot be loaded so that the full carrying capacity of a wagon was used; and more profitable economic terms for so-called ring-routes were provided.
Thus, a single Tariff Regulation was developed. It combines two methods of tariff formation – on freight domestic and international transportation via Russian ports, and on international cargo transportation via onland border crossings. As a result, the second stage of tariff unification for all types of transportation was fulfilled.
Target Market Model As The Main Guiding Line
In May 2007, the RF Government adopted the Target model of the railway transportation services market at the third stage of the structural reform, which made for formation of the basic principles of legislative and technological interaction between the market players. All this allowed development of the main ways to improve state tariff regulation and the methods of tariff formation on the basis of the adjusted targets for public railway transport reform.
To get rid of the shortage of investment in wagon park renewal, the launch of OAO First Cargo Company – a daughter company of OAO RZD is very important. The status of the company is “railway rolling stock operator”. This measure helps attract investments in rolling stock as well as reach the target of increasing the production of new wagons and locomotives, implementing new equipment and modern technologies (it may be done by managing an IPO). The solution will also help increase the profitability of assets of the First Cargo Company as well as the figures of OAO RZD’s capitalisation.
One of the main targets to be reached in forming and carrying out state tariff policy in the railway sector is reduction of cross-subsiding.
In public railway transport there is a problem of cross-subsiding in the freight transportation sector according to the type (domestic or international) of transportation (the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 differ by 2.7 times); the class of cargo carried (the tariff rates for the 1st and the 3rd class cargoes differ by 2 times), and the passenger transportation sector (losses exceed RUR 50 billion).
Several variants were discussed regarding the transfer to a single system for forming tariffs on cargo international and domestic transportation and the convergence of tariff rates according to type of transportation.
It was decided that the best of them was the variant envisaging step-by-step convergence of the tariff rates in the 2nd and the 3rd parts of Tariff Regulation № 10-01 by indexing the rates of the 2nd part on the basis of the average admissible tariff increase. The latter was defined in accordance with the forecast of the state social and economic development figures in 2008-2010. The chosen variant envisages keeping the 3rd part of the Tariff Regulation and its rates the same as they were in 2004. Thus, the transfer to a single tariff level regardless of the type of transportation will be provided without sudden changing of tariff loading on the railway service consumers. The forecast of transport expenses changing in the long-term is provided to industrial enterprises. 
This variant envisages the transfer to a single order of tariff calculation in accordance with the 2nd part of Tariff Regulation № 10-01 in 2009. To compensate for losses from tariff unification, an additional 1.88% indexation of the unified tariff level is required.
That is why in 2005-2007, after the differentiated indexation of tariffs on cargo domestic and international transportation, the ratio of tariffs from Part 3 and Part 2 of Tariff Regulation № 10-01 decreased from 3.37 in 2005 to 2.69 in 2007.
Meanwhile, taking into account the real level of tariffs on cargo railway transportation, since 2006 measures have been taken to unify tariffs on freight transportation in separate segments of the railway transportation market.
A decision was made to unify tariffs on grain transportation via border transfer stations regardless of the direction of transportation. To do it, amendments were put into Tariff Regulation № 10-01 applying a 0.89 coefficient for grain transportation to foreign ports and border crossings to the Baltic States and Finland. Also, work was continued on converging tariffs on methanol transportation via border transfer stations regardless of the direction of transportation. In particular, amendments were put into Tariff Regulation № 10-01: coefficients, corresponding to indexation of tariffs by 8%, were changed for the Finnish direction, if the transportation distance is 1,700-2,600 km and over 4,000 km, as well as for the direction to the CIS, if the transportation distance is 1,001-2,000 km.    
Today, the state is holding to a tough tariff policy to restrain the growth of tariffs on railway transportation. Meanwhile, because of the shortage of investment to purchase gondola cars and the lack of resources to repair rolling stock, on the network of Russian the normative life time of a gondola car is 22 years, the average age of a gondola car owned by OAO RZD is 18.7 years, and the life time of 29.9% of the public inventory park of gondola cars in use is spent.
So, the Federal Tariff Service made a decision on differentiated indexation of tariffs on freight transportation in gondola cars according to the ownership of the wagons. As a result, the attractiveness of private investment in purchasing this type of rolling stock will be provided by decreasing the term of a gondola car pay-off period from 10-12 to 7-8 years. 
Useful Privileges 
One of the instruments to carry out a flexible tariff policy is the privileged (considering the special terms of transportation) tariffs on cargo transportation set by the Federal Tariff Service. It is aimed at providing a competitive Russian transport system and producing national producers on the foreign and domestic markets, as well as stimulating development of new technologies in railway transport. For example, the average rate for coal transportation by railway is USD 19-21 per ton, if the exclusive tariffs are applied. Meanwhile, the cost of coal handling in Russian ports is USD 10-14 per ton. And OAO RZD’s losses from giving privileged tariffs on coal transportation amounted to RUR 1 billion in 2006. Naturally, it required additional indexation of tariffs on cargo railway transportation and caused an overall increase of tariff loading on the national economy.
The efficiency of the state tariff policy realisation in the cargo railway transportation sector is proved by the stable dynamics of transportation volume growth and the increase of Russian goods producers” competitiveness in the domestic and international markets, which is reflected in the stable dynamics of the reduction of the transport constituent in the price of transported cargo. Thus, in 2003-2006, the prices for industrial production grew by 80.9%, while the tariffs on cargo railway transportation (but transit) increased by 41.8% on average. During the period, the transport constituent in the price of the cargo fell from 16.8% to 12.8% on average; in the fuel industry it reduced from 52.1% to 30.5%; in the oil refining industry – from 7.9% to 5%; in the ore industry – from 19.5% to 12.3%, in the metallurgy – from 5.5% to 3.5%, and in the chemical industry – from 7% to 5.5%.
    
Indexation and investments
At the third stage of railway transport reform, the shortage of investment resources is to be overcome, and the development of railway infrastructure and rolling stock is to get ahead of the dynamics of the growth of demand for railway transportation and requirements as to their quality.
To do this, it is necessary to use a complex approach when examining the parameters of indexation of tariffs on railway transportation. Using this approach, one must take into consideration that the changes of the tariffs are to coincide with the target parameters of inflation as well as fulfil railway transport”s need for investment. There must be a multiplying effect from increasing the level of technical and technological equipment of the railways.
The RF Government approved the parameters of indexation of tariffs on cargo railway transportation in 2008-2010. They allow optimising the financial opportunities of the company to provide the reproduction of the basic funds and realisation of investment programmes. In particular, in 2008, the planned growth of the investment budget is 51.7% year-on-year, and in 2009 the figure is to increase by another 10.1%. In 2010, the investment budget of OAO RZD will grow by 70.2% in comparison with 2007.
Meanwhile, the demand for investment exceeds the possible volumes of investment project financing from OAO RZD’s own means. To carry out the projects of new railway line construction and high-speed railway communication development, it is necessary to attract external investment, especially from the Federal budget. The development of competition in the sector of rolling stock supplies will solve the problem from the standpoint of technical and technological improvement of railway rolling stock.
So, the most important task is to adjust the structure of the sources to finance the investment projects envisaged by the Strategy of Railway Transport Development to 2030.  
By Vitaly Evdokimenko, Deputy Head of the Federal Tariff Service
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New Status
The reform of research institutes will allow famous scientists to be involved in development of railway facilities and sectoral systems, and implement technologies based on modern solutions. Later the daughter companies will become scientific and technological integrators in the CIS and Baltic states, where railways with a 1,520 mm-wide gauge are in use.
The main reasons for turning the institutes into joint-stock companies are as follows:
• improving the quality of solutions to technical and structural problems at the railway transport;     
• speeding up the development of scientific and experimental research methods to reach prospective and applied targets;
• development and realisation of complex scientific and technical projects and programmes;
• making research and development more efficient.
The transfer to the joint-stock type of ownership is supposed to make for the development of innovative activities, diversification of the portfolio of products and clients, and an increase in the profitability of the scientific activity as well as growth of the institutes” capitalisation and generation of enough of its own means to fund further development.
Mainly, OAO VNIIZhT is to specialise in developing technologies for producing and testing rolling stock and other railway facilities. Nowadays, VNIIZhT is losing its position in the sector of autobrake equipment, crack detection, methods of repair and track maintenance. Making it a subsidiary of OAO RZD envisages its resurgence in fundamental scientific research.
OAO NIIAS is to become an engineering company, owning a necessary technical base and HR potential to develop and support management systems for enterprises in the railway or adjacent sectors. 
The competition in the market for scientific and technical services for railway transport has become tougher lately. Specialised high schools, Russian Academy of Sciences and other scientific organisations of the RF and the CIS are operating actively in the market. But the scientific and technical complex of OAO RZD has significant advantages in comparison with other market players. They have a well-developed experimental and laboratory base, long-term experience of fulfilment research and design works, and high scientific potential in its employees. The institutes and their brands are widely known. 

OAO NIIAS: High-Tech Science
OAO NIIAS, in cooperation with OAO RZD, has developed a number of systems to provide the efficient modernisation of the existing railway infrastructure through competitive navigation systems used to control railway traffic. 
The recent agreement between OAO RZD and RFI (Italian Railways) allows an earlier take-up of the measures necessary to implement satellite technologies in the Global Navigation Satellite System and communication system sectors to enlarge application of the ETCS-ERTMS system in Russia.
Traffic safety systems developed by OAO NIIAS are widely used on the railways in Russia, neighbouring states (in particular, in Middle Asia), Iran, India, China and other countries. 
Foreign experts confirm that, according to the “quality-price” ratio, Russian safety systems have advantages and are quite competitive in the international market. In fact, Russian devices have no equivalent in the world. 
In 2006, OAO NIIAS developed a concept targeted at making traffic safer using multi-functional complex train traffic regulating systems. The concept is the main document defining the stages of improving, as well as strategic directions of, locomotive and stationary traffic control systems and their integration with the automated systems of railway transport control. It defines the basic directions and stages of realisation of the single technical policy in the sectors of traffic safety control and railway transport efficiency.      
An important stage in improving the transportation process is creation of the system of controlling dispatch centres at the railways, which will allow concentration of dispatcher control in a single structure and reduce the impact of losses at “joints” with other transport modes. 
A complex technology was developed to manage the exploitation work at the line Chelyabinsk – Rybnoye and the single locomotive park.
Proposals about the organisational structure of the train operating managing system on the line at several railways in the through mode were made. According to them, the management structure is based on the Centre of Transportation Control and the Railway Centre of Transportation Control.
The train operation (including locomotive park operation) on the line Chelyabinsk – Kinel – Penza – Rybnoye is managed at three levels: network, regional and linear (station). At each of the levels there are operator-dispatcher personnel, providing current planning, control and analysis of locomotives” work.
At the network level:
• chief locomotive dispatcher of Centre of Transportation Control 
At the regional level:
• regional locomotive dispatcher 
To implement the new technology, at the railway level there are:
• locomotive dispatchers of railways, included on the line
• train dispatcher of railways, included on the line
The person in charge of locomotive park management on the line Chelyabinsk – Rybnoye is a regional locomotive dispatcher, who has the powers and responsibility of a network locomotive dispatcher. A regional locomotive dispatcher organises the work of the locomotive park on the line Chelyabinsk - Rybnoye that lies on the territory of three railways. Meanwhile, the automated work place of a regional locomotive dispatcher may be placed at the railway level – in Kuybyshev Railway Centre of Transportation Control in Samara.
Today information systems such as automated control systems for transportation operatives, wagon parks, container transportation and pulling resources, etc. are being successfully developed. OAO NIIAS coordinates the developments.
VNIIZhT: New Ways Of Development    
When domestic freight transportation volumes increase, it is necessary to enlarge the mass of cargo trains. VNIIZhT used to conduct research to model dynamic processes that take place in heavy trains – 6,000, 9,000, 12,000 and 18,000 tons. So, the longitudinal dynamics for safe modes to drive cargo trains were found.  
As for passenger transportation, the global tendency is toward increasing train speeds, putting into operation faster trains (up to 200-250 kph) on the lines where passenger and cargo traffic is combined, and high-speed trains (up to 300-350 kph) on special lines. The Strategy of Railway Transport Development to 2030 defines fast and high-speed communication as an important term for showing the social efficiency of OAO RZD’s operation.
Today, a lot is being done to organise high-speed electric train traffic on the lines Saint Petersburg – Moscow, Moscow – Nizhny Novgorod and Saint Petersburg – Helsinki. Technical requirements for the rolling stock to service the lines have already been developed. OAO VNIIZhT provides scientific and technical maintenance for development of fast trains, including tests and certification. 
Concerning infrastructure, OAO VNIIZhT developed technical standards for track facilities to organise train traffic at a speed of up to 250 kph. This standard is the basis for project and building organisations to prepare the infrastructure for faster communication.
Another direction of wagon park work intensification is the use of different dimensions on Russian railways. Considering the standards developed by VNIIZhT, OAO Altaivagon produced test samples of gondola cars of Tpr dimension. They allow the mass of trains to increase while using the same length of station track. If the Tpr dimension is used, the amount of gondola cars grows by 9-11 units, and the mass of the carried freight – by 700-1,300 tons. Today, 300 such gondola cars are being tested with an axle load of 23.5 tons.
Among the prospective directions of OAO VNIIZhT work there are principally new approaches to hauling development – construction of gas-turboelectric locomotives and application of energy storage. A number of aerospace enterprises and famous producers of microprocessor control systems are taking part in development of a gas-turbine power unit for locomotives. The model sample of the shunting gas-turboelectric locomotive is almost complete. It was created by VNIIZhT, Federal State Unitary Enterprise “Moscow Machine Building production Plant “Salut” and OAO Lyudinovoteplovoz. The power of the locomotive is 1,000 kilowatts.
Today, OAO VNIIZhT is actively cooperating with foreign countries. In particular, it performs research for companies from Poland (KAMAX S.A.), Czech Republic (Railtech Slavjana), USA (Railroad Friction Products Corporation), Germany (CosRail GmbH), Austria (Enzesfeld-Caro Metallwerke AG), Switzerland (Secheron SA), etc. Once VNIIZhT owns a powerful testing and experimental base, it will conclude contracts on technical facilities for railway testing. It is planned to test freight and passenger bogies with collapsible wheel sets produced by Spanish company Talgo and a contrailer flat wagon, which is in use in Finland. Besides, there are orders for expert examination of technical documentation.
By Elena Ushkova
interview
Competition Is Tough 
The developments of NIIAS are being successfully put into operation on the railways of Russia and foreign states. Sergey Adadurov, Director General of OAO NIIAS, told The RZD-Partner International about the targets set for the joint-stock institute. 
 
