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    [DETAIL_TEXT] => 
For The Future Possibilities
Many Russian regions approach the problem holistically and prepare several different projects. Pskov region plans to open six new logistics centres equipped with customs terminals. The agreement on this scheme will be signed soon by the regional authorities, the North-West customs administration and the North-West branch of the Federal Agency for State Border Infrastructure Development. 
The Samara authorities have approved the concept of regional transport and logistics system development. The main purpose of this concept is to provide West-East and North-South shipment lines with transport and logistics infrastructure to handle all types of transportation methods.  
Under the plans, an international distribution centre should be organised along regional highway “Samara-Volgograd”. Designers of the project propose to establish an industrial and logistics park there. Other logistics centres will be constructed near Kinel town next to the railway distribution station.  
The total volume of interregional transportation and exports/imports is expected to exceed 7.6 million tones in 2012, and 9.7 million tones in 2010 according to the plan. 
In the Republic of Tatarstan a logistical complex is envisaged at Sviyazsk train station. The combined interregional logistics complex will be located on the coast of the Volga river. 
Rustam Minnihanov, the President of Tatarstan, is sure that the project is going to become one of the most important tools to attract investment to the region. Minnihatov tasked ministries with raising funds for the purpose of constructing the logistics centre. Its overall cost is RUR 11-15 billion, and it will be 50% financed by the federal budget. 
The largest logistics centre in Nizhny Novgorod region, called ALIDI, was launched in June 2010. The up-to-date complex is located beside central highway M7 Kazan-Moscow in the suburbs of Nizhny Novgorod. On a 15-hectare site, two A-class warehouse terminals have been built. The first of them, occupying 14,500 square metres, went into operation in 2005, and construction of the second one with total area of 22,000 square metres was completed in September 2009. 
The terminals provide logistics services as well as distribution and storage facilities. “About RUR 1 billion was tied up in the project. The centre helps to lessen the load of cargo flow via Moscow. For example, we attracted 40% of  M-Video cargoes,” says Valery Shantsev, the governor of the region. 
In Ufa city, the first A-class logistics complex in the Republic of Bashkortostan was opened in June. Accent Real Estate Investment Management (Moscow) and Trilistnik-group (Ufa) had invested about 1 RUR billion in the Sigma complex. Construction of the 35,000-square-metre storage facilities in Shaksha region of Ufa started in late 2007. The first phase of the project was put into service in June. The second phase of  Sigma, covering 50,000 square metres, is scheduled to be launched next year.
Company Perm Vegetables plans to launch a large-scale logistics centre in Kama region in August 2010. It includes a vegetable store with a capacity of 4,000 tones, equipment for vegetable sorting, washing and packaging. The project, costing some RUR 250 million, was executed by private investors with the support of the regional government and Rosselkhozbank. 
Several projects have been initiated by transportation companies. RZD is going to work out a network of logistics centres for Archangelsk region. “Arkhangelsk junction already serves as the most important transshipment terminal for cargo flows supplying large gas and oil projects in the Arctic and Siberia,” said Andrew Dunaev, the Head of the Investment Policy Committee at the regional Economic Development Ministry. “Operators of the most significant Arctic production fields have shown their interest to the project”.  
Archangelsk region is promoted as a platform for Arctic development in the 21st century. Giant projects such as the renewal of the Northern Sea Route and development of offshore oil fields (including Shtockman gas condensate deposit in the Barents Sea) are connected with Archangelsk. Archangelsk distribution point is to be included in the system of logistics facilities on the RZD network.
One more logistics complex will be constructed at Koltsovo airport in Yekaterinburg city. German Hochtief Airports is the developer of this project. The first phase of construction (2011-2012) involves putting into operation about 20,000 square metres of logistics facilities, with 20,000 square metres more in the second phase (2018-2022). Investment in the first phase has reached RUR 900 million. The new complex is to ensure a growth in cargo turnover at Kolstovo of up to 80,000 tonnes per year by 2030.
In the Leningrad region on the Zanevsky Post railway station a storage and office complex called Onninen will be built. One more logistics complex is projected in the Utkina zavod area (St Petersburg). A Finnish Containerships subsidiary is going to start construction of a railway logistics complex in Yanino village which would be serviced by Moby Dick port in Kronshtadt town. The volume of investment is about $ 70 million. 

Warehouse Innovations
Some of the new logistics projects are based on innovative manufacturing methods. In Novosibirsk, new storehouse facilities will be built within the area of the PNK-Tolmachevo logistics centre. The first phase of construction is to be completed in the middle of 2011. Jones Lang LaSalle is an advisor on the project. Lithium-Ion Technologies acts as an investor, and PNK Group is the developer. 
Within the scheme a storehouse area, research centre and industrial zone for energy production will be created. The project was initiated by Chinese Thunder Sky Group and supported by Rosnano Corporation. PNK-Tolmachevo logistics centre is located in the Novosibirsk area along the М-51 highway. Its total area will reach 400,000 square metres.
Irkutsk region Ministry of Energy and Transportation had several meetings with Venchzhou (China) city delegation. Irkutsk representatives in China report that a Chinese delegation from EALO trade and logistics corporation showed interest in a plan to create an up-to-date combined logistics centre in Russia. The regional Minister of Energy and Transport said Irkutsk is able to provide all the conditions required for such a project, and the administration of the region is ready to support this initiative. Irkutsk companies Servico, Irkutsk cold-store complex and Trud-Agro offered their schemes and facilities for the establishment of the logistics centre. The parties came to an agreement to present the project at the Baikal Economic Forum. 
Eastfield Logistics investment company is supposed to renew the construction of a logistics centre in the Krasnodar region (in Korenovsky) in autumn 2010. The company had been carrying out preparation works on the construction plot since 2008 but, due to the crisis, it was put on hold. The investment in this project totald some €200 million. Korenovsky logistics park will handle cargoes coming from Europe for further distribution in Russia. 
Eastfield Logistics intends to build a large A-class warehouse complex with a total area of 98,000 square metres on the 20-hectare site. A Korenovsky Logistics Park organisation has been established to manage the complex. Rusprom Development is acting as developer.  
by Alexey Strigin
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For The Future Possibilities
Many Russian regions approach the problem holistically and prepare several different projects. Pskov region plans to open six new logistics centres equipped with customs terminals. The agreement on this scheme will be signed soon by the regional authorities, the North-West customs administration and the North-West branch of the Federal Agency for State Border Infrastructure Development. 
The Samara authorities have approved the concept of regional transport and logistics system development. The main purpose of this concept is to provide West-East and North-South shipment lines with transport and logistics infrastructure to handle all types of transportation methods.  
Under the plans, an international distribution centre should be organised along regional highway “Samara-Volgograd”. Designers of the project propose to establish an industrial and logistics park there. Other logistics centres will be constructed near Kinel town next to the railway distribution station.  
The total volume of interregional transportation and exports/imports is expected to exceed 7.6 million tones in 2012, and 9.7 million tones in 2010 according to the plan. 
In the Republic of Tatarstan a logistical complex is envisaged at Sviyazsk train station. The combined interregional logistics complex will be located on the coast of the Volga river. 
Rustam Minnihanov, the President of Tatarstan, is sure that the project is going to become one of the most important tools to attract investment to the region. Minnihatov tasked ministries with raising funds for the purpose of constructing the logistics centre. Its overall cost is RUR 11-15 billion, and it will be 50% financed by the federal budget. 
The largest logistics centre in Nizhny Novgorod region, called ALIDI, was launched in June 2010. The up-to-date complex is located beside central highway M7 Kazan-Moscow in the suburbs of Nizhny Novgorod. On a 15-hectare site, two A-class warehouse terminals have been built. The first of them, occupying 14,500 square metres, went into operation in 2005, and construction of the second one with total area of 22,000 square metres was completed in September 2009. 
The terminals provide logistics services as well as distribution and storage facilities. “About RUR 1 billion was tied up in the project. The centre helps to lessen the load of cargo flow via Moscow. For example, we attracted 40% of  M-Video cargoes,” says Valery Shantsev, the governor of the region. 
In Ufa city, the first A-class logistics complex in the Republic of Bashkortostan was opened in June. Accent Real Estate Investment Management (Moscow) and Trilistnik-group (Ufa) had invested about 1 RUR billion in the Sigma complex. Construction of the 35,000-square-metre storage facilities in Shaksha region of Ufa started in late 2007. The first phase of the project was put into service in June. The second phase of  Sigma, covering 50,000 square metres, is scheduled to be launched next year.
Company Perm Vegetables plans to launch a large-scale logistics centre in Kama region in August 2010. It includes a vegetable store with a capacity of 4,000 tones, equipment for vegetable sorting, washing and packaging. The project, costing some RUR 250 million, was executed by private investors with the support of the regional government and Rosselkhozbank. 
Several projects have been initiated by transportation companies. RZD is going to work out a network of logistics centres for Archangelsk region. “Arkhangelsk junction already serves as the most important transshipment terminal for cargo flows supplying large gas and oil projects in the Arctic and Siberia,” said Andrew Dunaev, the Head of the Investment Policy Committee at the regional Economic Development Ministry. “Operators of the most significant Arctic production fields have shown their interest to the project”.  
Archangelsk region is promoted as a platform for Arctic development in the 21st century. Giant projects such as the renewal of the Northern Sea Route and development of offshore oil fields (including Shtockman gas condensate deposit in the Barents Sea) are connected with Archangelsk. Archangelsk distribution point is to be included in the system of logistics facilities on the RZD network.
One more logistics complex will be constructed at Koltsovo airport in Yekaterinburg city. German Hochtief Airports is the developer of this project. The first phase of construction (2011-2012) involves putting into operation about 20,000 square metres of logistics facilities, with 20,000 square metres more in the second phase (2018-2022). Investment in the first phase has reached RUR 900 million. The new complex is to ensure a growth in cargo turnover at Kolstovo of up to 80,000 tonnes per year by 2030.
In the Leningrad region on the Zanevsky Post railway station a storage and office complex called Onninen will be built. One more logistics complex is projected in the Utkina zavod area (St Petersburg). A Finnish Containerships subsidiary is going to start construction of a railway logistics complex in Yanino village which would be serviced by Moby Dick port in Kronshtadt town. The volume of investment is about $ 70 million. 

