III КВАРТАЛ 2022Г. - 55 баллов
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[DETAIL_TEXT] => Broad-Gauge Track May Be Extended to Central Europe
In March, Russian Railways signed a memorandum to start pre-project research on extending a broad-gauge track to Central Europe with railway companies in Austria, Slovakia and Ukraine. The cost of the project is estimated at USD 4.3 billion and will be shared among the signatories to the memorandum in proportion to the length of the new track passing through each country. Deutsche Bahn is also interested in the project.
By extending the broad-gauge track used in the former Soviet Union further west, the signatories intend to attract greater volumes of freight onto the rail route between Asia, Russia and Central Europe and increase the competitiveness of rail transport across Eurasia compared with sea or road.
The project will connect the railway system in Central Europe with the regions served by the Trans-Siberian Railway and may be extended later to provide broad-gauge track to the South, the Adriatic Sea, the former Yugoslavia and Italy.
In 2008, part of the pre-project work is scheduled to be completed and negotiations with potential investors held.
The development of the technical specifications and a business plan are planned for 2009, after which the time frame for the project will be decided.
Development of Russian Ports Will Require RUR 1,350 billion by 2015
Over RUR 1,350 billion is to be invested into the development of railway infrastructure on the approaches to ports to 2015, said Boris Lapidus, Senior Vice-President of OAO RZD at an international investment forum called “Prospective Plans for Railway Infrastructure Development on the Approaches to Ports”.
Mr Lapidus specified that about 59% of the sum will be invested in the Southern region (railway approaches to ports in the Black Sea, the Azov and the Caspian Seas); over 26% in the North-Western region (ports in the Baltic Sea, the White and Barents Seas); and about 15% in the Far East (Russian ports in the Pacific).
Efficient port development is only possible with close cooperation between different types of transport, especially railways and shipping companies. The ports are a key link determining the efficiency and attractiveness of the intermodal transport system as a whole.
Specialised institutes forecast that, by 2015, transshipment of foreign trade cargo in the North-Western ports of Russia will grow to 205.2 million tons (in 2007, 85.9 million tons of foreign trade cargo was handled in the ports of the North-Western region).
To satisfy the demand for railway transportation of cargo, investment into the ports of the Baltic, White and Barents Seas should make some RUR 360 billion by 2015 (26% of all investment into the railway infrastructure of all Russian ports).
Such a large-scale task cannot be solved by Russian Railways alone.
Integrated projects require state support and attraction of resources from interested private investment.
OAO RZD Will Cooperate Closer With Iranian and Azerbaijan Railways
On March 29, Vladimir Yakunin, President of Russian Railways, signed a tripartite Memorandum of Understanding with the leaders of Azerbaijan and Iranian Railways.
According to the Memorandum, the three parties will intensify cooperation on the construction of the rail track between Qazvin - Rasht - Astara (Iran) - Astara (Azerbaijan) as part of the North-South International Transport Corridor.
A Tripartite Working Group will prepare the necessary materials during the next month, after which a concept and feasibility study for the project will be developed.
Russian Railways Takes Out Syndicated Loan
Russian Railways raised a syndicated loan worth USD 1.1billion from a group of international banks at the end of March. The size of the loan originally stood at USD 1 billion, but it was increased to USD 1.1 billion during the successful syndication. The loan was taken out in two equal tranches of USD 550 million each, with maturity dates of three and five years and interest rates of LIBOR plus 0.55% and LIBOR plus 0.75%, respectively. A total of 14 banks participated in the deal.
The funds are to be used to attain the company's goals, indicated in its approved budget and financial plan.
Vnesheconombank and Russian Railways Enter into Agreement
In April, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO Russian Railways entered into an Agreement on Cooperation.
The Agreement was signed by Vnesheconombank Chairman Vladimir Dmitriev and OJSC Russian Railways President Vladimir Yakunin.
The Agreement aims to establish and promote long-term and mutually beneficial cooperation in implementing joint investment projects. Top priority is to be given to developing infrastructure in the main transport directions as well as to renovating and upgrading rolling stock.
Under the agreement, the two sides intend, among other things, to explore the possibility of financing projects by Vnesheconombank through extending long-term credit loans and granting guarantees against investment projects, provided they are in line with Vnesheconombank’s Memorandum on Financial Policy. The agreement also allows Vnesheconombank to provide consulting services to OAO RZD on implementing investment projects.
RUR 345 billion For Reconstruction of Russian Aerodromes
RUR 345 billion is to be invested in reconstruction of Russian aerodromes in 2010-2015. A part of the sum – RUR 275 billion – will come from the Federal budget.
The funds will be spent on forming efficient mechanisms for keeping and developing the sector of socially important air travel, on a regional and local basis, including transportation in areas of the Far North and similar localities. Efficient mechanisms are needed to provide state support for air carriers and airport operators.
New Owner for Ukrainian Ship-building Leader
Aker Yards ASA, an international ship-building group focusing on sophisticated vessels, agreed to sell a 70% stake in Aker Yards Ukraine Holding AS to FLC West, a Russian state-controlled investment company, for EUR 291.9 million.
Aker Yards Ukraine Holding AS, which is to be renamed later, will cater to the growing demand in Russia for specialised modern vessels, especially from Russian companies engaged in hydrocarbon exploration, production and transportation. The transaction is expected to be completed during the summer of 2008, subject to approval from relevant authorities, including competition authorities in Germany and Ukraine.
Currently, Aker Yards Ukraine Holding AS owns 100% of Aker Yard’s Nikolaev facility in Ukraine. Before the transaction with FLC West, Aker Yards will transfer its 100% ownership of the yards in Wismar and Warnemünde in Germany to Aker Yards Ukraine Holding AS.
No Barriers for Oil
The Federal Tariff Service claims that the through-tariff rate will make oil exports even more attractive.
Since the East Siberia –Pacific Ocean (ESPO) oil pipeline is coming online soon, the Russian Federal Tariff Service gave a number of commissions to private departments. First of all, they are to specify the tariff on oil transportation.
The Federal Tariff Service also presented its own vision of the situation to the Government. Sergey Novikov, the Head of the Service, said that, to make oil export costs acceptable and economically attractive, it would be reasonable to carry out the principle of a through-tariff rate for oil delivery from Tayshet to Far East ports. According to preliminary analysis, no additional amendments to the legislation are needed for that.
“Then, the through-tariff rate would include expenses for oil pumping, handling, and its transportation by railway. One should understand that the final decision depends on freight flow. If the latter changes, the ratio of the tariff constituents will also change”, said Mr Novikov.
Roads Become a Priority in Latvia
Ainars Slesers, Latvian Minister of Communication, considers that the condition of the motorways is poor in the Republic. And significant investments into road modernisation are needed for the successful development of the economy and businesses in the region.
In 2004, Latvia gave USD 42 million to road reconstruction, while in 2008 the figure is USD 152 million.
Nevertheless, the Minister considers that the sum is insufficient to solve all the problems. That is why the priority projects will be carried out: reconstruction and building of border motorways and surface renewal on transit corridors.
Besides, USD 348 million is to be given from the Cohesion Fund until 2013 to reconstruct and build the main motorways in Latvia.
It was envisaged by the rules the Latvian Government approved in the framework of “Infrastructure and Services: Development of TEN T Motorways”.
First of all, means will be given to modernise a section of E22 motorway Riga ringroad – Koknese (USD 41 million), and the Ludza – Terekhovo section (USD 217 million).
Tariffs on Railway Transportation May Increase… Slightly
The tariffs on electricity and railway transportation may be slightly increased in 2009-2011, said Andrey Belousov, Deputy Minister of Economic Development and Trade.
But he refused to comment on any definite figures, saying that the issue was under development. Earlier, the Ministry of Economic Development and Trade presented the Government with the scenario for economic development in 2009-2011. Now it is to make its announcement on the ceiling for any tariff increase. These issues will be discussed at the next meeting of the Budget Committee.
[~DETAIL_TEXT] => Broad-Gauge Track May Be Extended to Central Europe
In March, Russian Railways signed a memorandum to start pre-project research on extending a broad-gauge track to Central Europe with railway companies in Austria, Slovakia and Ukraine. The cost of the project is estimated at USD 4.3 billion and will be shared among the signatories to the memorandum in proportion to the length of the new track passing through each country. Deutsche Bahn is also interested in the project.
By extending the broad-gauge track used in the former Soviet Union further west, the signatories intend to attract greater volumes of freight onto the rail route between Asia, Russia and Central Europe and increase the competitiveness of rail transport across Eurasia compared with sea or road.
The project will connect the railway system in Central Europe with the regions served by the Trans-Siberian Railway and may be extended later to provide broad-gauge track to the South, the Adriatic Sea, the former Yugoslavia and Italy.
In 2008, part of the pre-project work is scheduled to be completed and negotiations with potential investors held.
The development of the technical specifications and a business plan are planned for 2009, after which the time frame for the project will be decided.
Development of Russian Ports Will Require RUR 1,350 billion by 2015
Over RUR 1,350 billion is to be invested into the development of railway infrastructure on the approaches to ports to 2015, said Boris Lapidus, Senior Vice-President of OAO RZD at an international investment forum called “Prospective Plans for Railway Infrastructure Development on the Approaches to Ports”.
Mr Lapidus specified that about 59% of the sum will be invested in the Southern region (railway approaches to ports in the Black Sea, the Azov and the Caspian Seas); over 26% in the North-Western region (ports in the Baltic Sea, the White and Barents Seas); and about 15% in the Far East (Russian ports in the Pacific).
Efficient port development is only possible with close cooperation between different types of transport, especially railways and shipping companies. The ports are a key link determining the efficiency and attractiveness of the intermodal transport system as a whole.
Specialised institutes forecast that, by 2015, transshipment of foreign trade cargo in the North-Western ports of Russia will grow to 205.2 million tons (in 2007, 85.9 million tons of foreign trade cargo was handled in the ports of the North-Western region).
To satisfy the demand for railway transportation of cargo, investment into the ports of the Baltic, White and Barents Seas should make some RUR 360 billion by 2015 (26% of all investment into the railway infrastructure of all Russian ports).
Such a large-scale task cannot be solved by Russian Railways alone.
Integrated projects require state support and attraction of resources from interested private investment.
OAO RZD Will Cooperate Closer With Iranian and Azerbaijan Railways
On March 29, Vladimir Yakunin, President of Russian Railways, signed a tripartite Memorandum of Understanding with the leaders of Azerbaijan and Iranian Railways.
According to the Memorandum, the three parties will intensify cooperation on the construction of the rail track between Qazvin - Rasht - Astara (Iran) - Astara (Azerbaijan) as part of the North-South International Transport Corridor.
A Tripartite Working Group will prepare the necessary materials during the next month, after which a concept and feasibility study for the project will be developed.
Russian Railways Takes Out Syndicated Loan
Russian Railways raised a syndicated loan worth USD 1.1billion from a group of international banks at the end of March. The size of the loan originally stood at USD 1 billion, but it was increased to USD 1.1 billion during the successful syndication. The loan was taken out in two equal tranches of USD 550 million each, with maturity dates of three and five years and interest rates of LIBOR plus 0.55% and LIBOR plus 0.75%, respectively. A total of 14 banks participated in the deal.
The funds are to be used to attain the company's goals, indicated in its approved budget and financial plan.
Vnesheconombank and Russian Railways Enter into Agreement
In April, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO Russian Railways entered into an Agreement on Cooperation.
The Agreement was signed by Vnesheconombank Chairman Vladimir Dmitriev and OJSC Russian Railways President Vladimir Yakunin.
The Agreement aims to establish and promote long-term and mutually beneficial cooperation in implementing joint investment projects. Top priority is to be given to developing infrastructure in the main transport directions as well as to renovating and upgrading rolling stock.
Under the agreement, the two sides intend, among other things, to explore the possibility of financing projects by Vnesheconombank through extending long-term credit loans and granting guarantees against investment projects, provided they are in line with Vnesheconombank’s Memorandum on Financial Policy. The agreement also allows Vnesheconombank to provide consulting services to OAO RZD on implementing investment projects.
RUR 345 billion For Reconstruction of Russian Aerodromes
RUR 345 billion is to be invested in reconstruction of Russian aerodromes in 2010-2015. A part of the sum – RUR 275 billion – will come from the Federal budget.
The funds will be spent on forming efficient mechanisms for keeping and developing the sector of socially important air travel, on a regional and local basis, including transportation in areas of the Far North and similar localities. Efficient mechanisms are needed to provide state support for air carriers and airport operators.
New Owner for Ukrainian Ship-building Leader
Aker Yards ASA, an international ship-building group focusing on sophisticated vessels, agreed to sell a 70% stake in Aker Yards Ukraine Holding AS to FLC West, a Russian state-controlled investment company, for EUR 291.9 million.
Aker Yards Ukraine Holding AS, which is to be renamed later, will cater to the growing demand in Russia for specialised modern vessels, especially from Russian companies engaged in hydrocarbon exploration, production and transportation. The transaction is expected to be completed during the summer of 2008, subject to approval from relevant authorities, including competition authorities in Germany and Ukraine.
Currently, Aker Yards Ukraine Holding AS owns 100% of Aker Yard’s Nikolaev facility in Ukraine. Before the transaction with FLC West, Aker Yards will transfer its 100% ownership of the yards in Wismar and Warnemünde in Germany to Aker Yards Ukraine Holding AS.
No Barriers for Oil
The Federal Tariff Service claims that the through-tariff rate will make oil exports even more attractive.
Since the East Siberia –Pacific Ocean (ESPO) oil pipeline is coming online soon, the Russian Federal Tariff Service gave a number of commissions to private departments. First of all, they are to specify the tariff on oil transportation.
The Federal Tariff Service also presented its own vision of the situation to the Government. Sergey Novikov, the Head of the Service, said that, to make oil export costs acceptable and economically attractive, it would be reasonable to carry out the principle of a through-tariff rate for oil delivery from Tayshet to Far East ports. According to preliminary analysis, no additional amendments to the legislation are needed for that.
“Then, the through-tariff rate would include expenses for oil pumping, handling, and its transportation by railway. One should understand that the final decision depends on freight flow. If the latter changes, the ratio of the tariff constituents will also change”, said Mr Novikov.
Roads Become a Priority in Latvia
Ainars Slesers, Latvian Minister of Communication, considers that the condition of the motorways is poor in the Republic. And significant investments into road modernisation are needed for the successful development of the economy and businesses in the region.
In 2004, Latvia gave USD 42 million to road reconstruction, while in 2008 the figure is USD 152 million.
Nevertheless, the Minister considers that the sum is insufficient to solve all the problems. That is why the priority projects will be carried out: reconstruction and building of border motorways and surface renewal on transit corridors.
Besides, USD 348 million is to be given from the Cohesion Fund until 2013 to reconstruct and build the main motorways in Latvia.
It was envisaged by the rules the Latvian Government approved in the framework of “Infrastructure and Services: Development of TEN T Motorways”.
First of all, means will be given to modernise a section of E22 motorway Riga ringroad – Koknese (USD 41 million), and the Ludza – Terekhovo section (USD 217 million).
Tariffs on Railway Transportation May Increase… Slightly
The tariffs on electricity and railway transportation may be slightly increased in 2009-2011, said Andrey Belousov, Deputy Minister of Economic Development and Trade.
But he refused to comment on any definite figures, saying that the issue was under development. Earlier, the Ministry of Economic Development and Trade presented the Government with the scenario for economic development in 2009-2011. Now it is to make its announcement on the ceiling for any tariff increase. These issues will be discussed at the next meeting of the Budget Committee.
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[DETAIL_TEXT] => Broad-Gauge Track May Be Extended to Central Europe
In March, Russian Railways signed a memorandum to start pre-project research on extending a broad-gauge track to Central Europe with railway companies in Austria, Slovakia and Ukraine. The cost of the project is estimated at USD 4.3 billion and will be shared among the signatories to the memorandum in proportion to the length of the new track passing through each country. Deutsche Bahn is also interested in the project.
By extending the broad-gauge track used in the former Soviet Union further west, the signatories intend to attract greater volumes of freight onto the rail route between Asia, Russia and Central Europe and increase the competitiveness of rail transport across Eurasia compared with sea or road.
The project will connect the railway system in Central Europe with the regions served by the Trans-Siberian Railway and may be extended later to provide broad-gauge track to the South, the Adriatic Sea, the former Yugoslavia and Italy.
In 2008, part of the pre-project work is scheduled to be completed and negotiations with potential investors held.
The development of the technical specifications and a business plan are planned for 2009, after which the time frame for the project will be decided.
Development of Russian Ports Will Require RUR 1,350 billion by 2015
Over RUR 1,350 billion is to be invested into the development of railway infrastructure on the approaches to ports to 2015, said Boris Lapidus, Senior Vice-President of OAO RZD at an international investment forum called “Prospective Plans for Railway Infrastructure Development on the Approaches to Ports”.
Mr Lapidus specified that about 59% of the sum will be invested in the Southern region (railway approaches to ports in the Black Sea, the Azov and the Caspian Seas); over 26% in the North-Western region (ports in the Baltic Sea, the White and Barents Seas); and about 15% in the Far East (Russian ports in the Pacific).
Efficient port development is only possible with close cooperation between different types of transport, especially railways and shipping companies. The ports are a key link determining the efficiency and attractiveness of the intermodal transport system as a whole.
Specialised institutes forecast that, by 2015, transshipment of foreign trade cargo in the North-Western ports of Russia will grow to 205.2 million tons (in 2007, 85.9 million tons of foreign trade cargo was handled in the ports of the North-Western region).
To satisfy the demand for railway transportation of cargo, investment into the ports of the Baltic, White and Barents Seas should make some RUR 360 billion by 2015 (26% of all investment into the railway infrastructure of all Russian ports).
Such a large-scale task cannot be solved by Russian Railways alone.
Integrated projects require state support and attraction of resources from interested private investment.
OAO RZD Will Cooperate Closer With Iranian and Azerbaijan Railways
On March 29, Vladimir Yakunin, President of Russian Railways, signed a tripartite Memorandum of Understanding with the leaders of Azerbaijan and Iranian Railways.
According to the Memorandum, the three parties will intensify cooperation on the construction of the rail track between Qazvin - Rasht - Astara (Iran) - Astara (Azerbaijan) as part of the North-South International Transport Corridor.
A Tripartite Working Group will prepare the necessary materials during the next month, after which a concept and feasibility study for the project will be developed.
Russian Railways Takes Out Syndicated Loan
Russian Railways raised a syndicated loan worth USD 1.1billion from a group of international banks at the end of March. The size of the loan originally stood at USD 1 billion, but it was increased to USD 1.1 billion during the successful syndication. The loan was taken out in two equal tranches of USD 550 million each, with maturity dates of three and five years and interest rates of LIBOR plus 0.55% and LIBOR plus 0.75%, respectively. A total of 14 banks participated in the deal.
The funds are to be used to attain the company's goals, indicated in its approved budget and financial plan.
Vnesheconombank and Russian Railways Enter into Agreement
In April, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO Russian Railways entered into an Agreement on Cooperation.
The Agreement was signed by Vnesheconombank Chairman Vladimir Dmitriev and OJSC Russian Railways President Vladimir Yakunin.
The Agreement aims to establish and promote long-term and mutually beneficial cooperation in implementing joint investment projects. Top priority is to be given to developing infrastructure in the main transport directions as well as to renovating and upgrading rolling stock.
Under the agreement, the two sides intend, among other things, to explore the possibility of financing projects by Vnesheconombank through extending long-term credit loans and granting guarantees against investment projects, provided they are in line with Vnesheconombank’s Memorandum on Financial Policy. The agreement also allows Vnesheconombank to provide consulting services to OAO RZD on implementing investment projects.
RUR 345 billion For Reconstruction of Russian Aerodromes
RUR 345 billion is to be invested in reconstruction of Russian aerodromes in 2010-2015. A part of the sum – RUR 275 billion – will come from the Federal budget.
The funds will be spent on forming efficient mechanisms for keeping and developing the sector of socially important air travel, on a regional and local basis, including transportation in areas of the Far North and similar localities. Efficient mechanisms are needed to provide state support for air carriers and airport operators.
New Owner for Ukrainian Ship-building Leader
Aker Yards ASA, an international ship-building group focusing on sophisticated vessels, agreed to sell a 70% stake in Aker Yards Ukraine Holding AS to FLC West, a Russian state-controlled investment company, for EUR 291.9 million.
Aker Yards Ukraine Holding AS, which is to be renamed later, will cater to the growing demand in Russia for specialised modern vessels, especially from Russian companies engaged in hydrocarbon exploration, production and transportation. The transaction is expected to be completed during the summer of 2008, subject to approval from relevant authorities, including competition authorities in Germany and Ukraine.
Currently, Aker Yards Ukraine Holding AS owns 100% of Aker Yard’s Nikolaev facility in Ukraine. Before the transaction with FLC West, Aker Yards will transfer its 100% ownership of the yards in Wismar and Warnemünde in Germany to Aker Yards Ukraine Holding AS.
No Barriers for Oil
The Federal Tariff Service claims that the through-tariff rate will make oil exports even more attractive.
Since the East Siberia –Pacific Ocean (ESPO) oil pipeline is coming online soon, the Russian Federal Tariff Service gave a number of commissions to private departments. First of all, they are to specify the tariff on oil transportation.
The Federal Tariff Service also presented its own vision of the situation to the Government. Sergey Novikov, the Head of the Service, said that, to make oil export costs acceptable and economically attractive, it would be reasonable to carry out the principle of a through-tariff rate for oil delivery from Tayshet to Far East ports. According to preliminary analysis, no additional amendments to the legislation are needed for that.
“Then, the through-tariff rate would include expenses for oil pumping, handling, and its transportation by railway. One should understand that the final decision depends on freight flow. If the latter changes, the ratio of the tariff constituents will also change”, said Mr Novikov.
Roads Become a Priority in Latvia
Ainars Slesers, Latvian Minister of Communication, considers that the condition of the motorways is poor in the Republic. And significant investments into road modernisation are needed for the successful development of the economy and businesses in the region.
In 2004, Latvia gave USD 42 million to road reconstruction, while in 2008 the figure is USD 152 million.
Nevertheless, the Minister considers that the sum is insufficient to solve all the problems. That is why the priority projects will be carried out: reconstruction and building of border motorways and surface renewal on transit corridors.
Besides, USD 348 million is to be given from the Cohesion Fund until 2013 to reconstruct and build the main motorways in Latvia.
It was envisaged by the rules the Latvian Government approved in the framework of “Infrastructure and Services: Development of TEN T Motorways”.
First of all, means will be given to modernise a section of E22 motorway Riga ringroad – Koknese (USD 41 million), and the Ludza – Terekhovo section (USD 217 million).
Tariffs on Railway Transportation May Increase… Slightly
The tariffs on electricity and railway transportation may be slightly increased in 2009-2011, said Andrey Belousov, Deputy Minister of Economic Development and Trade.
But he refused to comment on any definite figures, saying that the issue was under development. Earlier, the Ministry of Economic Development and Trade presented the Government with the scenario for economic development in 2009-2011. Now it is to make its announcement on the ceiling for any tariff increase. These issues will be discussed at the next meeting of the Budget Committee.
[~DETAIL_TEXT] => Broad-Gauge Track May Be Extended to Central Europe
In March, Russian Railways signed a memorandum to start pre-project research on extending a broad-gauge track to Central Europe with railway companies in Austria, Slovakia and Ukraine. The cost of the project is estimated at USD 4.3 billion and will be shared among the signatories to the memorandum in proportion to the length of the new track passing through each country. Deutsche Bahn is also interested in the project.
By extending the broad-gauge track used in the former Soviet Union further west, the signatories intend to attract greater volumes of freight onto the rail route between Asia, Russia and Central Europe and increase the competitiveness of rail transport across Eurasia compared with sea or road.
The project will connect the railway system in Central Europe with the regions served by the Trans-Siberian Railway and may be extended later to provide broad-gauge track to the South, the Adriatic Sea, the former Yugoslavia and Italy.
In 2008, part of the pre-project work is scheduled to be completed and negotiations with potential investors held.
The development of the technical specifications and a business plan are planned for 2009, after which the time frame for the project will be decided.
Development of Russian Ports Will Require RUR 1,350 billion by 2015
Over RUR 1,350 billion is to be invested into the development of railway infrastructure on the approaches to ports to 2015, said Boris Lapidus, Senior Vice-President of OAO RZD at an international investment forum called “Prospective Plans for Railway Infrastructure Development on the Approaches to Ports”.
Mr Lapidus specified that about 59% of the sum will be invested in the Southern region (railway approaches to ports in the Black Sea, the Azov and the Caspian Seas); over 26% in the North-Western region (ports in the Baltic Sea, the White and Barents Seas); and about 15% in the Far East (Russian ports in the Pacific).
Efficient port development is only possible with close cooperation between different types of transport, especially railways and shipping companies. The ports are a key link determining the efficiency and attractiveness of the intermodal transport system as a whole.
Specialised institutes forecast that, by 2015, transshipment of foreign trade cargo in the North-Western ports of Russia will grow to 205.2 million tons (in 2007, 85.9 million tons of foreign trade cargo was handled in the ports of the North-Western region).
To satisfy the demand for railway transportation of cargo, investment into the ports of the Baltic, White and Barents Seas should make some RUR 360 billion by 2015 (26% of all investment into the railway infrastructure of all Russian ports).
Such a large-scale task cannot be solved by Russian Railways alone.
Integrated projects require state support and attraction of resources from interested private investment.
OAO RZD Will Cooperate Closer With Iranian and Azerbaijan Railways
On March 29, Vladimir Yakunin, President of Russian Railways, signed a tripartite Memorandum of Understanding with the leaders of Azerbaijan and Iranian Railways.
According to the Memorandum, the three parties will intensify cooperation on the construction of the rail track between Qazvin - Rasht - Astara (Iran) - Astara (Azerbaijan) as part of the North-South International Transport Corridor.
A Tripartite Working Group will prepare the necessary materials during the next month, after which a concept and feasibility study for the project will be developed.