– Mr. Adadurov, what targets does OAO NIIAS as a daughter company of OAO RZD have?
– As before, the main targets of our institute are to optimise the exploitation work of Russian railway transport using IT and new solutions and to make train traffic safer. One should understand that the sense of the institute reforming lies in new forms of operation, not the formal change of the business entity.  
The targets of the first importance are 
- increase of transport and forwarding services quality;
- growth of revenue from cargo transportation and services;
- application of new information technologies, including e-document turnover for interaction with consumers and partners;
- provision of information safety for corporate systems.
An important stage of improving the transportation process is creation of dispatcher control centres at the railways, which will allow dispatcher control to be concentrated into one structure and smooth the impact of losses at “joints” with other transport modes. To avoid failures in the work of railway transport, efficient functioning of the infrastructure is necessary. We are constantly developing and implementing the infrastructure management IT complex, allowing reduction of intersectoral expenses by optimising replacement of repair and technical facilities and decreasing waste of resources and service personnel.  
– What new software is OAO NIIAS developing and implementing now?
– Nowadays we are actively developing and putting automated control system CARGO EXPRESS and the system of coordinated cargo delivery to large consumers, ports and border crossings into operation on the railway network. 
The new generation of automated passenger transportation control systems, called EXPRESS-3, is being developed and implemented. The system is based on the latest foreign and Russian technological, telecommunication hardware and software data-processing devices and facilities for technical and information safety provision. Due to the system, a new level of quality may be achieved in train passenger servicing, booking and reservations, operative passenger transportation control, and passenger wagon park management. EXPRESS-3 is already operating in the CIS and the Baltic states.
Today, the institute is participating in development of the normative base and the technical requirements to promote the concept of control systems as well as systems for safe train traffic on the dedicated high-speed railway. A multi-functional system to control and provide train traffic safety is being developed, using satellite positioning and a digital radio channel. The system includes an automatic block system with tone track circuits, centralised placement of gear and reserved data transfer channel, microprocessor ABTC-M, which is an up-to-date generation of interval regulation and traffic safety systems developed on the microprocessor elemental base. 
An important link of the regulation and traffic safety systems is a complex locomotive safety device, CLUB-U. Its specific features are module interaction with other board automation systems, a digital radio channel and use of satellite navigation systems GPS/GLONASS and e-maps of railway lines to define a locomotive’s whereabouts automatically. In Russia, locomotives, multiple units and the whole park of special automotive rolling stock are equipped with the system.
Regarding the major railway network, satellite and microwave communication systems have been launched and are developing. Mainline and technological levels of digital network systems have been created. In fact, digital networks of operative and technological connection are the most important part of centralising transportation control to provide reliable and fast communication of the dispatcher gear and users, whose actions influence traffic safety (i.e. station operator, train drivers).
Every year the share of joint developments in the portfolio of OAO NIIAS orders becomes larger. The potential of our institute defines its role as a leading scientific-methodical, project and construction centre in the railway technology, automatic control and transportation infrastructure, railway automation and communication systems sectors. The competition in the sector is tough. The advantage of our institute is that it provides the full range of expertise needed for the creation of new machinery – from research works to installing and maintaining the facilities on the railway. Thus, our strategic partners, scientific organisation and railway transport high schools, as well as academic and engineering institutes of other industries such as aerospace ones, are interested in cooperation with OAO NIIAS.    
 
    [~DETAIL_TEXT] => 
New Status
The reform of research institutes will allow famous scientists to be involved in development of railway facilities and sectoral systems, and implement technologies based on modern solutions. Later the daughter companies will become scientific and technological integrators in the CIS and Baltic states, where railways with a 1,520 mm-wide gauge are in use.
The main reasons for turning the institutes into joint-stock companies are as follows:
• improving the quality of solutions to technical and structural problems at the railway transport;     
• speeding up the development of scientific and experimental research methods to reach prospective and applied targets;
• development and realisation of complex scientific and technical projects and programmes;
• making research and development more efficient.
The transfer to the joint-stock type of ownership is supposed to make for the development of innovative activities, diversification of the portfolio of products and clients, and an increase in the profitability of the scientific activity as well as growth of the institutes” capitalisation and generation of enough of its own means to fund further development.
Mainly, OAO VNIIZhT is to specialise in developing technologies for producing and testing rolling stock and other railway facilities. Nowadays, VNIIZhT is losing its position in the sector of autobrake equipment, crack detection, methods of repair and track maintenance. Making it a subsidiary of OAO RZD envisages its resurgence in fundamental scientific research.
OAO NIIAS is to become an engineering company, owning a necessary technical base and HR potential to develop and support management systems for enterprises in the railway or adjacent sectors. 
The competition in the market for scientific and technical services for railway transport has become tougher lately. Specialised high schools, Russian Academy of Sciences and other scientific organisations of the RF and the CIS are operating actively in the market. But the scientific and technical complex of OAO RZD has significant advantages in comparison with other market players. They have a well-developed experimental and laboratory base, long-term experience of fulfilment research and design works, and high scientific potential in its employees. The institutes and their brands are widely known. 

OAO NIIAS: High-Tech Science
OAO NIIAS, in cooperation with OAO RZD, has developed a number of systems to provide the efficient modernisation of the existing railway infrastructure through competitive navigation systems used to control railway traffic. 
The recent agreement between OAO RZD and RFI (Italian Railways) allows an earlier take-up of the measures necessary to implement satellite technologies in the Global Navigation Satellite System and communication system sectors to enlarge application of the ETCS-ERTMS system in Russia.
Traffic safety systems developed by OAO NIIAS are widely used on the railways in Russia, neighbouring states (in particular, in Middle Asia), Iran, India, China and other countries. 
Foreign experts confirm that, according to the “quality-price” ratio, Russian safety systems have advantages and are quite competitive in the international market. In fact, Russian devices have no equivalent in the world. 
In 2006, OAO NIIAS developed a concept targeted at making traffic safer using multi-functional complex train traffic regulating systems. The concept is the main document defining the stages of improving, as well as strategic directions of, locomotive and stationary traffic control systems and their integration with the automated systems of railway transport control. It defines the basic directions and stages of realisation of the single technical policy in the sectors of traffic safety control and railway transport efficiency.      
An important stage in improving the transportation process is creation of the system of controlling dispatch centres at the railways, which will allow concentration of dispatcher control in a single structure and reduce the impact of losses at “joints” with other transport modes. 
A complex technology was developed to manage the exploitation work at the line Chelyabinsk – Rybnoye and the single locomotive park.
Proposals about the organisational structure of the train operating managing system on the line at several railways in the through mode were made. According to them, the management structure is based on the Centre of Transportation Control and the Railway Centre of Transportation Control.
The train operation (including locomotive park operation) on the line Chelyabinsk – Kinel – Penza – Rybnoye is managed at three levels: network, regional and linear (station). At each of the levels there are operator-dispatcher personnel, providing current planning, control and analysis of locomotives” work.
At the network level:
• chief locomotive dispatcher of Centre of Transportation Control 
At the regional level:
• regional locomotive dispatcher 
To implement the new technology, at the railway level there are:
• locomotive dispatchers of railways, included on the line
• train dispatcher of railways, included on the line
The person in charge of locomotive park management on the line Chelyabinsk – Rybnoye is a regional locomotive dispatcher, who has the powers and responsibility of a network locomotive dispatcher. A regional locomotive dispatcher organises the work of the locomotive park on the line Chelyabinsk - Rybnoye that lies on the territory of three railways. Meanwhile, the automated work place of a regional locomotive dispatcher may be placed at the railway level – in Kuybyshev Railway Centre of Transportation Control in Samara.
Today information systems such as automated control systems for transportation operatives, wagon parks, container transportation and pulling resources, etc. are being successfully developed. OAO NIIAS coordinates the developments.
VNIIZhT: New Ways Of Development    
When domestic freight transportation volumes increase, it is necessary to enlarge the mass of cargo trains. VNIIZhT used to conduct research to model dynamic processes that take place in heavy trains – 6,000, 9,000, 12,000 and 18,000 tons. So, the longitudinal dynamics for safe modes to drive cargo trains were found.  
As for passenger transportation, the global tendency is toward increasing train speeds, putting into operation faster trains (up to 200-250 kph) on the lines where passenger and cargo traffic is combined, and high-speed trains (up to 300-350 kph) on special lines. The Strategy of Railway Transport Development to 2030 defines fast and high-speed communication as an important term for showing the social efficiency of OAO RZD’s operation.
Today, a lot is being done to organise high-speed electric train traffic on the lines Saint Petersburg – Moscow, Moscow – Nizhny Novgorod and Saint Petersburg – Helsinki. Technical requirements for the rolling stock to service the lines have already been developed. OAO VNIIZhT provides scientific and technical maintenance for development of fast trains, including tests and certification. 
Concerning infrastructure, OAO VNIIZhT developed technical standards for track facilities to organise train traffic at a speed of up to 250 kph. This standard is the basis for project and building organisations to prepare the infrastructure for faster communication.
Another direction of wagon park work intensification is the use of different dimensions on Russian railways. Considering the standards developed by VNIIZhT, OAO Altaivagon produced test samples of gondola cars of Tpr dimension. They allow the mass of trains to increase while using the same length of station track. If the Tpr dimension is used, the amount of gondola cars grows by 9-11 units, and the mass of the carried freight – by 700-1,300 tons. Today, 300 such gondola cars are being tested with an axle load of 23.5 tons.
Among the prospective directions of OAO VNIIZhT work there are principally new approaches to hauling development – construction of gas-turboelectric locomotives and application of energy storage. A number of aerospace enterprises and famous producers of microprocessor control systems are taking part in development of a gas-turbine power unit for locomotives. The model sample of the shunting gas-turboelectric locomotive is almost complete. It was created by VNIIZhT, Federal State Unitary Enterprise “Moscow Machine Building production Plant “Salut” and OAO Lyudinovoteplovoz. The power of the locomotive is 1,000 kilowatts.
Today, OAO VNIIZhT is actively cooperating with foreign countries. In particular, it performs research for companies from Poland (KAMAX S.A.), Czech Republic (Railtech Slavjana), USA (Railroad Friction Products Corporation), Germany (CosRail GmbH), Austria (Enzesfeld-Caro Metallwerke AG), Switzerland (Secheron SA), etc. Once VNIIZhT owns a powerful testing and experimental base, it will conclude contracts on technical facilities for railway testing. It is planned to test freight and passenger bogies with collapsible wheel sets produced by Spanish company Talgo and a contrailer flat wagon, which is in use in Finland. Besides, there are orders for expert examination of technical documentation.
By Elena Ushkova
interview
Competition Is Tough 
The developments of NIIAS are being successfully put into operation on the railways of Russia and foreign states. Sergey Adadurov, Director General of OAO NIIAS, told The RZD-Partner International about the targets set for the joint-stock institute. 
 
– Mr. Adadurov, what targets does OAO NIIAS as a daughter company of OAO RZD have?
– As before, the main targets of our institute are to optimise the exploitation work of Russian railway transport using IT and new solutions and to make train traffic safer. One should understand that the sense of the institute reforming lies in new forms of operation, not the formal change of the business entity.  
The targets of the first importance are 
- increase of transport and forwarding services quality;
- growth of revenue from cargo transportation and services;
- application of new information technologies, including e-document turnover for interaction with consumers and partners;
- provision of information safety for corporate systems.
An important stage of improving the transportation process is creation of dispatcher control centres at the railways, which will allow dispatcher control to be concentrated into one structure and smooth the impact of losses at “joints” with other transport modes. To avoid failures in the work of railway transport, efficient functioning of the infrastructure is necessary. We are constantly developing and implementing the infrastructure management IT complex, allowing reduction of intersectoral expenses by optimising replacement of repair and technical facilities and decreasing waste of resources and service personnel.  
– What new software is OAO NIIAS developing and implementing now?
– Nowadays we are actively developing and putting automated control system CARGO EXPRESS and the system of coordinated cargo delivery to large consumers, ports and border crossings into operation on the railway network. 
The new generation of automated passenger transportation control systems, called EXPRESS-3, is being developed and implemented. The system is based on the latest foreign and Russian technological, telecommunication hardware and software data-processing devices and facilities for technical and information safety provision. Due to the system, a new level of quality may be achieved in train passenger servicing, booking and reservations, operative passenger transportation control, and passenger wagon park management. EXPRESS-3 is already operating in the CIS and the Baltic states.
Today, the institute is participating in development of the normative base and the technical requirements to promote the concept of control systems as well as systems for safe train traffic on the dedicated high-speed railway. A multi-functional system to control and provide train traffic safety is being developed, using satellite positioning and a digital radio channel. The system includes an automatic block system with tone track circuits, centralised placement of gear and reserved data transfer channel, microprocessor ABTC-M, which is an up-to-date generation of interval regulation and traffic safety systems developed on the microprocessor elemental base. 
An important link of the regulation and traffic safety systems is a complex locomotive safety device, CLUB-U. Its specific features are module interaction with other board automation systems, a digital radio channel and use of satellite navigation systems GPS/GLONASS and e-maps of railway lines to define a locomotive’s whereabouts automatically. In Russia, locomotives, multiple units and the whole park of special automotive rolling stock are equipped with the system.
Regarding the major railway network, satellite and microwave communication systems have been launched and are developing. Mainline and technological levels of digital network systems have been created. In fact, digital networks of operative and technological connection are the most important part of centralising transportation control to provide reliable and fast communication of the dispatcher gear and users, whose actions influence traffic safety (i.e. station operator, train drivers).
Every year the share of joint developments in the portfolio of OAO NIIAS orders becomes larger. The potential of our institute defines its role as a leading scientific-methodical, project and construction centre in the railway technology, automatic control and transportation infrastructure, railway automation and communication systems sectors. The competition in the sector is tough. The advantage of our institute is that it provides the full range of expertise needed for the creation of new machinery – from research works to installing and maintaining the facilities on the railway. Thus, our strategic partners, scientific organisation and railway transport high schools, as well as academic and engineering institutes of other industries such as aerospace ones, are interested in cooperation with OAO NIIAS.    
 