Warehouse Innovations
Some of the new logistics projects are based on innovative manufacturing methods. In Novosibirsk, new storehouse facilities will be built within the area of the PNK-Tolmachevo logistics centre. The first phase of construction is to be completed in the middle of 2011. Jones Lang LaSalle is an advisor on the project. Lithium-Ion Technologies acts as an investor, and PNK Group is the developer. 
Within the scheme a storehouse area, research centre and industrial zone for energy production will be created. The project was initiated by Chinese Thunder Sky Group and supported by Rosnano Corporation. PNK-Tolmachevo logistics centre is located in the Novosibirsk area along the М-51 highway. Its total area will reach 400,000 square metres.
Irkutsk region Ministry of Energy and Transportation had several meetings with Venchzhou (China) city delegation. Irkutsk representatives in China report that a Chinese delegation from EALO trade and logistics corporation showed interest in a plan to create an up-to-date combined logistics centre in Russia. The regional Minister of Energy and Transport said Irkutsk is able to provide all the conditions required for such a project, and the administration of the region is ready to support this initiative. Irkutsk companies Servico, Irkutsk cold-store complex and Trud-Agro offered their schemes and facilities for the establishment of the logistics centre. The parties came to an agreement to present the project at the Baikal Economic Forum. 
Eastfield Logistics investment company is supposed to renew the construction of a logistics centre in the Krasnodar region (in Korenovsky) in autumn 2010. The company had been carrying out preparation works on the construction plot since 2008 but, due to the crisis, it was put on hold. The investment in this project totald some €200 million. Korenovsky logistics park will handle cargoes coming from Europe for further distribution in Russia. 
Eastfield Logistics intends to build a large A-class warehouse complex with a total area of 98,000 square metres on the 20-hectare site. A Korenovsky Logistics Park organisation has been established to manage the complex. Rusprom Development is acting as developer.  
by Alexey Strigin
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Let us review the major projects in this field to see the whole picture.
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Total market volume in 2009 shrank by 20.9% and amounted to USD36 billion. Nevertheless, Frost & Sullivan consulting forecasts stability in this market in the near future with a growth rate of 6-9% per year. According to analysts’ expectations, 
pre-crisis market volumes will be achieved by 2012-2013. 
Let us review the major projects in this field to see the whole picture.
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/27.jpg" border="1" alt=" " hspace="5" width="300" height="199" align="left" />The global financial crisis has had its negative impact on Russia’s logistics industry. <br />Total market volume in 2009 shrank by 20.9% and amounted to USD36 billion. Nevertheless, Frost &amp; Sullivan consulting forecasts stability in this market in the near future with a growth rate of 6-9% per year. According to analysts’ expectations, <br />pre-crisis market volumes will be achieved by 2012-2013. <br />Let us review the major projects in this field to see the whole picture.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/27.jpg" border="1" alt=" " hspace="5" width="300" height="199" align="left" />The global financial crisis has had its negative impact on Russia’s logistics industry. <br />Total market volume in 2009 shrank by 20.9% and amounted to USD36 billion. Nevertheless, Frost &amp; Sullivan consulting forecasts stability in this market in the near future with a growth rate of 6-9% per year. According to analysts’ expectations, <br />pre-crisis market volumes will be achieved by 2012-2013. <br />Let us review the major projects in this field to see the whole picture.
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For The Future Possibilities
Many Russian regions approach the problem holistically and prepare several different projects. Pskov region plans to open six new logistics centres equipped with customs terminals. The agreement on this scheme will be signed soon by the regional authorities, the North-West customs administration and the North-West branch of the Federal Agency for State Border Infrastructure Development. 
The Samara authorities have approved the concept of regional transport and logistics system development. The main purpose of this concept is to provide West-East and North-South shipment lines with transport and logistics infrastructure to handle all types of transportation methods.  
Under the plans, an international distribution centre should be organised along regional highway “Samara-Volgograd”. Designers of the project propose to establish an industrial and logistics park there. Other logistics centres will be constructed near Kinel town next to the railway distribution station.  
The total volume of interregional transportation and exports/imports is expected to exceed 7.6 million tones in 2012, and 9.7 million tones in 2010 according to the plan. 
In the Republic of Tatarstan a logistical complex is envisaged at Sviyazsk train station. The combined interregional logistics complex will be located on the coast of the Volga river. 
Rustam Minnihanov, the President of Tatarstan, is sure that the project is going to become one of the most important tools to attract investment to the region. Minnihatov tasked ministries with raising funds for the purpose of constructing the logistics centre. Its overall cost is RUR 11-15 billion, and it will be 50% financed by the federal budget. 
The largest logistics centre in Nizhny Novgorod region, called ALIDI, was launched in June 2010. The up-to-date complex is located beside central highway M7 Kazan-Moscow in the suburbs of Nizhny Novgorod. On a 15-hectare site, two A-class warehouse terminals have been built. The first of them, occupying 14,500 square metres, went into operation in 2005, and construction of the second one with total area of 22,000 square metres was completed in September 2009. 
The terminals provide logistics services as well as distribution and storage facilities. “About RUR 1 billion was tied up in the project. The centre helps to lessen the load of cargo flow via Moscow. For example, we attracted 40% of  M-Video cargoes,” says Valery Shantsev, the governor of the region. 
In Ufa city, the first A-class logistics complex in the Republic of Bashkortostan was opened in June. Accent Real Estate Investment Management (Moscow) and Trilistnik-group (Ufa) had invested about 1 RUR billion in the Sigma complex. Construction of the 35,000-square-metre storage facilities in Shaksha region of Ufa started in late 2007. The first phase of the project was put into service in June. The second phase of  Sigma, covering 50,000 square metres, is scheduled to be launched next year.
Company Perm Vegetables plans to launch a large-scale logistics centre in Kama region in August 2010. It includes a vegetable store with a capacity of 4,000 tones, equipment for vegetable sorting, washing and packaging. The project, costing some RUR 250 million, was executed by private investors with the support of the regional government and Rosselkhozbank. 
Several projects have been initiated by transportation companies. RZD is going to work out a network of logistics centres for Archangelsk region. “Arkhangelsk junction already serves as the most important transshipment terminal for cargo flows supplying large gas and oil projects in the Arctic and Siberia,” said Andrew Dunaev, the Head of the Investment Policy Committee at the regional Economic Development Ministry. “Operators of the most significant Arctic production fields have shown their interest to the project”.  
Archangelsk region is promoted as a platform for Arctic development in the 21st century. Giant projects such as the renewal of the Northern Sea Route and development of offshore oil fields (including Shtockman gas condensate deposit in the Barents Sea) are connected with Archangelsk. Archangelsk distribution point is to be included in the system of logistics facilities on the RZD network.
One more logistics complex will be constructed at Koltsovo airport in Yekaterinburg city. German Hochtief Airports is the developer of this project. The first phase of construction (2011-2012) involves putting into operation about 20,000 square metres of logistics facilities, with 20,000 square metres more in the second phase (2018-2022). Investment in the first phase has reached RUR 900 million. The new complex is to ensure a growth in cargo turnover at Kolstovo of up to 80,000 tonnes per year by 2030.
In the Leningrad region on the Zanevsky Post railway station a storage and office complex called Onninen will be built. One more logistics complex is projected in the Utkina zavod area (St Petersburg). A Finnish Containerships subsidiary is going to start construction of a railway logistics complex in Yanino village which would be serviced by Moby Dick port in Kronshtadt town. The volume of investment is about $ 70 million. 

Warehouse Innovations
Some of the new logistics projects are based on innovative manufacturing methods. In Novosibirsk, new storehouse facilities will be built within the area of the PNK-Tolmachevo logistics centre. The first phase of construction is to be completed in the middle of 2011. Jones Lang LaSalle is an advisor on the project. Lithium-Ion Technologies acts as an investor, and PNK Group is the developer. 
Within the scheme a storehouse area, research centre and industrial zone for energy production will be created. The project was initiated by Chinese Thunder Sky Group and supported by Rosnano Corporation. PNK-Tolmachevo logistics centre is located in the Novosibirsk area along the М-51 highway. Its total area will reach 400,000 square metres.
Irkutsk region Ministry of Energy and Transportation had several meetings with Venchzhou (China) city delegation. Irkutsk representatives in China report that a Chinese delegation from EALO trade and logistics corporation showed interest in a plan to create an up-to-date combined logistics centre in Russia. The regional Minister of Energy and Transport said Irkutsk is able to provide all the conditions required for such a project, and the administration of the region is ready to support this initiative. Irkutsk companies Servico, Irkutsk cold-store complex and Trud-Agro offered their schemes and facilities for the establishment of the logistics centre. The parties came to an agreement to present the project at the Baikal Economic Forum. 
Eastfield Logistics investment company is supposed to renew the construction of a logistics centre in the Krasnodar region (in Korenovsky) in autumn 2010. The company had been carrying out preparation works on the construction plot since 2008 but, due to the crisis, it was put on hold. The investment in this project totald some €200 million. Korenovsky logistics park will handle cargoes coming from Europe for further distribution in Russia. 
Eastfield Logistics intends to build a large A-class warehouse complex with a total area of 98,000 square metres on the 20-hectare site. A Korenovsky Logistics Park organisation has been established to manage the complex. Rusprom Development is acting as developer.  
by Alexey Strigin
    [~DETAIL_TEXT] => 
For The Future Possibilities
Many Russian regions approach the problem holistically and prepare several different projects. Pskov region plans to open six new logistics centres equipped with customs terminals. The agreement on this scheme will be signed soon by the regional authorities, the North-West customs administration and the North-West branch of the Federal Agency for State Border Infrastructure Development. 
The Samara authorities have approved the concept of regional transport and logistics system development. The main purpose of this concept is to provide West-East and North-South shipment lines with transport and logistics infrastructure to handle all types of transportation methods.  
Under the plans, an international distribution centre should be organised along regional highway “Samara-Volgograd”. Designers of the project propose to establish an industrial and logistics park there. Other logistics centres will be constructed near Kinel town next to the railway distribution station.  
The total volume of interregional transportation and exports/imports is expected to exceed 7.6 million tones in 2012, and 9.7 million tones in 2010 according to the plan. 
In the Republic of Tatarstan a logistical complex is envisaged at Sviyazsk train station. The combined interregional logistics complex will be located on the coast of the Volga river. 
Rustam Minnihanov, the President of Tatarstan, is sure that the project is going to become one of the most important tools to attract investment to the region. Minnihatov tasked ministries with raising funds for the purpose of constructing the logistics centre. Its overall cost is RUR 11-15 billion, and it will be 50% financed by the federal budget. 
The largest logistics centre in Nizhny Novgorod region, called ALIDI, was launched in June 2010. The up-to-date complex is located beside central highway M7 Kazan-Moscow in the suburbs of Nizhny Novgorod. On a 15-hectare site, two A-class warehouse terminals have been built. The first of them, occupying 14,500 square metres, went into operation in 2005, and construction of the second one with total area of 22,000 square metres was completed in September 2009. 
The terminals provide logistics services as well as distribution and storage facilities. “About RUR 1 billion was tied up in the project. The centre helps to lessen the load of cargo flow via Moscow. For example, we attracted 40% of  M-Video cargoes,” says Valery Shantsev, the governor of the region. 
In Ufa city, the first A-class logistics complex in the Republic of Bashkortostan was opened in June. Accent Real Estate Investment Management (Moscow) and Trilistnik-group (Ufa) had invested about 1 RUR billion in the Sigma complex. Construction of the 35,000-square-metre storage facilities in Shaksha region of Ufa started in late 2007. The first phase of the project was put into service in June. The second phase of  Sigma, covering 50,000 square metres, is scheduled to be launched next year.
Company Perm Vegetables plans to launch a large-scale logistics centre in Kama region in August 2010. It includes a vegetable store with a capacity of 4,000 tones, equipment for vegetable sorting, washing and packaging. The project, costing some RUR 250 million, was executed by private investors with the support of the regional government and Rosselkhozbank. 
Several projects have been initiated by transportation companies. RZD is going to work out a network of logistics centres for Archangelsk region. “Arkhangelsk junction already serves as the most important transshipment terminal for cargo flows supplying large gas and oil projects in the Arctic and Siberia,” said Andrew Dunaev, the Head of the Investment Policy Committee at the regional Economic Development Ministry. “Operators of the most significant Arctic production fields have shown their interest to the project”.  
Archangelsk region is promoted as a platform for Arctic development in the 21st century. Giant projects such as the renewal of the Northern Sea Route and development of offshore oil fields (including Shtockman gas condensate deposit in the Barents Sea) are connected with Archangelsk. Archangelsk distribution point is to be included in the system of logistics facilities on the RZD network.
One more logistics complex will be constructed at Koltsovo airport in Yekaterinburg city. German Hochtief Airports is the developer of this project. The first phase of construction (2011-2012) involves putting into operation about 20,000 square metres of logistics facilities, with 20,000 square metres more in the second phase (2018-2022). Investment in the first phase has reached RUR 900 million. The new complex is to ensure a growth in cargo turnover at Kolstovo of up to 80,000 tonnes per year by 2030.
In the Leningrad region on the Zanevsky Post railway station a storage and office complex called Onninen will be built. One more logistics complex is projected in the Utkina zavod area (St Petersburg). A Finnish Containerships subsidiary is going to start construction of a railway logistics complex in Yanino village which would be serviced by Moby Dick port in Kronshtadt town. The volume of investment is about $ 70 million. 