Russian Railways Takes Out Syndicated Loan
Russian Railways raised a syndicated loan worth USD 1.1billion from a group of international banks at the end of March. The size of the loan originally stood at USD 1 billion, but it was increased to USD 1.1 billion during the successful syndication. The loan was taken out in two equal tranches of USD 550 million each, with maturity dates of three and five years and interest rates of LIBOR plus 0.55% and LIBOR plus 0.75%, respectively. A total of 14 banks participated in the deal.
The funds are to be used to attain the company's goals, indicated in its approved budget and financial plan.
Vnesheconombank and Russian Railways Enter into Agreement
In April, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO Russian Railways entered into an Agreement on Cooperation.
The Agreement was signed by Vnesheconombank Chairman Vladimir Dmitriev and OJSC Russian Railways President Vladimir Yakunin.
The Agreement aims to establish and promote long-term and mutually beneficial cooperation in implementing joint investment projects. Top priority is to be given to developing infrastructure in the main transport directions as well as to renovating and upgrading rolling stock.
Under the agreement, the two sides intend, among other things, to explore the possibility of financing projects by Vnesheconombank through extending long-term credit loans and granting guarantees against investment projects, provided they are in line with Vnesheconombank’s Memorandum on Financial Policy. The agreement also allows Vnesheconombank to provide consulting services to OAO RZD on implementing investment projects.
RUR 345 billion For Reconstruction of Russian Aerodromes
RUR 345 billion is to be invested in reconstruction of Russian aerodromes in 2010-2015. A part of the sum – RUR 275 billion – will come from the Federal budget.
The funds will be spent on forming efficient mechanisms for keeping and developing the sector of socially important air travel, on a regional and local basis, including transportation in areas of the Far North and similar localities. Efficient mechanisms are needed to provide state support for air carriers and airport operators.
New Owner for Ukrainian Ship-building Leader
Aker Yards ASA, an international ship-building group focusing on sophisticated vessels, agreed to sell a 70% stake in Aker Yards Ukraine Holding AS to FLC West, a Russian state-controlled investment company, for EUR 291.9 million.
Aker Yards Ukraine Holding AS, which is to be renamed later, will cater to the growing demand in Russia for specialised modern vessels, especially from Russian companies engaged in hydrocarbon exploration, production and transportation. The transaction is expected to be completed during the summer of 2008, subject to approval from relevant authorities, including competition authorities in Germany and Ukraine.
Currently, Aker Yards Ukraine Holding AS owns 100% of Aker Yard’s Nikolaev facility in Ukraine. Before the transaction with FLC West, Aker Yards will transfer its 100% ownership of the yards in Wismar and Warnemünde in Germany to Aker Yards Ukraine Holding AS.
No Barriers for Oil
The Federal Tariff Service claims that the through-tariff rate will make oil exports even more attractive.
Since the East Siberia –Pacific Ocean (ESPO) oil pipeline is coming online soon, the Russian Federal Tariff Service gave a number of commissions to private departments. First of all, they are to specify the tariff on oil transportation.
The Federal Tariff Service also presented its own vision of the situation to the Government. Sergey Novikov, the Head of the Service, said that, to make oil export costs acceptable and economically attractive, it would be reasonable to carry out the principle of a through-tariff rate for oil delivery from Tayshet to Far East ports. According to preliminary analysis, no additional amendments to the legislation are needed for that.
“Then, the through-tariff rate would include expenses for oil pumping, handling, and its transportation by railway. One should understand that the final decision depends on freight flow. If the latter changes, the ratio of the tariff constituents will also change”, said Mr Novikov.
Roads Become a Priority in Latvia
Ainars Slesers, Latvian Minister of Communication, considers that the condition of the motorways is poor in the Republic. And significant investments into road modernisation are needed for the successful development of the economy and businesses in the region.
In 2004, Latvia gave USD 42 million to road reconstruction, while in 2008 the figure is USD 152 million.
Nevertheless, the Minister considers that the sum is insufficient to solve all the problems. That is why the priority projects will be carried out: reconstruction and building of border motorways and surface renewal on transit corridors.
Besides, USD 348 million is to be given from the Cohesion Fund until 2013 to reconstruct and build the main motorways in Latvia.
It was envisaged by the rules the Latvian Government approved in the framework of “Infrastructure and Services: Development of TEN T Motorways”.
First of all, means will be given to modernise a section of E22 motorway Riga ringroad – Koknese (USD 41 million), and the Ludza – Terekhovo section (USD 217 million).
Tariffs on Railway Transportation May Increase… Slightly
The tariffs on electricity and railway transportation may be slightly increased in 2009-2011, said Andrey Belousov, Deputy Minister of Economic Development and Trade.
But he refused to comment on any definite figures, saying that the issue was under development. Earlier, the Ministry of Economic Development and Trade presented the Government with the scenario for economic development in 2009-2011. Now it is to make its announcement on the ceiling for any tariff increase. These issues will be discussed at the next meeting of the Budget Committee.
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A year-and-a-half has passed since a unified CIM\SMGS consignment note, used for transportation between the countries with the 1,520 and 1,430 mm-wide gauge standards, was put into operation. And it has showed its advantages. Once additional documents regulating consignment applications are approved, railway transport will increase its competitiveness significantly. It seems that it is high time cargo owners in Europe took the new opportunities into consideration.Array
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[TIMESTAMP_X] => 24.10.2016 17:14:03
[~TIMESTAMP_X] => 24.10.2016 17:14:03
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[DETAIL_TEXT] => Invisible Border
Since the middle of the last century, Europe and some Asian states were divided into two systems of railway legislation (see reference 1). To some degree, the legal “architecture” of the relations between railwaymen on the two territories reflected the world situation of the time – a confrontation between capitalism and socialism. Most developed states entered the CIM zone and the countries of the so-called “social camp” joined the SMGS zone (see reference).
As a result, at the border between the two zones even now, carriers and forwarders have to go in for the so-called “re-dispatch” (in other words, re-forwarding) of the trains running from one zone to another. In fact, a new freight declaration was created at the border for every train or even wagon.
The revival of railway transport in Europe, caused by the overloaded road infrastructure and the activation of the “green”, coincided with the collapse of the Soviet Union and improvement of political and economic relations between the capitalist and socialist parties. Railway unification was just a matter of time. And the time came in 2004, when International Transport Committee (CIT) and the Organisation for Railways Cooperation (OSJD) made a decision to implement a single consignment note. The document was put into operation on September 1, 2006. At that time there was a demo trip Berlin-Warsaw-Brest-Moscow. It took just three days instead of the usual ten. Today the consignment note is used on pan-European transport corridors II (Berlin-Moscow), III (Dresden-Kiev), and V (Kiev-Trieste).
CIM\SMGS consignment note looks like this: on its front there are the columns to be filled with the data envisaged by CIM as well as SMGS, and the reverse features the data necessary for CIM only.
According to Erik Evtimov, a CIT representative for legal issues, who supervised the development of a single consignment note, the advantages of the document are as follows:
• a source of additional expense is removed;
• there will be no mistakes and inaccuracy that may appear when a consignment note is re-filled;
• available software for making and printing a consignment note speeds up the process.
Joachim Gerigk, Head of Russian-Asia direction in Railion Deutschland AG (a daughter company of Deutsche Band AG specialising in freight transportation), adds there is one more serious advantage: all the customs formalities may be fulfilled at the dispatch station, not at the reloading station. That decreases the risk of the cargo returning from the border station if any mistakes have been made at registration or any data is missed.
In Practice
It is worth noting that use of the consignment note is not widespread yet, but the carriers, operators and logistic companies, which use this instrument, are satisfied with the results and are going to actively use the technology in the transport process.
Ukraine was the first of the CIS states that joined the CIM. It happened in 2003. The country was one of the initiators and developers of the new document. Due to its good knowledge of both systems of transport legislation, Ukrzaliznytsya (the Administration of Railway Transport of Ukraine) had mastered the transportation technology before the CIM\SMGS consignment note was officially put into operation. In summer 2006, two trains loaded with ferrous metals ran along the routes Donetsk-Zeithain (Germany) and Nizhnednepropetrovsk-Ilsenburg (Germany). In December 2006, the test transportation between St. Ingbert (Germany) and Kotel (Russia, South-Eastern Railway) and between Mainz (Germany) and Zaporozhye (Ukraine) was organised. “The transportation was a success”, comments Mr Gerigk.
The experience of Ukrzalinytsya is impressive: the total time saved is 4 hours, money savings amounted to EUR 25 per wagon, and to USD 200 million annually. It is no wonder that, since 2007, there is regular transportation between the metallurgical enterprises in the Donetsk region (Ukraine) and their consumers in Germany. There appeared the back haul also – containers are carried from Mainz to Zaporozhye. Before the consignment note was implemented, train idling lasted two days, but has now fallen to just 17 hours.
The German side is also satisfied with the results. In the words of Mr Gerigk, for regular transportation Railion managed to reduce idling period to one day. In 2007, Railion dispatched 1,800 TEU. And DB Schenker (a logistics subsidiary of Deutsche Bahn) created a special client centre in Duisburg, whose aim is to service consignors which use a single consignment note.
Hans Reinhart, CEO of Swiss InterRail Holding AG which, together with logistics company M&M serviced the line St. Ingbert – Kotel, said his company cooperated with the Byelorussian Railway to create a structure that processes documents for trains running via Brest. After CIM\SMGS is put into operation, this structure offers use of the new technology. Moreover, it developed the mechanism of data transfer by Internet, which also cuts time taken – the consignment note is ready the moment the train arrives. “We are ready to share our developments in using the single consignment note”, says Mr Reinhart, referring to “serious simplification of the transportation process and the reduction of time and money costs”.
It is worth noting that OAO Russian Railways does not hurry to make use of the advantages given by the new consignment note. According to Viktor Zhukov, Deputy Chairperson of OSJD, there are organisational reasons for that: the personnel and the infrastructure at the railway stations must be prepared to adopt the new technology. Most likely, the pioneer in implementing the CIM\SMGS consignment note on the Russian railway network will be OAO TransContainer, which will transport car components to a Volkswagen assembling plant in Kaluga (Russia).
As a reminder, the general contractor of Volkswagen is DB Schenker, which is in charge of the whole logistics chain. So, use of CIM\SMGS will be well-deserved.
Obvious Progress
The development and implementation of the single document is just one half of what is to be done to fully harmonise legislation. Creation of a unified consignment note is only the first stage of the process. After it was completed, the second stage started, unifying all the clauses on the responsibility of all the parties involved in transportation process, etc.
In 2008, the mechanism of making complaints and reviewing them is to be developed. In the words of Mr Evtimov, the working group of CIT is discussing the different options of where a cargo owner must apply to if there is a problem during transportation, and who must be in charge of controlling compensation.
The working group is also developing a single commercial claims procedure. This document is filled-in at the destination if something went wrong with the cargo (e.g. lost, damaged, etc). This document will be the basis for claims that would be legal in both CIM and SMGS zones.
The act is supposed to come in to force in July 2008. Hans Reinhart (InterRail Holding AG) refers to the different approaches of settling property disputes as one of the main problems preventing the mass implementation of a promising technology.
Also, wagon and container lists are being developed. They will accompany the cargo transported in the CIM\SMGS zones. If the cargo carried in a group of wagons along one route is similar, one list may be registered for the whole group of wagons or containers. The CIT and OSJD already have draft documents and, after the final adjustment, they are to come in to force on July 1.
Finally, technical specifications for an e-consignment note are to be developed in 2008. This will allow companies to make use of advanced information technologies. Deputy Chairman of OSJD, Viktor Zhukov, states that before all the above-mentioned documents are approved, they must pass some certain reconciliation procedures, otherwise they may take longer to become legal. Anyway, as soon as the documents are adopted, the main projects for unifying railway rights may be considered completed. International organisations are working so intensively that, even if there are some disagreements, it will be completed not later than 2009.
Resume
Vladimir Laptinsky, First Deputy Head of the Byelorussian Railway, is sure that, “the future is the single consignment note”. This is certainly true, if one aspect is achieved: “We must ensure the adoption of the document by the overwhelming majority of countries located on the two continents, where the unified document will be in use”, says Erik Evtimov of CIT. So, the Europeans will have to convince their Asian partners, famous for their conservatism, that their developments are useful.
by Ivan Stupachenko
Reference
In 1890, West European states adopted the Convention concerning International Carriage by Rail (COTIF) and launched the Intergovernmental Organisation for International Carriage by Rail. The International Transport Committee (CIT) was formed later in the structure of this organisation. In their turn, countries in the Central Europe and some states in South-Eastern Asia concluded the Agreement on International Cargo Communication, as well as a number of other basic documents (including Agreement of Passenger Transportation, etc) in 1951. The Organisation for Railways Cooperation (OSJD) was created to coordinate their work. Since the 1950s, both legal systems have been trying to find a short, and legal, path towards each other.
Countries using SMGS
Azerbaijan, Albania, Byelorussia, Bulgaria, China, Democratic People’s Republic of Korea, Estonia, Georgia, Hungary, Iran, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Poland, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Vietnam.
Countries using CIM
Sweden, Norway, Iran, Iraq, Turkey, Syria, Lebanon, Bulgaria, Romania, Ukraine, Poland, Lithuania, Latvia, Slovakia, Hungary, Slovenia, Finland, Albania, Greece, Macedonia, Croatia, Austria, Switzerland, Germany, Luxemburg, France, Belgium, the Netherlands, Great Britain, Italy, Spain, Portugal, Algeria, Morocco, Tunisia.
Viewpoint
Krzysztof Niemiec,
Director, CTL Logistics S.A.:
– The CIM/SMG consignment note would streamline rail carriage of goods between railways belonging only to CIM and railways belonging only to SMGS. Work on standardising the consignment note, as well as SMGS and CIM, conducted by a joint commission of OSJD/UIC has been underway for a very long time. The first results include the CIM/SMGS consignment note, introduced by several rail carriers (DB, PKP, BC, RZD and UZ) but limited to only a small number of railway connections. Also, it cannot be used by other certified railway carriers who are not signatories of the common agreement on introduction of a standardised CIM/SMGS consignment note. In order to increase the effectiveness of the CIM/SMGS consignment note, it is necessary to broaden the scope of the railway carriers it covers and the area where it is being used.
To broadly adopt and take maximum advantage of the CIM/SMGS consignment note, true acceptance is required by all railway carriers (including former state railways of the European Union) of liberalisation of the railway market within the European Union and establishment of a large number of private railway carriers with equal rights. These carriers increase their carriage numbers with each passing year but, unfortunately, they are cut off from jointly performing in the international transport sector from the East to the West and back to the East.
This is largely due to incomprehensible difficulties in entering in to cooperation agreements with Eastern railways. The current scope of adoption of the CIM/SMGS consignment note is limited to only a select few carriers but has actually become a competitive advantage against other carriers.
Another step which would enable railway carriage of goods to effectively compete against road transport involves broad cooperation of all railway carriers and the opening of railway markets in the countries whose railways belong to the OSJD.
Another subject requiring separate discussion (to which we will gladly contribute) is the issue of complex transport contracts, the system of negotiating carriage or freight car usage settlements. These issues make cooperation with customers and competition against road transport more difficult today.
Interview
Our clients are interested in the use of the CIM/SMGS note
Joachim Gerigk is responsible for the European Network Production at Railion Deutschland AG, the rail freight subsidiary of Deutsche Bahn AG. He speaks on how the CIM\SMGS is used and how it should be used.
– Mr Gerigk, how does DB AG use the unified CIM\SMGS document in its work?
– The freight division of Deutsche Bahn AG (DB Schenker since January 1, 2008) has been using the CIM/SMGS consignment note in its transportation since July 2006.
Already, before the CIM/SBGS consignment note was introduced on September 1, 2006, the first test transports were carried out successfully with this consignment note from the Ukraine to Germany (Donetsk - Zeithain and Nizhnednepropetrovsk - Ilsenburg) in July 2006.
This was followed in December 2006 by test transports with the CIM/SMGS consignment note from Germany to Russia (St. Ingbert - Kotel) and the Ukraine (Mainz - Zaporozhye), which again were successful.
Some of the test transports in regular service have been using the CIM/SMGS consignment note since January 2007. The volume of traffic for transports using the CIM/SMGS consignment note consists of approx. 1,800 40-foot containers per year.
DB Schenker has installed a customised IT system for registration, printing and advance notice to deal with the new order management procedures necessary for the CIM/SMGS consignment note. The CIM/SMGS consignment notes for the clients are produced centrally in the Customer Service Centre in Duisburg by staff in a new competence team which has been set up for this purpose.
– What would you say about the efficiency of the consignment note?
– With the CIM/SMGS consignment note, the transport documents required between Europe (CIM jurisdiction) and Eastern European and Asian countries (SMGS jurisdiction) have been standardised in one document for the first time.
With conventional procedures, new consignment notes had to be drawn up at the so-called reconsignment stations. This poses a considerable expense and workload for the clients and railway companies involved. By using the CIM/SMGS consignment note, it is possible:
• to reduce transport times by reducing or even avoiding idle periods at the reconsignment stations;
• to reduce the time in which wagons are tied up during transport, thus increasing wagon availability;
• to avoid unnecessary workload and costs for reissuing the consignment notes.
Apart from prohibitions and restrictions, there is no more need for customs formalities at the outer borders of the European Community when transporting goods in the simplified EU rail transit procedure. It is possible to deal with the export formalities already in the consignment country of the EU/EFTA; For regular transports carried out with the CIM/SMGS consignment note, it was possible to reduce the time of standstill at the border by approximately 1 day.
– What problems must be resolved in order to enhance the efficiency of the Note?
– At the moment the use of the CIM/SMGS consignment note is very restricted because only a few SMGS railways have approved the use of the CIM/SMGS consignment note for their entire networks. Many railways either only intend to use the CIM/SMGS consignment note on certain routes, only approve of the use of the CIM/SMGS consignment note on certain routes for a specific transport on request, or do not accept the CIM/SMGS consignment note at all. This initial situation is impeding the use of the CIM/SMGS consignment note.
In talks with our clients, we have ascertained that many are interested in the fundamental use of the CIM/SMGS consignment note and would be willing to convert their transport order systems and processes to using this consignment note. This could be implemented either if approval were given for the use of the CIM/SMGS consignment note on all routes of the corresponding transit and receiving country, or if answers to such queries with the railways were to take no longer than two days. This is why a greater commitment to the actual use of the CIM/SMGS consignment note is still required.
Another problem in the context of using the new consignment note lies in the allocation of the consignment notes to the wagons for non-identical transshipment (e.g. transshipment from one wagon for the European gauge to 1.5 wagons for the 1520mm gauge). This problem is solved by using the CIM/SMGS wagon manifest or container manifest. But these forms will only be officially approved for use in June 2008 at the earliest.
– Does DB AG consider the CIM\SMGS a possible tool for improving rail cargo transportation along the axis Europe-Russia-Asia?
– Transportation along the axis Europe/Russia/Asia is a particular challenge in the same way as transportation between West Europe and the CIS countries. In addition to the normal technical and operational hindrances known in rail operations such as different power and signalling systems and different gauges, there are also other constraints of an administrative and commercial kind resulting from the different customs procedures (EU Customs Code, Customs Union of the CIS States, others) and transport law (CIM and SMGS).
Furthermore, the special conditions prevailing on the axis Europe/Russia/Asia still cause
• legal uncertainty
• additional costs
• losses in terms of quality and
• all in all: opaque, complicated transport handling procedures with long idling times.
All these factors contribute to the fact that consigners on routes between Europe, Russia and Asia still do not opt to send their transports by rail.
It is therefore important, particularly on these routes, to aim for standardisation and simplification of transport procedures. The CIM/SMGS consignment note is a very important instrument in this context. It constitutes an important step towards standardising European and Asian railway transport law and brings clear advantages for rail freight transport on this axis.
[~DETAIL_TEXT] => Invisible Border
Since the middle of the last century, Europe and some Asian states were divided into two systems of railway legislation (see reference 1). To some degree, the legal “architecture” of the relations between railwaymen on the two territories reflected the world situation of the time – a confrontation between capitalism and socialism. Most developed states entered the CIM zone and the countries of the so-called “social camp” joined the SMGS zone (see reference).
As a result, at the border between the two zones even now, carriers and forwarders have to go in for the so-called “re-dispatch” (in other words, re-forwarding) of the trains running from one zone to another. In fact, a new freight declaration was created at the border for every train or even wagon.
The revival of railway transport in Europe, caused by the overloaded road infrastructure and the activation of the “green”, coincided with the collapse of the Soviet Union and improvement of political and economic relations between the capitalist and socialist parties. Railway unification was just a matter of time. And the time came in 2004, when International Transport Committee (CIT) and the Organisation for Railways Cooperation (OSJD) made a decision to implement a single consignment note. The document was put into operation on September 1, 2006. At that time there was a demo trip Berlin-Warsaw-Brest-Moscow. It took just three days instead of the usual ten. Today the consignment note is used on pan-European transport corridors II (Berlin-Moscow), III (Dresden-Kiev), and V (Kiev-Trieste).
CIM\SMGS consignment note looks like this: on its front there are the columns to be filled with the data envisaged by CIM as well as SMGS, and the reverse features the data necessary for CIM only.
According to Erik Evtimov, a CIT representative for legal issues, who supervised the development of a single consignment note, the advantages of the document are as follows:
• a source of additional expense is removed;
• there will be no mistakes and inaccuracy that may appear when a consignment note is re-filled;
• available software for making and printing a consignment note speeds up the process.
Joachim Gerigk, Head of Russian-Asia direction in Railion Deutschland AG (a daughter company of Deutsche Band AG specialising in freight transportation), adds there is one more serious advantage: all the customs formalities may be fulfilled at the dispatch station, not at the reloading station. That decreases the risk of the cargo returning from the border station if any mistakes have been made at registration or any data is missed.
In Practice
It is worth noting that use of the consignment note is not widespread yet, but the carriers, operators and logistic companies, which use this instrument, are satisfied with the results and are going to actively use the technology in the transport process.
Ukraine was the first of the CIS states that joined the CIM. It happened in 2003. The country was one of the initiators and developers of the new document. Due to its good knowledge of both systems of transport legislation, Ukrzaliznytsya (the Administration of Railway Transport of Ukraine) had mastered the transportation technology before the CIM\SMGS consignment note was officially put into operation. In summer 2006, two trains loaded with ferrous metals ran along the routes Donetsk-Zeithain (Germany) and Nizhnednepropetrovsk-Ilsenburg (Germany). In December 2006, the test transportation between St. Ingbert (Germany) and Kotel (Russia, South-Eastern Railway) and between Mainz (Germany) and Zaporozhye (Ukraine) was organised. “The transportation was a success”, comments Mr Gerigk.
The experience of Ukrzalinytsya is impressive: the total time saved is 4 hours, money savings amounted to EUR 25 per wagon, and to USD 200 million annually. It is no wonder that, since 2007, there is regular transportation between the metallurgical enterprises in the Donetsk region (Ukraine) and their consumers in Germany. There appeared the back haul also – containers are carried from Mainz to Zaporozhye. Before the consignment note was implemented, train idling lasted two days, but has now fallen to just 17 hours.
The German side is also satisfied with the results. In the words of Mr Gerigk, for regular transportation Railion managed to reduce idling period to one day. In 2007, Railion dispatched 1,800 TEU. And DB Schenker (a logistics subsidiary of Deutsche Bahn) created a special client centre in Duisburg, whose aim is to service consignors which use a single consignment note.
Hans Reinhart, CEO of Swiss InterRail Holding AG which, together with logistics company M&M serviced the line St. Ingbert – Kotel, said his company cooperated with the Byelorussian Railway to create a structure that processes documents for trains running via Brest. After CIM\SMGS is put into operation, this structure offers use of the new technology. Moreover, it developed the mechanism of data transfer by Internet, which also cuts time taken – the consignment note is ready the moment the train arrives. “We are ready to share our developments in using the single consignment note”, says Mr Reinhart, referring to “serious simplification of the transportation process and the reduction of time and money costs”.
It is worth noting that OAO Russian Railways does not hurry to make use of the advantages given by the new consignment note. According to Viktor Zhukov, Deputy Chairperson of OSJD, there are organisational reasons for that: the personnel and the infrastructure at the railway stations must be prepared to adopt the new technology. Most likely, the pioneer in implementing the CIM\SMGS consignment note on the Russian railway network will be OAO TransContainer, which will transport car components to a Volkswagen assembling plant in Kaluga (Russia).
As a reminder, the general contractor of Volkswagen is DB Schenker, which is in charge of the whole logistics chain. So, use of CIM\SMGS will be well-deserved.
Obvious Progress
The development and implementation of the single document is just one half of what is to be done to fully harmonise legislation. Creation of a unified consignment note is only the first stage of the process. After it was completed, the second stage started, unifying all the clauses on the responsibility of all the parties involved in transportation process, etc.
In 2008, the mechanism of making complaints and reviewing them is to be developed. In the words of Mr Evtimov, the working group of CIT is discussing the different options of where a cargo owner must apply to if there is a problem during transportation, and who must be in charge of controlling compensation.
The working group is also developing a single commercial claims procedure. This document is filled-in at the destination if something went wrong with the cargo (e.g. lost, damaged, etc). This document will be the basis for claims that would be legal in both CIM and SMGS zones.
The act is supposed to come in to force in July 2008. Hans Reinhart (InterRail Holding AG) refers to the different approaches of settling property disputes as one of the main problems preventing the mass implementation of a promising technology.
Also, wagon and container lists are being developed. They will accompany the cargo transported in the CIM\SMGS zones. If the cargo carried in a group of wagons along one route is similar, one list may be registered for the whole group of wagons or containers. The CIT and OSJD already have draft documents and, after the final adjustment, they are to come in to force on July 1.
Finally, technical specifications for an e-consignment note are to be developed in 2008. This will allow companies to make use of advanced information technologies. Deputy Chairman of OSJD, Viktor Zhukov, states that before all the above-mentioned documents are approved, they must pass some certain reconciliation procedures, otherwise they may take longer to become legal. Anyway, as soon as the documents are adopted, the main projects for unifying railway rights may be considered completed. International organisations are working so intensively that, even if there are some disagreements, it will be completed not later than 2009.