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New Status
The reform of research institutes will allow famous scientists to be involved in development of railway facilities and sectoral systems, and implement technologies based on modern solutions. Later the daughter companies will become scientific and technological integrators in the CIS and Baltic states, where railways with a 1,520 mm-wide gauge are in use.
The main reasons for turning the institutes into joint-stock companies are as follows:
• improving the quality of solutions to technical and structural problems at the railway transport;     
• speeding up the development of scientific and experimental research methods to reach prospective and applied targets;
• development and realisation of complex scientific and technical projects and programmes;
• making research and development more efficient.
The transfer to the joint-stock type of ownership is supposed to make for the development of innovative activities, diversification of the portfolio of products and clients, and an increase in the profitability of the scientific activity as well as growth of the institutes” capitalisation and generation of enough of its own means to fund further development.
Mainly, OAO VNIIZhT is to specialise in developing technologies for producing and testing rolling stock and other railway facilities. Nowadays, VNIIZhT is losing its position in the sector of autobrake equipment, crack detection, methods of repair and track maintenance. Making it a subsidiary of OAO RZD envisages its resurgence in fundamental scientific research.
OAO NIIAS is to become an engineering company, owning a necessary technical base and HR potential to develop and support management systems for enterprises in the railway or adjacent sectors. 
The competition in the market for scientific and technical services for railway transport has become tougher lately. Specialised high schools, Russian Academy of Sciences and other scientific organisations of the RF and the CIS are operating actively in the market. But the scientific and technical complex of OAO RZD has significant advantages in comparison with other market players. They have a well-developed experimental and laboratory base, long-term experience of fulfilment research and design works, and high scientific potential in its employees. The institutes and their brands are widely known. 

OAO NIIAS: High-Tech Science
OAO NIIAS, in cooperation with OAO RZD, has developed a number of systems to provide the efficient modernisation of the existing railway infrastructure through competitive navigation systems used to control railway traffic. 
The recent agreement between OAO RZD and RFI (Italian Railways) allows an earlier take-up of the measures necessary to implement satellite technologies in the Global Navigation Satellite System and communication system sectors to enlarge application of the ETCS-ERTMS system in Russia.
Traffic safety systems developed by OAO NIIAS are widely used on the railways in Russia, neighbouring states (in particular, in Middle Asia), Iran, India, China and other countries. 
Foreign experts confirm that, according to the “quality-price” ratio, Russian safety systems have advantages and are quite competitive in the international market. In fact, Russian devices have no equivalent in the world. 
In 2006, OAO NIIAS developed a concept targeted at making traffic safer using multi-functional complex train traffic regulating systems. The concept is the main document defining the stages of improving, as well as strategic directions of, locomotive and stationary traffic control systems and their integration with the automated systems of railway transport control. It defines the basic directions and stages of realisation of the single technical policy in the sectors of traffic safety control and railway transport efficiency.      
An important stage in improving the transportation process is creation of the system of controlling dispatch centres at the railways, which will allow concentration of dispatcher control in a single structure and reduce the impact of losses at “joints” with other transport modes. 
A complex technology was developed to manage the exploitation work at the line Chelyabinsk – Rybnoye and the single locomotive park.
Proposals about the organisational structure of the train operating managing system on the line at several railways in the through mode were made. According to them, the management structure is based on the Centre of Transportation Control and the Railway Centre of Transportation Control.
The train operation (including locomotive park operation) on the line Chelyabinsk – Kinel – Penza – Rybnoye is managed at three levels: network, regional and linear (station). At each of the levels there are operator-dispatcher personnel, providing current planning, control and analysis of locomotives” work.
At the network level:
• chief locomotive dispatcher of Centre of Transportation Control 
At the regional level:
• regional locomotive dispatcher 
To implement the new technology, at the railway level there are:
• locomotive dispatchers of railways, included on the line
• train dispatcher of railways, included on the line
The person in charge of locomotive park management on the line Chelyabinsk – Rybnoye is a regional locomotive dispatcher, who has the powers and responsibility of a network locomotive dispatcher. A regional locomotive dispatcher organises the work of the locomotive park on the line Chelyabinsk - Rybnoye that lies on the territory of three railways. Meanwhile, the automated work place of a regional locomotive dispatcher may be placed at the railway level – in Kuybyshev Railway Centre of Transportation Control in Samara.
Today information systems such as automated control systems for transportation operatives, wagon parks, container transportation and pulling resources, etc. are being successfully developed. OAO NIIAS coordinates the developments.
VNIIZhT: New Ways Of Development    
When domestic freight transportation volumes increase, it is necessary to enlarge the mass of cargo trains. VNIIZhT used to conduct research to model dynamic processes that take place in heavy trains – 6,000, 9,000, 12,000 and 18,000 tons. So, the longitudinal dynamics for safe modes to drive cargo trains were found.  
As for passenger transportation, the global tendency is toward increasing train speeds, putting into operation faster trains (up to 200-250 kph) on the lines where passenger and cargo traffic is combined, and high-speed trains (up to 300-350 kph) on special lines. The Strategy of Railway Transport Development to 2030 defines fast and high-speed communication as an important term for showing the social efficiency of OAO RZD’s operation.
Today, a lot is being done to organise high-speed electric train traffic on the lines Saint Petersburg – Moscow, Moscow – Nizhny Novgorod and Saint Petersburg – Helsinki. Technical requirements for the rolling stock to service the lines have already been developed. OAO VNIIZhT provides scientific and technical maintenance for development of fast trains, including tests and certification. 
Concerning infrastructure, OAO VNIIZhT developed technical standards for track facilities to organise train traffic at a speed of up to 250 kph. This standard is the basis for project and building organisations to prepare the infrastructure for faster communication.
Another direction of wagon park work intensification is the use of different dimensions on Russian railways. Considering the standards developed by VNIIZhT, OAO Altaivagon produced test samples of gondola cars of Tpr dimension. They allow the mass of trains to increase while using the same length of station track. If the Tpr dimension is used, the amount of gondola cars grows by 9-11 units, and the mass of the carried freight – by 700-1,300 tons. Today, 300 such gondola cars are being tested with an axle load of 23.5 tons.
Among the prospective directions of OAO VNIIZhT work there are principally new approaches to hauling development – construction of gas-turboelectric locomotives and application of energy storage. A number of aerospace enterprises and famous producers of microprocessor control systems are taking part in development of a gas-turbine power unit for locomotives. The model sample of the shunting gas-turboelectric locomotive is almost complete. It was created by VNIIZhT, Federal State Unitary Enterprise “Moscow Machine Building production Plant “Salut” and OAO Lyudinovoteplovoz. The power of the locomotive is 1,000 kilowatts.
Today, OAO VNIIZhT is actively cooperating with foreign countries. In particular, it performs research for companies from Poland (KAMAX S.A.), Czech Republic (Railtech Slavjana), USA (Railroad Friction Products Corporation), Germany (CosRail GmbH), Austria (Enzesfeld-Caro Metallwerke AG), Switzerland (Secheron SA), etc. Once VNIIZhT owns a powerful testing and experimental base, it will conclude contracts on technical facilities for railway testing. It is planned to test freight and passenger bogies with collapsible wheel sets produced by Spanish company Talgo and a contrailer flat wagon, which is in use in Finland. Besides, there are orders for expert examination of technical documentation.
By Elena Ushkova
interview
Competition Is Tough 
The developments of NIIAS are being successfully put into operation on the railways of Russia and foreign states. Sergey Adadurov, Director General of OAO NIIAS, told The RZD-Partner International about the targets set for the joint-stock institute. 
 
– Mr. Adadurov, what targets does OAO NIIAS as a daughter company of OAO RZD have?
– As before, the main targets of our institute are to optimise the exploitation work of Russian railway transport using IT and new solutions and to make train traffic safer. One should understand that the sense of the institute reforming lies in new forms of operation, not the formal change of the business entity.  
The targets of the first importance are 
- increase of transport and forwarding services quality;
- growth of revenue from cargo transportation and services;
- application of new information technologies, including e-document turnover for interaction with consumers and partners;
- provision of information safety for corporate systems.
An important stage of improving the transportation process is creation of dispatcher control centres at the railways, which will allow dispatcher control to be concentrated into one structure and smooth the impact of losses at “joints” with other transport modes. To avoid failures in the work of railway transport, efficient functioning of the infrastructure is necessary. We are constantly developing and implementing the infrastructure management IT complex, allowing reduction of intersectoral expenses by optimising replacement of repair and technical facilities and decreasing waste of resources and service personnel.  
– What new software is OAO NIIAS developing and implementing now?
– Nowadays we are actively developing and putting automated control system CARGO EXPRESS and the system of coordinated cargo delivery to large consumers, ports and border crossings into operation on the railway network. 
The new generation of automated passenger transportation control systems, called EXPRESS-3, is being developed and implemented. The system is based on the latest foreign and Russian technological, telecommunication hardware and software data-processing devices and facilities for technical and information safety provision. Due to the system, a new level of quality may be achieved in train passenger servicing, booking and reservations, operative passenger transportation control, and passenger wagon park management. EXPRESS-3 is already operating in the CIS and the Baltic states.
Today, the institute is participating in development of the normative base and the technical requirements to promote the concept of control systems as well as systems for safe train traffic on the dedicated high-speed railway. A multi-functional system to control and provide train traffic safety is being developed, using satellite positioning and a digital radio channel. The system includes an automatic block system with tone track circuits, centralised placement of gear and reserved data transfer channel, microprocessor ABTC-M, which is an up-to-date generation of interval regulation and traffic safety systems developed on the microprocessor elemental base. 
An important link of the regulation and traffic safety systems is a complex locomotive safety device, CLUB-U. Its specific features are module interaction with other board automation systems, a digital radio channel and use of satellite navigation systems GPS/GLONASS and e-maps of railway lines to define a locomotive’s whereabouts automatically. In Russia, locomotives, multiple units and the whole park of special automotive rolling stock are equipped with the system.
Regarding the major railway network, satellite and microwave communication systems have been launched and are developing. Mainline and technological levels of digital network systems have been created. In fact, digital networks of operative and technological connection are the most important part of centralising transportation control to provide reliable and fast communication of the dispatcher gear and users, whose actions influence traffic safety (i.e. station operator, train drivers).
Every year the share of joint developments in the portfolio of OAO NIIAS orders becomes larger. The potential of our institute defines its role as a leading scientific-methodical, project and construction centre in the railway technology, automatic control and transportation infrastructure, railway automation and communication systems sectors. The competition in the sector is tough. The advantage of our institute is that it provides the full range of expertise needed for the creation of new machinery – from research works to installing and maintaining the facilities on the railway. Thus, our strategic partners, scientific organisation and railway transport high schools, as well as academic and engineering institutes of other industries such as aerospace ones, are interested in cooperation with OAO NIIAS.    
 
    [~DETAIL_TEXT] => 
New Status
The reform of research institutes will allow famous scientists to be involved in development of railway facilities and sectoral systems, and implement technologies based on modern solutions. Later the daughter companies will become scientific and technological integrators in the CIS and Baltic states, where railways with a 1,520 mm-wide gauge are in use.
The main reasons for turning the institutes into joint-stock companies are as follows:
• improving the quality of solutions to technical and structural problems at the railway transport;     
• speeding up the development of scientific and experimental research methods to reach prospective and applied targets;
• development and realisation of complex scientific and technical projects and programmes;
• making research and development more efficient.
The transfer to the joint-stock type of ownership is supposed to make for the development of innovative activities, diversification of the portfolio of products and clients, and an increase in the profitability of the scientific activity as well as growth of the institutes” capitalisation and generation of enough of its own means to fund further development.
Mainly, OAO VNIIZhT is to specialise in developing technologies for producing and testing rolling stock and other railway facilities. Nowadays, VNIIZhT is losing its position in the sector of autobrake equipment, crack detection, methods of repair and track maintenance. Making it a subsidiary of OAO RZD envisages its resurgence in fundamental scientific research.
OAO NIIAS is to become an engineering company, owning a necessary technical base and HR potential to develop and support management systems for enterprises in the railway or adjacent sectors. 
The competition in the market for scientific and technical services for railway transport has become tougher lately. Specialised high schools, Russian Academy of Sciences and other scientific organisations of the RF and the CIS are operating actively in the market. But the scientific and technical complex of OAO RZD has significant advantages in comparison with other market players. They have a well-developed experimental and laboratory base, long-term experience of fulfilment research and design works, and high scientific potential in its employees. The institutes and their brands are widely known. 