Warehouse Innovations
Some of the new logistics projects are based on innovative manufacturing methods. In Novosibirsk, new storehouse facilities will be built within the area of the PNK-Tolmachevo logistics centre. The first phase of construction is to be completed in the middle of 2011. Jones Lang LaSalle is an advisor on the project. Lithium-Ion Technologies acts as an investor, and PNK Group is the developer. 
Within the scheme a storehouse area, research centre and industrial zone for energy production will be created. The project was initiated by Chinese Thunder Sky Group and supported by Rosnano Corporation. PNK-Tolmachevo logistics centre is located in the Novosibirsk area along the М-51 highway. Its total area will reach 400,000 square metres.
Irkutsk region Ministry of Energy and Transportation had several meetings with Venchzhou (China) city delegation. Irkutsk representatives in China report that a Chinese delegation from EALO trade and logistics corporation showed interest in a plan to create an up-to-date combined logistics centre in Russia. The regional Minister of Energy and Transport said Irkutsk is able to provide all the conditions required for such a project, and the administration of the region is ready to support this initiative. Irkutsk companies Servico, Irkutsk cold-store complex and Trud-Agro offered their schemes and facilities for the establishment of the logistics centre. The parties came to an agreement to present the project at the Baikal Economic Forum. 
Eastfield Logistics investment company is supposed to renew the construction of a logistics centre in the Krasnodar region (in Korenovsky) in autumn 2010. The company had been carrying out preparation works on the construction plot since 2008 but, due to the crisis, it was put on hold. The investment in this project totald some €200 million. Korenovsky logistics park will handle cargoes coming from Europe for further distribution in Russia. 
Eastfield Logistics intends to build a large A-class warehouse complex with a total area of 98,000 square metres on the 20-hectare site. A Korenovsky Logistics Park organisation has been established to manage the complex. Rusprom Development is acting as developer.  
by Alexey Strigin
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    [PREVIEW_TEXT] => The global financial crisis has had its negative impact on Russia’s logistics industry. 
Total market volume in 2009 shrank by 20.9% and amounted to USD36 billion. Nevertheless, Frost & Sullivan consulting forecasts stability in this market in the near future with a growth rate of 6-9% per year. According to analysts’ expectations, 
pre-crisis market volumes will be achieved by 2012-2013. 
Let us review the major projects in this field to see the whole picture.
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Total market volume in 2009 shrank by 20.9% and amounted to USD36 billion. Nevertheless, Frost & Sullivan consulting forecasts stability in this market in the near future with a growth rate of 6-9% per year. According to analysts’ expectations, 
pre-crisis market volumes will be achieved by 2012-2013. 
Let us review the major projects in this field to see the whole picture.
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/27.jpg" border="1" alt=" " hspace="5" width="300" height="199" align="left" />The global financial crisis has had its negative impact on Russia’s logistics industry. <br />Total market volume in 2009 shrank by 20.9% and amounted to USD36 billion. Nevertheless, Frost &amp; Sullivan consulting forecasts stability in this market in the near future with a growth rate of 6-9% per year. According to analysts’ expectations, <br />pre-crisis market volumes will be achieved by 2012-2013. <br />Let us review the major projects in this field to see the whole picture.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/27.jpg" border="1" alt=" " hspace="5" width="300" height="199" align="left" />The global financial crisis has had its negative impact on Russia’s logistics industry. <br />Total market volume in 2009 shrank by 20.9% and amounted to USD36 billion. Nevertheless, Frost &amp; Sullivan consulting forecasts stability in this market in the near future with a growth rate of 6-9% per year. According to analysts’ expectations, <br />pre-crisis market volumes will be achieved by 2012-2013. <br />Let us review the major projects in this field to see the whole picture.
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    [DETAIL_TEXT] => 
Freight Transportation Volume Grows
A slight decline in oil bulk transportation volume in 2009 was expected. This cargo was the only one which had stable transportation figures during the crisis year. The forecast for 2010 was even more optimistic. Thus, in the first months of the year, loading of oil and petrochemicals increased by 10% compared with the same period in 2009. Railwaymen hope for the crisis to weaken its grip on the country’s economy, the recovery of transportation on the domestic market to pre-crisis levels, and the growth of high-quality oil products to be transported by railway.
Economic stability is behind the dynamic growth of the results in the tank wagons production sector, which are second after gondola railcars –amounting to 240,000 units in existence. Of that, 75,000 tank wagons are owned by Freight One.
In 2009, when the wagon building sector either fulfilled sporadic orders or idled, tank wagon producers were the only ones whose production increased in the sector. According to IA INFOLine, last year the volume of their production grew more than two-fold (by more than 3,000 units) in Russia alone. To compare, in 2008, Russian and Ukrainian enterprises produced 6,093 tank wagons for petrochemicals transportation (6,056 units in 2006). Thus, tank wagon production volumes increased even if we compare it with the most profitable year – 2008.  
  It is interesting that sectoral analysts recently said that this rolling stock segment was almost supersaturated. According to the research “Railway Machine Building: Production of Cargo Rolling Stock And Market Situation” made by IA INFOLine, in 2001-2008 Russian private companies purchased over 57,000 tank wagons for petrochemicals transportation, i.e. the rolling stock deficit – if there was one in the segment – was covered. This can be proved by a decline in the demand that started at that time. In 2008, the Russian park of private oil and petrol tank wagons increased by 2,100 units, while 2,500 railcars of this type were added to the private park in 2007.
However, the market situation, when the demand for oil bulk transportation remained stable, and the prices for wagons fell, made large railway operators actively buy new rolling stock. As a result, a number of railcar building companies succeeded in keeping their positions in the market.    

Petrochemical Trend
One can see how attractive this sector is, if one has a look at the plans of enterprises to produce this type of rolling stock in 2010. In particular, the senior managers of Roslavlsky Wagon Repair Plan are discussing opportunities to enlarge the annual volume of tank wagon production. Also, at the end of 2009, the Russian Federal Railway Transport Certification Register gave Armavir Heavy Machine Building Plant a certificate for the serial manufacture of a new model of tank wagon. 
These railcars will transport petrol and other light petrochemicals. Altaivagon (incorporated into Siberia Business Union, SDS) is going to get a certificate to produce tank wagons to transport petrochemicals. We should remember that, in the early 2000s, Altaivagon used to produce tank wagons. Box cars, which the enterprise specializes in producing, were not popular at that time. Specialists at the plant say that the decision to restart the line was made because of the “growing petrochemicals production market.”
“In the first four months of 2010, Uralvagonzavod produced 1,619 tank wagons for petrochemicals, i.e. more than twice as much as in the same period the previous year, when 771 tank wagons were made. Moreover, the volume of tank manufacturing and sale exceed the figures of not only 2009, but of the pre-crisis period 2005-2008 as well,” comments Andrey Shlensky, Commercial Director of Uralvagonzavod. In his view, demand for the rolling stock made the enterprise increase its production volume to 420 tank wagons per month.
There appears the question of whether cargo owners will be able to find enough load in the future. Won’t alternative transport modes (tank containers or pipeline systems) become a barrier for tank wagon producers? “Oil extraction is growing in Russia as well as Kazakhstan. Oil transportation by pipeline is very expensive for a number of companies. That is why they will have to use railways to transport it,” says Abylkasen Baltabaev, Technical Director of Akmolinsky Wagon Repair Plant. 
In his opinion, not all tank wagons survive the anticipated lifetime period, which is 32 years. The rolling stock may be damaged because of breaking exploitation rules, which cuts the working park of this type of wagons. As a result, tank wagons are a rolling stock in deficit, badly needed on the market. 