Resume
Vladimir Laptinsky, First Deputy Head of the Byelorussian Railway, is sure that, “the future is the single consignment note”. This is certainly true, if one aspect is achieved: “We must ensure the adoption of the document by the overwhelming majority of countries located on the two continents, where the unified document will be in use”, says Erik Evtimov of CIT. So, the Europeans will have to convince their Asian partners, famous for their conservatism, that their developments are useful.
by Ivan Stupachenko
Reference
In 1890, West European states adopted the Convention concerning International Carriage by Rail (COTIF) and launched the Intergovernmental Organisation for International Carriage by Rail. The International Transport Committee (CIT) was formed later in the structure of this organisation. In their turn, countries in the Central Europe and some states in South-Eastern Asia concluded the Agreement on International Cargo Communication, as well as a number of other basic documents (including Agreement of Passenger Transportation, etc) in 1951. The Organisation for Railways Cooperation (OSJD) was created to coordinate their work. Since the 1950s, both legal systems have been trying to find a short, and legal, path towards each other.
Countries using SMGS
Azerbaijan, Albania, Byelorussia, Bulgaria, China, Democratic People’s Republic of Korea, Estonia, Georgia, Hungary, Iran, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Poland, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Vietnam.
Countries using CIM
Sweden, Norway, Iran, Iraq, Turkey, Syria, Lebanon, Bulgaria, Romania, Ukraine, Poland, Lithuania, Latvia, Slovakia, Hungary, Slovenia, Finland, Albania, Greece, Macedonia, Croatia, Austria, Switzerland, Germany, Luxemburg, France, Belgium, the Netherlands, Great Britain, Italy, Spain, Portugal, Algeria, Morocco, Tunisia.
Viewpoint
Krzysztof Niemiec,
Director, CTL Logistics S.A.:
– The CIM/SMG consignment note would streamline rail carriage of goods between railways belonging only to CIM and railways belonging only to SMGS. Work on standardising the consignment note, as well as SMGS and CIM, conducted by a joint commission of OSJD/UIC has been underway for a very long time. The first results include the CIM/SMGS consignment note, introduced by several rail carriers (DB, PKP, BC, RZD and UZ) but limited to only a small number of railway connections. Also, it cannot be used by other certified railway carriers who are not signatories of the common agreement on introduction of a standardised CIM/SMGS consignment note. In order to increase the effectiveness of the CIM/SMGS consignment note, it is necessary to broaden the scope of the railway carriers it covers and the area where it is being used.
To broadly adopt and take maximum advantage of the CIM/SMGS consignment note, true acceptance is required by all railway carriers (including former state railways of the European Union) of liberalisation of the railway market within the European Union and establishment of a large number of private railway carriers with equal rights. These carriers increase their carriage numbers with each passing year but, unfortunately, they are cut off from jointly performing in the international transport sector from the East to the West and back to the East.
This is largely due to incomprehensible difficulties in entering in to cooperation agreements with Eastern railways. The current scope of adoption of the CIM/SMGS consignment note is limited to only a select few carriers but has actually become a competitive advantage against other carriers.
Another step which would enable railway carriage of goods to effectively compete against road transport involves broad cooperation of all railway carriers and the opening of railway markets in the countries whose railways belong to the OSJD.
Another subject requiring separate discussion (to which we will gladly contribute) is the issue of complex transport contracts, the system of negotiating carriage or freight car usage settlements. These issues make cooperation with customers and competition against road transport more difficult today.
Interview
Our clients are interested in the use of the CIM/SMGS note
Joachim Gerigk is responsible for the European Network Production at Railion Deutschland AG, the rail freight subsidiary of Deutsche Bahn AG. He speaks on how the CIM\SMGS is used and how it should be used.
– Mr Gerigk, how does DB AG use the unified CIM\SMGS document in its work?
– The freight division of Deutsche Bahn AG (DB Schenker since January 1, 2008) has been using the CIM/SMGS consignment note in its transportation since July 2006.
Already, before the CIM/SBGS consignment note was introduced on September 1, 2006, the first test transports were carried out successfully with this consignment note from the Ukraine to Germany (Donetsk - Zeithain and Nizhnednepropetrovsk - Ilsenburg) in July 2006.
This was followed in December 2006 by test transports with the CIM/SMGS consignment note from Germany to Russia (St. Ingbert - Kotel) and the Ukraine (Mainz - Zaporozhye), which again were successful.
Some of the test transports in regular service have been using the CIM/SMGS consignment note since January 2007. The volume of traffic for transports using the CIM/SMGS consignment note consists of approx. 1,800 40-foot containers per year.
DB Schenker has installed a customised IT system for registration, printing and advance notice to deal with the new order management procedures necessary for the CIM/SMGS consignment note. The CIM/SMGS consignment notes for the clients are produced centrally in the Customer Service Centre in Duisburg by staff in a new competence team which has been set up for this purpose.
– What would you say about the efficiency of the consignment note?
– With the CIM/SMGS consignment note, the transport documents required between Europe (CIM jurisdiction) and Eastern European and Asian countries (SMGS jurisdiction) have been standardised in one document for the first time.
With conventional procedures, new consignment notes had to be drawn up at the so-called reconsignment stations. This poses a considerable expense and workload for the clients and railway companies involved. By using the CIM/SMGS consignment note, it is possible:
• to reduce transport times by reducing or even avoiding idle periods at the reconsignment stations;
• to reduce the time in which wagons are tied up during transport, thus increasing wagon availability;
• to avoid unnecessary workload and costs for reissuing the consignment notes.
Apart from prohibitions and restrictions, there is no more need for customs formalities at the outer borders of the European Community when transporting goods in the simplified EU rail transit procedure. It is possible to deal with the export formalities already in the consignment country of the EU/EFTA; For regular transports carried out with the CIM/SMGS consignment note, it was possible to reduce the time of standstill at the border by approximately 1 day.
– What problems must be resolved in order to enhance the efficiency of the Note?
– At the moment the use of the CIM/SMGS consignment note is very restricted because only a few SMGS railways have approved the use of the CIM/SMGS consignment note for their entire networks. Many railways either only intend to use the CIM/SMGS consignment note on certain routes, only approve of the use of the CIM/SMGS consignment note on certain routes for a specific transport on request, or do not accept the CIM/SMGS consignment note at all. This initial situation is impeding the use of the CIM/SMGS consignment note.
In talks with our clients, we have ascertained that many are interested in the fundamental use of the CIM/SMGS consignment note and would be willing to convert their transport order systems and processes to using this consignment note. This could be implemented either if approval were given for the use of the CIM/SMGS consignment note on all routes of the corresponding transit and receiving country, or if answers to such queries with the railways were to take no longer than two days. This is why a greater commitment to the actual use of the CIM/SMGS consignment note is still required.
Another problem in the context of using the new consignment note lies in the allocation of the consignment notes to the wagons for non-identical transshipment (e.g. transshipment from one wagon for the European gauge to 1.5 wagons for the 1520mm gauge). This problem is solved by using the CIM/SMGS wagon manifest or container manifest. But these forms will only be officially approved for use in June 2008 at the earliest.
– Does DB AG consider the CIM\SMGS a possible tool for improving rail cargo transportation along the axis Europe-Russia-Asia?
– Transportation along the axis Europe/Russia/Asia is a particular challenge in the same way as transportation between West Europe and the CIS countries. In addition to the normal technical and operational hindrances known in rail operations such as different power and signalling systems and different gauges, there are also other constraints of an administrative and commercial kind resulting from the different customs procedures (EU Customs Code, Customs Union of the CIS States, others) and transport law (CIM and SMGS).
Furthermore, the special conditions prevailing on the axis Europe/Russia/Asia still cause
• legal uncertainty
• additional costs
• losses in terms of quality and
• all in all: opaque, complicated transport handling procedures with long idling times.
All these factors contribute to the fact that consigners on routes between Europe, Russia and Asia still do not opt to send their transports by rail.
It is therefore important, particularly on these routes, to aim for standardisation and simplification of transport procedures. The CIM/SMGS consignment note is a very important instrument in this context. It constitutes an important step towards standardising European and Asian railway transport law and brings clear advantages for rail freight transport on this axis.
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[SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/2/4.jpg" border="1" alt=" " hspace="3" vspace="3" width="150" height="82" align="left" />A year-and-a-half has passed since a unified CIM\SMGS consignment note, used for transportation between the countries with the 1,520 and 1,430 mm-wide gauge standards, was put into operation. And it has showed its advantages. Once additional documents regulating consignment applications are approved, railway transport will increase its competitiveness significantly. It seems that it is high time cargo owners in Europe took the new opportunities into consideration.
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[DETAIL_TEXT] => Invisible Border
Since the middle of the last century, Europe and some Asian states were divided into two systems of railway legislation (see reference 1). To some degree, the legal “architecture” of the relations between railwaymen on the two territories reflected the world situation of the time – a confrontation between capitalism and socialism. Most developed states entered the CIM zone and the countries of the so-called “social camp” joined the SMGS zone (see reference).
As a result, at the border between the two zones even now, carriers and forwarders have to go in for the so-called “re-dispatch” (in other words, re-forwarding) of the trains running from one zone to another. In fact, a new freight declaration was created at the border for every train or even wagon.
The revival of railway transport in Europe, caused by the overloaded road infrastructure and the activation of the “green”, coincided with the collapse of the Soviet Union and improvement of political and economic relations between the capitalist and socialist parties. Railway unification was just a matter of time. And the time came in 2004, when International Transport Committee (CIT) and the Organisation for Railways Cooperation (OSJD) made a decision to implement a single consignment note. The document was put into operation on September 1, 2006. At that time there was a demo trip Berlin-Warsaw-Brest-Moscow. It took just three days instead of the usual ten. Today the consignment note is used on pan-European transport corridors II (Berlin-Moscow), III (Dresden-Kiev), and V (Kiev-Trieste).
CIM\SMGS consignment note looks like this: on its front there are the columns to be filled with the data envisaged by CIM as well as SMGS, and the reverse features the data necessary for CIM only.
According to Erik Evtimov, a CIT representative for legal issues, who supervised the development of a single consignment note, the advantages of the document are as follows:
• a source of additional expense is removed;
• there will be no mistakes and inaccuracy that may appear when a consignment note is re-filled;
• available software for making and printing a consignment note speeds up the process.
Joachim Gerigk, Head of Russian-Asia direction in Railion Deutschland AG (a daughter company of Deutsche Band AG specialising in freight transportation), adds there is one more serious advantage: all the customs formalities may be fulfilled at the dispatch station, not at the reloading station. That decreases the risk of the cargo returning from the border station if any mistakes have been made at registration or any data is missed.
In Practice
It is worth noting that use of the consignment note is not widespread yet, but the carriers, operators and logistic companies, which use this instrument, are satisfied with the results and are going to actively use the technology in the transport process.
Ukraine was the first of the CIS states that joined the CIM. It happened in 2003. The country was one of the initiators and developers of the new document. Due to its good knowledge of both systems of transport legislation, Ukrzaliznytsya (the Administration of Railway Transport of Ukraine) had mastered the transportation technology before the CIM\SMGS consignment note was officially put into operation. In summer 2006, two trains loaded with ferrous metals ran along the routes Donetsk-Zeithain (Germany) and Nizhnednepropetrovsk-Ilsenburg (Germany). In December 2006, the test transportation between St. Ingbert (Germany) and Kotel (Russia, South-Eastern Railway) and between Mainz (Germany) and Zaporozhye (Ukraine) was organised. “The transportation was a success”, comments Mr Gerigk.
The experience of Ukrzalinytsya is impressive: the total time saved is 4 hours, money savings amounted to EUR 25 per wagon, and to USD 200 million annually. It is no wonder that, since 2007, there is regular transportation between the metallurgical enterprises in the Donetsk region (Ukraine) and their consumers in Germany. There appeared the back haul also – containers are carried from Mainz to Zaporozhye. Before the consignment note was implemented, train idling lasted two days, but has now fallen to just 17 hours.
The German side is also satisfied with the results. In the words of Mr Gerigk, for regular transportation Railion managed to reduce idling period to one day. In 2007, Railion dispatched 1,800 TEU. And DB Schenker (a logistics subsidiary of Deutsche Bahn) created a special client centre in Duisburg, whose aim is to service consignors which use a single consignment note.
Hans Reinhart, CEO of Swiss InterRail Holding AG which, together with logistics company M&M serviced the line St. Ingbert – Kotel, said his company cooperated with the Byelorussian Railway to create a structure that processes documents for trains running via Brest. After CIM\SMGS is put into operation, this structure offers use of the new technology. Moreover, it developed the mechanism of data transfer by Internet, which also cuts time taken – the consignment note is ready the moment the train arrives. “We are ready to share our developments in using the single consignment note”, says Mr Reinhart, referring to “serious simplification of the transportation process and the reduction of time and money costs”.
It is worth noting that OAO Russian Railways does not hurry to make use of the advantages given by the new consignment note. According to Viktor Zhukov, Deputy Chairperson of OSJD, there are organisational reasons for that: the personnel and the infrastructure at the railway stations must be prepared to adopt the new technology. Most likely, the pioneer in implementing the CIM\SMGS consignment note on the Russian railway network will be OAO TransContainer, which will transport car components to a Volkswagen assembling plant in Kaluga (Russia).
As a reminder, the general contractor of Volkswagen is DB Schenker, which is in charge of the whole logistics chain. So, use of CIM\SMGS will be well-deserved.
Obvious Progress
The development and implementation of the single document is just one half of what is to be done to fully harmonise legislation. Creation of a unified consignment note is only the first stage of the process. After it was completed, the second stage started, unifying all the clauses on the responsibility of all the parties involved in transportation process, etc.
In 2008, the mechanism of making complaints and reviewing them is to be developed. In the words of Mr Evtimov, the working group of CIT is discussing the different options of where a cargo owner must apply to if there is a problem during transportation, and who must be in charge of controlling compensation.
The working group is also developing a single commercial claims procedure. This document is filled-in at the destination if something went wrong with the cargo (e.g. lost, damaged, etc). This document will be the basis for claims that would be legal in both CIM and SMGS zones.
The act is supposed to come in to force in July 2008. Hans Reinhart (InterRail Holding AG) refers to the different approaches of settling property disputes as one of the main problems preventing the mass implementation of a promising technology.
Also, wagon and container lists are being developed. They will accompany the cargo transported in the CIM\SMGS zones. If the cargo carried in a group of wagons along one route is similar, one list may be registered for the whole group of wagons or containers. The CIT and OSJD already have draft documents and, after the final adjustment, they are to come in to force on July 1.
Finally, technical specifications for an e-consignment note are to be developed in 2008. This will allow companies to make use of advanced information technologies. Deputy Chairman of OSJD, Viktor Zhukov, states that before all the above-mentioned documents are approved, they must pass some certain reconciliation procedures, otherwise they may take longer to become legal. Anyway, as soon as the documents are adopted, the main projects for unifying railway rights may be considered completed. International organisations are working so intensively that, even if there are some disagreements, it will be completed not later than 2009.
Resume
Vladimir Laptinsky, First Deputy Head of the Byelorussian Railway, is sure that, “the future is the single consignment note”. This is certainly true, if one aspect is achieved: “We must ensure the adoption of the document by the overwhelming majority of countries located on the two continents, where the unified document will be in use”, says Erik Evtimov of CIT. So, the Europeans will have to convince their Asian partners, famous for their conservatism, that their developments are useful.
by Ivan Stupachenko
Reference
In 1890, West European states adopted the Convention concerning International Carriage by Rail (COTIF) and launched the Intergovernmental Organisation for International Carriage by Rail. The International Transport Committee (CIT) was formed later in the structure of this organisation. In their turn, countries in the Central Europe and some states in South-Eastern Asia concluded the Agreement on International Cargo Communication, as well as a number of other basic documents (including Agreement of Passenger Transportation, etc) in 1951. The Organisation for Railways Cooperation (OSJD) was created to coordinate their work. Since the 1950s, both legal systems have been trying to find a short, and legal, path towards each other.
Countries using SMGS
Azerbaijan, Albania, Byelorussia, Bulgaria, China, Democratic People’s Republic of Korea, Estonia, Georgia, Hungary, Iran, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Poland, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Vietnam.
Countries using CIM
Sweden, Norway, Iran, Iraq, Turkey, Syria, Lebanon, Bulgaria, Romania, Ukraine, Poland, Lithuania, Latvia, Slovakia, Hungary, Slovenia, Finland, Albania, Greece, Macedonia, Croatia, Austria, Switzerland, Germany, Luxemburg, France, Belgium, the Netherlands, Great Britain, Italy, Spain, Portugal, Algeria, Morocco, Tunisia.
Viewpoint
Krzysztof Niemiec,
Director, CTL Logistics S.A.:
– The CIM/SMG consignment note would streamline rail carriage of goods between railways belonging only to CIM and railways belonging only to SMGS. Work on standardising the consignment note, as well as SMGS and CIM, conducted by a joint commission of OSJD/UIC has been underway for a very long time. The first results include the CIM/SMGS consignment note, introduced by several rail carriers (DB, PKP, BC, RZD and UZ) but limited to only a small number of railway connections. Also, it cannot be used by other certified railway carriers who are not signatories of the common agreement on introduction of a standardised CIM/SMGS consignment note. In order to increase the effectiveness of the CIM/SMGS consignment note, it is necessary to broaden the scope of the railway carriers it covers and the area where it is being used.
To broadly adopt and take maximum advantage of the CIM/SMGS consignment note, true acceptance is required by all railway carriers (including former state railways of the European Union) of liberalisation of the railway market within the European Union and establishment of a large number of private railway carriers with equal rights. These carriers increase their carriage numbers with each passing year but, unfortunately, they are cut off from jointly performing in the international transport sector from the East to the West and back to the East.
This is largely due to incomprehensible difficulties in entering in to cooperation agreements with Eastern railways. The current scope of adoption of the CIM/SMGS consignment note is limited to only a select few carriers but has actually become a competitive advantage against other carriers.
Another step which would enable railway carriage of goods to effectively compete against road transport involves broad cooperation of all railway carriers and the opening of railway markets in the countries whose railways belong to the OSJD.
Another subject requiring separate discussion (to which we will gladly contribute) is the issue of complex transport contracts, the system of negotiating carriage or freight car usage settlements. These issues make cooperation with customers and competition against road transport more difficult today.
Interview
Our clients are interested in the use of the CIM/SMGS note
Joachim Gerigk is responsible for the European Network Production at Railion Deutschland AG, the rail freight subsidiary of Deutsche Bahn AG. He speaks on how the CIM\SMGS is used and how it should be used.
– Mr Gerigk, how does DB AG use the unified CIM\SMGS document in its work?
– The freight division of Deutsche Bahn AG (DB Schenker since January 1, 2008) has been using the CIM/SMGS consignment note in its transportation since July 2006.
Already, before the CIM/SBGS consignment note was introduced on September 1, 2006, the first test transports were carried out successfully with this consignment note from the Ukraine to Germany (Donetsk - Zeithain and Nizhnednepropetrovsk - Ilsenburg) in July 2006.
This was followed in December 2006 by test transports with the CIM/SMGS consignment note from Germany to Russia (St. Ingbert - Kotel) and the Ukraine (Mainz - Zaporozhye), which again were successful.
Some of the test transports in regular service have been using the CIM/SMGS consignment note since January 2007. The volume of traffic for transports using the CIM/SMGS consignment note consists of approx. 1,800 40-foot containers per year.
DB Schenker has installed a customised IT system for registration, printing and advance notice to deal with the new order management procedures necessary for the CIM/SMGS consignment note. The CIM/SMGS consignment notes for the clients are produced centrally in the Customer Service Centre in Duisburg by staff in a new competence team which has been set up for this purpose.
– What would you say about the efficiency of the consignment note?
– With the CIM/SMGS consignment note, the transport documents required between Europe (CIM jurisdiction) and Eastern European and Asian countries (SMGS jurisdiction) have been standardised in one document for the first time.
With conventional procedures, new consignment notes had to be drawn up at the so-called reconsignment stations. This poses a considerable expense and workload for the clients and railway companies involved. By using the CIM/SMGS consignment note, it is possible:
• to reduce transport times by reducing or even avoiding idle periods at the reconsignment stations;
• to reduce the time in which wagons are tied up during transport, thus increasing wagon availability;
• to avoid unnecessary workload and costs for reissuing the consignment notes.
Apart from prohibitions and restrictions, there is no more need for customs formalities at the outer borders of the European Community when transporting goods in the simplified EU rail transit procedure. It is possible to deal with the export formalities already in the consignment country of the EU/EFTA; For regular transports carried out with the CIM/SMGS consignment note, it was possible to reduce the time of standstill at the border by approximately 1 day.
– What problems must be resolved in order to enhance the efficiency of the Note?
– At the moment the use of the CIM/SMGS consignment note is very restricted because only a few SMGS railways have approved the use of the CIM/SMGS consignment note for their entire networks. Many railways either only intend to use the CIM/SMGS consignment note on certain routes, only approve of the use of the CIM/SMGS consignment note on certain routes for a specific transport on request, or do not accept the CIM/SMGS consignment note at all. This initial situation is impeding the use of the CIM/SMGS consignment note.
In talks with our clients, we have ascertained that many are interested in the fundamental use of the CIM/SMGS consignment note and would be willing to convert their transport order systems and processes to using this consignment note. This could be implemented either if approval were given for the use of the CIM/SMGS consignment note on all routes of the corresponding transit and receiving country, or if answers to such queries with the railways were to take no longer than two days. This is why a greater commitment to the actual use of the CIM/SMGS consignment note is still required.
Another problem in the context of using the new consignment note lies in the allocation of the consignment notes to the wagons for non-identical transshipment (e.g. transshipment from one wagon for the European gauge to 1.5 wagons for the 1520mm gauge). This problem is solved by using the CIM/SMGS wagon manifest or container manifest. But these forms will only be officially approved for use in June 2008 at the earliest.
– Does DB AG consider the CIM\SMGS a possible tool for improving rail cargo transportation along the axis Europe-Russia-Asia?
– Transportation along the axis Europe/Russia/Asia is a particular challenge in the same way as transportation between West Europe and the CIS countries. In addition to the normal technical and operational hindrances known in rail operations such as different power and signalling systems and different gauges, there are also other constraints of an administrative and commercial kind resulting from the different customs procedures (EU Customs Code, Customs Union of the CIS States, others) and transport law (CIM and SMGS).
Furthermore, the special conditions prevailing on the axis Europe/Russia/Asia still cause
• legal uncertainty
• additional costs
• losses in terms of quality and
• all in all: opaque, complicated transport handling procedures with long idling times.
All these factors contribute to the fact that consigners on routes between Europe, Russia and Asia still do not opt to send their transports by rail.
It is therefore important, particularly on these routes, to aim for standardisation and simplification of transport procedures. The CIM/SMGS consignment note is a very important instrument in this context. It constitutes an important step towards standardising European and Asian railway transport law and brings clear advantages for rail freight transport on this axis.
[~DETAIL_TEXT] => Invisible Border
Since the middle of the last century, Europe and some Asian states were divided into two systems of railway legislation (see reference 1). To some degree, the legal “architecture” of the relations between railwaymen on the two territories reflected the world situation of the time – a confrontation between capitalism and socialism. Most developed states entered the CIM zone and the countries of the so-called “social camp” joined the SMGS zone (see reference).
As a result, at the border between the two zones even now, carriers and forwarders have to go in for the so-called “re-dispatch” (in other words, re-forwarding) of the trains running from one zone to another. In fact, a new freight declaration was created at the border for every train or even wagon.
The revival of railway transport in Europe, caused by the overloaded road infrastructure and the activation of the “green”, coincided with the collapse of the Soviet Union and improvement of political and economic relations between the capitalist and socialist parties. Railway unification was just a matter of time. And the time came in 2004, when International Transport Committee (CIT) and the Organisation for Railways Cooperation (OSJD) made a decision to implement a single consignment note. The document was put into operation on September 1, 2006. At that time there was a demo trip Berlin-Warsaw-Brest-Moscow. It took just three days instead of the usual ten. Today the consignment note is used on pan-European transport corridors II (Berlin-Moscow), III (Dresden-Kiev), and V (Kiev-Trieste).
CIM\SMGS consignment note looks like this: on its front there are the columns to be filled with the data envisaged by CIM as well as SMGS, and the reverse features the data necessary for CIM only.
According to Erik Evtimov, a CIT representative for legal issues, who supervised the development of a single consignment note, the advantages of the document are as follows:
• a source of additional expense is removed;
• there will be no mistakes and inaccuracy that may appear when a consignment note is re-filled;
• available software for making and printing a consignment note speeds up the process.
Joachim Gerigk, Head of Russian-Asia direction in Railion Deutschland AG (a daughter company of Deutsche Band AG specialising in freight transportation), adds there is one more serious advantage: all the customs formalities may be fulfilled at the dispatch station, not at the reloading station. That decreases the risk of the cargo returning from the border station if any mistakes have been made at registration or any data is missed.
In Practice
It is worth noting that use of the consignment note is not widespread yet, but the carriers, operators and logistic companies, which use this instrument, are satisfied with the results and are going to actively use the technology in the transport process.
Ukraine was the first of the CIS states that joined the CIM. It happened in 2003. The country was one of the initiators and developers of the new document. Due to its good knowledge of both systems of transport legislation, Ukrzaliznytsya (the Administration of Railway Transport of Ukraine) had mastered the transportation technology before the CIM\SMGS consignment note was officially put into operation. In summer 2006, two trains loaded with ferrous metals ran along the routes Donetsk-Zeithain (Germany) and Nizhnednepropetrovsk-Ilsenburg (Germany). In December 2006, the test transportation between St. Ingbert (Germany) and Kotel (Russia, South-Eastern Railway) and between Mainz (Germany) and Zaporozhye (Ukraine) was organised. “The transportation was a success”, comments Mr Gerigk.
The experience of Ukrzalinytsya is impressive: the total time saved is 4 hours, money savings amounted to EUR 25 per wagon, and to USD 200 million annually. It is no wonder that, since 2007, there is regular transportation between the metallurgical enterprises in the Donetsk region (Ukraine) and their consumers in Germany. There appeared the back haul also – containers are carried from Mainz to Zaporozhye. Before the consignment note was implemented, train idling lasted two days, but has now fallen to just 17 hours.