OAO NIIAS: High-Tech Science
OAO NIIAS, in cooperation with OAO RZD, has developed a number of systems to provide the efficient modernisation of the existing railway infrastructure through competitive navigation systems used to control railway traffic. 
The recent agreement between OAO RZD and RFI (Italian Railways) allows an earlier take-up of the measures necessary to implement satellite technologies in the Global Navigation Satellite System and communication system sectors to enlarge application of the ETCS-ERTMS system in Russia.
Traffic safety systems developed by OAO NIIAS are widely used on the railways in Russia, neighbouring states (in particular, in Middle Asia), Iran, India, China and other countries. 
Foreign experts confirm that, according to the “quality-price” ratio, Russian safety systems have advantages and are quite competitive in the international market. In fact, Russian devices have no equivalent in the world. 
In 2006, OAO NIIAS developed a concept targeted at making traffic safer using multi-functional complex train traffic regulating systems. The concept is the main document defining the stages of improving, as well as strategic directions of, locomotive and stationary traffic control systems and their integration with the automated systems of railway transport control. It defines the basic directions and stages of realisation of the single technical policy in the sectors of traffic safety control and railway transport efficiency.      
An important stage in improving the transportation process is creation of the system of controlling dispatch centres at the railways, which will allow concentration of dispatcher control in a single structure and reduce the impact of losses at “joints” with other transport modes. 
A complex technology was developed to manage the exploitation work at the line Chelyabinsk – Rybnoye and the single locomotive park.
Proposals about the organisational structure of the train operating managing system on the line at several railways in the through mode were made. According to them, the management structure is based on the Centre of Transportation Control and the Railway Centre of Transportation Control.
The train operation (including locomotive park operation) on the line Chelyabinsk – Kinel – Penza – Rybnoye is managed at three levels: network, regional and linear (station). At each of the levels there are operator-dispatcher personnel, providing current planning, control and analysis of locomotives” work.
At the network level:
• chief locomotive dispatcher of Centre of Transportation Control 
At the regional level:
• regional locomotive dispatcher 
To implement the new technology, at the railway level there are:
• locomotive dispatchers of railways, included on the line
• train dispatcher of railways, included on the line
The person in charge of locomotive park management on the line Chelyabinsk – Rybnoye is a regional locomotive dispatcher, who has the powers and responsibility of a network locomotive dispatcher. A regional locomotive dispatcher organises the work of the locomotive park on the line Chelyabinsk - Rybnoye that lies on the territory of three railways. Meanwhile, the automated work place of a regional locomotive dispatcher may be placed at the railway level – in Kuybyshev Railway Centre of Transportation Control in Samara.
Today information systems such as automated control systems for transportation operatives, wagon parks, container transportation and pulling resources, etc. are being successfully developed. OAO NIIAS coordinates the developments.
VNIIZhT: New Ways Of Development    
When domestic freight transportation volumes increase, it is necessary to enlarge the mass of cargo trains. VNIIZhT used to conduct research to model dynamic processes that take place in heavy trains – 6,000, 9,000, 12,000 and 18,000 tons. So, the longitudinal dynamics for safe modes to drive cargo trains were found.  
As for passenger transportation, the global tendency is toward increasing train speeds, putting into operation faster trains (up to 200-250 kph) on the lines where passenger and cargo traffic is combined, and high-speed trains (up to 300-350 kph) on special lines. The Strategy of Railway Transport Development to 2030 defines fast and high-speed communication as an important term for showing the social efficiency of OAO RZD’s operation.
Today, a lot is being done to organise high-speed electric train traffic on the lines Saint Petersburg – Moscow, Moscow – Nizhny Novgorod and Saint Petersburg – Helsinki. Technical requirements for the rolling stock to service the lines have already been developed. OAO VNIIZhT provides scientific and technical maintenance for development of fast trains, including tests and certification. 
Concerning infrastructure, OAO VNIIZhT developed technical standards for track facilities to organise train traffic at a speed of up to 250 kph. This standard is the basis for project and building organisations to prepare the infrastructure for faster communication.
Another direction of wagon park work intensification is the use of different dimensions on Russian railways. Considering the standards developed by VNIIZhT, OAO Altaivagon produced test samples of gondola cars of Tpr dimension. They allow the mass of trains to increase while using the same length of station track. If the Tpr dimension is used, the amount of gondola cars grows by 9-11 units, and the mass of the carried freight – by 700-1,300 tons. Today, 300 such gondola cars are being tested with an axle load of 23.5 tons.
Among the prospective directions of OAO VNIIZhT work there are principally new approaches to hauling development – construction of gas-turboelectric locomotives and application of energy storage. A number of aerospace enterprises and famous producers of microprocessor control systems are taking part in development of a gas-turbine power unit for locomotives. The model sample of the shunting gas-turboelectric locomotive is almost complete. It was created by VNIIZhT, Federal State Unitary Enterprise “Moscow Machine Building production Plant “Salut” and OAO Lyudinovoteplovoz. The power of the locomotive is 1,000 kilowatts.
Today, OAO VNIIZhT is actively cooperating with foreign countries. In particular, it performs research for companies from Poland (KAMAX S.A.), Czech Republic (Railtech Slavjana), USA (Railroad Friction Products Corporation), Germany (CosRail GmbH), Austria (Enzesfeld-Caro Metallwerke AG), Switzerland (Secheron SA), etc. Once VNIIZhT owns a powerful testing and experimental base, it will conclude contracts on technical facilities for railway testing. It is planned to test freight and passenger bogies with collapsible wheel sets produced by Spanish company Talgo and a contrailer flat wagon, which is in use in Finland. Besides, there are orders for expert examination of technical documentation.
By Elena Ushkova
interview
Competition Is Tough 
The developments of NIIAS are being successfully put into operation on the railways of Russia and foreign states. Sergey Adadurov, Director General of OAO NIIAS, told The RZD-Partner International about the targets set for the joint-stock institute. 
 
– Mr. Adadurov, what targets does OAO NIIAS as a daughter company of OAO RZD have?
– As before, the main targets of our institute are to optimise the exploitation work of Russian railway transport using IT and new solutions and to make train traffic safer. One should understand that the sense of the institute reforming lies in new forms of operation, not the formal change of the business entity.  
The targets of the first importance are 
- increase of transport and forwarding services quality;
- growth of revenue from cargo transportation and services;
- application of new information technologies, including e-document turnover for interaction with consumers and partners;
- provision of information safety for corporate systems.
An important stage of improving the transportation process is creation of dispatcher control centres at the railways, which will allow dispatcher control to be concentrated into one structure and smooth the impact of losses at “joints” with other transport modes. To avoid failures in the work of railway transport, efficient functioning of the infrastructure is necessary. We are constantly developing and implementing the infrastructure management IT complex, allowing reduction of intersectoral expenses by optimising replacement of repair and technical facilities and decreasing waste of resources and service personnel.  
– What new software is OAO NIIAS developing and implementing now?
– Nowadays we are actively developing and putting automated control system CARGO EXPRESS and the system of coordinated cargo delivery to large consumers, ports and border crossings into operation on the railway network. 
The new generation of automated passenger transportation control systems, called EXPRESS-3, is being developed and implemented. The system is based on the latest foreign and Russian technological, telecommunication hardware and software data-processing devices and facilities for technical and information safety provision. Due to the system, a new level of quality may be achieved in train passenger servicing, booking and reservations, operative passenger transportation control, and passenger wagon park management. EXPRESS-3 is already operating in the CIS and the Baltic states.
Today, the institute is participating in development of the normative base and the technical requirements to promote the concept of control systems as well as systems for safe train traffic on the dedicated high-speed railway. A multi-functional system to control and provide train traffic safety is being developed, using satellite positioning and a digital radio channel. The system includes an automatic block system with tone track circuits, centralised placement of gear and reserved data transfer channel, microprocessor ABTC-M, which is an up-to-date generation of interval regulation and traffic safety systems developed on the microprocessor elemental base. 
An important link of the regulation and traffic safety systems is a complex locomotive safety device, CLUB-U. Its specific features are module interaction with other board automation systems, a digital radio channel and use of satellite navigation systems GPS/GLONASS and e-maps of railway lines to define a locomotive’s whereabouts automatically. In Russia, locomotives, multiple units and the whole park of special automotive rolling stock are equipped with the system.
Regarding the major railway network, satellite and microwave communication systems have been launched and are developing. Mainline and technological levels of digital network systems have been created. In fact, digital networks of operative and technological connection are the most important part of centralising transportation control to provide reliable and fast communication of the dispatcher gear and users, whose actions influence traffic safety (i.e. station operator, train drivers).
Every year the share of joint developments in the portfolio of OAO NIIAS orders becomes larger. The potential of our institute defines its role as a leading scientific-methodical, project and construction centre in the railway technology, automatic control and transportation infrastructure, railway automation and communication systems sectors. The competition in the sector is tough. The advantage of our institute is that it provides the full range of expertise needed for the creation of new machinery – from research works to installing and maintaining the facilities on the railway. Thus, our strategic partners, scientific organisation and railway transport high schools, as well as academic and engineering institutes of other industries such as aerospace ones, are interested in cooperation with OAO NIIAS.    
 