The Demand Is Growing
However, a more significant argument for tank wagon manufacturing development is the ageing of existing rolling stock. According to different assessments, the optimal number of new tank wagons in the total park is at least 13,000-15,000 per annum, and this is what rolling stock producers count on. Another important factor is that Freight One is discarding a significant number of its worn-out wagons. For this reason, in early 2009, the total park of Freight One reduced by 20%. The average age of discarded wagons was 27 years, while their normal lifetime is 32 years. Thus, in 2009-2015, the lifetime of over 50,000 tank wagons (70%) of Freight One will be over, say specialists at IA INFOLine. 
Experts at leasing companies agree that tank wagons will be a popular type of rolling stock for a long time. Moreover, analysts note that there is still some shortage of them in the oil bulk transportation market that is causing lease rate increases and is partially influencing the prices for new rolling stock. “In the early 2000s, when the freight transportation market was opened up, what the companies purchased was tank wagons. Then the market became saturated, and market players started to pay attention to gondola cars,” tell specialists at Brunswick Rail Leasing. 
Meanwhile, in the middle of 2009, demand for tank wagons started to grow again. The reasons for it were low prices and an increase in transportation volumes.
It is not clear when the market will be saturated this time. Specialists say that, even after the ESPO is put into operation, there will be a lot of work for existing tank wagons – new refineries for oil deep processing are being built in the country. 
Also, there is hardly any enterprise that will invest into a new production line if it is not sure that there will be the demand for its production. “Nowadays, the shortage of capacity for barrel manufacturing restrains the increase in tank wagon production volumes at Uralvagonzavod. The fastest way to solve the problem is to cooperate with other machine building enterprises. 
Since the fourth quarter of 2009, we have been cooperating with Uralkriomash, a part of our corporation. In the second half of the year we may attract some more enterprises into production cooperation,” considers Mr Shlensky. At the same time, senior managers of the corporation emphasise that they are discussing the opportunity of getting additional orders and, consequently, increasing output and tank wagons sales and extending the volume and geography of production cooperation with other machine building enterprises.
Nowadays, operators are still ready to invest at least into rolling stock park renewal. “Due to the crisis, the purchasing power of Russian transport companies has reduced, but they understand that it is necessary to buy new tank wagons. The financial opportunities of operators are returning to pre-crisis levels. The success depends directly on the number of railcars owned,” says one of the senior managers of YUKOS-Transservice. For example, Uralvagonzavod has formed of its orders for tank wagons in 2010 on the basis of, first of all, its work with the corporation’s strategic partner – Vostokneftetrans. 
It was launched in cooperation with Transneft in 2009 in the framework of the East Siberia –Pacific Ocean project. “The participation of Uralvagonzavod in the JV envisages that over 5,000 tank wagons will be given to the authorised capital of the new company,” says Commercial Director of Uralvagonzavod. Simultaneously, all market players note that prices for tank wagons are growing. The reason for it is well known. In March 2010, wagon building enterprises faced a significant rise in prices for the products of metallurgical companies. The increase in the prices of tank wagons makes our partners worry, note senior managers at Uralvagonzavod. Due to these circumstances they have to either cut their orders, or to look for additional financing sources. The main danger is that the increase in prices for metal and final production may make tank wagons lose their investment attractiveness.    
We should mention that the sale activity of Uralvagonzavod is oriented at long-term contracts with state companies. “The commercial services of the enterprise worked hard to adjust new prices in the framework of these long-term contracts. We also attracted new customers. All this kept large volumes of tank wagons manufacturing and sales in at least the second and third quarters of 2010,” he says.
However, there are other factors. “Nowadays, there are only two or four enterprises producing tank wagons and undercarriages in the CIS. There is practically a monopoly which leads to an unreasonable increase in prices for their production. For example: in 2003 our company purchased tank wagons from Azovobschemash for $30,000 and, at the beginning of 2010, this model cost $63,000. That is why the manufacturing of this rolling stock should be developed at other plants,” considers Konstantin Plakitin, Chairman of the Board of Alfa-wagon.
Analysts share this opinion. “Nowadays, unlike the first half of 2008, the market is not ready to accept any price for a cargo railcar. 

Complicated Delivery
Nevertheless, experts think that the rising prices for rolling stock and the shortage of casting are not the most important problems that operators may face in the future. In particular, several affiliates of RZD register a significant growth in oil bulk transportation by water. In the words of Vyacheslav Petrenko, Head of the Freight Transportation Marketing and Tariff Policy Department at RZD, they have discussed several times with oil companies possible terms for oil bulk redirection from water transport to railways. But the oil companies do not show an interest. And one of the reasons for this is railway’s inability to cut tariffs. 
Meanwhile, the rates of river companies are not regulated by the state, thus they are able to offer cheaper transportation. Another fact to be considered is the expanding pipeline network, which makes tank wagons purchase rather risky in the long term. Nowadays, Russia is cutting investment in the development of new oil fields. Consequently, it is unlikely there will appear significant growth in demand for tank wagons, because the advantages of railway lie in the ability to deliver oil to those places where there are no pipelines and to maintain the quality of production. 
Moreover, nowadays, pipelines are taking more and more oil and petrochemicals from railways, and the latter loses because of its prices.
As a result, such a strong competitor as pipelines will strengthen the decline in the market, transportation in tank wagons will fall, thus causing a decline in the demand for rolling stock of this type. In this situation, the producers of tank wagons can count on annual orders equal to the number of tank wagons to be discarded in 2010, i.e. about 12,600 units, say specialists. And this is the most favourable economic scenario. 
By Maria Shevchenko

viewpoint
Andrey Shlensky, 
Commercial Director of Uralvagonzavod:
– An important competitive advantage of a corporation is a closed production cycle, when a metallurgical enterprise produces different moulded pieces for bogies, including most deficit solebars and bogie bolsters. Due to inner reserves, we manage to restrain the prices of the tank wagons we manufacture. Unfortunately, there are price formation factors we can do nothing about. First of all, I mean boiler plates, which we buy from Severstal. The price for them is ballooning, thus we have to increase prices for oil and petrol tank wagons. 

Vitaly Bekuzarov,
CEO of Vladikavkazsky Kirov Wagon Repair Plant:
– In January-May 2010, the dynamics of tank wagon repair were not stable, which was connected with the seasonal decline in transportation volumes. In January-March, the volume of repair work increased, and in April and May it fell by 8.9% compared with March. Simultaneously, the repair volume of this rolling stock grew by 40% year-on-year. 
I would like to emphasise that nowadays the railway transport services market is passing the stage of active formation. The freight transportation market is developing and, consequently, the consumption of repair services is increasing. Taking all this into consideration, Vladikavkazsky Kirov Wagon Repair Plant plans to enlarge the volume of cargo rolling stock repair, including tank wagons for petrochemicals and insulated tank wagons for transportation of different cargoes.
    [~DETAIL_TEXT] => 
Freight Transportation Volume Grows
A slight decline in oil bulk transportation volume in 2009 was expected. This cargo was the only one which had stable transportation figures during the crisis year. The forecast for 2010 was even more optimistic. Thus, in the first months of the year, loading of oil and petrochemicals increased by 10% compared with the same period in 2009. Railwaymen hope for the crisis to weaken its grip on the country’s economy, the recovery of transportation on the domestic market to pre-crisis levels, and the growth of high-quality oil products to be transported by railway.
Economic stability is behind the dynamic growth of the results in the tank wagons production sector, which are second after gondola railcars –amounting to 240,000 units in existence. Of that, 75,000 tank wagons are owned by Freight One.
In 2009, when the wagon building sector either fulfilled sporadic orders or idled, tank wagon producers were the only ones whose production increased in the sector. According to IA INFOLine, last year the volume of their production grew more than two-fold (by more than 3,000 units) in Russia alone. To compare, in 2008, Russian and Ukrainian enterprises produced 6,093 tank wagons for petrochemicals transportation (6,056 units in 2006). Thus, tank wagon production volumes increased even if we compare it with the most profitable year – 2008.  
  It is interesting that sectoral analysts recently said that this rolling stock segment was almost supersaturated. According to the research “Railway Machine Building: Production of Cargo Rolling Stock And Market Situation” made by IA INFOLine, in 2001-2008 Russian private companies purchased over 57,000 tank wagons for petrochemicals transportation, i.e. the rolling stock deficit – if there was one in the segment – was covered. This can be proved by a decline in the demand that started at that time. In 2008, the Russian park of private oil and petrol tank wagons increased by 2,100 units, while 2,500 railcars of this type were added to the private park in 2007.
However, the market situation, when the demand for oil bulk transportation remained stable, and the prices for wagons fell, made large railway operators actively buy new rolling stock. As a result, a number of railcar building companies succeeded in keeping their positions in the market.    

Petrochemical Trend
One can see how attractive this sector is, if one has a look at the plans of enterprises to produce this type of rolling stock in 2010. In particular, the senior managers of Roslavlsky Wagon Repair Plan are discussing opportunities to enlarge the annual volume of tank wagon production. Also, at the end of 2009, the Russian Federal Railway Transport Certification Register gave Armavir Heavy Machine Building Plant a certificate for the serial manufacture of a new model of tank wagon. 
These railcars will transport petrol and other light petrochemicals. Altaivagon (incorporated into Siberia Business Union, SDS) is going to get a certificate to produce tank wagons to transport petrochemicals. We should remember that, in the early 2000s, Altaivagon used to produce tank wagons. Box cars, which the enterprise specializes in producing, were not popular at that time. Specialists at the plant say that the decision to restart the line was made because of the “growing petrochemicals production market.”
“In the first four months of 2010, Uralvagonzavod produced 1,619 tank wagons for petrochemicals, i.e. more than twice as much as in the same period the previous year, when 771 tank wagons were made. Moreover, the volume of tank manufacturing and sale exceed the figures of not only 2009, but of the pre-crisis period 2005-2008 as well,” comments Andrey Shlensky, Commercial Director of Uralvagonzavod. In his view, demand for the rolling stock made the enterprise increase its production volume to 420 tank wagons per month.
There appears the question of whether cargo owners will be able to find enough load in the future. Won’t alternative transport modes (tank containers or pipeline systems) become a barrier for tank wagon producers? “Oil extraction is growing in Russia as well as Kazakhstan. Oil transportation by pipeline is very expensive for a number of companies. That is why they will have to use railways to transport it,” says Abylkasen Baltabaev, Technical Director of Akmolinsky Wagon Repair Plant. 
In his opinion, not all tank wagons survive the anticipated lifetime period, which is 32 years. The rolling stock may be damaged because of breaking exploitation rules, which cuts the working park of this type of wagons. As a result, tank wagons are a rolling stock in deficit, badly needed on the market. 