The German side is also satisfied with the results. In the words of Mr Gerigk, for regular transportation Railion managed to reduce idling period to one day. In 2007, Railion dispatched 1,800 TEU. And DB Schenker (a logistics subsidiary of Deutsche Bahn) created a special client centre in Duisburg, whose aim is to service consignors which use a single consignment note.
Hans Reinhart, CEO of Swiss InterRail Holding AG which, together with logistics company M&M serviced the line St. Ingbert – Kotel, said his company cooperated with the Byelorussian Railway to create a structure that processes documents for trains running via Brest. After CIM\SMGS is put into operation, this structure offers use of the new technology. Moreover, it developed the mechanism of data transfer by Internet, which also cuts time taken – the consignment note is ready the moment the train arrives. “We are ready to share our developments in using the single consignment note”, says Mr Reinhart, referring to “serious simplification of the transportation process and the reduction of time and money costs”.
It is worth noting that OAO Russian Railways does not hurry to make use of the advantages given by the new consignment note. According to Viktor Zhukov, Deputy Chairperson of OSJD, there are organisational reasons for that: the personnel and the infrastructure at the railway stations must be prepared to adopt the new technology. Most likely, the pioneer in implementing the CIM\SMGS consignment note on the Russian railway network will be OAO TransContainer, which will transport car components to a Volkswagen assembling plant in Kaluga (Russia).
As a reminder, the general contractor of Volkswagen is DB Schenker, which is in charge of the whole logistics chain. So, use of CIM\SMGS will be well-deserved.
Obvious Progress
The development and implementation of the single document is just one half of what is to be done to fully harmonise legislation. Creation of a unified consignment note is only the first stage of the process. After it was completed, the second stage started, unifying all the clauses on the responsibility of all the parties involved in transportation process, etc.
In 2008, the mechanism of making complaints and reviewing them is to be developed. In the words of Mr Evtimov, the working group of CIT is discussing the different options of where a cargo owner must apply to if there is a problem during transportation, and who must be in charge of controlling compensation.
The working group is also developing a single commercial claims procedure. This document is filled-in at the destination if something went wrong with the cargo (e.g. lost, damaged, etc). This document will be the basis for claims that would be legal in both CIM and SMGS zones.
The act is supposed to come in to force in July 2008. Hans Reinhart (InterRail Holding AG) refers to the different approaches of settling property disputes as one of the main problems preventing the mass implementation of a promising technology.
Also, wagon and container lists are being developed. They will accompany the cargo transported in the CIM\SMGS zones. If the cargo carried in a group of wagons along one route is similar, one list may be registered for the whole group of wagons or containers. The CIT and OSJD already have draft documents and, after the final adjustment, they are to come in to force on July 1.
Finally, technical specifications for an e-consignment note are to be developed in 2008. This will allow companies to make use of advanced information technologies. Deputy Chairman of OSJD, Viktor Zhukov, states that before all the above-mentioned documents are approved, they must pass some certain reconciliation procedures, otherwise they may take longer to become legal. Anyway, as soon as the documents are adopted, the main projects for unifying railway rights may be considered completed. International organisations are working so intensively that, even if there are some disagreements, it will be completed not later than 2009.
Resume
Vladimir Laptinsky, First Deputy Head of the Byelorussian Railway, is sure that, “the future is the single consignment note”. This is certainly true, if one aspect is achieved: “We must ensure the adoption of the document by the overwhelming majority of countries located on the two continents, where the unified document will be in use”, says Erik Evtimov of CIT. So, the Europeans will have to convince their Asian partners, famous for their conservatism, that their developments are useful.
by Ivan Stupachenko
Reference
In 1890, West European states adopted the Convention concerning International Carriage by Rail (COTIF) and launched the Intergovernmental Organisation for International Carriage by Rail. The International Transport Committee (CIT) was formed later in the structure of this organisation. In their turn, countries in the Central Europe and some states in South-Eastern Asia concluded the Agreement on International Cargo Communication, as well as a number of other basic documents (including Agreement of Passenger Transportation, etc) in 1951. The Organisation for Railways Cooperation (OSJD) was created to coordinate their work. Since the 1950s, both legal systems have been trying to find a short, and legal, path towards each other.
Countries using SMGS
Azerbaijan, Albania, Byelorussia, Bulgaria, China, Democratic People’s Republic of Korea, Estonia, Georgia, Hungary, Iran, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Poland, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Vietnam.
Countries using CIM
Sweden, Norway, Iran, Iraq, Turkey, Syria, Lebanon, Bulgaria, Romania, Ukraine, Poland, Lithuania, Latvia, Slovakia, Hungary, Slovenia, Finland, Albania, Greece, Macedonia, Croatia, Austria, Switzerland, Germany, Luxemburg, France, Belgium, the Netherlands, Great Britain, Italy, Spain, Portugal, Algeria, Morocco, Tunisia.
Viewpoint
Krzysztof Niemiec,
Director, CTL Logistics S.A.:
– The CIM/SMG consignment note would streamline rail carriage of goods between railways belonging only to CIM and railways belonging only to SMGS. Work on standardising the consignment note, as well as SMGS and CIM, conducted by a joint commission of OSJD/UIC has been underway for a very long time. The first results include the CIM/SMGS consignment note, introduced by several rail carriers (DB, PKP, BC, RZD and UZ) but limited to only a small number of railway connections. Also, it cannot be used by other certified railway carriers who are not signatories of the common agreement on introduction of a standardised CIM/SMGS consignment note. In order to increase the effectiveness of the CIM/SMGS consignment note, it is necessary to broaden the scope of the railway carriers it covers and the area where it is being used.
To broadly adopt and take maximum advantage of the CIM/SMGS consignment note, true acceptance is required by all railway carriers (including former state railways of the European Union) of liberalisation of the railway market within the European Union and establishment of a large number of private railway carriers with equal rights. These carriers increase their carriage numbers with each passing year but, unfortunately, they are cut off from jointly performing in the international transport sector from the East to the West and back to the East.
This is largely due to incomprehensible difficulties in entering in to cooperation agreements with Eastern railways. The current scope of adoption of the CIM/SMGS consignment note is limited to only a select few carriers but has actually become a competitive advantage against other carriers.
Another step which would enable railway carriage of goods to effectively compete against road transport involves broad cooperation of all railway carriers and the opening of railway markets in the countries whose railways belong to the OSJD.
Another subject requiring separate discussion (to which we will gladly contribute) is the issue of complex transport contracts, the system of negotiating carriage or freight car usage settlements. These issues make cooperation with customers and competition against road transport more difficult today.
Interview
Our clients are interested in the use of the CIM/SMGS note
Joachim Gerigk is responsible for the European Network Production at Railion Deutschland AG, the rail freight subsidiary of Deutsche Bahn AG. He speaks on how the CIM\SMGS is used and how it should be used.
– Mr Gerigk, how does DB AG use the unified CIM\SMGS document in its work?
– The freight division of Deutsche Bahn AG (DB Schenker since January 1, 2008) has been using the CIM/SMGS consignment note in its transportation since July 2006.
Already, before the CIM/SBGS consignment note was introduced on September 1, 2006, the first test transports were carried out successfully with this consignment note from the Ukraine to Germany (Donetsk - Zeithain and Nizhnednepropetrovsk - Ilsenburg) in July 2006.
This was followed in December 2006 by test transports with the CIM/SMGS consignment note from Germany to Russia (St. Ingbert - Kotel) and the Ukraine (Mainz - Zaporozhye), which again were successful.
Some of the test transports in regular service have been using the CIM/SMGS consignment note since January 2007. The volume of traffic for transports using the CIM/SMGS consignment note consists of approx. 1,800 40-foot containers per year.
DB Schenker has installed a customised IT system for registration, printing and advance notice to deal with the new order management procedures necessary for the CIM/SMGS consignment note. The CIM/SMGS consignment notes for the clients are produced centrally in the Customer Service Centre in Duisburg by staff in a new competence team which has been set up for this purpose.
– What would you say about the efficiency of the consignment note?
– With the CIM/SMGS consignment note, the transport documents required between Europe (CIM jurisdiction) and Eastern European and Asian countries (SMGS jurisdiction) have been standardised in one document for the first time.
With conventional procedures, new consignment notes had to be drawn up at the so-called reconsignment stations. This poses a considerable expense and workload for the clients and railway companies involved. By using the CIM/SMGS consignment note, it is possible:
• to reduce transport times by reducing or even avoiding idle periods at the reconsignment stations;
• to reduce the time in which wagons are tied up during transport, thus increasing wagon availability;
• to avoid unnecessary workload and costs for reissuing the consignment notes.
Apart from prohibitions and restrictions, there is no more need for customs formalities at the outer borders of the European Community when transporting goods in the simplified EU rail transit procedure. It is possible to deal with the export formalities already in the consignment country of the EU/EFTA; For regular transports carried out with the CIM/SMGS consignment note, it was possible to reduce the time of standstill at the border by approximately 1 day.
– What problems must be resolved in order to enhance the efficiency of the Note?
– At the moment the use of the CIM/SMGS consignment note is very restricted because only a few SMGS railways have approved the use of the CIM/SMGS consignment note for their entire networks. Many railways either only intend to use the CIM/SMGS consignment note on certain routes, only approve of the use of the CIM/SMGS consignment note on certain routes for a specific transport on request, or do not accept the CIM/SMGS consignment note at all. This initial situation is impeding the use of the CIM/SMGS consignment note.
In talks with our clients, we have ascertained that many are interested in the fundamental use of the CIM/SMGS consignment note and would be willing to convert their transport order systems and processes to using this consignment note. This could be implemented either if approval were given for the use of the CIM/SMGS consignment note on all routes of the corresponding transit and receiving country, or if answers to such queries with the railways were to take no longer than two days. This is why a greater commitment to the actual use of the CIM/SMGS consignment note is still required.
Another problem in the context of using the new consignment note lies in the allocation of the consignment notes to the wagons for non-identical transshipment (e.g. transshipment from one wagon for the European gauge to 1.5 wagons for the 1520mm gauge). This problem is solved by using the CIM/SMGS wagon manifest or container manifest. But these forms will only be officially approved for use in June 2008 at the earliest.
– Does DB AG consider the CIM\SMGS a possible tool for improving rail cargo transportation along the axis Europe-Russia-Asia?
– Transportation along the axis Europe/Russia/Asia is a particular challenge in the same way as transportation between West Europe and the CIS countries. In addition to the normal technical and operational hindrances known in rail operations such as different power and signalling systems and different gauges, there are also other constraints of an administrative and commercial kind resulting from the different customs procedures (EU Customs Code, Customs Union of the CIS States, others) and transport law (CIM and SMGS).
Furthermore, the special conditions prevailing on the axis Europe/Russia/Asia still cause
• legal uncertainty
• additional costs
• losses in terms of quality and
• all in all: opaque, complicated transport handling procedures with long idling times.
All these factors contribute to the fact that consigners on routes between Europe, Russia and Asia still do not opt to send their transports by rail.
It is therefore important, particularly on these routes, to aim for standardisation and simplification of transport procedures. The CIM/SMGS consignment note is a very important instrument in this context. It constitutes an important step towards standardising European and Asian railway transport law and brings clear advantages for rail freight transport on this axis.
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“The Confidence of Cargo Owners Must Be Restored”
– Mr Reinhard, your company specialises in railway transportation between Europe, the CIS and South-Eastern Asia. What is your opinion on the prospects of a land bridge connecting Europe and Asia, the main part of which is served by the Transsiberian railway?
H.R. – We believe there are great prospects, especially in the sector of transportation of expensive goods, since fast delivery is very important for them.
As for the regional aspect, the places where the cargo is dispatched and received play an important role. Railway communication between the sea ports, for example, Shanghai in China and Rotterdam or Hamburg in Europe, can hardly compete with sea carriers. However, if a consignor and a consignee are far from ports, the costs may be similar. For example, land and sea transportation from Urumchi to Nuernberg (Germany) or from Beijing to Vienna (Austria) is always comparable.
There are several common factors, which will seriously improve the prospects of land communication between Asia and Europe. The most important of them is the growth of container transportation, which has left the increase in port capacities behind. Today, a container vessel with the capacity of 10,000 TEU or more may sometimes fail to find a place at the berths in the ports between Antwerp and Hamburg. The infrastructure for receiving and servicing containers in these ports does not fulfil the demand. According to one forecast, container turnover in the ports of the North Sea will grow by 11% annually until 2015. So, it will increase from 34 million TEU in 2007 to 77 million TEU in 2015.
These facts prove that we need not only sea transportation but also a qualitative railway bridge connecting Europe with China, India, etc. Otherwise, we will struggle to fulfil the demands of world trade.
– Mr Albert, you were one of the initiators behind the Coordinating Council on Transsiberian Transportation (CCTT). Has the Council lived up to your expectations?
W.A. – When the CCTT was established in November 1993, our target was the resurrection of international transportation. The main idea of the CCTT was to unite everyone interested in the Transsib, so that they could together develop and carry out specific measures to develop transportation. At the very beginning we used to be a small group of enthusiasts. Today, there are 115 individual and associated members of the Council – institutes, railway companies, representatives of customs and other official bodies. 250 delegates from 24 countries participated in the last annual meeting of the CCTT in November 2007. Such figures show how interest in the Eurasian land corridor has increased. So, our activity may be considered a success from this standpoint.
After 15 years of the CCTT’s existence, economic relations in the world have changed. The trade between Europe and Asia increases very fast. And the ports are overloaded because of the container boom. These factors made consignors pay more attention to land routes. The brightest example is the famous demo-train Beijing-Hamburg. After it arrived in Hamburg, a lot of consignors phoned the members of GETO to learn more about the specific terms of transportation. They wanted to get information about the through rate, about the terms of container services, how empty rolling stock is returned, etc. In fact, a lot of companies, participating in trade between China and Europe are waiting for regular railway communication between the two regions.
Unfortunately, we had to say that, although the train had demonstrated an advantage in delivery time, we have yet to reach such targets as a competitive rate, unimpeded transit, unified transport rights, solving of container and wagon shortage and the launch of an economically viable ring route.
In fact, we have been searching for the solutions to these problems since the CCTT was established. And we have done much work towards them. I would be happier if the progress were much more significant, so that there were thousands and thousands containers on the Transsib. But, in reality, European companies have little faith in railway transportation between Europe and Asia, though such a trip takes less time. Much must be done to launch regular cargo trains on the route. And we should use the opportunities presented by the railways better.
– Some Russian experts are sure that the Transsib is not and will not be attractive for transit cargo.
W.A. – For thirty years I have been making efforts and spending time on the development of transportation along the Transsiberian railway. I would never have done it if I had not been sure that the railway had great potential. And all its physical opportunities – the infrastructure, the rolling stock, and traffic channels – prove that I am right. Much is being done now to increase parks of containers and wagons. Handling and logistics terminals for railways and service providers are being constructed along the Transsib. And the goods flows between Europe and Asia are doing nothing but growing!
My own experience is another reason why I am certain of the competitiveness of the Transsib. Since the very start of my professional work, I have dispatched hundreds of thousands of containers on the route, most of them in the early 1980s. My attitude to the railway is one of real practicality. I believe the Transsib is the basis of a strategically important transport corridor between the two continents.
– Could you comment on your experience of servicing cargo flows for members of GETO between Europe and the CIS or between Europe and Asia?
H.R. - Railway transportation to Russia or between Russian and China or Russia and Iran is everyday work for us. As for the demands, terms and peculiarities of each operation, there is little difference between two-sided and transit transportation via the RF territory. And our practical experience in transporting cargo for the motor-car industry in separate wagons proves this. We are sure that such transportation will be serviced by regular trains in the near future.
To sum up our experience in cargo transportation in and via Russia, I can say that the delivery time and the quality of services has significantly improved recently.
W.A. – All the members of GETO are drawn to goods railway transportation between Western Europe and Russia. The brightest example is the block train “Vostochny Veter” (the Eastern Wind) which services the route between Berlin and Moscow and further to the east and other destinations in the CIS. It was GETO that initiated the project in 1995. Later its “opponent”, “Zapadny Veter” (the Western Wind) ran in the opposite direction. Stable container routes have existed for a decade already. And its viability was doubted only during the financial crisis in Russia in 1998. Nowadays, “Vostochny Veter” is dispatched from the Grosberen terminal (Berlin) three times a week and the cargo for it is delivered from all over Germany and neighbour states. The final consignors of many cargoes are in the states in Central Asia, so the containers are carried along the Transsiberian railway.
Also, the members of GETO dispatch plenty of separate containers to South Asian countries. Mainly, the cargoes are carried for specific projects. Unfortunately, in spite of all the efforts made, GETO has still not succeeded in forming a regular train, such as “Vostochny Veter”, to China. As far as I know, one of the members of GETO is developing such a service. But a lot of problems are to be solved before it becomes attractive for potential clients. However, they are not in our remit.
– What are these problems?
W.A. – I believe the difficulties preventing the development of Eurasian railway communication emerge from the investment sector and the different interests of parties from many countries participating in different states. For example, there are a lot of players wishing to benefit from a transit train – railway companies, terminal operators, state bodies, including customs, and sometimes inspectors – but some of them are from several countries. And sometimes progress is hindered by a problem that seems to have nothing to do with transit – the procedures to be completed at borders and the necessity to remove certain formalities. A block train needs the same things as a shipping company: a reliable quality, a competitive rate (including a range of possible payment options), a qualified operator and trouble-free border crossings. Naturally, it is easier to solve such problems for sea transportation than onland. However, preliminary findings from the demo train Beijing-Hamburg showed that, where is a will, there is a way. We need the same mode for regular trains to cross the border. It is, after all, transit, so there is no need to examine each container at each border and check the documents, which have already been filled in and checked!
There are also some other problems concerning not just railways. First of all, the transport flows are unbalanced. Consequently, difficulties arise when returning empty containers to Asian countries. It would be ideal if there were enough cargo to organise a ring route, but such an idea is hardly possible.
Besides, there are a plenty of difficulties preventing railway communication development lately. I have already mentioned the lack of containers, wagons, logistic services and infrastructure on the meeting points of railways with a different gauge width. However, there is some progress. For example, in the sector of railway rights unification. Different legal systems – CIM and SMGS – are working today to create a single freight consignment note.
It is also necessary to prevent the emergence of new barriers, such as the monopolisation of the sector.
H.R. – In China, there is a shortage of container flat wagons and other rail cars and so the transport flows are unbalanced, in spite of the boom in container transportation to Europe. There is a lack of handling capacity at the border of China with Russia, Mongolia, and Kazakhstan, where different types of railway gauges are connected.
For us it means a demand for investment in equipment and container parks (or their rental) and a search for partners, looking for cargo in Europe to be transported to China in order to balance cargo flows and deliver a sufficient number of containers to China. I believe there are promising prospects in the car industry. That is why we are going to purchase containers with a special restraint system to safely carry as many cars as possible. Last March, our company opened a representative office in China. It will allow us to solve a range of problems more efficiently. Naturally, more measures are to be taken to reduce the time spent by transit trains on border crossings, to make document turnover electronic and less bureaucratic and to unify transport law. But I do not consider these factors to be barriers preventing the development of land communication.
I am a member of the secretariat of the CCTT. The organisation is making efforts to solve the problems and I am sure that soon they will bear fruit. For example, the CCTT developed a project called ‘Container Exchange’ that will contribute to optimisation of container turnover. Another observation: the cooperation between railway companies transporting along the Transsib has increased. A good example of such cooperation is the demo train Beijing-Hamburg that made a 15-day trip at the beginning of 2008. It was organised by six railway companies from different countries.
– How many containers can be carried along the Transsib, considering its potential cargo base as well as the technical capacity of the railway?
H.R. – Taking into account the whole railway and re-export, 500,000 TEU could be transported along the Transsib in the short term and, if significant investment is made, the figure will significantly grow in the long term. Russia is a strategic crossing of several transport corridors. And not all opportunities have been realised to unite them into a single unit.
W.A. - In our estimations, the capacity of the Transsib is currently 500,000 TEU and, after some investment, it could reach 1million TEU of transit volume. And, if we take into account the containers transported from China via Kazakhstan that use a part of the Transsiberian railroad on their way to Europe, the figure will be 2 million TEU. But this is just theory. In reality, the situation will be improved if one or two regular block trains are launched between Zabaikalsk or Nakhodka-Vostochnaya and Brest railway stations.
– Could you comment on the activities of the RF Ministry of Transport, OAO RZD, and the CCTT in the development and promotion of the Transsib? What else must be done?
H.R. – I have already mentioned the problems to be solved. What else can be done? We need an enterprise that will control all the operations, including empty container delivery. A shipping company operates its vessels and containers, and a railway operator could use the same scheme, managing regular trains running along the Transsib from Europe to Asia and back. We could invest in fitting platforms for a 1,520 mm-wide gauge, but before that we must find a partner in Russia who can solve operational problems for using such wagons.
There are plenty of problems which are not noticeable at first glance, but they must be solved to make transborder railway communication more attractive. We also must agree about the definition of a block train and the tariff policy applied to it. The minimum length of a container train on the CIS network is at least 50% longer than that allowed in the Chinese and European sectors of the route. Meanwhile, it is regular trains that get tariff preferences on transit via Russian territory. And if there is no preferential treatment, a competitive through rate can hardly be formed. How can transportation be organised where the requirements for a train are different? It turns out that containers need to accumulate at the border to make a train with the minimum admissible length in Russia. It is too complicated. We expect that participants in the CIS Tariff Conference will decide to make an exclusion for transit trains from third-party states.
I will give another example. At the borders of the countries that joined the SMGS agreement, where railways with different gauge widths connect(for example, at the Polish-Byelorussian border), cargo is loaded from the rolling stock operating on one gauge to the wagons used on the other. Thus, there must be at least two container terminals at the border – one in each country. For a businessman it means an unnecessary doubling of expenses, and consequently, less efficiency. We must give up old, inefficient rules and show our flexibility in solving the problem.
by Ivan Stupachenko
[~DETAIL_TEXT] => “The Confidence of Cargo Owners Must Be Restored”
– Mr Reinhard, your company specialises in railway transportation between Europe, the CIS and South-Eastern Asia. What is your opinion on the prospects of a land bridge connecting Europe and Asia, the main part of which is served by the Transsiberian railway?
H.R. – We believe there are great prospects, especially in the sector of transportation of expensive goods, since fast delivery is very important for them.
As for the regional aspect, the places where the cargo is dispatched and received play an important role. Railway communication between the sea ports, for example, Shanghai in China and Rotterdam or Hamburg in Europe, can hardly compete with sea carriers. However, if a consignor and a consignee are far from ports, the costs may be similar. For example, land and sea transportation from Urumchi to Nuernberg (Germany) or from Beijing to Vienna (Austria) is always comparable.
There are several common factors, which will seriously improve the prospects of land communication between Asia and Europe. The most important of them is the growth of container transportation, which has left the increase in port capacities behind. Today, a container vessel with the capacity of 10,000 TEU or more may sometimes fail to find a place at the berths in the ports between Antwerp and Hamburg. The infrastructure for receiving and servicing containers in these ports does not fulfil the demand. According to one forecast, container turnover in the ports of the North Sea will grow by 11% annually until 2015. So, it will increase from 34 million TEU in 2007 to 77 million TEU in 2015.
These facts prove that we need not only sea transportation but also a qualitative railway bridge connecting Europe with China, India, etc. Otherwise, we will struggle to fulfil the demands of world trade.
– Mr Albert, you were one of the initiators behind the Coordinating Council on Transsiberian Transportation (CCTT). Has the Council lived up to your expectations?
W.A. – When the CCTT was established in November 1993, our target was the resurrection of international transportation. The main idea of the CCTT was to unite everyone interested in the Transsib, so that they could together develop and carry out specific measures to develop transportation. At the very beginning we used to be a small group of enthusiasts. Today, there are 115 individual and associated members of the Council – institutes, railway companies, representatives of customs and other official bodies. 250 delegates from 24 countries participated in the last annual meeting of the CCTT in November 2007. Such figures show how interest in the Eurasian land corridor has increased. So, our activity may be considered a success from this standpoint.
After 15 years of the CCTT’s existence, economic relations in the world have changed. The trade between Europe and Asia increases very fast. And the ports are overloaded because of the container boom. These factors made consignors pay more attention to land routes. The brightest example is the famous demo-train Beijing-Hamburg. After it arrived in Hamburg, a lot of consignors phoned the members of GETO to learn more about the specific terms of transportation. They wanted to get information about the through rate, about the terms of container services, how empty rolling stock is returned, etc. In fact, a lot of companies, participating in trade between China and Europe are waiting for regular railway communication between the two regions.
Unfortunately, we had to say that, although the train had demonstrated an advantage in delivery time, we have yet to reach such targets as a competitive rate, unimpeded transit, unified transport rights, solving of container and wagon shortage and the launch of an economically viable ring route.
In fact, we have been searching for the solutions to these problems since the CCTT was established. And we have done much work towards them. I would be happier if the progress were much more significant, so that there were thousands and thousands containers on the Transsib. But, in reality, European companies have little faith in railway transportation between Europe and Asia, though such a trip takes less time. Much must be done to launch regular cargo trains on the route. And we should use the opportunities presented by the railways better.
– Some Russian experts are sure that the Transsib is not and will not be attractive for transit cargo.
W.A. – For thirty years I have been making efforts and spending time on the development of transportation along the Transsiberian railway. I would never have done it if I had not been sure that the railway had great potential. And all its physical opportunities – the infrastructure, the rolling stock, and traffic channels – prove that I am right. Much is being done now to increase parks of containers and wagons. Handling and logistics terminals for railways and service providers are being constructed along the Transsib. And the goods flows between Europe and Asia are doing nothing but growing!
My own experience is another reason why I am certain of the competitiveness of the Transsib. Since the very start of my professional work, I have dispatched hundreds of thousands of containers on the route, most of them in the early 1980s. My attitude to the railway is one of real practicality. I believe the Transsib is the basis of a strategically important transport corridor between the two continents.
– Could you comment on your experience of servicing cargo flows for members of GETO between Europe and the CIS or between Europe and Asia?