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OAO RZD Acquires Blocking Stake in Breakers  Investments B.V.
President of Russian Railways, Vladimir Yakunin, and Director of The Breakers Investments B.V., Indrek Gusev, signed documents whereby Russian Railways acquired a 25% blocking stake plus 1 share in the Dutch company The Breakers Investments B.V, which owns 100% of Transmashholding.
Russian Railways will be represented on the board of directors of Transmashholding, its subsidiaries and The Breakers Investments B.V. 
OAO RZD will participate in development and approval of the production programme, the strategic annual and long-term budget and business plans; and working out the development strategy and research and development plan. It will also help form the mid- and long-term contracts in its product delivery system; develop and improve the investment programme; choose auditors, and appoint the Director General of ZAO Transmashholding. 
Transmashholding is Russia’s largest transport machine building company. Launched in 2002, Transmashholding is the largest rolling stock supplier to OAO Russian railways. The list of the company’s products includes mainline and industrial electric locomotives; mainline and shunting diesel locomotives; cargo and passenger rail cars; wagons for electric trains and Metro; rail buses and diesel multiple-unit trains, etc.
In future, the enterprises incorporated into ZAO Transmashholding may get a lot of contracts on rolling stock production, envisaged by the Strategy of Railway Transport Development in the Russian Federation to 2030.  
Transfer to Russian Railways of a 75% Stake in TransCreditBank Complete 
On 20 December 2007, the transfer to Russian Railways of 1,243,725,000 ordinary shares in TransCreditBank was entered into the register of shareholders. It represents the completion of the legal procedures whereby the Russian Federation gave a 75% stake to Russian Railways as part of the Company’s charter capital. 
The process was initiated by Russian President Vladimir Putin’s signature of Decree ¹ 178 on 15 February 2007. 
The government’s decision reflects the need to develop Russia’s economy and the interests of both companies, following as it does the global trend towards creating holding structures which incorporate banks, pension funds, insurance companies and other divisions involved in the main production areas.
Sergey Pushkin, President of TransCreditBank, said: “The presence of Russian Railways, one of the biggest transportation companies in the world, as the main shareholder, with 100% state participation, provides a solid basis for the successful realisation of our plans to undertake the active expansion of TransCreditBank’s business as outlined in our Development Strategy for 2008 to 2010”.
Investment in Russian Railways Development to Grow 50% in 2008  
This year OAO RZD will start to carry out the financial plan and investment programme for 2008-2010, approved by the RF Government on November 15, 2007. 
On the whole, the investment programme for 2008 envisages investments of RUR 405 billion, up 50% year-on-year.
This is to allow OAO RZD to increase throughput by 4.3%, and passenger turnover by 3%.
Vladimir Yakunin, President of OAO RZD, defined the following targets of the company as strategic ones in 2008: improvement of the company’s financial and economic parameters through development of its quality management system; speeding up the modernisation of the infrastructure and rolling stock; strengthening the company’s positions in the transport sector on both the domestic and international markets.
Russian Government Approved Sale of Russian Railways’ Stake in TransContainer 
On January 9, 2008, the Russian government approved the suggestion made by the RF Ministry of Economic Development and Trade that Russian Railways sell 2,084,216 (15%) or less common registered shares of its subsidiary, TransContainter, – the operator of Russia’s largest fleet of container flat cars – for at least approx. USD 100.1 per share. 
Russian Prime Minister Viktor Zubkov signed a decree to this effect. 
The price of RUB 2,446.96 per share was set last August as the minimal price for private placement, thus the company is estimated at USD 1.32 billion. The real cost of TransContainer was estimated at USD 2.11–2.12 billion. 
OAO RZD is going to sell a 15% shareholding in TransContainer. 10% of it is being purchased by the European Bank of Reconstruction and Development, and the rest, 5%, by two foreign investment funds (2.5% each). In fact, Russian Railways will earn USD 316-318 million from the placement.
The Governmental decree was necessary because the property of TransContainer was included into OAO RZD authorised capital as a holding of the Russian Federation.
After the private placement, OAO RZD is going to issue an IPO of 25-30% shareholding of TransContainer in Russia. Russian Railways still plans to keep the majority shareholding in the company.
The authorised capital of OAO TransContainer amounts to RUR 13,894,778,000. It is divided into 13,894,778 equities with a nominal value of RUR 1,000 each.
Four More Projects to Be Financed from Russian Investment Fund 
The Governmental Committee approved four investment projects for a total cost of RUR 128 billion, said Dmitry Kozak, Minister of Regional Development. 
The Committee approved the following projects: building of a fourth ring road around Moscow; reconstruction of the railway line Oune-Vysokogornaya (Khabarovsk region); construction of a new tunnel, called Kuznetsovsky, on the motorway Komsomolsk-on-Amur – Sovetskaya harbour; creation of a Southern transregional water system and construction of integral microcircuity plant. All these projects will be financed from the Russian Investment Fund.
The total construction budget of the projects is RUR 128 billion, and RUR 53 billion will be given from the Investment Fund to carry them out.
RUR 330 Billion for the RF Federal Road Agency  
The Federal Road Agency will receive RUR 330 billion from the RF budget in 2008, up 50% year-on-year, said the Head of the Agency Oleg Belozerov.
In 2007, RUR 223 billion was invested in the activities of the agency from the RF budget. Another RUR 30 billion was given to carry out the project of “Don” motorway. A part of the sum will be transferred to 2009, emphasised Mr Belozerov.
According to estimates by the Federal Road Agency, more than RUR 1.2 trillion will be required from the RF budget to finance its activities by 2015. Commenting on the possible launch of a state corporation on the basis of the Federal Road Agency, Mr Belozerov said the issue of dividing the functions between the departments is being worked out. In particular, the targets of the state corporation will include attraction of private investment to use the territories near the federal motorways. 
According to the Head of The Federal Road Agency, the report on carrying out the state corporation project will be presented to the Russian Government before August 1, 2008.
NCC and EUROGATE enter into a partnership which is to form a North-European alliance  
On 12 December 2007, National Container Company (NCC) and EUROGATE signed an agreement to provide for strategic partnership and cross-participation in container terminals in Ust-Luga (Baltic Container Terminal) and EUROGATE Container Terminal Wilhelmshaven (JadeWeserPort).
As per the terms of the agreement, EUROGATE is to take a 20% stake in the Baltic Container Terminal and have the right to be represented on the Board of Directors as well as to invest, in accordance with the terminal construction and development program.
In return, NCC has an option to buy an 18.2% share in EUROGATE Container Terminal Wilhelmshaven, which has to be exercised before June 30, 2008.
“Being chosen as a strategic foreign partner for the most important terminal project in Russia is a huge success for us”, said Thomas Eckelmann, president of EUROGATE. “It is of great importance for EUROGATE to ensure that its network of container terminals in the Baltic region covers Russia, which is a rapidly growing market. Our co-operation will contribute to the continual increase of cargo flow between container terminals in Russia and Germany”, Mr Eckelmann added.
Alyona Ashurkova, President of NCC, commented that “the main goal of NCC is to create opportunities in the field of contemporary logistics and ensure sufficient terminal capacity for continual growth of container throughput in Russia. The agreement with EUROGATE is an important element of NCC’s development strategy and it creates a solid base for a long term partnership with the leading European terminal operator, whose expertise will be of high value to NCC”.
Maritime Territory Speeding Up
Construction of a high-speed railway in the Maritime Territory (Primorsk region) will be one half again more expensive than the launch of a high-speed line between Moscow and Saint Petersburg, something which was taken into consideration when developing the project.
Experts believe that, owing to the complicated topography of the southern part of the Maritime, the reconstruction of the railway line in Primorsk region will be at least by 50% more expensive than the launch of high-speed railway traffic between Moscow and Saint Petersburg. The high-speed railway to be constructed as part of the “Big Vladivostok” project will connect three cities in the southern part of the region – Vladivostok, Artem and Ussuriysk – and is expected to halve travel time.
The developers examined several variants of high-speed railway transportation on the South of Maritime Territory, including construction of a third line, parallel to the two existing ones, as well as creation of a fully isolated railway. As a result, reconstruction of the existing lines was recognised as the most efficient option. Do to the line modernisation, the speed of trains will see a staged increase from 120 kph to 250 kph. 
Alstom and Transmashholding Agree to Form Joint Ventures in Russia 
Alstom Transport and Transmashholding, the leading supplier to the Russian railway operator RZD (Russian Railways), signed an agreement on 13 December 2007 in Moscow. The agreement allows for co-operation between the two companies, which would, in the future, take the form of joint companies for aspects ranging from production of railway components to finished rolling stock.
This agreement has been reached within the context of the structural modernisation of the Russian railways, according to the plan recently adopted by the Russian government and known as “Strategy of Railway Transport Development to 2030”. In this context, Alstom was awarded in September 2007 a contract with Karelian Railways (a joint venture between RZD and VR of Finland) to supply Pendolino high-speed tilting trains, which will operate between Saint Petersburg and Helsinki. 
Transmashholding is the largest company in the Russian rolling stock market, making and providing electric and diesel locomotives, switchers, freight and passenger cars, commuter and metro cars, diesel engines for locomotives, diesel generators and other products. 
    [~DETAIL_TEXT] => 
OAO RZD Acquires Blocking Stake in Breakers  Investments B.V.
President of Russian Railways, Vladimir Yakunin, and Director of The Breakers Investments B.V., Indrek Gusev, signed documents whereby Russian Railways acquired a 25% blocking stake plus 1 share in the Dutch company The Breakers Investments B.V, which owns 100% of Transmashholding.
Russian Railways will be represented on the board of directors of Transmashholding, its subsidiaries and The Breakers Investments B.V. 
OAO RZD will participate in development and approval of the production programme, the strategic annual and long-term budget and business plans; and working out the development strategy and research and development plan. It will also help form the mid- and long-term contracts in its product delivery system; develop and improve the investment programme; choose auditors, and appoint the Director General of ZAO Transmashholding. 
Transmashholding is Russia’s largest transport machine building company. Launched in 2002, Transmashholding is the largest rolling stock supplier to OAO Russian railways. The list of the company’s products includes mainline and industrial electric locomotives; mainline and shunting diesel locomotives; cargo and passenger rail cars; wagons for electric trains and Metro; rail buses and diesel multiple-unit trains, etc.
In future, the enterprises incorporated into ZAO Transmashholding may get a lot of contracts on rolling stock production, envisaged by the Strategy of Railway Transport Development in the Russian Federation to 2030.  
Transfer to Russian Railways of a 75% Stake in TransCreditBank Complete 
On 20 December 2007, the transfer to Russian Railways of 1,243,725,000 ordinary shares in TransCreditBank was entered into the register of shareholders. It represents the completion of the legal procedures whereby the Russian Federation gave a 75% stake to Russian Railways as part of the Company’s charter capital. 
The process was initiated by Russian President Vladimir Putin’s signature of Decree ¹ 178 on 15 February 2007. 
The government’s decision reflects the need to develop Russia’s economy and the interests of both companies, following as it does the global trend towards creating holding structures which incorporate banks, pension funds, insurance companies and other divisions involved in the main production areas.
Sergey Pushkin, President of TransCreditBank, said: “The presence of Russian Railways, one of the biggest transportation companies in the world, as the main shareholder, with 100% state participation, provides a solid basis for the successful realisation of our plans to undertake the active expansion of TransCreditBank’s business as outlined in our Development Strategy for 2008 to 2010”.
Investment in Russian Railways Development to Grow 50% in 2008  
This year OAO RZD will start to carry out the financial plan and investment programme for 2008-2010, approved by the RF Government on November 15, 2007. 
On the whole, the investment programme for 2008 envisages investments of RUR 405 billion, up 50% year-on-year.
This is to allow OAO RZD to increase throughput by 4.3%, and passenger turnover by 3%.
Vladimir Yakunin, President of OAO RZD, defined the following targets of the company as strategic ones in 2008: improvement of the company’s financial and economic parameters through development of its quality management system; speeding up the modernisation of the infrastructure and rolling stock; strengthening the company’s positions in the transport sector on both the domestic and international markets.
Russian Government Approved Sale of Russian Railways’ Stake in TransContainer 
On January 9, 2008, the Russian government approved the suggestion made by the RF Ministry of Economic Development and Trade that Russian Railways sell 2,084,216 (15%) or less common registered shares of its subsidiary, TransContainter, – the operator of Russia’s largest fleet of container flat cars – for at least approx. USD 100.1 per share. 
Russian Prime Minister Viktor Zubkov signed a decree to this effect. 
The price of RUB 2,446.96 per share was set last August as the minimal price for private placement, thus the company is estimated at USD 1.32 billion. The real cost of TransContainer was estimated at USD 2.11–2.12 billion. 
OAO RZD is going to sell a 15% shareholding in TransContainer. 10% of it is being purchased by the European Bank of Reconstruction and Development, and the rest, 5%, by two foreign investment funds (2.5% each). In fact, Russian Railways will earn USD 316-318 million from the placement.
The Governmental decree was necessary because the property of TransContainer was included into OAO RZD authorised capital as a holding of the Russian Federation.
After the private placement, OAO RZD is going to issue an IPO of 25-30% shareholding of TransContainer in Russia. Russian Railways still plans to keep the majority shareholding in the company.
The authorised capital of OAO TransContainer amounts to RUR 13,894,778,000. It is divided into 13,894,778 equities with a nominal value of RUR 1,000 each.
Four More Projects to Be Financed from Russian Investment Fund 
The Governmental Committee approved four investment projects for a total cost of RUR 128 billion, said Dmitry Kozak, Minister of Regional Development. 
The Committee approved the following projects: building of a fourth ring road around Moscow; reconstruction of the railway line Oune-Vysokogornaya (Khabarovsk region); construction of a new tunnel, called Kuznetsovsky, on the motorway Komsomolsk-on-Amur – Sovetskaya harbour; creation of a Southern transregional water system and construction of integral microcircuity plant. All these projects will be financed from the Russian Investment Fund.
The total construction budget of the projects is RUR 128 billion, and RUR 53 billion will be given from the Investment Fund to carry them out.
RUR 330 Billion for the RF Federal Road Agency  
The Federal Road Agency will receive RUR 330 billion from the RF budget in 2008, up 50% year-on-year, said the Head of the Agency Oleg Belozerov.
In 2007, RUR 223 billion was invested in the activities of the agency from the RF budget. Another RUR 30 billion was given to carry out the project of “Don” motorway. A part of the sum will be transferred to 2009, emphasised Mr Belozerov.
According to estimates by the Federal Road Agency, more than RUR 1.2 trillion will be required from the RF budget to finance its activities by 2015. Commenting on the possible launch of a state corporation on the basis of the Federal Road Agency, Mr Belozerov said the issue of dividing the functions between the departments is being worked out. In particular, the targets of the state corporation will include attraction of private investment to use the territories near the federal motorways. 
According to the Head of The Federal Road Agency, the report on carrying out the state corporation project will be presented to the Russian Government before August 1, 2008.
NCC and EUROGATE enter into a partnership which is to form a North-European alliance  
On 12 December 2007, National Container Company (NCC) and EUROGATE signed an agreement to provide for strategic partnership and cross-participation in container terminals in Ust-Luga (Baltic Container Terminal) and EUROGATE Container Terminal Wilhelmshaven (JadeWeserPort).
As per the terms of the agreement, EUROGATE is to take a 20% stake in the Baltic Container Terminal and have the right to be represented on the Board of Directors as well as to invest, in accordance with the terminal construction and development program.
In return, NCC has an option to buy an 18.2% share in EUROGATE Container Terminal Wilhelmshaven, which has to be exercised before June 30, 2008.
“Being chosen as a strategic foreign partner for the most important terminal project in Russia is a huge success for us”, said Thomas Eckelmann, president of EUROGATE. “It is of great importance for EUROGATE to ensure that its network of container terminals in the Baltic region covers Russia, which is a rapidly growing market. Our co-operation will contribute to the continual increase of cargo flow between container terminals in Russia and Germany”, Mr Eckelmann added.
Alyona Ashurkova, President of NCC, commented that “the main goal of NCC is to create opportunities in the field of contemporary logistics and ensure sufficient terminal capacity for continual growth of container throughput in Russia. The agreement with EUROGATE is an important element of NCC’s development strategy and it creates a solid base for a long term partnership with the leading European terminal operator, whose expertise will be of high value to NCC”.
Maritime Territory Speeding Up
Construction of a high-speed railway in the Maritime Territory (Primorsk region) will be one half again more expensive than the launch of a high-speed line between Moscow and Saint Petersburg, something which was taken into consideration when developing the project.
Experts believe that, owing to the complicated topography of the southern part of the Maritime, the reconstruction of the railway line in Primorsk region will be at least by 50% more expensive than the launch of high-speed railway traffic between Moscow and Saint Petersburg. The high-speed railway to be constructed as part of the “Big Vladivostok” project will connect three cities in the southern part of the region – Vladivostok, Artem and Ussuriysk – and is expected to halve travel time.
The developers examined several variants of high-speed railway transportation on the South of Maritime Territory, including construction of a third line, parallel to the two existing ones, as well as creation of a fully isolated railway. As a result, reconstruction of the existing lines was recognised as the most efficient option. Do to the line modernisation, the speed of trains will see a staged increase from 120 kph to 250 kph. 
Alstom and Transmashholding Agree to Form Joint Ventures in Russia 
Alstom Transport and Transmashholding, the leading supplier to the Russian railway operator RZD (Russian Railways), signed an agreement on 13 December 2007 in Moscow. The agreement allows for co-operation between the two companies, which would, in the future, take the form of joint companies for aspects ranging from production of railway components to finished rolling stock.
This agreement has been reached within the context of the structural modernisation of the Russian railways, according to the plan recently adopted by the Russian government and known as “Strategy of Railway Transport Development to 2030”. In this context, Alstom was awarded in September 2007 a contract with Karelian Railways (a joint venture between RZD and VR of Finland) to supply Pendolino high-speed tilting trains, which will operate between Saint Petersburg and Helsinki. 
Transmashholding is the largest company in the Russian rolling stock market, making and providing electric and diesel locomotives, switchers, freight and passenger cars, commuter and metro cars, diesel engines for locomotives, diesel generators and other products. 
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    [~PREVIEW_TEXT] => President of Russian Railways, Vladimir Yakunin, and Director of The Breakers Investments B.V., Indrek Gusev, signed documents whereby Russian Railways acquired a 25% blocking stake plus 1 share in the Dutch company The Breakers Investments B.V, which owns 100% of Transmashholding.
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OAO RZD Acquires Blocking Stake in Breakers  Investments B.V.
President of Russian Railways, Vladimir Yakunin, and Director of The Breakers Investments B.V., Indrek Gusev, signed documents whereby Russian Railways acquired a 25% blocking stake plus 1 share in the Dutch company The Breakers Investments B.V, which owns 100% of Transmashholding.
Russian Railways will be represented on the board of directors of Transmashholding, its subsidiaries and The Breakers Investments B.V. 
OAO RZD will participate in development and approval of the production programme, the strategic annual and long-term budget and business plans; and working out the development strategy and research and development plan. It will also help form the mid- and long-term contracts in its product delivery system; develop and improve the investment programme; choose auditors, and appoint the Director General of ZAO Transmashholding. 
Transmashholding is Russia’s largest transport machine building company. Launched in 2002, Transmashholding is the largest rolling stock supplier to OAO Russian railways. The list of the company’s products includes mainline and industrial electric locomotives; mainline and shunting diesel locomotives; cargo and passenger rail cars; wagons for electric trains and Metro; rail buses and diesel multiple-unit trains, etc.
In future, the enterprises incorporated into ZAO Transmashholding may get a lot of contracts on rolling stock production, envisaged by the Strategy of Railway Transport Development in the Russian Federation to 2030.  
Transfer to Russian Railways of a 75% Stake in TransCreditBank Complete 
On 20 December 2007, the transfer to Russian Railways of 1,243,725,000 ordinary shares in TransCreditBank was entered into the register of shareholders. It represents the completion of the legal procedures whereby the Russian Federation gave a 75% stake to Russian Railways as part of the Company’s charter capital. 
The process was initiated by Russian President Vladimir Putin’s signature of Decree ¹ 178 on 15 February 2007. 
The government’s decision reflects the need to develop Russia’s economy and the interests of both companies, following as it does the global trend towards creating holding structures which incorporate banks, pension funds, insurance companies and other divisions involved in the main production areas.
Sergey Pushkin, President of TransCreditBank, said: “The presence of Russian Railways, one of the biggest transportation companies in the world, as the main shareholder, with 100% state participation, provides a solid basis for the successful realisation of our plans to undertake the active expansion of TransCreditBank’s business as outlined in our Development Strategy for 2008 to 2010”.
Investment in Russian Railways Development to Grow 50% in 2008  
This year OAO RZD will start to carry out the financial plan and investment programme for 2008-2010, approved by the RF Government on November 15, 2007. 
On the whole, the investment programme for 2008 envisages investments of RUR 405 billion, up 50% year-on-year.
This is to allow OAO RZD to increase throughput by 4.3%, and passenger turnover by 3%.
Vladimir Yakunin, President of OAO RZD, defined the following targets of the company as strategic ones in 2008: improvement of the company’s financial and economic parameters through development of its quality management system; speeding up the modernisation of the infrastructure and rolling stock; strengthening the company’s positions in the transport sector on both the domestic and international markets.
Russian Government Approved Sale of Russian Railways’ Stake in TransContainer 
On January 9, 2008, the Russian government approved the suggestion made by the RF Ministry of Economic Development and Trade that Russian Railways sell 2,084,216 (15%) or less common registered shares of its subsidiary, TransContainter, – the operator of Russia’s largest fleet of container flat cars – for at least approx. USD 100.1 per share. 
Russian Prime Minister Viktor Zubkov signed a decree to this effect. 
The price of RUB 2,446.96 per share was set last August as the minimal price for private placement, thus the company is estimated at USD 1.32 billion. The real cost of TransContainer was estimated at USD 2.11–2.12 billion. 
OAO RZD is going to sell a 15% shareholding in TransContainer. 10% of it is being purchased by the European Bank of Reconstruction and Development, and the rest, 5%, by two foreign investment funds (2.5% each). In fact, Russian Railways will earn USD 316-318 million from the placement.
The Governmental decree was necessary because the property of TransContainer was included into OAO RZD authorised capital as a holding of the Russian Federation.
After the private placement, OAO RZD is going to issue an IPO of 25-30% shareholding of TransContainer in Russia. Russian Railways still plans to keep the majority shareholding in the company.