The Demand Is Growing
However, a more significant argument for tank wagon manufacturing development is the ageing of existing rolling stock. According to different assessments, the optimal number of new tank wagons in the total park is at least 13,000-15,000 per annum, and this is what rolling stock producers count on. Another important factor is that Freight One is discarding a significant number of its worn-out wagons. For this reason, in early 2009, the total park of Freight One reduced by 20%. The average age of discarded wagons was 27 years, while their normal lifetime is 32 years. Thus, in 2009-2015, the lifetime of over 50,000 tank wagons (70%) of Freight One will be over, say specialists at IA INFOLine. 
Experts at leasing companies agree that tank wagons will be a popular type of rolling stock for a long time. Moreover, analysts note that there is still some shortage of them in the oil bulk transportation market that is causing lease rate increases and is partially influencing the prices for new rolling stock. “In the early 2000s, when the freight transportation market was opened up, what the companies purchased was tank wagons. Then the market became saturated, and market players started to pay attention to gondola cars,” tell specialists at Brunswick Rail Leasing. 
Meanwhile, in the middle of 2009, demand for tank wagons started to grow again. The reasons for it were low prices and an increase in transportation volumes.
It is not clear when the market will be saturated this time. Specialists say that, even after the ESPO is put into operation, there will be a lot of work for existing tank wagons – new refineries for oil deep processing are being built in the country. 
Also, there is hardly any enterprise that will invest into a new production line if it is not sure that there will be the demand for its production. “Nowadays, the shortage of capacity for barrel manufacturing restrains the increase in tank wagon production volumes at Uralvagonzavod. The fastest way to solve the problem is to cooperate with other machine building enterprises. 
Since the fourth quarter of 2009, we have been cooperating with Uralkriomash, a part of our corporation. In the second half of the year we may attract some more enterprises into production cooperation,” considers Mr Shlensky. At the same time, senior managers of the corporation emphasise that they are discussing the opportunity of getting additional orders and, consequently, increasing output and tank wagons sales and extending the volume and geography of production cooperation with other machine building enterprises.
Nowadays, operators are still ready to invest at least into rolling stock park renewal. “Due to the crisis, the purchasing power of Russian transport companies has reduced, but they understand that it is necessary to buy new tank wagons. The financial opportunities of operators are returning to pre-crisis levels. The success depends directly on the number of railcars owned,” says one of the senior managers of YUKOS-Transservice. For example, Uralvagonzavod has formed of its orders for tank wagons in 2010 on the basis of, first of all, its work with the corporation’s strategic partner – Vostokneftetrans. 
It was launched in cooperation with Transneft in 2009 in the framework of the East Siberia –Pacific Ocean project. “The participation of Uralvagonzavod in the JV envisages that over 5,000 tank wagons will be given to the authorised capital of the new company,” says Commercial Director of Uralvagonzavod. Simultaneously, all market players note that prices for tank wagons are growing. The reason for it is well known. In March 2010, wagon building enterprises faced a significant rise in prices for the products of metallurgical companies. The increase in the prices of tank wagons makes our partners worry, note senior managers at Uralvagonzavod. Due to these circumstances they have to either cut their orders, or to look for additional financing sources. The main danger is that the increase in prices for metal and final production may make tank wagons lose their investment attractiveness.    
We should mention that the sale activity of Uralvagonzavod is oriented at long-term contracts with state companies. “The commercial services of the enterprise worked hard to adjust new prices in the framework of these long-term contracts. We also attracted new customers. All this kept large volumes of tank wagons manufacturing and sales in at least the second and third quarters of 2010,” he says.
However, there are other factors. “Nowadays, there are only two or four enterprises producing tank wagons and undercarriages in the CIS. There is practically a monopoly which leads to an unreasonable increase in prices for their production. For example: in 2003 our company purchased tank wagons from Azovobschemash for $30,000 and, at the beginning of 2010, this model cost $63,000. That is why the manufacturing of this rolling stock should be developed at other plants,” considers Konstantin Plakitin, Chairman of the Board of Alfa-wagon.
Analysts share this opinion. “Nowadays, unlike the first half of 2008, the market is not ready to accept any price for a cargo railcar. 

Complicated Delivery
Nevertheless, experts think that the rising prices for rolling stock and the shortage of casting are not the most important problems that operators may face in the future. In particular, several affiliates of RZD register a significant growth in oil bulk transportation by water. In the words of Vyacheslav Petrenko, Head of the Freight Transportation Marketing and Tariff Policy Department at RZD, they have discussed several times with oil companies possible terms for oil bulk redirection from water transport to railways. But the oil companies do not show an interest. And one of the reasons for this is railway’s inability to cut tariffs. 
Meanwhile, the rates of river companies are not regulated by the state, thus they are able to offer cheaper transportation. Another fact to be considered is the expanding pipeline network, which makes tank wagons purchase rather risky in the long term. Nowadays, Russia is cutting investment in the development of new oil fields. Consequently, it is unlikely there will appear significant growth in demand for tank wagons, because the advantages of railway lie in the ability to deliver oil to those places where there are no pipelines and to maintain the quality of production. 
Moreover, nowadays, pipelines are taking more and more oil and petrochemicals from railways, and the latter loses because of its prices.
As a result, such a strong competitor as pipelines will strengthen the decline in the market, transportation in tank wagons will fall, thus causing a decline in the demand for rolling stock of this type. In this situation, the producers of tank wagons can count on annual orders equal to the number of tank wagons to be discarded in 2010, i.e. about 12,600 units, say specialists. And this is the most favourable economic scenario. 
By Maria Shevchenko

viewpoint
Andrey Shlensky, 
Commercial Director of Uralvagonzavod:
– An important competitive advantage of a corporation is a closed production cycle, when a metallurgical enterprise produces different moulded pieces for bogies, including most deficit solebars and bogie bolsters. Due to inner reserves, we manage to restrain the prices of the tank wagons we manufacture. Unfortunately, there are price formation factors we can do nothing about. First of all, I mean boiler plates, which we buy from Severstal. The price for them is ballooning, thus we have to increase prices for oil and petrol tank wagons. 

Vitaly Bekuzarov,
CEO of Vladikavkazsky Kirov Wagon Repair Plant:
– In January-May 2010, the dynamics of tank wagon repair were not stable, which was connected with the seasonal decline in transportation volumes. In January-March, the volume of repair work increased, and in April and May it fell by 8.9% compared with March. Simultaneously, the repair volume of this rolling stock grew by 40% year-on-year. 
I would like to emphasise that nowadays the railway transport services market is passing the stage of active formation. The freight transportation market is developing and, consequently, the consumption of repair services is increasing. Taking all this into consideration, Vladikavkazsky Kirov Wagon Repair Plant plans to enlarge the volume of cargo rolling stock repair, including tank wagons for petrochemicals and insulated tank wagons for transportation of different cargoes.
    [DETAIL_TEXT_TYPE] => html
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    [PREVIEW_TEXT] => The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
    [~PREVIEW_TEXT] => The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/24.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/24.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
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    [DETAIL_TEXT] => 
Freight Transportation Volume Grows
A slight decline in oil bulk transportation volume in 2009 was expected. This cargo was the only one which had stable transportation figures during the crisis year. The forecast for 2010 was even more optimistic. Thus, in the first months of the year, loading of oil and petrochemicals increased by 10% compared with the same period in 2009. Railwaymen hope for the crisis to weaken its grip on the country’s economy, the recovery of transportation on the domestic market to pre-crisis levels, and the growth of high-quality oil products to be transported by railway.
Economic stability is behind the dynamic growth of the results in the tank wagons production sector, which are second after gondola railcars –amounting to 240,000 units in existence. Of that, 75,000 tank wagons are owned by Freight One.
In 2009, when the wagon building sector either fulfilled sporadic orders or idled, tank wagon producers were the only ones whose production increased in the sector. According to IA INFOLine, last year the volume of their production grew more than two-fold (by more than 3,000 units) in Russia alone. To compare, in 2008, Russian and Ukrainian enterprises produced 6,093 tank wagons for petrochemicals transportation (6,056 units in 2006). Thus, tank wagon production volumes increased even if we compare it with the most profitable year – 2008.  
  It is interesting that sectoral analysts recently said that this rolling stock segment was almost supersaturated. According to the research “Railway Machine Building: Production of Cargo Rolling Stock And Market Situation” made by IA INFOLine, in 2001-2008 Russian private companies purchased over 57,000 tank wagons for petrochemicals transportation, i.e. the rolling stock deficit – if there was one in the segment – was covered. This can be proved by a decline in the demand that started at that time. In 2008, the Russian park of private oil and petrol tank wagons increased by 2,100 units, while 2,500 railcars of this type were added to the private park in 2007.
However, the market situation, when the demand for oil bulk transportation remained stable, and the prices for wagons fell, made large railway operators actively buy new rolling stock. As a result, a number of railcar building companies succeeded in keeping their positions in the market.    

Petrochemical Trend
One can see how attractive this sector is, if one has a look at the plans of enterprises to produce this type of rolling stock in 2010. In particular, the senior managers of Roslavlsky Wagon Repair Plan are discussing opportunities to enlarge the annual volume of tank wagon production. Also, at the end of 2009, the Russian Federal Railway Transport Certification Register gave Armavir Heavy Machine Building Plant a certificate for the serial manufacture of a new model of tank wagon. 
These railcars will transport petrol and other light petrochemicals. Altaivagon (incorporated into Siberia Business Union, SDS) is going to get a certificate to produce tank wagons to transport petrochemicals. We should remember that, in the early 2000s, Altaivagon used to produce tank wagons. Box cars, which the enterprise specializes in producing, were not popular at that time. Specialists at the plant say that the decision to restart the line was made because of the “growing petrochemicals production market.”
“In the first four months of 2010, Uralvagonzavod produced 1,619 tank wagons for petrochemicals, i.e. more than twice as much as in the same period the previous year, when 771 tank wagons were made. Moreover, the volume of tank manufacturing and sale exceed the figures of not only 2009, but of the pre-crisis period 2005-2008 as well,” comments Andrey Shlensky, Commercial Director of Uralvagonzavod. In his view, demand for the rolling stock made the enterprise increase its production volume to 420 tank wagons per month.
There appears the question of whether cargo owners will be able to find enough load in the future. Won’t alternative transport modes (tank containers or pipeline systems) become a barrier for tank wagon producers? “Oil extraction is growing in Russia as well as Kazakhstan. Oil transportation by pipeline is very expensive for a number of companies. That is why they will have to use railways to transport it,” says Abylkasen Baltabaev, Technical Director of Akmolinsky Wagon Repair Plant. 
In his opinion, not all tank wagons survive the anticipated lifetime period, which is 32 years. The rolling stock may be damaged because of breaking exploitation rules, which cuts the working park of this type of wagons. As a result, tank wagons are a rolling stock in deficit, badly needed on the market. 