H.R. - Railway transportation to Russia or between Russian and China or Russia and Iran is everyday work for us. As for the demands, terms and peculiarities of each operation, there is little difference between two-sided and transit transportation via the RF territory. And our practical experience in transporting cargo for the motor-car industry in separate wagons proves this. We are sure that such transportation will be serviced by regular trains in the near future.
To sum up our experience in cargo transportation in and via Russia, I can say that the delivery time and the quality of services has significantly improved recently.
W.A. – All the members of GETO are drawn to goods railway transportation between Western Europe and Russia. The brightest example is the block train “Vostochny Veter” (the Eastern Wind) which services the route between Berlin and Moscow and further to the east and other destinations in the CIS. It was GETO that initiated the project in 1995. Later its “opponent”, “Zapadny Veter” (the Western Wind) ran in the opposite direction. Stable container routes have existed for a decade already. And its viability was doubted only during the financial crisis in Russia in 1998. Nowadays, “Vostochny Veter” is dispatched from the Grosberen terminal (Berlin) three times a week and the cargo for it is delivered from all over Germany and neighbour states. The final consignors of many cargoes are in the states in Central Asia, so the containers are carried along the Transsiberian railway.
Also, the members of GETO dispatch plenty of separate containers to South Asian countries. Mainly, the cargoes are carried for specific projects. Unfortunately, in spite of all the efforts made, GETO has still not succeeded in forming a regular train, such as “Vostochny Veter”, to China. As far as I know, one of the members of GETO is developing such a service. But a lot of problems are to be solved before it becomes attractive for potential clients. However, they are not in our remit.
– What are these problems?
W.A. – I believe the difficulties preventing the development of Eurasian railway communication emerge from the investment sector and the different interests of parties from many countries participating in different states. For example, there are a lot of players wishing to benefit from a transit train – railway companies, terminal operators, state bodies, including customs, and sometimes inspectors – but some of them are from several countries. And sometimes progress is hindered by a problem that seems to have nothing to do with transit – the procedures to be completed at borders and the necessity to remove certain formalities. A block train needs the same things as a shipping company: a reliable quality, a competitive rate (including a range of possible payment options), a qualified operator and trouble-free border crossings. Naturally, it is easier to solve such problems for sea transportation than onland. However, preliminary findings from the demo train Beijing-Hamburg showed that, where is a will, there is a way. We need the same mode for regular trains to cross the border. It is, after all, transit, so there is no need to examine each container at each border and check the documents, which have already been filled in and checked!
There are also some other problems concerning not just railways. First of all, the transport flows are unbalanced. Consequently, difficulties arise when returning empty containers to Asian countries. It would be ideal if there were enough cargo to organise a ring route, but such an idea is hardly possible.
Besides, there are a plenty of difficulties preventing railway communication development lately. I have already mentioned the lack of containers, wagons, logistic services and infrastructure on the meeting points of railways with a different gauge width. However, there is some progress. For example, in the sector of railway rights unification. Different legal systems – CIM and SMGS – are working today to create a single freight consignment note.
It is also necessary to prevent the emergence of new barriers, such as the monopolisation of the sector.
H.R. – In China, there is a shortage of container flat wagons and other rail cars and so the transport flows are unbalanced, in spite of the boom in container transportation to Europe. There is a lack of handling capacity at the border of China with Russia, Mongolia, and Kazakhstan, where different types of railway gauges are connected.
For us it means a demand for investment in equipment and container parks (or their rental) and a search for partners, looking for cargo in Europe to be transported to China in order to balance cargo flows and deliver a sufficient number of containers to China. I believe there are promising prospects in the car industry. That is why we are going to purchase containers with a special restraint system to safely carry as many cars as possible. Last March, our company opened a representative office in China. It will allow us to solve a range of problems more efficiently. Naturally, more measures are to be taken to reduce the time spent by transit trains on border crossings, to make document turnover electronic and less bureaucratic and to unify transport law. But I do not consider these factors to be barriers preventing the development of land communication.
I am a member of the secretariat of the CCTT. The organisation is making efforts to solve the problems and I am sure that soon they will bear fruit. For example, the CCTT developed a project called ‘Container Exchange’ that will contribute to optimisation of container turnover. Another observation: the cooperation between railway companies transporting along the Transsib has increased. A good example of such cooperation is the demo train Beijing-Hamburg that made a 15-day trip at the beginning of 2008. It was organised by six railway companies from different countries.
– How many containers can be carried along the Transsib, considering its potential cargo base as well as the technical capacity of the railway?
H.R. – Taking into account the whole railway and re-export, 500,000 TEU could be transported along the Transsib in the short term and, if significant investment is made, the figure will significantly grow in the long term. Russia is a strategic crossing of several transport corridors. And not all opportunities have been realised to unite them into a single unit.
W.A. - In our estimations, the capacity of the Transsib is currently 500,000 TEU and, after some investment, it could reach 1million TEU of transit volume. And, if we take into account the containers transported from China via Kazakhstan that use a part of the Transsiberian railroad on their way to Europe, the figure will be 2 million TEU. But this is just theory. In reality, the situation will be improved if one or two regular block trains are launched between Zabaikalsk or Nakhodka-Vostochnaya and Brest railway stations.
– Could you comment on the activities of the RF Ministry of Transport, OAO RZD, and the CCTT in the development and promotion of the Transsib? What else must be done?
H.R. – I have already mentioned the problems to be solved. What else can be done? We need an enterprise that will control all the operations, including empty container delivery. A shipping company operates its vessels and containers, and a railway operator could use the same scheme, managing regular trains running along the Transsib from Europe to Asia and back. We could invest in fitting platforms for a 1,520 mm-wide gauge, but before that we must find a partner in Russia who can solve operational problems for using such wagons.
There are plenty of problems which are not noticeable at first glance, but they must be solved to make transborder railway communication more attractive. We also must agree about the definition of a block train and the tariff policy applied to it. The minimum length of a container train on the CIS network is at least 50% longer than that allowed in the Chinese and European sectors of the route. Meanwhile, it is regular trains that get tariff preferences on transit via Russian territory. And if there is no preferential treatment, a competitive through rate can hardly be formed. How can transportation be organised where the requirements for a train are different? It turns out that containers need to accumulate at the border to make a train with the minimum admissible length in Russia. It is too complicated. We expect that participants in the CIS Tariff Conference will decide to make an exclusion for transit trains from third-party states.
I will give another example. At the borders of the countries that joined the SMGS agreement, where railways with different gauge widths connect(for example, at the Polish-Byelorussian border), cargo is loaded from the rolling stock operating on one gauge to the wagons used on the other. Thus, there must be at least two container terminals at the border – one in each country. For a businessman it means an unnecessary doubling of expenses, and consequently, less efficiency. We must give up old, inefficient rules and show our flexibility in solving the problem.
by Ivan Stupachenko
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[SECTION_META_TITLE] => “Railways Have Good Opportunities. And They Should Be Used Better!”
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[SECTION_META_DESCRIPTION] => Since motorways, ports and sea lines are overloaded, there appears the demand for railway transport services in spite of less profitable rates in comparison with sea transport and smaller opportunities to deliver goods door-to-door as with road transport. Werner Albert, Chairman of the Board of Directors of TransInvest Holding AG and President of Association of European Transsiberian Operators (GETO), and Hans Reinhard, CEO of InterRail Holding AG, told The RZD-Partner International about their vision of developing land routes between Europe and Russia and Europe and Asia.
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[DETAIL_TEXT] => “The Confidence of Cargo Owners Must Be Restored”
– Mr Reinhard, your company specialises in railway transportation between Europe, the CIS and South-Eastern Asia. What is your opinion on the prospects of a land bridge connecting Europe and Asia, the main part of which is served by the Transsiberian railway?
H.R. – We believe there are great prospects, especially in the sector of transportation of expensive goods, since fast delivery is very important for them.
As for the regional aspect, the places where the cargo is dispatched and received play an important role. Railway communication between the sea ports, for example, Shanghai in China and Rotterdam or Hamburg in Europe, can hardly compete with sea carriers. However, if a consignor and a consignee are far from ports, the costs may be similar. For example, land and sea transportation from Urumchi to Nuernberg (Germany) or from Beijing to Vienna (Austria) is always comparable.
There are several common factors, which will seriously improve the prospects of land communication between Asia and Europe. The most important of them is the growth of container transportation, which has left the increase in port capacities behind. Today, a container vessel with the capacity of 10,000 TEU or more may sometimes fail to find a place at the berths in the ports between Antwerp and Hamburg. The infrastructure for receiving and servicing containers in these ports does not fulfil the demand. According to one forecast, container turnover in the ports of the North Sea will grow by 11% annually until 2015. So, it will increase from 34 million TEU in 2007 to 77 million TEU in 2015.
These facts prove that we need not only sea transportation but also a qualitative railway bridge connecting Europe with China, India, etc. Otherwise, we will struggle to fulfil the demands of world trade.
– Mr Albert, you were one of the initiators behind the Coordinating Council on Transsiberian Transportation (CCTT). Has the Council lived up to your expectations?
W.A. – When the CCTT was established in November 1993, our target was the resurrection of international transportation. The main idea of the CCTT was to unite everyone interested in the Transsib, so that they could together develop and carry out specific measures to develop transportation. At the very beginning we used to be a small group of enthusiasts. Today, there are 115 individual and associated members of the Council – institutes, railway companies, representatives of customs and other official bodies. 250 delegates from 24 countries participated in the last annual meeting of the CCTT in November 2007. Such figures show how interest in the Eurasian land corridor has increased. So, our activity may be considered a success from this standpoint.
After 15 years of the CCTT’s existence, economic relations in the world have changed. The trade between Europe and Asia increases very fast. And the ports are overloaded because of the container boom. These factors made consignors pay more attention to land routes. The brightest example is the famous demo-train Beijing-Hamburg. After it arrived in Hamburg, a lot of consignors phoned the members of GETO to learn more about the specific terms of transportation. They wanted to get information about the through rate, about the terms of container services, how empty rolling stock is returned, etc. In fact, a lot of companies, participating in trade between China and Europe are waiting for regular railway communication between the two regions.
Unfortunately, we had to say that, although the train had demonstrated an advantage in delivery time, we have yet to reach such targets as a competitive rate, unimpeded transit, unified transport rights, solving of container and wagon shortage and the launch of an economically viable ring route.
In fact, we have been searching for the solutions to these problems since the CCTT was established. And we have done much work towards them. I would be happier if the progress were much more significant, so that there were thousands and thousands containers on the Transsib. But, in reality, European companies have little faith in railway transportation between Europe and Asia, though such a trip takes less time. Much must be done to launch regular cargo trains on the route. And we should use the opportunities presented by the railways better.
– Some Russian experts are sure that the Transsib is not and will not be attractive for transit cargo.
W.A. – For thirty years I have been making efforts and spending time on the development of transportation along the Transsiberian railway. I would never have done it if I had not been sure that the railway had great potential. And all its physical opportunities – the infrastructure, the rolling stock, and traffic channels – prove that I am right. Much is being done now to increase parks of containers and wagons. Handling and logistics terminals for railways and service providers are being constructed along the Transsib. And the goods flows between Europe and Asia are doing nothing but growing!
My own experience is another reason why I am certain of the competitiveness of the Transsib. Since the very start of my professional work, I have dispatched hundreds of thousands of containers on the route, most of them in the early 1980s. My attitude to the railway is one of real practicality. I believe the Transsib is the basis of a strategically important transport corridor between the two continents.
– Could you comment on your experience of servicing cargo flows for members of GETO between Europe and the CIS or between Europe and Asia?
H.R. - Railway transportation to Russia or between Russian and China or Russia and Iran is everyday work for us. As for the demands, terms and peculiarities of each operation, there is little difference between two-sided and transit transportation via the RF territory. And our practical experience in transporting cargo for the motor-car industry in separate wagons proves this. We are sure that such transportation will be serviced by regular trains in the near future.
To sum up our experience in cargo transportation in and via Russia, I can say that the delivery time and the quality of services has significantly improved recently.
W.A. – All the members of GETO are drawn to goods railway transportation between Western Europe and Russia. The brightest example is the block train “Vostochny Veter” (the Eastern Wind) which services the route between Berlin and Moscow and further to the east and other destinations in the CIS. It was GETO that initiated the project in 1995. Later its “opponent”, “Zapadny Veter” (the Western Wind) ran in the opposite direction. Stable container routes have existed for a decade already. And its viability was doubted only during the financial crisis in Russia in 1998. Nowadays, “Vostochny Veter” is dispatched from the Grosberen terminal (Berlin) three times a week and the cargo for it is delivered from all over Germany and neighbour states. The final consignors of many cargoes are in the states in Central Asia, so the containers are carried along the Transsiberian railway.
Also, the members of GETO dispatch plenty of separate containers to South Asian countries. Mainly, the cargoes are carried for specific projects. Unfortunately, in spite of all the efforts made, GETO has still not succeeded in forming a regular train, such as “Vostochny Veter”, to China. As far as I know, one of the members of GETO is developing such a service. But a lot of problems are to be solved before it becomes attractive for potential clients. However, they are not in our remit.
– What are these problems?
W.A. – I believe the difficulties preventing the development of Eurasian railway communication emerge from the investment sector and the different interests of parties from many countries participating in different states. For example, there are a lot of players wishing to benefit from a transit train – railway companies, terminal operators, state bodies, including customs, and sometimes inspectors – but some of them are from several countries. And sometimes progress is hindered by a problem that seems to have nothing to do with transit – the procedures to be completed at borders and the necessity to remove certain formalities. A block train needs the same things as a shipping company: a reliable quality, a competitive rate (including a range of possible payment options), a qualified operator and trouble-free border crossings. Naturally, it is easier to solve such problems for sea transportation than onland. However, preliminary findings from the demo train Beijing-Hamburg showed that, where is a will, there is a way. We need the same mode for regular trains to cross the border. It is, after all, transit, so there is no need to examine each container at each border and check the documents, which have already been filled in and checked!
There are also some other problems concerning not just railways. First of all, the transport flows are unbalanced. Consequently, difficulties arise when returning empty containers to Asian countries. It would be ideal if there were enough cargo to organise a ring route, but such an idea is hardly possible.
Besides, there are a plenty of difficulties preventing railway communication development lately. I have already mentioned the lack of containers, wagons, logistic services and infrastructure on the meeting points of railways with a different gauge width. However, there is some progress. For example, in the sector of railway rights unification. Different legal systems – CIM and SMGS – are working today to create a single freight consignment note.
It is also necessary to prevent the emergence of new barriers, such as the monopolisation of the sector.
H.R. – In China, there is a shortage of container flat wagons and other rail cars and so the transport flows are unbalanced, in spite of the boom in container transportation to Europe. There is a lack of handling capacity at the border of China with Russia, Mongolia, and Kazakhstan, where different types of railway gauges are connected.
For us it means a demand for investment in equipment and container parks (or their rental) and a search for partners, looking for cargo in Europe to be transported to China in order to balance cargo flows and deliver a sufficient number of containers to China. I believe there are promising prospects in the car industry. That is why we are going to purchase containers with a special restraint system to safely carry as many cars as possible. Last March, our company opened a representative office in China. It will allow us to solve a range of problems more efficiently. Naturally, more measures are to be taken to reduce the time spent by transit trains on border crossings, to make document turnover electronic and less bureaucratic and to unify transport law. But I do not consider these factors to be barriers preventing the development of land communication.
I am a member of the secretariat of the CCTT. The organisation is making efforts to solve the problems and I am sure that soon they will bear fruit. For example, the CCTT developed a project called ‘Container Exchange’ that will contribute to optimisation of container turnover. Another observation: the cooperation between railway companies transporting along the Transsib has increased. A good example of such cooperation is the demo train Beijing-Hamburg that made a 15-day trip at the beginning of 2008. It was organised by six railway companies from different countries.
– How many containers can be carried along the Transsib, considering its potential cargo base as well as the technical capacity of the railway?
H.R. – Taking into account the whole railway and re-export, 500,000 TEU could be transported along the Transsib in the short term and, if significant investment is made, the figure will significantly grow in the long term. Russia is a strategic crossing of several transport corridors. And not all opportunities have been realised to unite them into a single unit.
W.A. - In our estimations, the capacity of the Transsib is currently 500,000 TEU and, after some investment, it could reach 1million TEU of transit volume. And, if we take into account the containers transported from China via Kazakhstan that use a part of the Transsiberian railroad on their way to Europe, the figure will be 2 million TEU. But this is just theory. In reality, the situation will be improved if one or two regular block trains are launched between Zabaikalsk or Nakhodka-Vostochnaya and Brest railway stations.
– Could you comment on the activities of the RF Ministry of Transport, OAO RZD, and the CCTT in the development and promotion of the Transsib? What else must be done?
H.R. – I have already mentioned the problems to be solved. What else can be done? We need an enterprise that will control all the operations, including empty container delivery. A shipping company operates its vessels and containers, and a railway operator could use the same scheme, managing regular trains running along the Transsib from Europe to Asia and back. We could invest in fitting platforms for a 1,520 mm-wide gauge, but before that we must find a partner in Russia who can solve operational problems for using such wagons.
There are plenty of problems which are not noticeable at first glance, but they must be solved to make transborder railway communication more attractive. We also must agree about the definition of a block train and the tariff policy applied to it. The minimum length of a container train on the CIS network is at least 50% longer than that allowed in the Chinese and European sectors of the route. Meanwhile, it is regular trains that get tariff preferences on transit via Russian territory. And if there is no preferential treatment, a competitive through rate can hardly be formed. How can transportation be organised where the requirements for a train are different? It turns out that containers need to accumulate at the border to make a train with the minimum admissible length in Russia. It is too complicated. We expect that participants in the CIS Tariff Conference will decide to make an exclusion for transit trains from third-party states.
I will give another example. At the borders of the countries that joined the SMGS agreement, where railways with different gauge widths connect(for example, at the Polish-Byelorussian border), cargo is loaded from the rolling stock operating on one gauge to the wagons used on the other. Thus, there must be at least two container terminals at the border – one in each country. For a businessman it means an unnecessary doubling of expenses, and consequently, less efficiency. We must give up old, inefficient rules and show our flexibility in solving the problem.
by Ivan Stupachenko
[~DETAIL_TEXT] => “The Confidence of Cargo Owners Must Be Restored”
– Mr Reinhard, your company specialises in railway transportation between Europe, the CIS and South-Eastern Asia. What is your opinion on the prospects of a land bridge connecting Europe and Asia, the main part of which is served by the Transsiberian railway?
H.R. – We believe there are great prospects, especially in the sector of transportation of expensive goods, since fast delivery is very important for them.
As for the regional aspect, the places where the cargo is dispatched and received play an important role. Railway communication between the sea ports, for example, Shanghai in China and Rotterdam or Hamburg in Europe, can hardly compete with sea carriers. However, if a consignor and a consignee are far from ports, the costs may be similar. For example, land and sea transportation from Urumchi to Nuernberg (Germany) or from Beijing to Vienna (Austria) is always comparable.
There are several common factors, which will seriously improve the prospects of land communication between Asia and Europe. The most important of them is the growth of container transportation, which has left the increase in port capacities behind. Today, a container vessel with the capacity of 10,000 TEU or more may sometimes fail to find a place at the berths in the ports between Antwerp and Hamburg. The infrastructure for receiving and servicing containers in these ports does not fulfil the demand. According to one forecast, container turnover in the ports of the North Sea will grow by 11% annually until 2015. So, it will increase from 34 million TEU in 2007 to 77 million TEU in 2015.
These facts prove that we need not only sea transportation but also a qualitative railway bridge connecting Europe with China, India, etc. Otherwise, we will struggle to fulfil the demands of world trade.
– Mr Albert, you were one of the initiators behind the Coordinating Council on Transsiberian Transportation (CCTT). Has the Council lived up to your expectations?
W.A. – When the CCTT was established in November 1993, our target was the resurrection of international transportation. The main idea of the CCTT was to unite everyone interested in the Transsib, so that they could together develop and carry out specific measures to develop transportation. At the very beginning we used to be a small group of enthusiasts. Today, there are 115 individual and associated members of the Council – institutes, railway companies, representatives of customs and other official bodies. 250 delegates from 24 countries participated in the last annual meeting of the CCTT in November 2007. Such figures show how interest in the Eurasian land corridor has increased. So, our activity may be considered a success from this standpoint.
After 15 years of the CCTT’s existence, economic relations in the world have changed. The trade between Europe and Asia increases very fast. And the ports are overloaded because of the container boom. These factors made consignors pay more attention to land routes. The brightest example is the famous demo-train Beijing-Hamburg. After it arrived in Hamburg, a lot of consignors phoned the members of GETO to learn more about the specific terms of transportation. They wanted to get information about the through rate, about the terms of container services, how empty rolling stock is returned, etc. In fact, a lot of companies, participating in trade between China and Europe are waiting for regular railway communication between the two regions.
Unfortunately, we had to say that, although the train had demonstrated an advantage in delivery time, we have yet to reach such targets as a competitive rate, unimpeded transit, unified transport rights, solving of container and wagon shortage and the launch of an economically viable ring route.
In fact, we have been searching for the solutions to these problems since the CCTT was established. And we have done much work towards them. I would be happier if the progress were much more significant, so that there were thousands and thousands containers on the Transsib. But, in reality, European companies have little faith in railway transportation between Europe and Asia, though such a trip takes less time. Much must be done to launch regular cargo trains on the route. And we should use the opportunities presented by the railways better.
– Some Russian experts are sure that the Transsib is not and will not be attractive for transit cargo.
W.A. – For thirty years I have been making efforts and spending time on the development of transportation along the Transsiberian railway. I would never have done it if I had not been sure that the railway had great potential. And all its physical opportunities – the infrastructure, the rolling stock, and traffic channels – prove that I am right. Much is being done now to increase parks of containers and wagons. Handling and logistics terminals for railways and service providers are being constructed along the Transsib. And the goods flows between Europe and Asia are doing nothing but growing!
My own experience is another reason why I am certain of the competitiveness of the Transsib. Since the very start of my professional work, I have dispatched hundreds of thousands of containers on the route, most of them in the early 1980s. My attitude to the railway is one of real practicality. I believe the Transsib is the basis of a strategically important transport corridor between the two continents.
– Could you comment on your experience of servicing cargo flows for members of GETO between Europe and the CIS or between Europe and Asia?
H.R. - Railway transportation to Russia or between Russian and China or Russia and Iran is everyday work for us. As for the demands, terms and peculiarities of each operation, there is little difference between two-sided and transit transportation via the RF territory. And our practical experience in transporting cargo for the motor-car industry in separate wagons proves this. We are sure that such transportation will be serviced by regular trains in the near future.
To sum up our experience in cargo transportation in and via Russia, I can say that the delivery time and the quality of services has significantly improved recently.
W.A. – All the members of GETO are drawn to goods railway transportation between Western Europe and Russia. The brightest example is the block train “Vostochny Veter” (the Eastern Wind) which services the route between Berlin and Moscow and further to the east and other destinations in the CIS. It was GETO that initiated the project in 1995. Later its “opponent”, “Zapadny Veter” (the Western Wind) ran in the opposite direction. Stable container routes have existed for a decade already. And its viability was doubted only during the financial crisis in Russia in 1998. Nowadays, “Vostochny Veter” is dispatched from the Grosberen terminal (Berlin) three times a week and the cargo for it is delivered from all over Germany and neighbour states. The final consignors of many cargoes are in the states in Central Asia, so the containers are carried along the Transsiberian railway.
Also, the members of GETO dispatch plenty of separate containers to South Asian countries. Mainly, the cargoes are carried for specific projects. Unfortunately, in spite of all the efforts made, GETO has still not succeeded in forming a regular train, such as “Vostochny Veter”, to China. As far as I know, one of the members of GETO is developing such a service. But a lot of problems are to be solved before it becomes attractive for potential clients. However, they are not in our remit.
– What are these problems?
W.A. – I believe the difficulties preventing the development of Eurasian railway communication emerge from the investment sector and the different interests of parties from many countries participating in different states. For example, there are a lot of players wishing to benefit from a transit train – railway companies, terminal operators, state bodies, including customs, and sometimes inspectors – but some of them are from several countries. And sometimes progress is hindered by a problem that seems to have nothing to do with transit – the procedures to be completed at borders and the necessity to remove certain formalities. A block train needs the same things as a shipping company: a reliable quality, a competitive rate (including a range of possible payment options), a qualified operator and trouble-free border crossings. Naturally, it is easier to solve such problems for sea transportation than onland. However, preliminary findings from the demo train Beijing-Hamburg showed that, where is a will, there is a way. We need the same mode for regular trains to cross the border. It is, after all, transit, so there is no need to examine each container at each border and check the documents, which have already been filled in and checked!
There are also some other problems concerning not just railways. First of all, the transport flows are unbalanced. Consequently, difficulties arise when returning empty containers to Asian countries. It would be ideal if there were enough cargo to organise a ring route, but such an idea is hardly possible.
Besides, there are a plenty of difficulties preventing railway communication development lately. I have already mentioned the lack of containers, wagons, logistic services and infrastructure on the meeting points of railways with a different gauge width. However, there is some progress. For example, in the sector of railway rights unification. Different legal systems – CIM and SMGS – are working today to create a single freight consignment note.
It is also necessary to prevent the emergence of new barriers, such as the monopolisation of the sector.
H.R. – In China, there is a shortage of container flat wagons and other rail cars and so the transport flows are unbalanced, in spite of the boom in container transportation to Europe. There is a lack of handling capacity at the border of China with Russia, Mongolia, and Kazakhstan, where different types of railway gauges are connected.
For us it means a demand for investment in equipment and container parks (or their rental) and a search for partners, looking for cargo in Europe to be transported to China in order to balance cargo flows and deliver a sufficient number of containers to China. I believe there are promising prospects in the car industry. That is why we are going to purchase containers with a special restraint system to safely carry as many cars as possible. Last March, our company opened a representative office in China. It will allow us to solve a range of problems more efficiently. Naturally, more measures are to be taken to reduce the time spent by transit trains on border crossings, to make document turnover electronic and less bureaucratic and to unify transport law. But I do not consider these factors to be barriers preventing the development of land communication.