The authorised capital of OAO TransContainer amounts to RUR 13,894,778,000. It is divided into 13,894,778 equities with a nominal value of RUR 1,000 each.
Four More Projects to Be Financed from Russian Investment Fund 
The Governmental Committee approved four investment projects for a total cost of RUR 128 billion, said Dmitry Kozak, Minister of Regional Development. 
The Committee approved the following projects: building of a fourth ring road around Moscow; reconstruction of the railway line Oune-Vysokogornaya (Khabarovsk region); construction of a new tunnel, called Kuznetsovsky, on the motorway Komsomolsk-on-Amur – Sovetskaya harbour; creation of a Southern transregional water system and construction of integral microcircuity plant. All these projects will be financed from the Russian Investment Fund.
The total construction budget of the projects is RUR 128 billion, and RUR 53 billion will be given from the Investment Fund to carry them out.
RUR 330 Billion for the RF Federal Road Agency  
The Federal Road Agency will receive RUR 330 billion from the RF budget in 2008, up 50% year-on-year, said the Head of the Agency Oleg Belozerov.
In 2007, RUR 223 billion was invested in the activities of the agency from the RF budget. Another RUR 30 billion was given to carry out the project of “Don” motorway. A part of the sum will be transferred to 2009, emphasised Mr Belozerov.
According to estimates by the Federal Road Agency, more than RUR 1.2 trillion will be required from the RF budget to finance its activities by 2015. Commenting on the possible launch of a state corporation on the basis of the Federal Road Agency, Mr Belozerov said the issue of dividing the functions between the departments is being worked out. In particular, the targets of the state corporation will include attraction of private investment to use the territories near the federal motorways. 
According to the Head of The Federal Road Agency, the report on carrying out the state corporation project will be presented to the Russian Government before August 1, 2008.
NCC and EUROGATE enter into a partnership which is to form a North-European alliance  
On 12 December 2007, National Container Company (NCC) and EUROGATE signed an agreement to provide for strategic partnership and cross-participation in container terminals in Ust-Luga (Baltic Container Terminal) and EUROGATE Container Terminal Wilhelmshaven (JadeWeserPort).
As per the terms of the agreement, EUROGATE is to take a 20% stake in the Baltic Container Terminal and have the right to be represented on the Board of Directors as well as to invest, in accordance with the terminal construction and development program.
In return, NCC has an option to buy an 18.2% share in EUROGATE Container Terminal Wilhelmshaven, which has to be exercised before June 30, 2008.
“Being chosen as a strategic foreign partner for the most important terminal project in Russia is a huge success for us”, said Thomas Eckelmann, president of EUROGATE. “It is of great importance for EUROGATE to ensure that its network of container terminals in the Baltic region covers Russia, which is a rapidly growing market. Our co-operation will contribute to the continual increase of cargo flow between container terminals in Russia and Germany”, Mr Eckelmann added.
Alyona Ashurkova, President of NCC, commented that “the main goal of NCC is to create opportunities in the field of contemporary logistics and ensure sufficient terminal capacity for continual growth of container throughput in Russia. The agreement with EUROGATE is an important element of NCC’s development strategy and it creates a solid base for a long term partnership with the leading European terminal operator, whose expertise will be of high value to NCC”.
Maritime Territory Speeding Up
Construction of a high-speed railway in the Maritime Territory (Primorsk region) will be one half again more expensive than the launch of a high-speed line between Moscow and Saint Petersburg, something which was taken into consideration when developing the project.
Experts believe that, owing to the complicated topography of the southern part of the Maritime, the reconstruction of the railway line in Primorsk region will be at least by 50% more expensive than the launch of high-speed railway traffic between Moscow and Saint Petersburg. The high-speed railway to be constructed as part of the “Big Vladivostok” project will connect three cities in the southern part of the region – Vladivostok, Artem and Ussuriysk – and is expected to halve travel time.
The developers examined several variants of high-speed railway transportation on the South of Maritime Territory, including construction of a third line, parallel to the two existing ones, as well as creation of a fully isolated railway. As a result, reconstruction of the existing lines was recognised as the most efficient option. Do to the line modernisation, the speed of trains will see a staged increase from 120 kph to 250 kph. 
Alstom and Transmashholding Agree to Form Joint Ventures in Russia 
Alstom Transport and Transmashholding, the leading supplier to the Russian railway operator RZD (Russian Railways), signed an agreement on 13 December 2007 in Moscow. The agreement allows for co-operation between the two companies, which would, in the future, take the form of joint companies for aspects ranging from production of railway components to finished rolling stock.
This agreement has been reached within the context of the structural modernisation of the Russian railways, according to the plan recently adopted by the Russian government and known as “Strategy of Railway Transport Development to 2030”. In this context, Alstom was awarded in September 2007 a contract with Karelian Railways (a joint venture between RZD and VR of Finland) to supply Pendolino high-speed tilting trains, which will operate between Saint Petersburg and Helsinki. 
Transmashholding is the largest company in the Russian rolling stock market, making and providing electric and diesel locomotives, switchers, freight and passenger cars, commuter and metro cars, diesel engines for locomotives, diesel generators and other products. 
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OAO RZD Acquires Blocking Stake in Breakers  Investments B.V.
President of Russian Railways, Vladimir Yakunin, and Director of The Breakers Investments B.V., Indrek Gusev, signed documents whereby Russian Railways acquired a 25% blocking stake plus 1 share in the Dutch company The Breakers Investments B.V, which owns 100% of Transmashholding.
Russian Railways will be represented on the board of directors of Transmashholding, its subsidiaries and The Breakers Investments B.V. 
OAO RZD will participate in development and approval of the production programme, the strategic annual and long-term budget and business plans; and working out the development strategy and research and development plan. It will also help form the mid- and long-term contracts in its product delivery system; develop and improve the investment programme; choose auditors, and appoint the Director General of ZAO Transmashholding. 
Transmashholding is Russia’s largest transport machine building company. Launched in 2002, Transmashholding is the largest rolling stock supplier to OAO Russian railways. The list of the company’s products includes mainline and industrial electric locomotives; mainline and shunting diesel locomotives; cargo and passenger rail cars; wagons for electric trains and Metro; rail buses and diesel multiple-unit trains, etc.
In future, the enterprises incorporated into ZAO Transmashholding may get a lot of contracts on rolling stock production, envisaged by the Strategy of Railway Transport Development in the Russian Federation to 2030.  
Transfer to Russian Railways of a 75% Stake in TransCreditBank Complete 
On 20 December 2007, the transfer to Russian Railways of 1,243,725,000 ordinary shares in TransCreditBank was entered into the register of shareholders. It represents the completion of the legal procedures whereby the Russian Federation gave a 75% stake to Russian Railways as part of the Company’s charter capital. 
The process was initiated by Russian President Vladimir Putin’s signature of Decree ¹ 178 on 15 February 2007. 
The government’s decision reflects the need to develop Russia’s economy and the interests of both companies, following as it does the global trend towards creating holding structures which incorporate banks, pension funds, insurance companies and other divisions involved in the main production areas.
Sergey Pushkin, President of TransCreditBank, said: “The presence of Russian Railways, one of the biggest transportation companies in the world, as the main shareholder, with 100% state participation, provides a solid basis for the successful realisation of our plans to undertake the active expansion of TransCreditBank’s business as outlined in our Development Strategy for 2008 to 2010”.
Investment in Russian Railways Development to Grow 50% in 2008  
This year OAO RZD will start to carry out the financial plan and investment programme for 2008-2010, approved by the RF Government on November 15, 2007. 
On the whole, the investment programme for 2008 envisages investments of RUR 405 billion, up 50% year-on-year.
This is to allow OAO RZD to increase throughput by 4.3%, and passenger turnover by 3%.
Vladimir Yakunin, President of OAO RZD, defined the following targets of the company as strategic ones in 2008: improvement of the company’s financial and economic parameters through development of its quality management system; speeding up the modernisation of the infrastructure and rolling stock; strengthening the company’s positions in the transport sector on both the domestic and international markets.
Russian Government Approved Sale of Russian Railways’ Stake in TransContainer 
On January 9, 2008, the Russian government approved the suggestion made by the RF Ministry of Economic Development and Trade that Russian Railways sell 2,084,216 (15%) or less common registered shares of its subsidiary, TransContainter, – the operator of Russia’s largest fleet of container flat cars – for at least approx. USD 100.1 per share. 
Russian Prime Minister Viktor Zubkov signed a decree to this effect. 
The price of RUB 2,446.96 per share was set last August as the minimal price for private placement, thus the company is estimated at USD 1.32 billion. The real cost of TransContainer was estimated at USD 2.11–2.12 billion. 
OAO RZD is going to sell a 15% shareholding in TransContainer. 10% of it is being purchased by the European Bank of Reconstruction and Development, and the rest, 5%, by two foreign investment funds (2.5% each). In fact, Russian Railways will earn USD 316-318 million from the placement.
The Governmental decree was necessary because the property of TransContainer was included into OAO RZD authorised capital as a holding of the Russian Federation.
After the private placement, OAO RZD is going to issue an IPO of 25-30% shareholding of TransContainer in Russia. Russian Railways still plans to keep the majority shareholding in the company.
The authorised capital of OAO TransContainer amounts to RUR 13,894,778,000. It is divided into 13,894,778 equities with a nominal value of RUR 1,000 each.
Four More Projects to Be Financed from Russian Investment Fund 
The Governmental Committee approved four investment projects for a total cost of RUR 128 billion, said Dmitry Kozak, Minister of Regional Development. 
The Committee approved the following projects: building of a fourth ring road around Moscow; reconstruction of the railway line Oune-Vysokogornaya (Khabarovsk region); construction of a new tunnel, called Kuznetsovsky, on the motorway Komsomolsk-on-Amur – Sovetskaya harbour; creation of a Southern transregional water system and construction of integral microcircuity plant. All these projects will be financed from the Russian Investment Fund.
The total construction budget of the projects is RUR 128 billion, and RUR 53 billion will be given from the Investment Fund to carry them out.
RUR 330 Billion for the RF Federal Road Agency  
The Federal Road Agency will receive RUR 330 billion from the RF budget in 2008, up 50% year-on-year, said the Head of the Agency Oleg Belozerov.
In 2007, RUR 223 billion was invested in the activities of the agency from the RF budget. Another RUR 30 billion was given to carry out the project of “Don” motorway. A part of the sum will be transferred to 2009, emphasised Mr Belozerov.
According to estimates by the Federal Road Agency, more than RUR 1.2 trillion will be required from the RF budget to finance its activities by 2015. Commenting on the possible launch of a state corporation on the basis of the Federal Road Agency, Mr Belozerov said the issue of dividing the functions between the departments is being worked out. In particular, the targets of the state corporation will include attraction of private investment to use the territories near the federal motorways. 
According to the Head of The Federal Road Agency, the report on carrying out the state corporation project will be presented to the Russian Government before August 1, 2008.
NCC and EUROGATE enter into a partnership which is to form a North-European alliance  
On 12 December 2007, National Container Company (NCC) and EUROGATE signed an agreement to provide for strategic partnership and cross-participation in container terminals in Ust-Luga (Baltic Container Terminal) and EUROGATE Container Terminal Wilhelmshaven (JadeWeserPort).
As per the terms of the agreement, EUROGATE is to take a 20% stake in the Baltic Container Terminal and have the right to be represented on the Board of Directors as well as to invest, in accordance with the terminal construction and development program.
In return, NCC has an option to buy an 18.2% share in EUROGATE Container Terminal Wilhelmshaven, which has to be exercised before June 30, 2008.
“Being chosen as a strategic foreign partner for the most important terminal project in Russia is a huge success for us”, said Thomas Eckelmann, president of EUROGATE. “It is of great importance for EUROGATE to ensure that its network of container terminals in the Baltic region covers Russia, which is a rapidly growing market. Our co-operation will contribute to the continual increase of cargo flow between container terminals in Russia and Germany”, Mr Eckelmann added.
Alyona Ashurkova, President of NCC, commented that “the main goal of NCC is to create opportunities in the field of contemporary logistics and ensure sufficient terminal capacity for continual growth of container throughput in Russia. The agreement with EUROGATE is an important element of NCC’s development strategy and it creates a solid base for a long term partnership with the leading European terminal operator, whose expertise will be of high value to NCC”.
Maritime Territory Speeding Up
Construction of a high-speed railway in the Maritime Territory (Primorsk region) will be one half again more expensive than the launch of a high-speed line between Moscow and Saint Petersburg, something which was taken into consideration when developing the project.
Experts believe that, owing to the complicated topography of the southern part of the Maritime, the reconstruction of the railway line in Primorsk region will be at least by 50% more expensive than the launch of high-speed railway traffic between Moscow and Saint Petersburg. The high-speed railway to be constructed as part of the “Big Vladivostok” project will connect three cities in the southern part of the region – Vladivostok, Artem and Ussuriysk – and is expected to halve travel time.
The developers examined several variants of high-speed railway transportation on the South of Maritime Territory, including construction of a third line, parallel to the two existing ones, as well as creation of a fully isolated railway. As a result, reconstruction of the existing lines was recognised as the most efficient option. Do to the line modernisation, the speed of trains will see a staged increase from 120 kph to 250 kph. 
Alstom and Transmashholding Agree to Form Joint Ventures in Russia 
Alstom Transport and Transmashholding, the leading supplier to the Russian railway operator RZD (Russian Railways), signed an agreement on 13 December 2007 in Moscow. The agreement allows for co-operation between the two companies, which would, in the future, take the form of joint companies for aspects ranging from production of railway components to finished rolling stock.
This agreement has been reached within the context of the structural modernisation of the Russian railways, according to the plan recently adopted by the Russian government and known as “Strategy of Railway Transport Development to 2030”. In this context, Alstom was awarded in September 2007 a contract with Karelian Railways (a joint venture between RZD and VR of Finland) to supply Pendolino high-speed tilting trains, which will operate between Saint Petersburg and Helsinki. 
Transmashholding is the largest company in the Russian rolling stock market, making and providing electric and diesel locomotives, switchers, freight and passenger cars, commuter and metro cars, diesel engines for locomotives, diesel generators and other products. 
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    [DETAIL_TEXT] => 
Customs Falls Behind Economic Progress
Today Russia is the 8th largest commercial partner of China according to goods turnover. Both states are interested in increasing the commodity turnover, and that is quite reasonable, because Russia is a consumer market, developing according to “overtaking model”, thus compensating for the investment gap in the 1990’s; and China is a world “manufacturer”. Since the countries are neighbours and politically friendly, there are all the necessary conditions for a trade boom.
Let us consider the list of goods exported to Russia from China, the volumes of cars and components carried. In 2007 the figures increased more than threefold year-on-year. 
Meanwhile, officials from different departments confirm that Russian customs is still not able to adjust registration of goods transported from China. The problem of “grey” goods carried from China has not yet been solved by Russian Federal Customs Service. A paradox it is, but Russian customs officers seem to be unaware of the exact figures, reflecting the level of foreign trade volumes. Interesting it is, but there is the same problem on the other side of the border.
There is such a situation even despite the fact that about 60% of all cargoes are inspected.
Experts consider that such strict demands on filling in documents to export goods from China appeared after recent changes were made in Chinese legislation. So, China is striving to get rid of the image that “Made in China” means “poor quality”. For some goods (in particular, equipment and clothes), the amount of examinations increased two- or even threefold and all foodstuffs are controlled. It took a month to implement the strict order in all Chinese customs offices, and all the interested organisations were notified about the possible consequences.
Red Instead Of Black: Lack Accuracy And Precision    
The following problems are considered the most frequent in the process of goods transportation from China to Russia. At the customs formalities stage, the documents and the goods are controlled more and more thoroughly – the latter is being examined, re-calculated, re-weighed, and sent to experts to find out if it relates to the declared export code. If documents are filled improperly (and there are 20 documents for every container and, for example, six documents for every car component), there will be idle time and fines.
The main stumbling block for RF customs bodies and foreign economy activity partners is the determination of the imported goods’ customs cost, which is the base for calculating different payments.
Customs dues are rarely calculated in accordance with the basic method of customs cost calculation, i.e. using the contract prices, invoices, etc. At the seminar organised by Moscow Investment Support Agency, a representative of the Tax Policy Department, the Ministry of Finance, emphasised that the situation became possible due to foreign economic partners, who are reluctant to provide customs with the necessary information about their contracts. The reason for such behaviour is clear – the information is often highly confidential. Customs officers have five more methods to determine the customs cost, and whichever of them is used – how logical – the result must be the same. Due to the imperfect application of the Customs Code and the databases used by the Russian Federal Customs Service to determine the customs cost, there are often conflicts and misunderstandings between state bodies and foreign partners, causing downtime and financial losses.
Let’s say, the customs does not often agree with the cost of a good declared by an importer and it calculates the customs payments using other methods, which makes customs dues too high for a company. Often such disputes between the customs and an importer are taken to court, and it negatively influences the speed of turnover and economic efficiency. 
“When filling in the documents on transit cargo transportation via the border, a wrong location for customs formalities was mentioned. And it happened not just once”, says Alexey Druzhinin, Logistics Director of Bang&Bonsomer Group Oy.
Gennady Sidnivtsev, Director General of Cherry Motors (the plant producing Chinese Cherry Motors cars in Novosibirsk), says, “At cargo registration, customs officers sometimes make mistakes. For example, the wrong data is put onto components or spares may be classified as used ones. We know that the Russian Federal Customs Service is imposing order in its work, nevertheless there will be difficulties for a long time to come”.
In the words of Mr Sidnivtsev, there are also administrative barriers, for example, toughening of the certification for supplied models or details. “We have to prove the actual value, declared in the contract, of every new car imported to the state. Since Chinese manufacturers provide no official references or catalogues, there appear certain difficulties”, he says. 
Another problem that may cause customs clearance stoppages, is the discrepancy of real and mentioned in the customs declaration parameters of the cargo. “The customs value is calculated based on the cost of the commodity, but not on its weight or colour. Nevertheless, the mismatching characteristics allow customs officers to stop the cargo, make a report and start filling in new documents”, says Denis Zalevsky, Head of Business Development Department of STS - Logistics. “Chinese consignors have not got used to dealing with scales, so when filling in the documents they mention the approximate weight. And when the cargo arrives to Russia, mismatching weight data is the most frequent problem at customs formalities”, says Director General of NYK Logistics Mikhail Holyavenko.
On the whole, the representatives of the companies servicing the freight flows between Russia and China note that the most frequent problems arising at border crossing, are because of inaccurate data in the customs declarations filled in by the Chinese. A “popular” claim is like this: the declaration says that the detail is red, while its colour is black.
Another example: it is declared that there are 1,500 pens in the imported container, and in reality there are 1,530 pens. The container will be stopped at the border to find out what customs due the importer must pay. Obviously, the sum will be small, but this violation is an excuse to stop the cargo and make a report. There used to be another situation: a Chinese producer put several advertising booklets into a container with pens. Russian customs officers considered the booklets  contraband, because they were not mentioned in the documents.
Data often mismatches at transportation of oversized cargo and this cargo is to become one of the key issues in the trade between China and Russia. “Our standards often differ from the Chinese ones, because they are not unified. The difference between oversized cargo in Russia and cargo within loading range in China may be just 14 cm”, notes Andrey Bukhvalov, Customs and Logistics Project Manager of OOO Taiga Shenyan MDF. As a result, the lack of unified parameters stops the whole cargo flow, because the documents have to be re-executed.
New Laws Demanded
Naturally, importers and transporters facing such problems understand that they are to be solved in the legislation. “There will be no such situations, if the states agree to unify all of the sizes and parameters”, explains Mr Bukhvalov. Besides, the existing e-declaration, aimed at reducing the time taken to register documents, has not been properly implemented, so it is inefficient. “I would like the officials to revise the definition “unauthentic declaration”, and make it clearer. Some mistakes are made by chance, they do not help avoid paying dues, and finally, they make no profit to a participant of foreign economic activity,” comments Mr Zalevsky.
Representatives of the companies also ask the Federal Customs Service to examine the possible simplification of customs formalities at the border. Long document registration times caused by interdepartmental barriers prevent fast cargo delivery. “To form documents for transportation of only one container via the border, it is necessary for the documents to be signed by a dozen officials”, says Pavel Chichagov, Deputy CEO for Strategic Development of OAO TransContainer.
Pavel Lagov, Director General of OOO Transsiberian Intermodal Service, agrees with him. “Simplification of customs formalities is required as well as less inspection of cargoes of those clients who regularly transport goods via the border crossings and make no violations”, he believes.
The problems mentioned above are causing a re-distribution of logistic flows in Russia. Far Eastern sea ports handle smaller volumes of cargo imported from the People’s Republic of China, suffering significant losses. Sometimes the route of goods delivery from China to towns in Siberia is like this: the cargo is carried to Finland by sea, from there to Moscow or Saint Petersburg by road hauliers, and only then is it transported to Siberia. One of the reasons for this is it is easier to clear consumer goods produced in China in the western part of the Russian Federation than in the eastern part.
By  Maria  Shevchenko
    [~DETAIL_TEXT] => 
Customs Falls Behind Economic Progress
Today Russia is the 8th largest commercial partner of China according to goods turnover. Both states are interested in increasing the commodity turnover, and that is quite reasonable, because Russia is a consumer market, developing according to “overtaking model”, thus compensating for the investment gap in the 1990’s; and China is a world “manufacturer”. Since the countries are neighbours and politically friendly, there are all the necessary conditions for a trade boom.
Let us consider the list of goods exported to Russia from China, the volumes of cars and components carried. In 2007 the figures increased more than threefold year-on-year. 