The Demand Is Growing
However, a more significant argument for tank wagon manufacturing development is the ageing of existing rolling stock. According to different assessments, the optimal number of new tank wagons in the total park is at least 13,000-15,000 per annum, and this is what rolling stock producers count on. Another important factor is that Freight One is discarding a significant number of its worn-out wagons. For this reason, in early 2009, the total park of Freight One reduced by 20%. The average age of discarded wagons was 27 years, while their normal lifetime is 32 years. Thus, in 2009-2015, the lifetime of over 50,000 tank wagons (70%) of Freight One will be over, say specialists at IA INFOLine. 
Experts at leasing companies agree that tank wagons will be a popular type of rolling stock for a long time. Moreover, analysts note that there is still some shortage of them in the oil bulk transportation market that is causing lease rate increases and is partially influencing the prices for new rolling stock. “In the early 2000s, when the freight transportation market was opened up, what the companies purchased was tank wagons. Then the market became saturated, and market players started to pay attention to gondola cars,” tell specialists at Brunswick Rail Leasing. 
Meanwhile, in the middle of 2009, demand for tank wagons started to grow again. The reasons for it were low prices and an increase in transportation volumes.
It is not clear when the market will be saturated this time. Specialists say that, even after the ESPO is put into operation, there will be a lot of work for existing tank wagons – new refineries for oil deep processing are being built in the country. 
Also, there is hardly any enterprise that will invest into a new production line if it is not sure that there will be the demand for its production. “Nowadays, the shortage of capacity for barrel manufacturing restrains the increase in tank wagon production volumes at Uralvagonzavod. The fastest way to solve the problem is to cooperate with other machine building enterprises. 
Since the fourth quarter of 2009, we have been cooperating with Uralkriomash, a part of our corporation. In the second half of the year we may attract some more enterprises into production cooperation,” considers Mr Shlensky. At the same time, senior managers of the corporation emphasise that they are discussing the opportunity of getting additional orders and, consequently, increasing output and tank wagons sales and extending the volume and geography of production cooperation with other machine building enterprises.
Nowadays, operators are still ready to invest at least into rolling stock park renewal. “Due to the crisis, the purchasing power of Russian transport companies has reduced, but they understand that it is necessary to buy new tank wagons. The financial opportunities of operators are returning to pre-crisis levels. The success depends directly on the number of railcars owned,” says one of the senior managers of YUKOS-Transservice. For example, Uralvagonzavod has formed of its orders for tank wagons in 2010 on the basis of, first of all, its work with the corporation’s strategic partner – Vostokneftetrans. 
It was launched in cooperation with Transneft in 2009 in the framework of the East Siberia –Pacific Ocean project. “The participation of Uralvagonzavod in the JV envisages that over 5,000 tank wagons will be given to the authorised capital of the new company,” says Commercial Director of Uralvagonzavod. Simultaneously, all market players note that prices for tank wagons are growing. The reason for it is well known. In March 2010, wagon building enterprises faced a significant rise in prices for the products of metallurgical companies. The increase in the prices of tank wagons makes our partners worry, note senior managers at Uralvagonzavod. Due to these circumstances they have to either cut their orders, or to look for additional financing sources. The main danger is that the increase in prices for metal and final production may make tank wagons lose their investment attractiveness.    
We should mention that the sale activity of Uralvagonzavod is oriented at long-term contracts with state companies. “The commercial services of the enterprise worked hard to adjust new prices in the framework of these long-term contracts. We also attracted new customers. All this kept large volumes of tank wagons manufacturing and sales in at least the second and third quarters of 2010,” he says.
However, there are other factors. “Nowadays, there are only two or four enterprises producing tank wagons and undercarriages in the CIS. There is practically a monopoly which leads to an unreasonable increase in prices for their production. For example: in 2003 our company purchased tank wagons from Azovobschemash for $30,000 and, at the beginning of 2010, this model cost $63,000. That is why the manufacturing of this rolling stock should be developed at other plants,” considers Konstantin Plakitin, Chairman of the Board of Alfa-wagon.
Analysts share this opinion. “Nowadays, unlike the first half of 2008, the market is not ready to accept any price for a cargo railcar. 

Complicated Delivery
Nevertheless, experts think that the rising prices for rolling stock and the shortage of casting are not the most important problems that operators may face in the future. In particular, several affiliates of RZD register a significant growth in oil bulk transportation by water. In the words of Vyacheslav Petrenko, Head of the Freight Transportation Marketing and Tariff Policy Department at RZD, they have discussed several times with oil companies possible terms for oil bulk redirection from water transport to railways. But the oil companies do not show an interest. And one of the reasons for this is railway’s inability to cut tariffs. 
Meanwhile, the rates of river companies are not regulated by the state, thus they are able to offer cheaper transportation. Another fact to be considered is the expanding pipeline network, which makes tank wagons purchase rather risky in the long term. Nowadays, Russia is cutting investment in the development of new oil fields. Consequently, it is unlikely there will appear significant growth in demand for tank wagons, because the advantages of railway lie in the ability to deliver oil to those places where there are no pipelines and to maintain the quality of production. 
Moreover, nowadays, pipelines are taking more and more oil and petrochemicals from railways, and the latter loses because of its prices.
As a result, such a strong competitor as pipelines will strengthen the decline in the market, transportation in tank wagons will fall, thus causing a decline in the demand for rolling stock of this type. In this situation, the producers of tank wagons can count on annual orders equal to the number of tank wagons to be discarded in 2010, i.e. about 12,600 units, say specialists. And this is the most favourable economic scenario. 
By Maria Shevchenko

viewpoint
Andrey Shlensky, 
Commercial Director of Uralvagonzavod:
– An important competitive advantage of a corporation is a closed production cycle, when a metallurgical enterprise produces different moulded pieces for bogies, including most deficit solebars and bogie bolsters. Due to inner reserves, we manage to restrain the prices of the tank wagons we manufacture. Unfortunately, there are price formation factors we can do nothing about. First of all, I mean boiler plates, which we buy from Severstal. The price for them is ballooning, thus we have to increase prices for oil and petrol tank wagons. 

Vitaly Bekuzarov,
CEO of Vladikavkazsky Kirov Wagon Repair Plant:
– In January-May 2010, the dynamics of tank wagon repair were not stable, which was connected with the seasonal decline in transportation volumes. In January-March, the volume of repair work increased, and in April and May it fell by 8.9% compared with March. Simultaneously, the repair volume of this rolling stock grew by 40% year-on-year. 
I would like to emphasise that nowadays the railway transport services market is passing the stage of active formation. The freight transportation market is developing and, consequently, the consumption of repair services is increasing. Taking all this into consideration, Vladikavkazsky Kirov Wagon Repair Plant plans to enlarge the volume of cargo rolling stock repair, including tank wagons for petrochemicals and insulated tank wagons for transportation of different cargoes.
    [~DETAIL_TEXT] => 
Freight Transportation Volume Grows
A slight decline in oil bulk transportation volume in 2009 was expected. This cargo was the only one which had stable transportation figures during the crisis year. The forecast for 2010 was even more optimistic. Thus, in the first months of the year, loading of oil and petrochemicals increased by 10% compared with the same period in 2009. Railwaymen hope for the crisis to weaken its grip on the country’s economy, the recovery of transportation on the domestic market to pre-crisis levels, and the growth of high-quality oil products to be transported by railway.
Economic stability is behind the dynamic growth of the results in the tank wagons production sector, which are second after gondola railcars –amounting to 240,000 units in existence. Of that, 75,000 tank wagons are owned by Freight One.
In 2009, when the wagon building sector either fulfilled sporadic orders or idled, tank wagon producers were the only ones whose production increased in the sector. According to IA INFOLine, last year the volume of their production grew more than two-fold (by more than 3,000 units) in Russia alone. To compare, in 2008, Russian and Ukrainian enterprises produced 6,093 tank wagons for petrochemicals transportation (6,056 units in 2006). Thus, tank wagon production volumes increased even if we compare it with the most profitable year – 2008.  
  It is interesting that sectoral analysts recently said that this rolling stock segment was almost supersaturated. According to the research “Railway Machine Building: Production of Cargo Rolling Stock And Market Situation” made by IA INFOLine, in 2001-2008 Russian private companies purchased over 57,000 tank wagons for petrochemicals transportation, i.e. the rolling stock deficit – if there was one in the segment – was covered. This can be proved by a decline in the demand that started at that time. In 2008, the Russian park of private oil and petrol tank wagons increased by 2,100 units, while 2,500 railcars of this type were added to the private park in 2007.
However, the market situation, when the demand for oil bulk transportation remained stable, and the prices for wagons fell, made large railway operators actively buy new rolling stock. As a result, a number of railcar building companies succeeded in keeping their positions in the market.    

Petrochemical Trend
One can see how attractive this sector is, if one has a look at the plans of enterprises to produce this type of rolling stock in 2010. In particular, the senior managers of Roslavlsky Wagon Repair Plan are discussing opportunities to enlarge the annual volume of tank wagon production. Also, at the end of 2009, the Russian Federal Railway Transport Certification Register gave Armavir Heavy Machine Building Plant a certificate for the serial manufacture of a new model of tank wagon. 
These railcars will transport petrol and other light petrochemicals. Altaivagon (incorporated into Siberia Business Union, SDS) is going to get a certificate to produce tank wagons to transport petrochemicals. We should remember that, in the early 2000s, Altaivagon used to produce tank wagons. Box cars, which the enterprise specializes in producing, were not popular at that time. Specialists at the plant say that the decision to restart the line was made because of the “growing petrochemicals production market.”
“In the first four months of 2010, Uralvagonzavod produced 1,619 tank wagons for petrochemicals, i.e. more than twice as much as in the same period the previous year, when 771 tank wagons were made. Moreover, the volume of tank manufacturing and sale exceed the figures of not only 2009, but of the pre-crisis period 2005-2008 as well,” comments Andrey Shlensky, Commercial Director of Uralvagonzavod. In his view, demand for the rolling stock made the enterprise increase its production volume to 420 tank wagons per month.
There appears the question of whether cargo owners will be able to find enough load in the future. Won’t alternative transport modes (tank containers or pipeline systems) become a barrier for tank wagon producers? “Oil extraction is growing in Russia as well as Kazakhstan. Oil transportation by pipeline is very expensive for a number of companies. That is why they will have to use railways to transport it,” says Abylkasen Baltabaev, Technical Director of Akmolinsky Wagon Repair Plant. 
In his opinion, not all tank wagons survive the anticipated lifetime period, which is 32 years. The rolling stock may be damaged because of breaking exploitation rules, which cuts the working park of this type of wagons. As a result, tank wagons are a rolling stock in deficit, badly needed on the market. 