I am a member of the secretariat of the CCTT. The organisation is making efforts to solve the problems and I am sure that soon they will bear fruit. For example, the CCTT developed a project called ‘Container Exchange’ that will contribute to optimisation of container turnover. Another observation: the cooperation between railway companies transporting along the Transsib has increased. A good example of such cooperation is the demo train Beijing-Hamburg that made a 15-day trip at the beginning of 2008. It was organised by six railway companies from different countries.
– How many containers can be carried along the Transsib, considering its potential cargo base as well as the technical capacity of the railway?
H.R. – Taking into account the whole railway and re-export, 500,000 TEU could be transported along the Transsib in the short term and, if significant investment is made, the figure will significantly grow in the long term. Russia is a strategic crossing of several transport corridors. And not all opportunities have been realised to unite them into a single unit.
W.A. - In our estimations, the capacity of the Transsib is currently 500,000 TEU and, after some investment, it could reach 1million TEU of transit volume. And, if we take into account the containers transported from China via Kazakhstan that use a part of the Transsiberian railroad on their way to Europe, the figure will be 2 million TEU. But this is just theory. In reality, the situation will be improved if one or two regular block trains are launched between Zabaikalsk or Nakhodka-Vostochnaya and Brest railway stations.
– Could you comment on the activities of the RF Ministry of Transport, OAO RZD, and the CCTT in the development and promotion of the Transsib? What else must be done?
H.R. – I have already mentioned the problems to be solved. What else can be done? We need an enterprise that will control all the operations, including empty container delivery. A shipping company operates its vessels and containers, and a railway operator could use the same scheme, managing regular trains running along the Transsib from Europe to Asia and back. We could invest in fitting platforms for a 1,520 mm-wide gauge, but before that we must find a partner in Russia who can solve operational problems for using such wagons.
There are plenty of problems which are not noticeable at first glance, but they must be solved to make transborder railway communication more attractive. We also must agree about the definition of a block train and the tariff policy applied to it. The minimum length of a container train on the CIS network is at least 50% longer than that allowed in the Chinese and European sectors of the route. Meanwhile, it is regular trains that get tariff preferences on transit via Russian territory. And if there is no preferential treatment, a competitive through rate can hardly be formed. How can transportation be organised where the requirements for a train are different? It turns out that containers need to accumulate at the border to make a train with the minimum admissible length in Russia. It is too complicated. We expect that participants in the CIS Tariff Conference will decide to make an exclusion for transit trains from third-party states.
I will give another example. At the borders of the countries that joined the SMGS agreement, where railways with different gauge widths connect(for example, at the Polish-Byelorussian border), cargo is loaded from the rolling stock operating on one gauge to the wagons used on the other. Thus, there must be at least two container terminals at the border – one in each country. For a businessman it means an unnecessary doubling of expenses, and consequently, less efficiency. We must give up old, inefficient rules and show our flexibility in solving the problem.
by Ivan Stupachenko
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The question whether to open a representative office or not is urgent for many Russian transport and logistics companies. The answer to it depends on the development strategy of a company and on the need to control the process of packaging and dispatching the cargo to another country. Obviously, the number of affiliates in foreign states will increase because of the growth of transport flows between the EU and Russia.Array
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[DETAIL_TEXT] => Affiliate: All Eyes and Ears… and Cash Office
In the RF, economy’s development enlarged the amount of foreign economic activities of Russian companies as well as growing the volume of the logistics services market. The increase in import and export of goods led to better control over the quality of services provided at foreign trade operations. Large Russian transport companies faced the necessity of a constant presence to control the work in European capitals. In particular, strict control may be necessary if a company provides organisationally complicated services, for example, delivery of LCL cargoes.
A number of companies decided it was necessary for them to create their own representative offices, which would coordinate goods transportation and cover other important issues. “The efficiency of a logistics company’s representative office is defined by the type of its business first of all, by the range of services provided. For the companies specialising in intermodal and multimodal transportation, a representative office is very important. It cannot just organise and control transportation, it must also fulfil sale and promoting functions in a region, if it is strategically important for business development”, claims Artyom Belov, Deputy Director of consulting company IKF (Research and Consulting Firm) “ALT”. In his opinion, an office abroad may be used as a platform for the company’s entry to the country. “For example, some companies used to open offices in India and China to research and promote company services in those markets. The representative offices fulfilled the marketing function”, he says. Once the research is over, such a “project” office must either turn into a representative office or be closed if the future does not seem promising.
Offices are also important for logistic companies providing 3PL services in the transport market. But there are factors that prevent representative offices from opening in foreign states. “In particular, there are few companies providing 3PL services in Russia. As for those claiming they provide them, the share of 3PL services is not more than 10-20%, in fact. There is another limitation: few Russian producers export their goods. As a result, there is not a sufficient market for the companies to develop abroad”, according to Mr Belov.
Russian Guide for the European
Every representative office in a foreign country has its own peculiarities and sometimes faces difficulties. “Western companies have a clear vision of the measures to take in this or that situation and they know what the consequences will be in the long term. But Russian companies are just learning it. They know the Russian economy pretty well but the Western market is an absolutely different thing, because their shareholders think in decades when they make decisions on investments”, says Andrey Savelyev, CEO of Greenway holding company.
On the other hand, Mr Savelyev draws attention to the excessive red tape which appears when many questions are discussed, for example in Finland. It is one of the main problems. “To organise transportation, one should apply to a company that has been in transportation over two years. That is why a lot of logistics enterprises often depend on the terms set by Finnish authorities. And they have to adopt to the fast-changing conditions of national legislation. Several years ago, a licence for a logistics terminal similar to ours, cost EUR 50,000. Last year, our company paid much more for opening such a warehouse”, he claims.
Another difficulty mentioned by experts is that the USA and the EU markets are well-structured and competition is tough. “Nobody waits for Russian companies there. The main difficulty for them is to find their place in the market and to create an efficient development strategy”, emphasises Mr Belov. As a result, most companies provide cargo delivery services to and from Russia. Fully-fledged development and provision of a full pack of services is possible if national structures merge with foreign ones, and this may help the company to enter the market. “We understand it is very difficult to compete in the local market overcrowded by providers of standard logistics services, so we do not consider it our target. When our company opens its representative office abroad, the main goals are promotion of services we provide in Russia and the CIS in the local market”, states Natalya Titova, Director of STS Logistics representative office in the Netherlands. In her opinion, logistics and customs services in Russia and the CIS are still a separate “niche” in the foreign markets, since the post-Soviet region is considered rather complicated for business due to underdeveloped transport infrastructure, customs rules, red tape and commercial crime. Meanwhile, most producing, trade and logistics companies understand the prospects for the market and are eager to enter it. “And here they need the help of specialists such as us. We understand what they need and how to do it. So, we often become “a guide” in the Russian market. In other words, it is possible to say that we take additional business to our Russian offices, and this is our main value”, emphasises Mrs Titova.
Do Russians and Europeans Differ?
Companies admit that staff recruiting is one of the main problems. On the one hand, the opinion that managers from Russia differ from more careful and demanding Europeans is not true any longer. “In the Russian economy there have appeared managers whose professionalism meets European standards. That is why, lately, the style of doing business by Russian and foreign companies is becoming more and more similar. Nowadays, we work in Europe actively enough, and I do not think it is absolutely different there with another special style”, notes Mr Savelyev.
On the other hand, it is simpler to deal with European companies, because every business environment has some definite norms and rules of doing business, which are to be followed.
“For example, fulfilment of agreements and promises, less risk of not being paid for the work executed, the level of communication and staff professionalism. The company’s employees are focused at fulfilling the client’s demands. Naturally, there may be some exceptions and difficulties, but on the whole the business environment is much smoother there than in Russia”, explains Mrs Titova. In her words, another advantage of working in a European office is less stress than in Russian companies.
Meanwhile, even those that believe European employees are much more responsible note that people from Russia and the CIS work more efficiently in representative offices. That may be explained by several factors: when they worked in Russia, they got used to a more compressed timetable and pace of work as well as to stricter requirements from the management. “Besides, constantly dealing with clients in Russia and the headquarters, the lack of a language barrier becomes very important. Such employees better understand the peculiarities of doing business, operative work and record-keeping and correspondence is easier. However, it is not easy to find an employee that suits the company, even though there are a lot of Russian-speaking people in European countries. To work in our company they must have some definite experience and knowledge, and there are few such people in the labour-market”, says Mrs Titova. A lot of European companies are, unsurprisingly, developing their business actively in Russia, so there is a high demand for qualified staff familiar with the peculiarities of doing business in Russia and speaking Russian.
Changing Waymarks
A number of experts believe that a representative office in another country is created as a matter of course, or for reputation or money receipt optimisation. But practice shows that unprofitable presentation disappears, and a division operating outside Russia aims to bring profits.
“Successful functioning of an office always covers all expenses that arise if a company does business in a foreign country. As for a logistic delivery chain, today transportation via Finnish ports becomes more and more attractive for Russian cargoes. And from Finland the freight is carried to the customs office in Saint Petersburg or Moscow –depending on the logistics scheme chosen by the client. The containers arriving at the port of Saint Petersburg may be kept in a terminal for over a week until customs clearance is held. A lot of clients are unhappy about such terms, and that is why our logistics terminal in Finland is loaded to capacity, since cargo is registered much faster there”, states Mr Savelyev.
And experts from IFK “ALT” agree with him. “As far as I know the reputation function of a representative office is not critical. It must generate profit and be included in the process of providing services. For example, a lot of Russian companies have representative offices in the Baltic States. It is connected by the similarity of culture and mentality, a lower cost of transportation, and the fact that the Baltic States are members of the EU. Such offices make business more efficient”, confirms Mr Belov. Moreover, specialists of STS Logistics say that they have had a representative office in the Netherlands since 2004, and, from the very beginning, it has been profitable. “Nowadays, the representative office also makes profit for the whole holding company and is one of the top ten affiliates according to profitability”, explains Mrs Titova.
Resume:
Much Space to Work
Summing up, it is worth noting that the experts were unanimous that the number of Russian companies opening affiliates and offices abroad will grow. Experts from Greenway are sure that the activity has good prospects for holding companies. “A company organising representative offices in another country can control its business there, gain business information, and form the logistics chain”, says Mr Savelyev. On the other hand, the analysts from IKF “ALT” forecast that there will be expansion outside the Russian market, and local players will merge to enlarge their businesses.
By Maria Shevchenko
[~DETAIL_TEXT] => Affiliate: All Eyes and Ears… and Cash Office
In the RF, economy’s development enlarged the amount of foreign economic activities of Russian companies as well as growing the volume of the logistics services market. The increase in import and export of goods led to better control over the quality of services provided at foreign trade operations. Large Russian transport companies faced the necessity of a constant presence to control the work in European capitals. In particular, strict control may be necessary if a company provides organisationally complicated services, for example, delivery of LCL cargoes.
A number of companies decided it was necessary for them to create their own representative offices, which would coordinate goods transportation and cover other important issues. “The efficiency of a logistics company’s representative office is defined by the type of its business first of all, by the range of services provided. For the companies specialising in intermodal and multimodal transportation, a representative office is very important. It cannot just organise and control transportation, it must also fulfil sale and promoting functions in a region, if it is strategically important for business development”, claims Artyom Belov, Deputy Director of consulting company IKF (Research and Consulting Firm) “ALT”. In his opinion, an office abroad may be used as a platform for the company’s entry to the country. “For example, some companies used to open offices in India and China to research and promote company services in those markets. The representative offices fulfilled the marketing function”, he says. Once the research is over, such a “project” office must either turn into a representative office or be closed if the future does not seem promising.
Offices are also important for logistic companies providing 3PL services in the transport market. But there are factors that prevent representative offices from opening in foreign states. “In particular, there are few companies providing 3PL services in Russia. As for those claiming they provide them, the share of 3PL services is not more than 10-20%, in fact. There is another limitation: few Russian producers export their goods. As a result, there is not a sufficient market for the companies to develop abroad”, according to Mr Belov.
Russian Guide for the European
Every representative office in a foreign country has its own peculiarities and sometimes faces difficulties. “Western companies have a clear vision of the measures to take in this or that situation and they know what the consequences will be in the long term. But Russian companies are just learning it. They know the Russian economy pretty well but the Western market is an absolutely different thing, because their shareholders think in decades when they make decisions on investments”, says Andrey Savelyev, CEO of Greenway holding company.
On the other hand, Mr Savelyev draws attention to the excessive red tape which appears when many questions are discussed, for example in Finland. It is one of the main problems. “To organise transportation, one should apply to a company that has been in transportation over two years. That is why a lot of logistics enterprises often depend on the terms set by Finnish authorities. And they have to adopt to the fast-changing conditions of national legislation. Several years ago, a licence for a logistics terminal similar to ours, cost EUR 50,000. Last year, our company paid much more for opening such a warehouse”, he claims.
Another difficulty mentioned by experts is that the USA and the EU markets are well-structured and competition is tough. “Nobody waits for Russian companies there. The main difficulty for them is to find their place in the market and to create an efficient development strategy”, emphasises Mr Belov. As a result, most companies provide cargo delivery services to and from Russia. Fully-fledged development and provision of a full pack of services is possible if national structures merge with foreign ones, and this may help the company to enter the market. “We understand it is very difficult to compete in the local market overcrowded by providers of standard logistics services, so we do not consider it our target. When our company opens its representative office abroad, the main goals are promotion of services we provide in Russia and the CIS in the local market”, states Natalya Titova, Director of STS Logistics representative office in the Netherlands. In her opinion, logistics and customs services in Russia and the CIS are still a separate “niche” in the foreign markets, since the post-Soviet region is considered rather complicated for business due to underdeveloped transport infrastructure, customs rules, red tape and commercial crime. Meanwhile, most producing, trade and logistics companies understand the prospects for the market and are eager to enter it. “And here they need the help of specialists such as us. We understand what they need and how to do it. So, we often become “a guide” in the Russian market. In other words, it is possible to say that we take additional business to our Russian offices, and this is our main value”, emphasises Mrs Titova.
Do Russians and Europeans Differ?
Companies admit that staff recruiting is one of the main problems. On the one hand, the opinion that managers from Russia differ from more careful and demanding Europeans is not true any longer. “In the Russian economy there have appeared managers whose professionalism meets European standards. That is why, lately, the style of doing business by Russian and foreign companies is becoming more and more similar. Nowadays, we work in Europe actively enough, and I do not think it is absolutely different there with another special style”, notes Mr Savelyev.
On the other hand, it is simpler to deal with European companies, because every business environment has some definite norms and rules of doing business, which are to be followed.
“For example, fulfilment of agreements and promises, less risk of not being paid for the work executed, the level of communication and staff professionalism. The company’s employees are focused at fulfilling the client’s demands. Naturally, there may be some exceptions and difficulties, but on the whole the business environment is much smoother there than in Russia”, explains Mrs Titova. In her words, another advantage of working in a European office is less stress than in Russian companies.
Meanwhile, even those that believe European employees are much more responsible note that people from Russia and the CIS work more efficiently in representative offices. That may be explained by several factors: when they worked in Russia, they got used to a more compressed timetable and pace of work as well as to stricter requirements from the management. “Besides, constantly dealing with clients in Russia and the headquarters, the lack of a language barrier becomes very important. Such employees better understand the peculiarities of doing business, operative work and record-keeping and correspondence is easier. However, it is not easy to find an employee that suits the company, even though there are a lot of Russian-speaking people in European countries. To work in our company they must have some definite experience and knowledge, and there are few such people in the labour-market”, says Mrs Titova. A lot of European companies are, unsurprisingly, developing their business actively in Russia, so there is a high demand for qualified staff familiar with the peculiarities of doing business in Russia and speaking Russian.
Changing Waymarks
A number of experts believe that a representative office in another country is created as a matter of course, or for reputation or money receipt optimisation. But practice shows that unprofitable presentation disappears, and a division operating outside Russia aims to bring profits.
“Successful functioning of an office always covers all expenses that arise if a company does business in a foreign country. As for a logistic delivery chain, today transportation via Finnish ports becomes more and more attractive for Russian cargoes. And from Finland the freight is carried to the customs office in Saint Petersburg or Moscow –depending on the logistics scheme chosen by the client. The containers arriving at the port of Saint Petersburg may be kept in a terminal for over a week until customs clearance is held. A lot of clients are unhappy about such terms, and that is why our logistics terminal in Finland is loaded to capacity, since cargo is registered much faster there”, states Mr Savelyev.
And experts from IFK “ALT” agree with him. “As far as I know the reputation function of a representative office is not critical. It must generate profit and be included in the process of providing services. For example, a lot of Russian companies have representative offices in the Baltic States. It is connected by the similarity of culture and mentality, a lower cost of transportation, and the fact that the Baltic States are members of the EU. Such offices make business more efficient”, confirms Mr Belov. Moreover, specialists of STS Logistics say that they have had a representative office in the Netherlands since 2004, and, from the very beginning, it has been profitable. “Nowadays, the representative office also makes profit for the whole holding company and is one of the top ten affiliates according to profitability”, explains Mrs Titova.
Resume:
Much Space to Work
Summing up, it is worth noting that the experts were unanimous that the number of Russian companies opening affiliates and offices abroad will grow. Experts from Greenway are sure that the activity has good prospects for holding companies. “A company organising representative offices in another country can control its business there, gain business information, and form the logistics chain”, says Mr Savelyev. On the other hand, the analysts from IKF “ALT” forecast that there will be expansion outside the Russian market, and local players will merge to enlarge their businesses.
By Maria Shevchenko
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[SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/2/1.jpg" border="1" alt=" " hspace="3" vspace="3" width="110" height="140" align="left" />The question whether to open a representative office or not is urgent for many Russian transport and logistics companies. The answer to it depends on the development strategy of a company and on the need to control the process of packaging and dispatching the cargo to another country. Obviously, the number of affiliates in foreign states will increase because of the growth of transport flows between the EU and Russia.
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[DETAIL_TEXT] => Affiliate: All Eyes and Ears… and Cash Office
In the RF, economy’s development enlarged the amount of foreign economic activities of Russian companies as well as growing the volume of the logistics services market. The increase in import and export of goods led to better control over the quality of services provided at foreign trade operations. Large Russian transport companies faced the necessity of a constant presence to control the work in European capitals. In particular, strict control may be necessary if a company provides organisationally complicated services, for example, delivery of LCL cargoes.
A number of companies decided it was necessary for them to create their own representative offices, which would coordinate goods transportation and cover other important issues. “The efficiency of a logistics company’s representative office is defined by the type of its business first of all, by the range of services provided. For the companies specialising in intermodal and multimodal transportation, a representative office is very important. It cannot just organise and control transportation, it must also fulfil sale and promoting functions in a region, if it is strategically important for business development”, claims Artyom Belov, Deputy Director of consulting company IKF (Research and Consulting Firm) “ALT”. In his opinion, an office abroad may be used as a platform for the company’s entry to the country. “For example, some companies used to open offices in India and China to research and promote company services in those markets. The representative offices fulfilled the marketing function”, he says. Once the research is over, such a “project” office must either turn into a representative office or be closed if the future does not seem promising.
Offices are also important for logistic companies providing 3PL services in the transport market. But there are factors that prevent representative offices from opening in foreign states. “In particular, there are few companies providing 3PL services in Russia. As for those claiming they provide them, the share of 3PL services is not more than 10-20%, in fact. There is another limitation: few Russian producers export their goods. As a result, there is not a sufficient market for the companies to develop abroad”, according to Mr Belov.
Russian Guide for the European
Every representative office in a foreign country has its own peculiarities and sometimes faces difficulties. “Western companies have a clear vision of the measures to take in this or that situation and they know what the consequences will be in the long term. But Russian companies are just learning it. They know the Russian economy pretty well but the Western market is an absolutely different thing, because their shareholders think in decades when they make decisions on investments”, says Andrey Savelyev, CEO of Greenway holding company.
On the other hand, Mr Savelyev draws attention to the excessive red tape which appears when many questions are discussed, for example in Finland. It is one of the main problems. “To organise transportation, one should apply to a company that has been in transportation over two years. That is why a lot of logistics enterprises often depend on the terms set by Finnish authorities. And they have to adopt to the fast-changing conditions of national legislation. Several years ago, a licence for a logistics terminal similar to ours, cost EUR 50,000. Last year, our company paid much more for opening such a warehouse”, he claims.
Another difficulty mentioned by experts is that the USA and the EU markets are well-structured and competition is tough. “Nobody waits for Russian companies there. The main difficulty for them is to find their place in the market and to create an efficient development strategy”, emphasises Mr Belov. As a result, most companies provide cargo delivery services to and from Russia. Fully-fledged development and provision of a full pack of services is possible if national structures merge with foreign ones, and this may help the company to enter the market. “We understand it is very difficult to compete in the local market overcrowded by providers of standard logistics services, so we do not consider it our target. When our company opens its representative office abroad, the main goals are promotion of services we provide in Russia and the CIS in the local market”, states Natalya Titova, Director of STS Logistics representative office in the Netherlands. In her opinion, logistics and customs services in Russia and the CIS are still a separate “niche” in the foreign markets, since the post-Soviet region is considered rather complicated for business due to underdeveloped transport infrastructure, customs rules, red tape and commercial crime. Meanwhile, most producing, trade and logistics companies understand the prospects for the market and are eager to enter it. “And here they need the help of specialists such as us. We understand what they need and how to do it. So, we often become “a guide” in the Russian market. In other words, it is possible to say that we take additional business to our Russian offices, and this is our main value”, emphasises Mrs Titova.
Do Russians and Europeans Differ?
Companies admit that staff recruiting is one of the main problems. On the one hand, the opinion that managers from Russia differ from more careful and demanding Europeans is not true any longer. “In the Russian economy there have appeared managers whose professionalism meets European standards. That is why, lately, the style of doing business by Russian and foreign companies is becoming more and more similar. Nowadays, we work in Europe actively enough, and I do not think it is absolutely different there with another special style”, notes Mr Savelyev.
On the other hand, it is simpler to deal with European companies, because every business environment has some definite norms and rules of doing business, which are to be followed.
“For example, fulfilment of agreements and promises, less risk of not being paid for the work executed, the level of communication and staff professionalism. The company’s employees are focused at fulfilling the client’s demands. Naturally, there may be some exceptions and difficulties, but on the whole the business environment is much smoother there than in Russia”, explains Mrs Titova. In her words, another advantage of working in a European office is less stress than in Russian companies.
Meanwhile, even those that believe European employees are much more responsible note that people from Russia and the CIS work more efficiently in representative offices. That may be explained by several factors: when they worked in Russia, they got used to a more compressed timetable and pace of work as well as to stricter requirements from the management. “Besides, constantly dealing with clients in Russia and the headquarters, the lack of a language barrier becomes very important. Such employees better understand the peculiarities of doing business, operative work and record-keeping and correspondence is easier. However, it is not easy to find an employee that suits the company, even though there are a lot of Russian-speaking people in European countries. To work in our company they must have some definite experience and knowledge, and there are few such people in the labour-market”, says Mrs Titova. A lot of European companies are, unsurprisingly, developing their business actively in Russia, so there is a high demand for qualified staff familiar with the peculiarities of doing business in Russia and speaking Russian.
Changing Waymarks
A number of experts believe that a representative office in another country is created as a matter of course, or for reputation or money receipt optimisation. But practice shows that unprofitable presentation disappears, and a division operating outside Russia aims to bring profits.
“Successful functioning of an office always covers all expenses that arise if a company does business in a foreign country. As for a logistic delivery chain, today transportation via Finnish ports becomes more and more attractive for Russian cargoes. And from Finland the freight is carried to the customs office in Saint Petersburg or Moscow –depending on the logistics scheme chosen by the client. The containers arriving at the port of Saint Petersburg may be kept in a terminal for over a week until customs clearance is held. A lot of clients are unhappy about such terms, and that is why our logistics terminal in Finland is loaded to capacity, since cargo is registered much faster there”, states Mr Savelyev.
And experts from IFK “ALT” agree with him. “As far as I know the reputation function of a representative office is not critical. It must generate profit and be included in the process of providing services. For example, a lot of Russian companies have representative offices in the Baltic States. It is connected by the similarity of culture and mentality, a lower cost of transportation, and the fact that the Baltic States are members of the EU. Such offices make business more efficient”, confirms Mr Belov. Moreover, specialists of STS Logistics say that they have had a representative office in the Netherlands since 2004, and, from the very beginning, it has been profitable. “Nowadays, the representative office also makes profit for the whole holding company and is one of the top ten affiliates according to profitability”, explains Mrs Titova.
Resume:
Much Space to Work
Summing up, it is worth noting that the experts were unanimous that the number of Russian companies opening affiliates and offices abroad will grow. Experts from Greenway are sure that the activity has good prospects for holding companies. “A company organising representative offices in another country can control its business there, gain business information, and form the logistics chain”, says Mr Savelyev. On the other hand, the analysts from IKF “ALT” forecast that there will be expansion outside the Russian market, and local players will merge to enlarge their businesses.
By Maria Shevchenko
[~DETAIL_TEXT] => Affiliate: All Eyes and Ears… and Cash Office
In the RF, economy’s development enlarged the amount of foreign economic activities of Russian companies as well as growing the volume of the logistics services market. The increase in import and export of goods led to better control over the quality of services provided at foreign trade operations. Large Russian transport companies faced the necessity of a constant presence to control the work in European capitals. In particular, strict control may be necessary if a company provides organisationally complicated services, for example, delivery of LCL cargoes.
A number of companies decided it was necessary for them to create their own representative offices, which would coordinate goods transportation and cover other important issues. “The efficiency of a logistics company’s representative office is defined by the type of its business first of all, by the range of services provided. For the companies specialising in intermodal and multimodal transportation, a representative office is very important. It cannot just organise and control transportation, it must also fulfil sale and promoting functions in a region, if it is strategically important for business development”, claims Artyom Belov, Deputy Director of consulting company IKF (Research and Consulting Firm) “ALT”. In his opinion, an office abroad may be used as a platform for the company’s entry to the country. “For example, some companies used to open offices in India and China to research and promote company services in those markets. The representative offices fulfilled the marketing function”, he says. Once the research is over, such a “project” office must either turn into a representative office or be closed if the future does not seem promising.