Meanwhile, officials from different departments confirm that Russian customs is still not able to adjust registration of goods transported from China. The problem of “grey” goods carried from China has not yet been solved by Russian Federal Customs Service. A paradox it is, but Russian customs officers seem to be unaware of the exact figures, reflecting the level of foreign trade volumes. Interesting it is, but there is the same problem on the other side of the border.
There is such a situation even despite the fact that about 60% of all cargoes are inspected.
Experts consider that such strict demands on filling in documents to export goods from China appeared after recent changes were made in Chinese legislation. So, China is striving to get rid of the image that “Made in China” means “poor quality”. For some goods (in particular, equipment and clothes), the amount of examinations increased two- or even threefold and all foodstuffs are controlled. It took a month to implement the strict order in all Chinese customs offices, and all the interested organisations were notified about the possible consequences.
Red Instead Of Black: Lack Accuracy And Precision    
The following problems are considered the most frequent in the process of goods transportation from China to Russia. At the customs formalities stage, the documents and the goods are controlled more and more thoroughly – the latter is being examined, re-calculated, re-weighed, and sent to experts to find out if it relates to the declared export code. If documents are filled improperly (and there are 20 documents for every container and, for example, six documents for every car component), there will be idle time and fines.
The main stumbling block for RF customs bodies and foreign economy activity partners is the determination of the imported goods’ customs cost, which is the base for calculating different payments.
Customs dues are rarely calculated in accordance with the basic method of customs cost calculation, i.e. using the contract prices, invoices, etc. At the seminar organised by Moscow Investment Support Agency, a representative of the Tax Policy Department, the Ministry of Finance, emphasised that the situation became possible due to foreign economic partners, who are reluctant to provide customs with the necessary information about their contracts. The reason for such behaviour is clear – the information is often highly confidential. Customs officers have five more methods to determine the customs cost, and whichever of them is used – how logical – the result must be the same. Due to the imperfect application of the Customs Code and the databases used by the Russian Federal Customs Service to determine the customs cost, there are often conflicts and misunderstandings between state bodies and foreign partners, causing downtime and financial losses.
Let’s say, the customs does not often agree with the cost of a good declared by an importer and it calculates the customs payments using other methods, which makes customs dues too high for a company. Often such disputes between the customs and an importer are taken to court, and it negatively influences the speed of turnover and economic efficiency. 
“When filling in the documents on transit cargo transportation via the border, a wrong location for customs formalities was mentioned. And it happened not just once”, says Alexey Druzhinin, Logistics Director of Bang&Bonsomer Group Oy.
Gennady Sidnivtsev, Director General of Cherry Motors (the plant producing Chinese Cherry Motors cars in Novosibirsk), says, “At cargo registration, customs officers sometimes make mistakes. For example, the wrong data is put onto components or spares may be classified as used ones. We know that the Russian Federal Customs Service is imposing order in its work, nevertheless there will be difficulties for a long time to come”.
In the words of Mr Sidnivtsev, there are also administrative barriers, for example, toughening of the certification for supplied models or details. “We have to prove the actual value, declared in the contract, of every new car imported to the state. Since Chinese manufacturers provide no official references or catalogues, there appear certain difficulties”, he says. 
Another problem that may cause customs clearance stoppages, is the discrepancy of real and mentioned in the customs declaration parameters of the cargo. “The customs value is calculated based on the cost of the commodity, but not on its weight or colour. Nevertheless, the mismatching characteristics allow customs officers to stop the cargo, make a report and start filling in new documents”, says Denis Zalevsky, Head of Business Development Department of STS - Logistics. “Chinese consignors have not got used to dealing with scales, so when filling in the documents they mention the approximate weight. And when the cargo arrives to Russia, mismatching weight data is the most frequent problem at customs formalities”, says Director General of NYK Logistics Mikhail Holyavenko.
On the whole, the representatives of the companies servicing the freight flows between Russia and China note that the most frequent problems arising at border crossing, are because of inaccurate data in the customs declarations filled in by the Chinese. A “popular” claim is like this: the declaration says that the detail is red, while its colour is black.
Another example: it is declared that there are 1,500 pens in the imported container, and in reality there are 1,530 pens. The container will be stopped at the border to find out what customs due the importer must pay. Obviously, the sum will be small, but this violation is an excuse to stop the cargo and make a report. There used to be another situation: a Chinese producer put several advertising booklets into a container with pens. Russian customs officers considered the booklets  contraband, because they were not mentioned in the documents.
Data often mismatches at transportation of oversized cargo and this cargo is to become one of the key issues in the trade between China and Russia. “Our standards often differ from the Chinese ones, because they are not unified. The difference between oversized cargo in Russia and cargo within loading range in China may be just 14 cm”, notes Andrey Bukhvalov, Customs and Logistics Project Manager of OOO Taiga Shenyan MDF. As a result, the lack of unified parameters stops the whole cargo flow, because the documents have to be re-executed.
New Laws Demanded
Naturally, importers and transporters facing such problems understand that they are to be solved in the legislation. “There will be no such situations, if the states agree to unify all of the sizes and parameters”, explains Mr Bukhvalov. Besides, the existing e-declaration, aimed at reducing the time taken to register documents, has not been properly implemented, so it is inefficient. “I would like the officials to revise the definition “unauthentic declaration”, and make it clearer. Some mistakes are made by chance, they do not help avoid paying dues, and finally, they make no profit to a participant of foreign economic activity,” comments Mr Zalevsky.
Representatives of the companies also ask the Federal Customs Service to examine the possible simplification of customs formalities at the border. Long document registration times caused by interdepartmental barriers prevent fast cargo delivery. “To form documents for transportation of only one container via the border, it is necessary for the documents to be signed by a dozen officials”, says Pavel Chichagov, Deputy CEO for Strategic Development of OAO TransContainer.
Pavel Lagov, Director General of OOO Transsiberian Intermodal Service, agrees with him. “Simplification of customs formalities is required as well as less inspection of cargoes of those clients who regularly transport goods via the border crossings and make no violations”, he believes.
The problems mentioned above are causing a re-distribution of logistic flows in Russia. Far Eastern sea ports handle smaller volumes of cargo imported from the People’s Republic of China, suffering significant losses. Sometimes the route of goods delivery from China to towns in Siberia is like this: the cargo is carried to Finland by sea, from there to Moscow or Saint Petersburg by road hauliers, and only then is it transported to Siberia. One of the reasons for this is it is easier to clear consumer goods produced in China in the western part of the Russian Federation than in the eastern part.
By  Maria  Shevchenko
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/004.png" border="1" alt=" " hspace="5" width="140" height="110" align="left" />European consignees and transport companies are staking their hopes on railway communication between China and the EU. The target of the Beijing – Hamburg train is to demonstrate the advantages of such a project. But all the interested parties should pay attention to the problem of customs formalities at the border of Russia and China. The difficulties described below concern transit goods destined for the EU member states as well.
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Customs Falls Behind Economic Progress
Today Russia is the 8th largest commercial partner of China according to goods turnover. Both states are interested in increasing the commodity turnover, and that is quite reasonable, because Russia is a consumer market, developing according to “overtaking model”, thus compensating for the investment gap in the 1990’s; and China is a world “manufacturer”. Since the countries are neighbours and politically friendly, there are all the necessary conditions for a trade boom.
Let us consider the list of goods exported to Russia from China, the volumes of cars and components carried. In 2007 the figures increased more than threefold year-on-year. 
Meanwhile, officials from different departments confirm that Russian customs is still not able to adjust registration of goods transported from China. The problem of “grey” goods carried from China has not yet been solved by Russian Federal Customs Service. A paradox it is, but Russian customs officers seem to be unaware of the exact figures, reflecting the level of foreign trade volumes. Interesting it is, but there is the same problem on the other side of the border.
There is such a situation even despite the fact that about 60% of all cargoes are inspected.
Experts consider that such strict demands on filling in documents to export goods from China appeared after recent changes were made in Chinese legislation. So, China is striving to get rid of the image that “Made in China” means “poor quality”. For some goods (in particular, equipment and clothes), the amount of examinations increased two- or even threefold and all foodstuffs are controlled. It took a month to implement the strict order in all Chinese customs offices, and all the interested organisations were notified about the possible consequences.
Red Instead Of Black: Lack Accuracy And Precision    
The following problems are considered the most frequent in the process of goods transportation from China to Russia. At the customs formalities stage, the documents and the goods are controlled more and more thoroughly – the latter is being examined, re-calculated, re-weighed, and sent to experts to find out if it relates to the declared export code. If documents are filled improperly (and there are 20 documents for every container and, for example, six documents for every car component), there will be idle time and fines.
The main stumbling block for RF customs bodies and foreign economy activity partners is the determination of the imported goods’ customs cost, which is the base for calculating different payments.
Customs dues are rarely calculated in accordance with the basic method of customs cost calculation, i.e. using the contract prices, invoices, etc. At the seminar organised by Moscow Investment Support Agency, a representative of the Tax Policy Department, the Ministry of Finance, emphasised that the situation became possible due to foreign economic partners, who are reluctant to provide customs with the necessary information about their contracts. The reason for such behaviour is clear – the information is often highly confidential. Customs officers have five more methods to determine the customs cost, and whichever of them is used – how logical – the result must be the same. Due to the imperfect application of the Customs Code and the databases used by the Russian Federal Customs Service to determine the customs cost, there are often conflicts and misunderstandings between state bodies and foreign partners, causing downtime and financial losses.
Let’s say, the customs does not often agree with the cost of a good declared by an importer and it calculates the customs payments using other methods, which makes customs dues too high for a company. Often such disputes between the customs and an importer are taken to court, and it negatively influences the speed of turnover and economic efficiency. 
“When filling in the documents on transit cargo transportation via the border, a wrong location for customs formalities was mentioned. And it happened not just once”, says Alexey Druzhinin, Logistics Director of Bang&Bonsomer Group Oy.
Gennady Sidnivtsev, Director General of Cherry Motors (the plant producing Chinese Cherry Motors cars in Novosibirsk), says, “At cargo registration, customs officers sometimes make mistakes. For example, the wrong data is put onto components or spares may be classified as used ones. We know that the Russian Federal Customs Service is imposing order in its work, nevertheless there will be difficulties for a long time to come”.
In the words of Mr Sidnivtsev, there are also administrative barriers, for example, toughening of the certification for supplied models or details. “We have to prove the actual value, declared in the contract, of every new car imported to the state. Since Chinese manufacturers provide no official references or catalogues, there appear certain difficulties”, he says. 
Another problem that may cause customs clearance stoppages, is the discrepancy of real and mentioned in the customs declaration parameters of the cargo. “The customs value is calculated based on the cost of the commodity, but not on its weight or colour. Nevertheless, the mismatching characteristics allow customs officers to stop the cargo, make a report and start filling in new documents”, says Denis Zalevsky, Head of Business Development Department of STS - Logistics. “Chinese consignors have not got used to dealing with scales, so when filling in the documents they mention the approximate weight. And when the cargo arrives to Russia, mismatching weight data is the most frequent problem at customs formalities”, says Director General of NYK Logistics Mikhail Holyavenko.
On the whole, the representatives of the companies servicing the freight flows between Russia and China note that the most frequent problems arising at border crossing, are because of inaccurate data in the customs declarations filled in by the Chinese. A “popular” claim is like this: the declaration says that the detail is red, while its colour is black.
Another example: it is declared that there are 1,500 pens in the imported container, and in reality there are 1,530 pens. The container will be stopped at the border to find out what customs due the importer must pay. Obviously, the sum will be small, but this violation is an excuse to stop the cargo and make a report. There used to be another situation: a Chinese producer put several advertising booklets into a container with pens. Russian customs officers considered the booklets  contraband, because they were not mentioned in the documents.
Data often mismatches at transportation of oversized cargo and this cargo is to become one of the key issues in the trade between China and Russia. “Our standards often differ from the Chinese ones, because they are not unified. The difference between oversized cargo in Russia and cargo within loading range in China may be just 14 cm”, notes Andrey Bukhvalov, Customs and Logistics Project Manager of OOO Taiga Shenyan MDF. As a result, the lack of unified parameters stops the whole cargo flow, because the documents have to be re-executed.
New Laws Demanded
Naturally, importers and transporters facing such problems understand that they are to be solved in the legislation. “There will be no such situations, if the states agree to unify all of the sizes and parameters”, explains Mr Bukhvalov. Besides, the existing e-declaration, aimed at reducing the time taken to register documents, has not been properly implemented, so it is inefficient. “I would like the officials to revise the definition “unauthentic declaration”, and make it clearer. Some mistakes are made by chance, they do not help avoid paying dues, and finally, they make no profit to a participant of foreign economic activity,” comments Mr Zalevsky.
Representatives of the companies also ask the Federal Customs Service to examine the possible simplification of customs formalities at the border. Long document registration times caused by interdepartmental barriers prevent fast cargo delivery. “To form documents for transportation of only one container via the border, it is necessary for the documents to be signed by a dozen officials”, says Pavel Chichagov, Deputy CEO for Strategic Development of OAO TransContainer.
Pavel Lagov, Director General of OOO Transsiberian Intermodal Service, agrees with him. “Simplification of customs formalities is required as well as less inspection of cargoes of those clients who regularly transport goods via the border crossings and make no violations”, he believes.
The problems mentioned above are causing a re-distribution of logistic flows in Russia. Far Eastern sea ports handle smaller volumes of cargo imported from the People’s Republic of China, suffering significant losses. Sometimes the route of goods delivery from China to towns in Siberia is like this: the cargo is carried to Finland by sea, from there to Moscow or Saint Petersburg by road hauliers, and only then is it transported to Siberia. One of the reasons for this is it is easier to clear consumer goods produced in China in the western part of the Russian Federation than in the eastern part.
By  Maria  Shevchenko
    [~DETAIL_TEXT] => 
Customs Falls Behind Economic Progress
Today Russia is the 8th largest commercial partner of China according to goods turnover. Both states are interested in increasing the commodity turnover, and that is quite reasonable, because Russia is a consumer market, developing according to “overtaking model”, thus compensating for the investment gap in the 1990’s; and China is a world “manufacturer”. Since the countries are neighbours and politically friendly, there are all the necessary conditions for a trade boom.
Let us consider the list of goods exported to Russia from China, the volumes of cars and components carried. In 2007 the figures increased more than threefold year-on-year. 
Meanwhile, officials from different departments confirm that Russian customs is still not able to adjust registration of goods transported from China. The problem of “grey” goods carried from China has not yet been solved by Russian Federal Customs Service. A paradox it is, but Russian customs officers seem to be unaware of the exact figures, reflecting the level of foreign trade volumes. Interesting it is, but there is the same problem on the other side of the border.
There is such a situation even despite the fact that about 60% of all cargoes are inspected.
Experts consider that such strict demands on filling in documents to export goods from China appeared after recent changes were made in Chinese legislation. So, China is striving to get rid of the image that “Made in China” means “poor quality”. For some goods (in particular, equipment and clothes), the amount of examinations increased two- or even threefold and all foodstuffs are controlled. It took a month to implement the strict order in all Chinese customs offices, and all the interested organisations were notified about the possible consequences.
Red Instead Of Black: Lack Accuracy And Precision    
The following problems are considered the most frequent in the process of goods transportation from China to Russia. At the customs formalities stage, the documents and the goods are controlled more and more thoroughly – the latter is being examined, re-calculated, re-weighed, and sent to experts to find out if it relates to the declared export code. If documents are filled improperly (and there are 20 documents for every container and, for example, six documents for every car component), there will be idle time and fines.
The main stumbling block for RF customs bodies and foreign economy activity partners is the determination of the imported goods’ customs cost, which is the base for calculating different payments.
Customs dues are rarely calculated in accordance with the basic method of customs cost calculation, i.e. using the contract prices, invoices, etc. At the seminar organised by Moscow Investment Support Agency, a representative of the Tax Policy Department, the Ministry of Finance, emphasised that the situation became possible due to foreign economic partners, who are reluctant to provide customs with the necessary information about their contracts. The reason for such behaviour is clear – the information is often highly confidential. Customs officers have five more methods to determine the customs cost, and whichever of them is used – how logical – the result must be the same. Due to the imperfect application of the Customs Code and the databases used by the Russian Federal Customs Service to determine the customs cost, there are often conflicts and misunderstandings between state bodies and foreign partners, causing downtime and financial losses.
Let’s say, the customs does not often agree with the cost of a good declared by an importer and it calculates the customs payments using other methods, which makes customs dues too high for a company. Often such disputes between the customs and an importer are taken to court, and it negatively influences the speed of turnover and economic efficiency. 
“When filling in the documents on transit cargo transportation via the border, a wrong location for customs formalities was mentioned. And it happened not just once”, says Alexey Druzhinin, Logistics Director of Bang&Bonsomer Group Oy.
Gennady Sidnivtsev, Director General of Cherry Motors (the plant producing Chinese Cherry Motors cars in Novosibirsk), says, “At cargo registration, customs officers sometimes make mistakes. For example, the wrong data is put onto components or spares may be classified as used ones. We know that the Russian Federal Customs Service is imposing order in its work, nevertheless there will be difficulties for a long time to come”.
In the words of Mr Sidnivtsev, there are also administrative barriers, for example, toughening of the certification for supplied models or details. “We have to prove the actual value, declared in the contract, of every new car imported to the state. Since Chinese manufacturers provide no official references or catalogues, there appear certain difficulties”, he says. 
Another problem that may cause customs clearance stoppages, is the discrepancy of real and mentioned in the customs declaration parameters of the cargo. “The customs value is calculated based on the cost of the commodity, but not on its weight or colour. Nevertheless, the mismatching characteristics allow customs officers to stop the cargo, make a report and start filling in new documents”, says Denis Zalevsky, Head of Business Development Department of STS - Logistics. “Chinese consignors have not got used to dealing with scales, so when filling in the documents they mention the approximate weight. And when the cargo arrives to Russia, mismatching weight data is the most frequent problem at customs formalities”, says Director General of NYK Logistics Mikhail Holyavenko.
On the whole, the representatives of the companies servicing the freight flows between Russia and China note that the most frequent problems arising at border crossing, are because of inaccurate data in the customs declarations filled in by the Chinese. A “popular” claim is like this: the declaration says that the detail is red, while its colour is black.
Another example: it is declared that there are 1,500 pens in the imported container, and in reality there are 1,530 pens. The container will be stopped at the border to find out what customs due the importer must pay. Obviously, the sum will be small, but this violation is an excuse to stop the cargo and make a report. There used to be another situation: a Chinese producer put several advertising booklets into a container with pens. Russian customs officers considered the booklets  contraband, because they were not mentioned in the documents.
Data often mismatches at transportation of oversized cargo and this cargo is to become one of the key issues in the trade between China and Russia. “Our standards often differ from the Chinese ones, because they are not unified. The difference between oversized cargo in Russia and cargo within loading range in China may be just 14 cm”, notes Andrey Bukhvalov, Customs and Logistics Project Manager of OOO Taiga Shenyan MDF. As a result, the lack of unified parameters stops the whole cargo flow, because the documents have to be re-executed.
New Laws Demanded
Naturally, importers and transporters facing such problems understand that they are to be solved in the legislation. “There will be no such situations, if the states agree to unify all of the sizes and parameters”, explains Mr Bukhvalov. Besides, the existing e-declaration, aimed at reducing the time taken to register documents, has not been properly implemented, so it is inefficient. “I would like the officials to revise the definition “unauthentic declaration”, and make it clearer. Some mistakes are made by chance, they do not help avoid paying dues, and finally, they make no profit to a participant of foreign economic activity,” comments Mr Zalevsky.
Representatives of the companies also ask the Federal Customs Service to examine the possible simplification of customs formalities at the border. Long document registration times caused by interdepartmental barriers prevent fast cargo delivery. “To form documents for transportation of only one container via the border, it is necessary for the documents to be signed by a dozen officials”, says Pavel Chichagov, Deputy CEO for Strategic Development of OAO TransContainer.
Pavel Lagov, Director General of OOO Transsiberian Intermodal Service, agrees with him. “Simplification of customs formalities is required as well as less inspection of cargoes of those clients who regularly transport goods via the border crossings and make no violations”, he believes.
The problems mentioned above are causing a re-distribution of logistic flows in Russia. Far Eastern sea ports handle smaller volumes of cargo imported from the People’s Republic of China, suffering significant losses. Sometimes the route of goods delivery from China to towns in Siberia is like this: the cargo is carried to Finland by sea, from there to Moscow or Saint Petersburg by road hauliers, and only then is it transported to Siberia. One of the reasons for this is it is easier to clear consumer goods produced in China in the western part of the Russian Federation than in the eastern part.
By  Maria  Shevchenko
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    [DISPLAY_PROPERTIES] => Array
        (
        )