The Demand Is Growing
However, a more significant argument for tank wagon manufacturing development is the ageing of existing rolling stock. According to different assessments, the optimal number of new tank wagons in the total park is at least 13,000-15,000 per annum, and this is what rolling stock producers count on. Another important factor is that Freight One is discarding a significant number of its worn-out wagons. For this reason, in early 2009, the total park of Freight One reduced by 20%. The average age of discarded wagons was 27 years, while their normal lifetime is 32 years. Thus, in 2009-2015, the lifetime of over 50,000 tank wagons (70%) of Freight One will be over, say specialists at IA INFOLine. 
Experts at leasing companies agree that tank wagons will be a popular type of rolling stock for a long time. Moreover, analysts note that there is still some shortage of them in the oil bulk transportation market that is causing lease rate increases and is partially influencing the prices for new rolling stock. “In the early 2000s, when the freight transportation market was opened up, what the companies purchased was tank wagons. Then the market became saturated, and market players started to pay attention to gondola cars,” tell specialists at Brunswick Rail Leasing. 
Meanwhile, in the middle of 2009, demand for tank wagons started to grow again. The reasons for it were low prices and an increase in transportation volumes.
It is not clear when the market will be saturated this time. Specialists say that, even after the ESPO is put into operation, there will be a lot of work for existing tank wagons – new refineries for oil deep processing are being built in the country. 
Also, there is hardly any enterprise that will invest into a new production line if it is not sure that there will be the demand for its production. “Nowadays, the shortage of capacity for barrel manufacturing restrains the increase in tank wagon production volumes at Uralvagonzavod. The fastest way to solve the problem is to cooperate with other machine building enterprises. 
Since the fourth quarter of 2009, we have been cooperating with Uralkriomash, a part of our corporation. In the second half of the year we may attract some more enterprises into production cooperation,” considers Mr Shlensky. At the same time, senior managers of the corporation emphasise that they are discussing the opportunity of getting additional orders and, consequently, increasing output and tank wagons sales and extending the volume and geography of production cooperation with other machine building enterprises.
Nowadays, operators are still ready to invest at least into rolling stock park renewal. “Due to the crisis, the purchasing power of Russian transport companies has reduced, but they understand that it is necessary to buy new tank wagons. The financial opportunities of operators are returning to pre-crisis levels. The success depends directly on the number of railcars owned,” says one of the senior managers of YUKOS-Transservice. For example, Uralvagonzavod has formed of its orders for tank wagons in 2010 on the basis of, first of all, its work with the corporation’s strategic partner – Vostokneftetrans. 
It was launched in cooperation with Transneft in 2009 in the framework of the East Siberia –Pacific Ocean project. “The participation of Uralvagonzavod in the JV envisages that over 5,000 tank wagons will be given to the authorised capital of the new company,” says Commercial Director of Uralvagonzavod. Simultaneously, all market players note that prices for tank wagons are growing. The reason for it is well known. In March 2010, wagon building enterprises faced a significant rise in prices for the products of metallurgical companies. The increase in the prices of tank wagons makes our partners worry, note senior managers at Uralvagonzavod. Due to these circumstances they have to either cut their orders, or to look for additional financing sources. The main danger is that the increase in prices for metal and final production may make tank wagons lose their investment attractiveness.    
We should mention that the sale activity of Uralvagonzavod is oriented at long-term contracts with state companies. “The commercial services of the enterprise worked hard to adjust new prices in the framework of these long-term contracts. We also attracted new customers. All this kept large volumes of tank wagons manufacturing and sales in at least the second and third quarters of 2010,” he says.
However, there are other factors. “Nowadays, there are only two or four enterprises producing tank wagons and undercarriages in the CIS. There is practically a monopoly which leads to an unreasonable increase in prices for their production. For example: in 2003 our company purchased tank wagons from Azovobschemash for $30,000 and, at the beginning of 2010, this model cost $63,000. That is why the manufacturing of this rolling stock should be developed at other plants,” considers Konstantin Plakitin, Chairman of the Board of Alfa-wagon.
Analysts share this opinion. “Nowadays, unlike the first half of 2008, the market is not ready to accept any price for a cargo railcar. 

Complicated Delivery
Nevertheless, experts think that the rising prices for rolling stock and the shortage of casting are not the most important problems that operators may face in the future. In particular, several affiliates of RZD register a significant growth in oil bulk transportation by water. In the words of Vyacheslav Petrenko, Head of the Freight Transportation Marketing and Tariff Policy Department at RZD, they have discussed several times with oil companies possible terms for oil bulk redirection from water transport to railways. But the oil companies do not show an interest. And one of the reasons for this is railway’s inability to cut tariffs. 
Meanwhile, the rates of river companies are not regulated by the state, thus they are able to offer cheaper transportation. Another fact to be considered is the expanding pipeline network, which makes tank wagons purchase rather risky in the long term. Nowadays, Russia is cutting investment in the development of new oil fields. Consequently, it is unlikely there will appear significant growth in demand for tank wagons, because the advantages of railway lie in the ability to deliver oil to those places where there are no pipelines and to maintain the quality of production. 
Moreover, nowadays, pipelines are taking more and more oil and petrochemicals from railways, and the latter loses because of its prices.
As a result, such a strong competitor as pipelines will strengthen the decline in the market, transportation in tank wagons will fall, thus causing a decline in the demand for rolling stock of this type. In this situation, the producers of tank wagons can count on annual orders equal to the number of tank wagons to be discarded in 2010, i.e. about 12,600 units, say specialists. And this is the most favourable economic scenario. 
By Maria Shevchenko

viewpoint
Andrey Shlensky, 
Commercial Director of Uralvagonzavod:
– An important competitive advantage of a corporation is a closed production cycle, when a metallurgical enterprise produces different moulded pieces for bogies, including most deficit solebars and bogie bolsters. Due to inner reserves, we manage to restrain the prices of the tank wagons we manufacture. Unfortunately, there are price formation factors we can do nothing about. First of all, I mean boiler plates, which we buy from Severstal. The price for them is ballooning, thus we have to increase prices for oil and petrol tank wagons. 

Vitaly Bekuzarov,
CEO of Vladikavkazsky Kirov Wagon Repair Plant:
– In January-May 2010, the dynamics of tank wagon repair were not stable, which was connected with the seasonal decline in transportation volumes. In January-March, the volume of repair work increased, and in April and May it fell by 8.9% compared with March. Simultaneously, the repair volume of this rolling stock grew by 40% year-on-year. 
I would like to emphasise that nowadays the railway transport services market is passing the stage of active formation. The freight transportation market is developing and, consequently, the consumption of repair services is increasing. Taking all this into consideration, Vladikavkazsky Kirov Wagon Repair Plant plans to enlarge the volume of cargo rolling stock repair, including tank wagons for petrochemicals and insulated tank wagons for transportation of different cargoes.
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    [PREVIEW_TEXT] => The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
    [~PREVIEW_TEXT] => The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
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            [SECTION_META_TITLE] => Tank Wagons Are In Short Supply Yet Again
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/24.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/24.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />The statistics shows that oil bulk transportation remained stable even during the crisis. This means that the growth in the production of rolling stock for petrochemicals transportation will continue. However, some experts believe that the future of oil transportation by railway is rather unclear and that, consequently, those investing in tanks may be leaping before they look.
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    [DETAIL_TEXT] => 
The Power of Unity
It is well known that there are some scopes of activity where membership of a self regulating organisation is a precondition for further professional and commercial enterprise. Exactly that trend is observed in building and other branches, where the integration process of self regulating is full swing.
As for rolling-stock companies working in railway (the operators, who have their own carriages and forwarders, who don’t). they are not bound to enter any SRO. But of course they are well able to do this in compliance with the law “About self regulating organisations.” Last year a prototype of the first such organisation was set up. 
At the moment, a non-profit partnership “Council of participants in the railway rolling-stock operator’s services market” (Council of market) unites 26 big operator companies including the daughter companies of JSC RZD (JSC Freight One and TransContainer and affiliated with “RZD” company “Rusagrotrans”). It is planned to register this non-profit company as an SRO; it has by this time the required number of participants. But this is a formal request. The most important item on the agenda is the need for an SRO on the Russian railway transport market.
According to Dmitry Yeremeev – adviser to the President on non-profit partnerships – the creation of JSC “Freight One” (the biggest daughter and dependent company, which has a large rolling stock) has qualitatively changed the railway transport market situation, and it has created new problems, particularly the optimisation of its legal base, transport technologies, costs etc. 
“The situation today requires more activity to answer new problems, - among them are the deficit of infrastructure traffic capacity, which appeared because of complications in the control of empty stock, the maintenance of the interests of operators and infrastructure, the build-up of the services market for wagons leaving when inventory stock is lacking, a legislative and regulatory gap on the reformation process and the improvement of the tariff system and pay system for the natural monopoly”, - notes Mr Yeremeev.
Experts believe there are also additional risks when we speak of business efficiency and the appeal for rolling-stock owners. These are the imperfections of the legal base, and the lack of coordination between market participants on exploitation and optimal use of stock. To keep and develop the institution of operators, the companies should actively help by forming the modern technical and economic base for transport functioning via self-organisation. So the most optimal way here is the creation of a self-regulated organisation. 
Specialists at the “Council of market” consider that an SRO is required both for state and for operators. The State needs a mechanism of market development coordination, which could defend its interests and solve the problems not of only individuals, but of all associates. The operators need such a mechanism to defend their business and to curb state ascendancy in this area. In other words, one of the main SRO functions is the defence of businessmen’s interests via cooperation with authorities. Theoretically, here is a double effect: fewer problems for state government, and more independence and influence for specialists. 
By the way it seems that the Federal railway agency (Roszheldor) is ready to share some of its functions with an SRO. According to the deputy head of the agency, Alan Lushnikov, this will take place when all the risks for all the market participants have been identified. A representative of the Federal tariff service also mentioned that, once the sharing of functions is legalised, they will take part in this discussion. 
But some experts express other opinions about SROs. For example, they think that the activity of such an organisation is first of all directed at being jointly answerable to third parties for possible injury to SRO members. It is not about taking some functions from the government or to protect its members.
However, representatives of operators retort that this cannot be the main objective because companies working in the railway transport sector, which is regulated throughout, are in theory more liable than building companies. So members of “Council of market” think that the build-up of a self-regulating organisation is first of all essential for the protection of operator association from “external influence”.
At the same time, according to the managing director of JSC Sovfracht Andrey Shtribi, SRO functioning as an arbiter is a very interesting idea. “It’s much more effective and it saves money: disputes can be settled faster and cheaper than in a conventional court,” said the expert. But Mr Yeremeev insists that the major objective for operators in a non-profit partnership is the reduction of business risks. And now, at a time when the SRO is in embryonic form, we should decide on its exact rights and responsibilities. 
Managers at the “Council of market” asked private companies to help them define the main risks of operators and, as consequence, define the areas of authority for an SRO, but they didn’t receive a clear answer. Possibly the reason lies in deep differences between operators, who have different purposes and ways of working. 
Some of them are very close to freight owners and sometimes their interests are mutually exclusive. For example, the managing director of “Uralkhim-Trans” Sergey Momzelidze noted that some operators, who always have a guaranteed workload, don’t need to join an SRO. Indeed, a lot of transport companies affiliated with freight owners don’t run the risk of losing work and don’t have problems with accountability to their customers. 