Offices are also important for logistic companies providing 3PL services in the transport market. But there are factors that prevent representative offices from opening in foreign states. “In particular, there are few companies providing 3PL services in Russia. As for those claiming they provide them, the share of 3PL services is not more than 10-20%, in fact. There is another limitation: few Russian producers export their goods. As a result, there is not a sufficient market for the companies to develop abroad”, according to Mr Belov.
Russian Guide for the European
Every representative office in a foreign country has its own peculiarities and sometimes faces difficulties. “Western companies have a clear vision of the measures to take in this or that situation and they know what the consequences will be in the long term. But Russian companies are just learning it. They know the Russian economy pretty well but the Western market is an absolutely different thing, because their shareholders think in decades when they make decisions on investments”, says Andrey Savelyev, CEO of Greenway holding company.
On the other hand, Mr Savelyev draws attention to the excessive red tape which appears when many questions are discussed, for example in Finland. It is one of the main problems. “To organise transportation, one should apply to a company that has been in transportation over two years. That is why a lot of logistics enterprises often depend on the terms set by Finnish authorities. And they have to adopt to the fast-changing conditions of national legislation. Several years ago, a licence for a logistics terminal similar to ours, cost EUR 50,000. Last year, our company paid much more for opening such a warehouse”, he claims.
Another difficulty mentioned by experts is that the USA and the EU markets are well-structured and competition is tough. “Nobody waits for Russian companies there. The main difficulty for them is to find their place in the market and to create an efficient development strategy”, emphasises Mr Belov. As a result, most companies provide cargo delivery services to and from Russia. Fully-fledged development and provision of a full pack of services is possible if national structures merge with foreign ones, and this may help the company to enter the market. “We understand it is very difficult to compete in the local market overcrowded by providers of standard logistics services, so we do not consider it our target. When our company opens its representative office abroad, the main goals are promotion of services we provide in Russia and the CIS in the local market”, states Natalya Titova, Director of STS Logistics representative office in the Netherlands. In her opinion, logistics and customs services in Russia and the CIS are still a separate “niche” in the foreign markets, since the post-Soviet region is considered rather complicated for business due to underdeveloped transport infrastructure, customs rules, red tape and commercial crime. Meanwhile, most producing, trade and logistics companies understand the prospects for the market and are eager to enter it. “And here they need the help of specialists such as us. We understand what they need and how to do it. So, we often become “a guide” in the Russian market. In other words, it is possible to say that we take additional business to our Russian offices, and this is our main value”, emphasises Mrs Titova.
Do Russians and Europeans Differ?
Companies admit that staff recruiting is one of the main problems. On the one hand, the opinion that managers from Russia differ from more careful and demanding Europeans is not true any longer. “In the Russian economy there have appeared managers whose professionalism meets European standards. That is why, lately, the style of doing business by Russian and foreign companies is becoming more and more similar. Nowadays, we work in Europe actively enough, and I do not think it is absolutely different there with another special style”, notes Mr Savelyev.
On the other hand, it is simpler to deal with European companies, because every business environment has some definite norms and rules of doing business, which are to be followed.
“For example, fulfilment of agreements and promises, less risk of not being paid for the work executed, the level of communication and staff professionalism. The company’s employees are focused at fulfilling the client’s demands. Naturally, there may be some exceptions and difficulties, but on the whole the business environment is much smoother there than in Russia”, explains Mrs Titova. In her words, another advantage of working in a European office is less stress than in Russian companies.
Meanwhile, even those that believe European employees are much more responsible note that people from Russia and the CIS work more efficiently in representative offices. That may be explained by several factors: when they worked in Russia, they got used to a more compressed timetable and pace of work as well as to stricter requirements from the management. “Besides, constantly dealing with clients in Russia and the headquarters, the lack of a language barrier becomes very important. Such employees better understand the peculiarities of doing business, operative work and record-keeping and correspondence is easier. However, it is not easy to find an employee that suits the company, even though there are a lot of Russian-speaking people in European countries. To work in our company they must have some definite experience and knowledge, and there are few such people in the labour-market”, says Mrs Titova. A lot of European companies are, unsurprisingly, developing their business actively in Russia, so there is a high demand for qualified staff familiar with the peculiarities of doing business in Russia and speaking Russian.
Changing Waymarks
A number of experts believe that a representative office in another country is created as a matter of course, or for reputation or money receipt optimisation. But practice shows that unprofitable presentation disappears, and a division operating outside Russia aims to bring profits.
“Successful functioning of an office always covers all expenses that arise if a company does business in a foreign country. As for a logistic delivery chain, today transportation via Finnish ports becomes more and more attractive for Russian cargoes. And from Finland the freight is carried to the customs office in Saint Petersburg or Moscow –depending on the logistics scheme chosen by the client. The containers arriving at the port of Saint Petersburg may be kept in a terminal for over a week until customs clearance is held. A lot of clients are unhappy about such terms, and that is why our logistics terminal in Finland is loaded to capacity, since cargo is registered much faster there”, states Mr Savelyev.
And experts from IFK “ALT” agree with him. “As far as I know the reputation function of a representative office is not critical. It must generate profit and be included in the process of providing services. For example, a lot of Russian companies have representative offices in the Baltic States. It is connected by the similarity of culture and mentality, a lower cost of transportation, and the fact that the Baltic States are members of the EU. Such offices make business more efficient”, confirms Mr Belov. Moreover, specialists of STS Logistics say that they have had a representative office in the Netherlands since 2004, and, from the very beginning, it has been profitable. “Nowadays, the representative office also makes profit for the whole holding company and is one of the top ten affiliates according to profitability”, explains Mrs Titova.
Resume:
Much Space to Work
Summing up, it is worth noting that the experts were unanimous that the number of Russian companies opening affiliates and offices abroad will grow. Experts from Greenway are sure that the activity has good prospects for holding companies. “A company organising representative offices in another country can control its business there, gain business information, and form the logistics chain”, says Mr Savelyev. On the other hand, the analysts from IKF “ALT” forecast that there will be expansion outside the Russian market, and local players will merge to enlarge their businesses.
By Maria Shevchenko
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Serious reform is going on in the Russian transport sector, and its target is liberalisation. The RZD-Partner International asked Igor Levitin, Russian Minister of Transport, to comment on his vision of the reform.Array
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[DETAIL_TEXT] => Difficulties and Priorities
– Mr Levitin, only a liberal-minded person can remove monopolies from the sector. How did it happen that you became a marked-oriented man?
– It was very difficult for me to get used to the idea that the Russian economy is to become a market-based one, because earlier our life were completely different – Gosplan (State Planning Committee in the USSR), Gossnab (State Committee for Material Technical Supply in the Soviet Union), fulfilling a five-year plan, etc. We just had no idea that there may be other parameters of economy and a completely different level of services. When I went into business, I told myself that the transport business must not develop as it did so in the 1990s. Transport differs from other industries, for example, from the oil-extracting industry, or metallurgy, or timber processing. There must be a just state infrastructure, regulated by the state alone. And businesses must have an equal access to the infrastructure. Unfortunately, some mistakes were made in the 1990s. As a result aviation, shipping companies, etc. suffered a crisis. However, railwaymen did not rush to become market players all at once, and that allowed the sector to keep going. On the other hand, why is railway transport passing through a rather complicated stage of reform now? Why is it more difficult? Since the economy has developed significantly, the monopoly sector is to be actively restructured to bring it closer to a market one. On the whole, practice and the knowledge from international experience has helped me to study the market’s relations. I travelled a lot when I worked for business and I saw how transport develops in other countries.
– Was it difficult for you to interact with OAO RZD?
– It was their misfortune that I am a railwayman. So is Deputy Transport Minister Alexander Misharin. And Deputy Transport Minister Sergey Aristov also used to work for OAO RZD. So, it is difficult for the company to arrange things with us, consequently, there arise some debates. But it would be even worse if we managed to find a common language all of a sudden. Our constant discussions are for the welfare of the consumer, of the people. It was impossible to agree with all the conditions offered by the company during all these years! It is not that OAO RZD is being reformed for its own good! The Government does it for the benefit of all market players. That why my opinion is that we are moving along the planned route, though slower than we were doing it in 2003.
– What decisions were most difficult for you? Personally I suppose that it was the target model of the railway transport services market, since your first idea had been much more radical than the one adopted.
– You are right. It was the most difficult decision. In fact, the target model made us stop. Stop to think thoroughly once again. At some stage we started to understand differently the way we were moving along during the reform. The company had one vision and we another.
The target model allowed us to develop in three years the issues offered by each party. I believe it was good for the economy that we stopped instead of working on any radical variant. The creation of the First Cargo Company was also rather difficult. I understood pretty well that the key is not the new company or the locomotive constituent of the tariff but the management of OAO RZD. We see today that OAO Russian Railways is not ready to fulfil its responsibilities to provide infrastructure but it wants to go in to business as any other private company. So, the target model will provide us with a period of time when the First Cargo Company will show the management of OAO RZD that the railway is primarily infrastructure and technical condition. Business is the issue of an operating company separated from OAO RZD.
That is why I am grateful to the Government for its support that, according to the model, it is not the only company. Do you remember, there was a suggestion to give 500,000 wagons to one daughter company? Then, there would have been just one more monopolist. Today, the work of the First Cargo Company proves that three or even four companies were to be made at that time. We understand that it is rather hard for business to compete with the launched cargo company even while it operates tens of thousands of wagons. And if it had almost the whole inventory park, we could fail on the road to creating competition. So, I think that the target model was a difficult decision, but it was reasonable.
– Do you think that separation of the Second Cargo Company must not be postponed?
– We consider we must weigh all pros and cons. Perhaps, it should not be separated at all, and the rolling stock owned by OAO RZD should be sold. Maybe, the larger part of it should be given to the market and the rest left as security.
– Then the phenomenon of a carrier without wagons would appear. The old legislative base stood in the way of reform, preventing creation of an efficient market in the sector wherever possible. What is your vision of the situation and of developing new laws?
– The target model really contradicts the acting normative and legislative base. According to the law “On the Railway Transport in the RF”, there must be a lot of carriers in Russia. But OAO RZD does not want them to have locomotives. That is why it was decided to postpone the creation of private carriers until the end of the third stage of the reform, and to form a market in rolling stock and private train unit operators. It seems to me that, in future, there will be private transporters managing locomotives in Russia. And it is not important who will own the locomotives – a transporter, a leasing company, or a subsidiary of OAO RZD. But OAO Russian Railways must become an infrastructure company. And perhaps by 2010 we will get close to launching a single infrastructure company based on OAO RZD. The experience of the First Cargo Company is to show us whether such a variant is reasonable.
– So, the infrastructure and transport functions of OAO RZD will be separated off in the near future?
– We are striving for such separation, although very carefully.
Russian Style
– I want to ask about the law on transit initiated by you in 2005. Your initiative was not supported at the time…
– It will be a long process, as usually happens in Russia. But the initiative was not abandoned. Moreover, we asked transport associations, in particular the Association of Russian Forwarders, to participate in development of the law. Recently, Valery Aliseychik, the President of the Association of Russian Forwarders, and I discussed the development of the draft law, and I think, it will be adopted. This law is very important. And its role will grow immensely after the customs union of Russia, Byelorussia and Kazakhstan is created. As soon as it starts work, they will come to us – as transporters – and say, “Come on!”
– Is drafting new railway laws so hard?
– Yes, very hard. We cannot come to agreement on many issues with businesses and OAO RZD. Security ministries also have some criticism. We will do our best to keep to the planned term but one should understand that amendments are rarely put to the law “On Railway Transport in the RF” and the Code. And we want to do no harm to the country’s economy.
– When authorities try to please everyone when developing new laws, such laws do not work properly, i.e. they do not create conditions for normal money-raising. Should the political will be strengthened to cover the issues of removing transport monopolies and creating liberalisation, in your opinion?
– One should understand in what terrible condition Russian economy used to be. If I were Transport Minister in Germany, France, or Great Britain, I would say, “It is the market, so this must be done. And you, the transport market player, will do this because you have experience with transport companies, partners, the legislative base, good credit, etc.” But Russian transport companies are in a different situation. As far as I understand, single-hull tankers must be prohibited now. But then this type of transportation will stop and fuel will not be delivered to a number of Russian regions. Why? Because the business has no opportunity to put its vessels in order. Firstly, there is no place to build them, and secondly, they have no money. The same thing goes for planes and airports, etc. So, a man occupying such a post as mine must take responsibility and compromise: we must reform the sector and manage to make a living at the same time. It would be easier to say, “stop flying, stop going by train, stop sailing…”, and close the Ministry… then everything would be calm and safe.
– Developing long-term strategies to 2030 is all the rage today. Don’t you think that, under the market economy conditions, such a term is too long for such directive planning?
– Thank you for a good question. We do not sew fashionable clothes, we construct infrastructure, the backbone of the economy, the basis for everything else. And if we do not say where we want to build roads, ports and aerodromes and fail to reserve land for them in the forecast to 2030, people will soon occupy the territory. We will come there with our projects, and they will say, “We understand that road is necessary here. But where were you earlier, for example in 2008, when the land was not inventoried?” So, we consider that there must be long-term plans for such sectors as energy and transport. Moreover, if there are no plans for transport and power infrastructure, the social and economic development of the country can hardly be planned. We can write anything we like but nothing would be realised. Usually, four years pass from the moment when the decision on an infrastructure object’s construction is made to the beginning of construction. In this time we build nothing, we arrange things, reserve the territory, design, and then start working. For example, we have not started to build the toll road yet but we have been discussing the project for three years already. So, until 2015, we will discuss the project, then we will begin the construction, and something will have been built by 2025. And then the year of 2030 will come some. I.e. there is little time for construction. Much more time will be spent getting the documents approved in different departments and ministries.
Red Tape Is the Main Problem
– You have mentioned toll roads. That was your initiative three years ago. You must be dissatisfied with how it is being carried out.
– Of course I am not satisfied. In 2005, I thought it would be carried out much faster. But then there was no law on concessions. And we must be grateful to German Gref, former Minister of Economic Development and Trade that he supported the law, though at first he was against it. At that time, he considered there was everything needed for toll road construction in the legislation. But when we persuaded him, he supported the law. Why am I in such a hurry to carry out the project of toll roads? Because, until we build the first samples, no calls to use new investment instruments in the sector will bear fruit. It is necessary that people start to use the roads, and then, I am sure, toll roads will be popular is Russia as they are throughout the whole world. But I could not predict that it would take so much time.
– What troubles does it face today?
– Red tape. We have to adjust every detail. I.e. what mistake was made when the decree on the Investment Fund was written? It was not to be formed in the framework of the Budget Code. It must have a completely different structure. And we suggested that, after the Government decides on an object’s construction, money from the Ministry of Finance should go to an account in Vnesheconombank. We continue to insist on this mechanism. The business must see that the means are not in the Treasury, from where they can hardly be taken, but the money is in the bank, and a private investor can put his part into the bank and start construction. But the process is slowed down because of the Budget Code. I hope, in future we will succeed in convincing all parties in charge that we are right. But today the situation remains.
– Is the construction of the high-speed railway Moscow – Saint Petersburg postponed for similar reasons?
– Yes, it is.
– It was also your initiative to bring the project of high-speed railway to life instead of changing the acting line of the Oktyabrskaya railway (the October railway) for usage that was not very clear.
– I am sure that Russia has only one future path – construction of high-speed railways. We must provide the opportunity for people to go by express trains in the day time, instead of languishing in compartments at nights. Trains must run in the day time, otherwise going by plane seems more reasonable.
– What is your attitude to the process of developing transport business self-regulation in Russia? A proper law has already been adopted, but railway associations are suspicious of it.
– And I offer business the opportunity to launch self-regulated organisations. Today it is important that they hold voluntary certification of all companies. So, everyone knows that this company got a certificate on a voluntary basis. I believe, a serious self-regulated organisation must be launched in the railway sector, and a part of our functions must be given to it. But the members of this organisation are to be independent professionals, who worry about the sector as much as the President of OAO RZD or the Minister of Transport. As far as I know, some results have already been achieved.
– Do you mean that the daughter companies of OAO RZD should become members of the organisation?
– Yes, I do. They must do it to speak with their partners and competitors using the same language. They must be equal to the rest. There must be no “umbilical cord” drawing them to the mother company and feeding them with what it will never feed an independent company.
Biography
Igor Levitin
Was born on February 21, 1952, in Odessa region (Tsebrikovo settlement). In 1973, he graduated from the military college of railways and communication in Leningrad. In 1983, he graduated from the Military Academy of rear services and transport as transport engineer. In 1970, he joined the USSR armed forces. From 1973 to 1976, he served in Odessa military district at Transdnestrian railway. From 1976 to 1980, he served in the Southern troops. From 1983 to 1985, he held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). He participated in “Golden Link” joining. From 1985 to 1994, he held the post of Railway Transportation Officer at Moscowskaya railway, and later took the post of Deputy Head of military communication. From 1996 to 2004, he worked for ZAO Severstaltrans and, in 1998, took the post of Deputy General Director of the company. He was responsible for the transport engineering, railway transportation and sea commercial ports sector. He was a member of the Public Committee under the Government Commission on railway transport reform.
On March 9, 2004, he was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 he was appointed the RF Minister of Transport.
He is married and has a daughter.
by Andrey Guryev
[~DETAIL_TEXT] => Difficulties and Priorities
– Mr Levitin, only a liberal-minded person can remove monopolies from the sector. How did it happen that you became a marked-oriented man?
– It was very difficult for me to get used to the idea that the Russian economy is to become a market-based one, because earlier our life were completely different – Gosplan (State Planning Committee in the USSR), Gossnab (State Committee for Material Technical Supply in the Soviet Union), fulfilling a five-year plan, etc. We just had no idea that there may be other parameters of economy and a completely different level of services. When I went into business, I told myself that the transport business must not develop as it did so in the 1990s. Transport differs from other industries, for example, from the oil-extracting industry, or metallurgy, or timber processing. There must be a just state infrastructure, regulated by the state alone. And businesses must have an equal access to the infrastructure. Unfortunately, some mistakes were made in the 1990s. As a result aviation, shipping companies, etc. suffered a crisis. However, railwaymen did not rush to become market players all at once, and that allowed the sector to keep going. On the other hand, why is railway transport passing through a rather complicated stage of reform now? Why is it more difficult? Since the economy has developed significantly, the monopoly sector is to be actively restructured to bring it closer to a market one. On the whole, practice and the knowledge from international experience has helped me to study the market’s relations. I travelled a lot when I worked for business and I saw how transport develops in other countries.
– Was it difficult for you to interact with OAO RZD?
– It was their misfortune that I am a railwayman. So is Deputy Transport Minister Alexander Misharin. And Deputy Transport Minister Sergey Aristov also used to work for OAO RZD. So, it is difficult for the company to arrange things with us, consequently, there arise some debates. But it would be even worse if we managed to find a common language all of a sudden. Our constant discussions are for the welfare of the consumer, of the people. It was impossible to agree with all the conditions offered by the company during all these years! It is not that OAO RZD is being reformed for its own good! The Government does it for the benefit of all market players. That why my opinion is that we are moving along the planned route, though slower than we were doing it in 2003.
– What decisions were most difficult for you? Personally I suppose that it was the target model of the railway transport services market, since your first idea had been much more radical than the one adopted.
– You are right. It was the most difficult decision. In fact, the target model made us stop. Stop to think thoroughly once again. At some stage we started to understand differently the way we were moving along during the reform. The company had one vision and we another.
The target model allowed us to develop in three years the issues offered by each party. I believe it was good for the economy that we stopped instead of working on any radical variant. The creation of the First Cargo Company was also rather difficult. I understood pretty well that the key is not the new company or the locomotive constituent of the tariff but the management of OAO RZD. We see today that OAO Russian Railways is not ready to fulfil its responsibilities to provide infrastructure but it wants to go in to business as any other private company. So, the target model will provide us with a period of time when the First Cargo Company will show the management of OAO RZD that the railway is primarily infrastructure and technical condition. Business is the issue of an operating company separated from OAO RZD.
That is why I am grateful to the Government for its support that, according to the model, it is not the only company. Do you remember, there was a suggestion to give 500,000 wagons to one daughter company? Then, there would have been just one more monopolist. Today, the work of the First Cargo Company proves that three or even four companies were to be made at that time. We understand that it is rather hard for business to compete with the launched cargo company even while it operates tens of thousands of wagons. And if it had almost the whole inventory park, we could fail on the road to creating competition. So, I think that the target model was a difficult decision, but it was reasonable.
– Do you think that separation of the Second Cargo Company must not be postponed?
– We consider we must weigh all pros and cons. Perhaps, it should not be separated at all, and the rolling stock owned by OAO RZD should be sold. Maybe, the larger part of it should be given to the market and the rest left as security.
– Then the phenomenon of a carrier without wagons would appear. The old legislative base stood in the way of reform, preventing creation of an efficient market in the sector wherever possible. What is your vision of the situation and of developing new laws?
– The target model really contradicts the acting normative and legislative base. According to the law “On the Railway Transport in the RF”, there must be a lot of carriers in Russia. But OAO RZD does not want them to have locomotives. That is why it was decided to postpone the creation of private carriers until the end of the third stage of the reform, and to form a market in rolling stock and private train unit operators. It seems to me that, in future, there will be private transporters managing locomotives in Russia. And it is not important who will own the locomotives – a transporter, a leasing company, or a subsidiary of OAO RZD. But OAO Russian Railways must become an infrastructure company. And perhaps by 2010 we will get close to launching a single infrastructure company based on OAO RZD. The experience of the First Cargo Company is to show us whether such a variant is reasonable.
– So, the infrastructure and transport functions of OAO RZD will be separated off in the near future?
– We are striving for such separation, although very carefully.
Russian Style
– I want to ask about the law on transit initiated by you in 2005. Your initiative was not supported at the time…
– It will be a long process, as usually happens in Russia. But the initiative was not abandoned. Moreover, we asked transport associations, in particular the Association of Russian Forwarders, to participate in development of the law. Recently, Valery Aliseychik, the President of the Association of Russian Forwarders, and I discussed the development of the draft law, and I think, it will be adopted. This law is very important. And its role will grow immensely after the customs union of Russia, Byelorussia and Kazakhstan is created. As soon as it starts work, they will come to us – as transporters – and say, “Come on!”
– Is drafting new railway laws so hard?
– Yes, very hard. We cannot come to agreement on many issues with businesses and OAO RZD. Security ministries also have some criticism. We will do our best to keep to the planned term but one should understand that amendments are rarely put to the law “On Railway Transport in the RF” and the Code. And we want to do no harm to the country’s economy.
– When authorities try to please everyone when developing new laws, such laws do not work properly, i.e. they do not create conditions for normal money-raising. Should the political will be strengthened to cover the issues of removing transport monopolies and creating liberalisation, in your opinion?
– One should understand in what terrible condition Russian economy used to be. If I were Transport Minister in Germany, France, or Great Britain, I would say, “It is the market, so this must be done. And you, the transport market player, will do this because you have experience with transport companies, partners, the legislative base, good credit, etc.” But Russian transport companies are in a different situation. As far as I understand, single-hull tankers must be prohibited now. But then this type of transportation will stop and fuel will not be delivered to a number of Russian regions. Why? Because the business has no opportunity to put its vessels in order. Firstly, there is no place to build them, and secondly, they have no money. The same thing goes for planes and airports, etc. So, a man occupying such a post as mine must take responsibility and compromise: we must reform the sector and manage to make a living at the same time. It would be easier to say, “stop flying, stop going by train, stop sailing…”, and close the Ministry… then everything would be calm and safe.
– Developing long-term strategies to 2030 is all the rage today. Don’t you think that, under the market economy conditions, such a term is too long for such directive planning?
– Thank you for a good question. We do not sew fashionable clothes, we construct infrastructure, the backbone of the economy, the basis for everything else. And if we do not say where we want to build roads, ports and aerodromes and fail to reserve land for them in the forecast to 2030, people will soon occupy the territory. We will come there with our projects, and they will say, “We understand that road is necessary here. But where were you earlier, for example in 2008, when the land was not inventoried?” So, we consider that there must be long-term plans for such sectors as energy and transport. Moreover, if there are no plans for transport and power infrastructure, the social and economic development of the country can hardly be planned. We can write anything we like but nothing would be realised. Usually, four years pass from the moment when the decision on an infrastructure object’s construction is made to the beginning of construction. In this time we build nothing, we arrange things, reserve the territory, design, and then start working. For example, we have not started to build the toll road yet but we have been discussing the project for three years already. So, until 2015, we will discuss the project, then we will begin the construction, and something will have been built by 2025. And then the year of 2030 will come some. I.e. there is little time for construction. Much more time will be spent getting the documents approved in different departments and ministries.
Red Tape Is the Main Problem
– You have mentioned toll roads. That was your initiative three years ago. You must be dissatisfied with how it is being carried out.
– Of course I am not satisfied. In 2005, I thought it would be carried out much faster. But then there was no law on concessions. And we must be grateful to German Gref, former Minister of Economic Development and Trade that he supported the law, though at first he was against it. At that time, he considered there was everything needed for toll road construction in the legislation. But when we persuaded him, he supported the law. Why am I in such a hurry to carry out the project of toll roads? Because, until we build the first samples, no calls to use new investment instruments in the sector will bear fruit. It is necessary that people start to use the roads, and then, I am sure, toll roads will be popular is Russia as they are throughout the whole world. But I could not predict that it would take so much time.
– What troubles does it face today?
– Red tape. We have to adjust every detail. I.e. what mistake was made when the decree on the Investment Fund was written? It was not to be formed in the framework of the Budget Code. It must have a completely different structure. And we suggested that, after the Government decides on an object’s construction, money from the Ministry of Finance should go to an account in Vnesheconombank. We continue to insist on this mechanism. The business must see that the means are not in the Treasury, from where they can hardly be taken, but the money is in the bank, and a private investor can put his part into the bank and start construction. But the process is slowed down because of the Budget Code. I hope, in future we will succeed in convincing all parties in charge that we are right. But today the situation remains.
– Is the construction of the high-speed railway Moscow – Saint Petersburg postponed for similar reasons?