    [IPROPERTY_VALUES] => Array
        (
            [SECTION_META_TITLE] => Customs Barrier
            [SECTION_META_KEYWORDS] => customs barrier
            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/004.png" border="1" alt=" " hspace="5" width="140" height="110" align="left" />European consignees and transport companies are staking their hopes on railway communication between China and the EU. The target of the Beijing – Hamburg train is to demonstrate the advantages of such a project. But all the interested parties should pay attention to the problem of customs formalities at the border of Russia and China. The difficulties described below concern transit goods destined for the EU member states as well.
            [ELEMENT_META_TITLE] => Customs Barrier
            [ELEMENT_META_KEYWORDS] => customs barrier
            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/1/004.png" border="1" alt=" " hspace="5" width="140" height="110" align="left" />European consignees and transport companies are staking their hopes on railway communication between China and the EU. The target of the Beijing – Hamburg train is to demonstrate the advantages of such a project. But all the interested parties should pay attention to the problem of customs formalities at the border of Russia and China. The difficulties described below concern transit goods destined for the EU member states as well.
            [SECTION_PICTURE_FILE_ALT] => Customs Barrier
            [SECTION_PICTURE_FILE_TITLE] => Customs Barrier
            [SECTION_DETAIL_PICTURE_FILE_ALT] => Customs Barrier
            [SECTION_DETAIL_PICTURE_FILE_TITLE] => Customs Barrier
            [ELEMENT_PREVIEW_PICTURE_FILE_ALT] => Customs Barrier
            [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => Customs Barrier
            [ELEMENT_DETAIL_PICTURE_FILE_ALT] => Customs Barrier
            [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => Customs Barrier
        )

)