– Yes, it is.
– It was also your initiative to bring the project of high-speed railway to life instead of changing the acting line of the Oktyabrskaya railway (the October railway) for usage that was not very clear.
– I am sure that Russia has only one future path – construction of high-speed railways. We must provide the opportunity for people to go by express trains in the day time, instead of languishing in compartments at nights. Trains must run in the day time, otherwise going by plane seems more reasonable.
– What is your attitude to the process of developing transport business self-regulation in Russia? A proper law has already been adopted, but railway associations are suspicious of it.
– And I offer business the opportunity to launch self-regulated organisations. Today it is important that they hold voluntary certification of all companies. So, everyone knows that this company got a certificate on a voluntary basis. I believe, a serious self-regulated organisation must be launched in the railway sector, and a part of our functions must be given to it. But the members of this organisation are to be independent professionals, who worry about the sector as much as the President of OAO RZD or the Minister of Transport. As far as I know, some results have already been achieved.
– Do you mean that the daughter companies of OAO RZD should become members of the organisation?
– Yes, I do. They must do it to speak with their partners and competitors using the same language. They must be equal to the rest. There must be no “umbilical cord” drawing them to the mother company and feeding them with what it will never feed an independent company.
Biography
Igor Levitin
Was born on February 21, 1952, in Odessa region (Tsebrikovo settlement). In 1973, he graduated from the military college of railways and communication in Leningrad. In 1983, he graduated from the Military Academy of rear services and transport as transport engineer. In 1970, he joined the USSR armed forces. From 1973 to 1976, he served in Odessa military district at Transdnestrian railway. From 1976 to 1980, he served in the Southern troops. From 1983 to 1985, he held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). He participated in “Golden Link” joining. From 1985 to 1994, he held the post of Railway Transportation Officer at Moscowskaya railway, and later took the post of Deputy Head of military communication. From 1996 to 2004, he worked for ZAO Severstaltrans and, in 1998, took the post of Deputy General Director of the company. He was responsible for the transport engineering, railway transportation and sea commercial ports sector. He was a member of the Public Committee under the Government Commission on railway transport reform.
On March 9, 2004, he was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 he was appointed the RF Minister of Transport.
He is married and has a daughter.
by Andrey Guryev
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[DETAIL_TEXT] => Difficulties and Priorities
– Mr Levitin, only a liberal-minded person can remove monopolies from the sector. How did it happen that you became a marked-oriented man?
– It was very difficult for me to get used to the idea that the Russian economy is to become a market-based one, because earlier our life were completely different – Gosplan (State Planning Committee in the USSR), Gossnab (State Committee for Material Technical Supply in the Soviet Union), fulfilling a five-year plan, etc. We just had no idea that there may be other parameters of economy and a completely different level of services. When I went into business, I told myself that the transport business must not develop as it did so in the 1990s. Transport differs from other industries, for example, from the oil-extracting industry, or metallurgy, or timber processing. There must be a just state infrastructure, regulated by the state alone. And businesses must have an equal access to the infrastructure. Unfortunately, some mistakes were made in the 1990s. As a result aviation, shipping companies, etc. suffered a crisis. However, railwaymen did not rush to become market players all at once, and that allowed the sector to keep going. On the other hand, why is railway transport passing through a rather complicated stage of reform now? Why is it more difficult? Since the economy has developed significantly, the monopoly sector is to be actively restructured to bring it closer to a market one. On the whole, practice and the knowledge from international experience has helped me to study the market’s relations. I travelled a lot when I worked for business and I saw how transport develops in other countries.
– Was it difficult for you to interact with OAO RZD?
– It was their misfortune that I am a railwayman. So is Deputy Transport Minister Alexander Misharin. And Deputy Transport Minister Sergey Aristov also used to work for OAO RZD. So, it is difficult for the company to arrange things with us, consequently, there arise some debates. But it would be even worse if we managed to find a common language all of a sudden. Our constant discussions are for the welfare of the consumer, of the people. It was impossible to agree with all the conditions offered by the company during all these years! It is not that OAO RZD is being reformed for its own good! The Government does it for the benefit of all market players. That why my opinion is that we are moving along the planned route, though slower than we were doing it in 2003.
– What decisions were most difficult for you? Personally I suppose that it was the target model of the railway transport services market, since your first idea had been much more radical than the one adopted.
– You are right. It was the most difficult decision. In fact, the target model made us stop. Stop to think thoroughly once again. At some stage we started to understand differently the way we were moving along during the reform. The company had one vision and we another.
The target model allowed us to develop in three years the issues offered by each party. I believe it was good for the economy that we stopped instead of working on any radical variant. The creation of the First Cargo Company was also rather difficult. I understood pretty well that the key is not the new company or the locomotive constituent of the tariff but the management of OAO RZD. We see today that OAO Russian Railways is not ready to fulfil its responsibilities to provide infrastructure but it wants to go in to business as any other private company. So, the target model will provide us with a period of time when the First Cargo Company will show the management of OAO RZD that the railway is primarily infrastructure and technical condition. Business is the issue of an operating company separated from OAO RZD.
That is why I am grateful to the Government for its support that, according to the model, it is not the only company. Do you remember, there was a suggestion to give 500,000 wagons to one daughter company? Then, there would have been just one more monopolist. Today, the work of the First Cargo Company proves that three or even four companies were to be made at that time. We understand that it is rather hard for business to compete with the launched cargo company even while it operates tens of thousands of wagons. And if it had almost the whole inventory park, we could fail on the road to creating competition. So, I think that the target model was a difficult decision, but it was reasonable.
– Do you think that separation of the Second Cargo Company must not be postponed?
– We consider we must weigh all pros and cons. Perhaps, it should not be separated at all, and the rolling stock owned by OAO RZD should be sold. Maybe, the larger part of it should be given to the market and the rest left as security.
– Then the phenomenon of a carrier without wagons would appear. The old legislative base stood in the way of reform, preventing creation of an efficient market in the sector wherever possible. What is your vision of the situation and of developing new laws?
– The target model really contradicts the acting normative and legislative base. According to the law “On the Railway Transport in the RF”, there must be a lot of carriers in Russia. But OAO RZD does not want them to have locomotives. That is why it was decided to postpone the creation of private carriers until the end of the third stage of the reform, and to form a market in rolling stock and private train unit operators. It seems to me that, in future, there will be private transporters managing locomotives in Russia. And it is not important who will own the locomotives – a transporter, a leasing company, or a subsidiary of OAO RZD. But OAO Russian Railways must become an infrastructure company. And perhaps by 2010 we will get close to launching a single infrastructure company based on OAO RZD. The experience of the First Cargo Company is to show us whether such a variant is reasonable.
– So, the infrastructure and transport functions of OAO RZD will be separated off in the near future?
– We are striving for such separation, although very carefully.
Russian Style
– I want to ask about the law on transit initiated by you in 2005. Your initiative was not supported at the time…
– It will be a long process, as usually happens in Russia. But the initiative was not abandoned. Moreover, we asked transport associations, in particular the Association of Russian Forwarders, to participate in development of the law. Recently, Valery Aliseychik, the President of the Association of Russian Forwarders, and I discussed the development of the draft law, and I think, it will be adopted. This law is very important. And its role will grow immensely after the customs union of Russia, Byelorussia and Kazakhstan is created. As soon as it starts work, they will come to us – as transporters – and say, “Come on!”
– Is drafting new railway laws so hard?
– Yes, very hard. We cannot come to agreement on many issues with businesses and OAO RZD. Security ministries also have some criticism. We will do our best to keep to the planned term but one should understand that amendments are rarely put to the law “On Railway Transport in the RF” and the Code. And we want to do no harm to the country’s economy.
– When authorities try to please everyone when developing new laws, such laws do not work properly, i.e. they do not create conditions for normal money-raising. Should the political will be strengthened to cover the issues of removing transport monopolies and creating liberalisation, in your opinion?
– One should understand in what terrible condition Russian economy used to be. If I were Transport Minister in Germany, France, or Great Britain, I would say, “It is the market, so this must be done. And you, the transport market player, will do this because you have experience with transport companies, partners, the legislative base, good credit, etc.” But Russian transport companies are in a different situation. As far as I understand, single-hull tankers must be prohibited now. But then this type of transportation will stop and fuel will not be delivered to a number of Russian regions. Why? Because the business has no opportunity to put its vessels in order. Firstly, there is no place to build them, and secondly, they have no money. The same thing goes for planes and airports, etc. So, a man occupying such a post as mine must take responsibility and compromise: we must reform the sector and manage to make a living at the same time. It would be easier to say, “stop flying, stop going by train, stop sailing…”, and close the Ministry… then everything would be calm and safe.
– Developing long-term strategies to 2030 is all the rage today. Don’t you think that, under the market economy conditions, such a term is too long for such directive planning?
– Thank you for a good question. We do not sew fashionable clothes, we construct infrastructure, the backbone of the economy, the basis for everything else. And if we do not say where we want to build roads, ports and aerodromes and fail to reserve land for them in the forecast to 2030, people will soon occupy the territory. We will come there with our projects, and they will say, “We understand that road is necessary here. But where were you earlier, for example in 2008, when the land was not inventoried?” So, we consider that there must be long-term plans for such sectors as energy and transport. Moreover, if there are no plans for transport and power infrastructure, the social and economic development of the country can hardly be planned. We can write anything we like but nothing would be realised. Usually, four years pass from the moment when the decision on an infrastructure object’s construction is made to the beginning of construction. In this time we build nothing, we arrange things, reserve the territory, design, and then start working. For example, we have not started to build the toll road yet but we have been discussing the project for three years already. So, until 2015, we will discuss the project, then we will begin the construction, and something will have been built by 2025. And then the year of 2030 will come some. I.e. there is little time for construction. Much more time will be spent getting the documents approved in different departments and ministries.
Red Tape Is the Main Problem
– You have mentioned toll roads. That was your initiative three years ago. You must be dissatisfied with how it is being carried out.
– Of course I am not satisfied. In 2005, I thought it would be carried out much faster. But then there was no law on concessions. And we must be grateful to German Gref, former Minister of Economic Development and Trade that he supported the law, though at first he was against it. At that time, he considered there was everything needed for toll road construction in the legislation. But when we persuaded him, he supported the law. Why am I in such a hurry to carry out the project of toll roads? Because, until we build the first samples, no calls to use new investment instruments in the sector will bear fruit. It is necessary that people start to use the roads, and then, I am sure, toll roads will be popular is Russia as they are throughout the whole world. But I could not predict that it would take so much time.
– What troubles does it face today?
– Red tape. We have to adjust every detail. I.e. what mistake was made when the decree on the Investment Fund was written? It was not to be formed in the framework of the Budget Code. It must have a completely different structure. And we suggested that, after the Government decides on an object’s construction, money from the Ministry of Finance should go to an account in Vnesheconombank. We continue to insist on this mechanism. The business must see that the means are not in the Treasury, from where they can hardly be taken, but the money is in the bank, and a private investor can put his part into the bank and start construction. But the process is slowed down because of the Budget Code. I hope, in future we will succeed in convincing all parties in charge that we are right. But today the situation remains.
– Is the construction of the high-speed railway Moscow – Saint Petersburg postponed for similar reasons?
– Yes, it is.
– It was also your initiative to bring the project of high-speed railway to life instead of changing the acting line of the Oktyabrskaya railway (the October railway) for usage that was not very clear.
– I am sure that Russia has only one future path – construction of high-speed railways. We must provide the opportunity for people to go by express trains in the day time, instead of languishing in compartments at nights. Trains must run in the day time, otherwise going by plane seems more reasonable.
– What is your attitude to the process of developing transport business self-regulation in Russia? A proper law has already been adopted, but railway associations are suspicious of it.
– And I offer business the opportunity to launch self-regulated organisations. Today it is important that they hold voluntary certification of all companies. So, everyone knows that this company got a certificate on a voluntary basis. I believe, a serious self-regulated organisation must be launched in the railway sector, and a part of our functions must be given to it. But the members of this organisation are to be independent professionals, who worry about the sector as much as the President of OAO RZD or the Minister of Transport. As far as I know, some results have already been achieved.
– Do you mean that the daughter companies of OAO RZD should become members of the organisation?
– Yes, I do. They must do it to speak with their partners and competitors using the same language. They must be equal to the rest. There must be no “umbilical cord” drawing them to the mother company and feeding them with what it will never feed an independent company.
Biography
Igor Levitin
Was born on February 21, 1952, in Odessa region (Tsebrikovo settlement). In 1973, he graduated from the military college of railways and communication in Leningrad. In 1983, he graduated from the Military Academy of rear services and transport as transport engineer. In 1970, he joined the USSR armed forces. From 1973 to 1976, he served in Odessa military district at Transdnestrian railway. From 1976 to 1980, he served in the Southern troops. From 1983 to 1985, he held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). He participated in “Golden Link” joining. From 1985 to 1994, he held the post of Railway Transportation Officer at Moscowskaya railway, and later took the post of Deputy Head of military communication. From 1996 to 2004, he worked for ZAO Severstaltrans and, in 1998, took the post of Deputy General Director of the company. He was responsible for the transport engineering, railway transportation and sea commercial ports sector. He was a member of the Public Committee under the Government Commission on railway transport reform.
On March 9, 2004, he was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 he was appointed the RF Minister of Transport.
He is married and has a daughter.
by Andrey Guryev
[~DETAIL_TEXT] => Difficulties and Priorities
– Mr Levitin, only a liberal-minded person can remove monopolies from the sector. How did it happen that you became a marked-oriented man?
– It was very difficult for me to get used to the idea that the Russian economy is to become a market-based one, because earlier our life were completely different – Gosplan (State Planning Committee in the USSR), Gossnab (State Committee for Material Technical Supply in the Soviet Union), fulfilling a five-year plan, etc. We just had no idea that there may be other parameters of economy and a completely different level of services. When I went into business, I told myself that the transport business must not develop as it did so in the 1990s. Transport differs from other industries, for example, from the oil-extracting industry, or metallurgy, or timber processing. There must be a just state infrastructure, regulated by the state alone. And businesses must have an equal access to the infrastructure. Unfortunately, some mistakes were made in the 1990s. As a result aviation, shipping companies, etc. suffered a crisis. However, railwaymen did not rush to become market players all at once, and that allowed the sector to keep going. On the other hand, why is railway transport passing through a rather complicated stage of reform now? Why is it more difficult? Since the economy has developed significantly, the monopoly sector is to be actively restructured to bring it closer to a market one. On the whole, practice and the knowledge from international experience has helped me to study the market’s relations. I travelled a lot when I worked for business and I saw how transport develops in other countries.
– Was it difficult for you to interact with OAO RZD?
– It was their misfortune that I am a railwayman. So is Deputy Transport Minister Alexander Misharin. And Deputy Transport Minister Sergey Aristov also used to work for OAO RZD. So, it is difficult for the company to arrange things with us, consequently, there arise some debates. But it would be even worse if we managed to find a common language all of a sudden. Our constant discussions are for the welfare of the consumer, of the people. It was impossible to agree with all the conditions offered by the company during all these years! It is not that OAO RZD is being reformed for its own good! The Government does it for the benefit of all market players. That why my opinion is that we are moving along the planned route, though slower than we were doing it in 2003.
– What decisions were most difficult for you? Personally I suppose that it was the target model of the railway transport services market, since your first idea had been much more radical than the one adopted.
– You are right. It was the most difficult decision. In fact, the target model made us stop. Stop to think thoroughly once again. At some stage we started to understand differently the way we were moving along during the reform. The company had one vision and we another.
The target model allowed us to develop in three years the issues offered by each party. I believe it was good for the economy that we stopped instead of working on any radical variant. The creation of the First Cargo Company was also rather difficult. I understood pretty well that the key is not the new company or the locomotive constituent of the tariff but the management of OAO RZD. We see today that OAO Russian Railways is not ready to fulfil its responsibilities to provide infrastructure but it wants to go in to business as any other private company. So, the target model will provide us with a period of time when the First Cargo Company will show the management of OAO RZD that the railway is primarily infrastructure and technical condition. Business is the issue of an operating company separated from OAO RZD.
That is why I am grateful to the Government for its support that, according to the model, it is not the only company. Do you remember, there was a suggestion to give 500,000 wagons to one daughter company? Then, there would have been just one more monopolist. Today, the work of the First Cargo Company proves that three or even four companies were to be made at that time. We understand that it is rather hard for business to compete with the launched cargo company even while it operates tens of thousands of wagons. And if it had almost the whole inventory park, we could fail on the road to creating competition. So, I think that the target model was a difficult decision, but it was reasonable.
– Do you think that separation of the Second Cargo Company must not be postponed?
– We consider we must weigh all pros and cons. Perhaps, it should not be separated at all, and the rolling stock owned by OAO RZD should be sold. Maybe, the larger part of it should be given to the market and the rest left as security.
– Then the phenomenon of a carrier without wagons would appear. The old legislative base stood in the way of reform, preventing creation of an efficient market in the sector wherever possible. What is your vision of the situation and of developing new laws?
– The target model really contradicts the acting normative and legislative base. According to the law “On the Railway Transport in the RF”, there must be a lot of carriers in Russia. But OAO RZD does not want them to have locomotives. That is why it was decided to postpone the creation of private carriers until the end of the third stage of the reform, and to form a market in rolling stock and private train unit operators. It seems to me that, in future, there will be private transporters managing locomotives in Russia. And it is not important who will own the locomotives – a transporter, a leasing company, or a subsidiary of OAO RZD. But OAO Russian Railways must become an infrastructure company. And perhaps by 2010 we will get close to launching a single infrastructure company based on OAO RZD. The experience of the First Cargo Company is to show us whether such a variant is reasonable.
– So, the infrastructure and transport functions of OAO RZD will be separated off in the near future?
– We are striving for such separation, although very carefully.
Russian Style
– I want to ask about the law on transit initiated by you in 2005. Your initiative was not supported at the time…
– It will be a long process, as usually happens in Russia. But the initiative was not abandoned. Moreover, we asked transport associations, in particular the Association of Russian Forwarders, to participate in development of the law. Recently, Valery Aliseychik, the President of the Association of Russian Forwarders, and I discussed the development of the draft law, and I think, it will be adopted. This law is very important. And its role will grow immensely after the customs union of Russia, Byelorussia and Kazakhstan is created. As soon as it starts work, they will come to us – as transporters – and say, “Come on!”
– Is drafting new railway laws so hard?
– Yes, very hard. We cannot come to agreement on many issues with businesses and OAO RZD. Security ministries also have some criticism. We will do our best to keep to the planned term but one should understand that amendments are rarely put to the law “On Railway Transport in the RF” and the Code. And we want to do no harm to the country’s economy.
– When authorities try to please everyone when developing new laws, such laws do not work properly, i.e. they do not create conditions for normal money-raising. Should the political will be strengthened to cover the issues of removing transport monopolies and creating liberalisation, in your opinion?
– One should understand in what terrible condition Russian economy used to be. If I were Transport Minister in Germany, France, or Great Britain, I would say, “It is the market, so this must be done. And you, the transport market player, will do this because you have experience with transport companies, partners, the legislative base, good credit, etc.” But Russian transport companies are in a different situation. As far as I understand, single-hull tankers must be prohibited now. But then this type of transportation will stop and fuel will not be delivered to a number of Russian regions. Why? Because the business has no opportunity to put its vessels in order. Firstly, there is no place to build them, and secondly, they have no money. The same thing goes for planes and airports, etc. So, a man occupying such a post as mine must take responsibility and compromise: we must reform the sector and manage to make a living at the same time. It would be easier to say, “stop flying, stop going by train, stop sailing…”, and close the Ministry… then everything would be calm and safe.
– Developing long-term strategies to 2030 is all the rage today. Don’t you think that, under the market economy conditions, such a term is too long for such directive planning?
– Thank you for a good question. We do not sew fashionable clothes, we construct infrastructure, the backbone of the economy, the basis for everything else. And if we do not say where we want to build roads, ports and aerodromes and fail to reserve land for them in the forecast to 2030, people will soon occupy the territory. We will come there with our projects, and they will say, “We understand that road is necessary here. But where were you earlier, for example in 2008, when the land was not inventoried?” So, we consider that there must be long-term plans for such sectors as energy and transport. Moreover, if there are no plans for transport and power infrastructure, the social and economic development of the country can hardly be planned. We can write anything we like but nothing would be realised. Usually, four years pass from the moment when the decision on an infrastructure object’s construction is made to the beginning of construction. In this time we build nothing, we arrange things, reserve the territory, design, and then start working. For example, we have not started to build the toll road yet but we have been discussing the project for three years already. So, until 2015, we will discuss the project, then we will begin the construction, and something will have been built by 2025. And then the year of 2030 will come some. I.e. there is little time for construction. Much more time will be spent getting the documents approved in different departments and ministries.
Red Tape Is the Main Problem
– You have mentioned toll roads. That was your initiative three years ago. You must be dissatisfied with how it is being carried out.
– Of course I am not satisfied. In 2005, I thought it would be carried out much faster. But then there was no law on concessions. And we must be grateful to German Gref, former Minister of Economic Development and Trade that he supported the law, though at first he was against it. At that time, he considered there was everything needed for toll road construction in the legislation. But when we persuaded him, he supported the law. Why am I in such a hurry to carry out the project of toll roads? Because, until we build the first samples, no calls to use new investment instruments in the sector will bear fruit. It is necessary that people start to use the roads, and then, I am sure, toll roads will be popular is Russia as they are throughout the whole world. But I could not predict that it would take so much time.
– What troubles does it face today?
– Red tape. We have to adjust every detail. I.e. what mistake was made when the decree on the Investment Fund was written? It was not to be formed in the framework of the Budget Code. It must have a completely different structure. And we suggested that, after the Government decides on an object’s construction, money from the Ministry of Finance should go to an account in Vnesheconombank. We continue to insist on this mechanism. The business must see that the means are not in the Treasury, from where they can hardly be taken, but the money is in the bank, and a private investor can put his part into the bank and start construction. But the process is slowed down because of the Budget Code. I hope, in future we will succeed in convincing all parties in charge that we are right. But today the situation remains.
– Is the construction of the high-speed railway Moscow – Saint Petersburg postponed for similar reasons?
– Yes, it is.
– It was also your initiative to bring the project of high-speed railway to life instead of changing the acting line of the Oktyabrskaya railway (the October railway) for usage that was not very clear.
– I am sure that Russia has only one future path – construction of high-speed railways. We must provide the opportunity for people to go by express trains in the day time, instead of languishing in compartments at nights. Trains must run in the day time, otherwise going by plane seems more reasonable.
– What is your attitude to the process of developing transport business self-regulation in Russia? A proper law has already been adopted, but railway associations are suspicious of it.
– And I offer business the opportunity to launch self-regulated organisations. Today it is important that they hold voluntary certification of all companies. So, everyone knows that this company got a certificate on a voluntary basis. I believe, a serious self-regulated organisation must be launched in the railway sector, and a part of our functions must be given to it. But the members of this organisation are to be independent professionals, who worry about the sector as much as the President of OAO RZD or the Minister of Transport. As far as I know, some results have already been achieved.
– Do you mean that the daughter companies of OAO RZD should become members of the organisation?
– Yes, I do. They must do it to speak with their partners and competitors using the same language. They must be equal to the rest. There must be no “umbilical cord” drawing them to the mother company and feeding them with what it will never feed an independent company.
Biography
Igor Levitin
Was born on February 21, 1952, in Odessa region (Tsebrikovo settlement). In 1973, he graduated from the military college of railways and communication in Leningrad. In 1983, he graduated from the Military Academy of rear services and transport as transport engineer. In 1970, he joined the USSR armed forces. From 1973 to 1976, he served in Odessa military district at Transdnestrian railway. From 1976 to 1980, he served in the Southern troops. From 1983 to 1985, he held the post of Railway Transportation Officer of Urgal railway station (Baikal-Amur railway). He participated in “Golden Link” joining. From 1985 to 1994, he held the post of Railway Transportation Officer at Moscowskaya railway, and later took the post of Deputy Head of military communication. From 1996 to 2004, he worked for ZAO Severstaltrans and, in 1998, took the post of Deputy General Director of the company. He was responsible for the transport engineering, railway transportation and sea commercial ports sector. He was a member of the Public Committee under the Government Commission on railway transport reform.
On March 9, 2004, he was appointed the RF Minister of Transport and Communication. According to the RF President Decree No 643 from May 20, 2004 he was appointed the RF Minister of Transport.
He is married and has a daughter.
by Andrey Guryev
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[SECTION_META_TITLE] => “I Provoke Business into Criticism”
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[SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/2/levitin.jpg" border="1" alt="Igor Levitin" title="Igor Levitin" hspace="3" vspace="3" width="140" height="110" align="left" />Serious reform is going on in the Russian transport sector, and its target is liberalisation. The RZD-Partner International asked Igor Levitin, Russian Minister of Transport, to comment on his vision of the reform.
[ELEMENT_META_TITLE] => “I Provoke Business into Criticism”
[ELEMENT_META_KEYWORDS] => “i provoke business into criticism”
[ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2008/2/levitin.jpg" border="1" alt="Igor Levitin" title="Igor Levitin" hspace="3" vspace="3" width="140" height="110" align="left" />Serious reform is going on in the Russian transport sector, and its target is liberalisation. The RZD-Partner International asked Igor Levitin, Russian Minister of Transport, to comment on his vision of the reform.
[SECTION_PICTURE_FILE_ALT] => “I Provoke Business into Criticism”
[SECTION_PICTURE_FILE_TITLE] => “I Provoke Business into Criticism”
[SECTION_DETAIL_PICTURE_FILE_ALT] => “I Provoke Business into Criticism”
[SECTION_DETAIL_PICTURE_FILE_TITLE] => “I Provoke Business into Criticism”
[ELEMENT_PREVIEW_PICTURE_FILE_ALT] => “I Provoke Business into Criticism”
[ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => “I Provoke Business into Criticism”
[ELEMENT_DETAIL_PICTURE_FILE_ALT] => “I Provoke Business into Criticism”
[ELEMENT_DETAIL_PICTURE_FILE_TITLE] => “I Provoke Business into Criticism”
)
)
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