Why is an SRO better than an association? 
The managing director of VKM-Trans, Valeriy Andryushin, among other market participants have a logical question: where is the difference between SRO activity and other non-government communities and associations for operators? 
Different legal and technological undertakings and initiatives have already been developed by many such associations, but the Ministry of Transport and RZD didn’t consider their opinion. So where is the guarantee that the “Council of market” could make progress? Do they need the status of an SRO at all? For example, non-government organisations also have the right to initiate legislation. Unfortunately, market participants don’t have an exact answer to all these questions. On the one hand, an SRO and communities have the same objectives. Possibly, an SRO would have in future more ability to defend the members interests, but it will be in future when law about self-regulation will be developed and improved, so here is the matter also the entry of regulations about SRO in federal law about railway transport in Russian Federation” and “Charter of railway transport in Russian Federation”.
By the way, another transport association, a non-commercial partnership called the “Guild of forwarders” is also going to register as an SRO. The vice-president of this non-commercial partnership, Alevtina Kirillova, noted that the Guild worked from the start as an SRO. Since its existence, it has helped all members (more than 300 companies today), so it would be logical to register as a self-regulating organisation. 
But Mrs Kirillova didn’t answer the question about the exact changes in the system of work and cooperation. In her opinion, first of all the status of the SRO should be consolidated more exactly, it would help to define all the responsibilities of such organisations. 
On the other hand, according to federal law №315 “About self-regulating organisations”, an SRO isn’t so inoffensive a structure. In contrast to a non-government organisation, it can fix standards and rules for business realisation and control maintenance. If membership of an SRO was obligatory it means they must follow its rules. 
Of course, then there is the other apprehension for the potential participants of a railway SRO: will it become a kind of Masonic lodge, where the select few and those affiliated with RZD operators will have influence? Does the market actually need such a regulator? Earlier, there was an independent arbiter – the state, but now there can be more biased one. 

The functions are not clear
In any case, according to executive manager of “Council of market”, Dmitry Korolev, the idea of a non-commercial partnership has already been discussed with the Ministry of transport and JSC “RZD” and a lot of questions raised. That means future SRO de facto starts to defend operators’ interests. At the end of last year, the management of RZD suggested building joint working groups for some areas, that are the most important for companies.During the meetings, the groups discussed follow topics: the law, also last documents projects were made by Ministry of transport, making of model agreements, consolidation of operator status, rolling-stock control etc. But operators are in no hurry to enter the “Council of market”. This non-commercial partnership was registered on the 15th of July 2009, so more than a year ago. 26 operators have become members of this organisation; these are big companies with big private rolling stocks. According to some company representatives, they still don’t know the difference between an SRO and other existing branch organisations, or whether there would be any changes on the market because, earlier, operators’ opinions weren’t taken into account at all. 
Besides, the Council will have a lot of things to do also organizationally. Mr Andryushin proposed to make changes in the Charter of non-commercial partnerships. At the time VKM-Trans wasn’t eligible to enter the new SRO because, according to the article 3 of section 3 in Charter, “membership applicants should have their own stock, and the number of carriages should be more than 1,000”. It means the company which is a de-facto operator but runs rents rolling-stock, can’t become an SRO member. 
Since then, leasing companies have been able to become the members, they have their own rolling stocks, but they are actually not operators (for example, Brunswick Rail Service became a member of the Council of market). According to W.Andryushin, this rules eliminate a lot of operators, even though the creation of such an organisation was to defend operators. At the same time, aside from the uncertainty surrounding its creation and development, SROs face the problem of creating a separate self-regulating company for each kind of transportation. 
The director-general of Refservice, Pavel Ivankin, believes there is the need to make a separate SRO for the branch of perishable goods transportation. In his opinion, JSC Refservice works in a very specialised segment that is socially important and so it would be more efficient to create such as specific organisation. This is a possibility after an SRO appears for railway operators (in compliance with general federal law №315) and after all the details and functions have been defined and improved. 
By Nadezhda Vtorushina
    [~DETAIL_TEXT] => 
The Power of Unity
It is well known that there are some scopes of activity where membership of a self regulating organisation is a precondition for further professional and commercial enterprise. Exactly that trend is observed in building and other branches, where the integration process of self regulating is full swing.
As for rolling-stock companies working in railway (the operators, who have their own carriages and forwarders, who don’t). they are not bound to enter any SRO. But of course they are well able to do this in compliance with the law “About self regulating organisations.” Last year a prototype of the first such organisation was set up. 
At the moment, a non-profit partnership “Council of participants in the railway rolling-stock operator’s services market” (Council of market) unites 26 big operator companies including the daughter companies of JSC RZD (JSC Freight One and TransContainer and affiliated with “RZD” company “Rusagrotrans”). It is planned to register this non-profit company as an SRO; it has by this time the required number of participants. But this is a formal request. The most important item on the agenda is the need for an SRO on the Russian railway transport market.
According to Dmitry Yeremeev – adviser to the President on non-profit partnerships – the creation of JSC “Freight One” (the biggest daughter and dependent company, which has a large rolling stock) has qualitatively changed the railway transport market situation, and it has created new problems, particularly the optimisation of its legal base, transport technologies, costs etc. 
“The situation today requires more activity to answer new problems, - among them are the deficit of infrastructure traffic capacity, which appeared because of complications in the control of empty stock, the maintenance of the interests of operators and infrastructure, the build-up of the services market for wagons leaving when inventory stock is lacking, a legislative and regulatory gap on the reformation process and the improvement of the tariff system and pay system for the natural monopoly”, - notes Mr Yeremeev.
Experts believe there are also additional risks when we speak of business efficiency and the appeal for rolling-stock owners. These are the imperfections of the legal base, and the lack of coordination between market participants on exploitation and optimal use of stock. To keep and develop the institution of operators, the companies should actively help by forming the modern technical and economic base for transport functioning via self-organisation. So the most optimal way here is the creation of a self-regulated organisation. 
Specialists at the “Council of market” consider that an SRO is required both for state and for operators. The State needs a mechanism of market development coordination, which could defend its interests and solve the problems not of only individuals, but of all associates. The operators need such a mechanism to defend their business and to curb state ascendancy in this area. In other words, one of the main SRO functions is the defence of businessmen’s interests via cooperation with authorities. Theoretically, here is a double effect: fewer problems for state government, and more independence and influence for specialists. 
By the way it seems that the Federal railway agency (Roszheldor) is ready to share some of its functions with an SRO. According to the deputy head of the agency, Alan Lushnikov, this will take place when all the risks for all the market participants have been identified. A representative of the Federal tariff service also mentioned that, once the sharing of functions is legalised, they will take part in this discussion. 
But some experts express other opinions about SROs. For example, they think that the activity of such an organisation is first of all directed at being jointly answerable to third parties for possible injury to SRO members. It is not about taking some functions from the government or to protect its members.
However, representatives of operators retort that this cannot be the main objective because companies working in the railway transport sector, which is regulated throughout, are in theory more liable than building companies. So members of “Council of market” think that the build-up of a self-regulating organisation is first of all essential for the protection of operator association from “external influence”.
At the same time, according to the managing director of JSC Sovfracht Andrey Shtribi, SRO functioning as an arbiter is a very interesting idea. “It’s much more effective and it saves money: disputes can be settled faster and cheaper than in a conventional court,” said the expert. But Mr Yeremeev insists that the major objective for operators in a non-profit partnership is the reduction of business risks. And now, at a time when the SRO is in embryonic form, we should decide on its exact rights and responsibilities. 
Managers at the “Council of market” asked private companies to help them define the main risks of operators and, as consequence, define the areas of authority for an SRO, but they didn’t receive a clear answer. Possibly the reason lies in deep differences between operators, who have different purposes and ways of working. 
Some of them are very close to freight owners and sometimes their interests are mutually exclusive. For example, the managing director of “Uralkhim-Trans” Sergey Momzelidze noted that some operators, who always have a guaranteed workload, don’t need to join an SRO. Indeed, a lot of transport companies affiliated with freight owners don’t run the risk of losing work and don’t have problems with accountability to their customers. 

Why is an SRO better than an association? 
The managing director of VKM-Trans, Valeriy Andryushin, among other market participants have a logical question: where is the difference between SRO activity and other non-government communities and associations for operators? 
Different legal and technological undertakings and initiatives have already been developed by many such associations, but the Ministry of Transport and RZD didn’t consider their opinion. So where is the guarantee that the “Council of market” could make progress? Do they need the status of an SRO at all? For example, non-government organisations also have the right to initiate legislation. Unfortunately, market participants don’t have an exact answer to all these questions. On the one hand, an SRO and communities have the same objectives. Possibly, an SRO would have in future more ability to defend the members interests, but it will be in future when law about self-regulation will be developed and improved, so here is the matter also the entry of regulations about SRO in federal law about railway transport in Russian Federation” and “Charter of railway transport in Russian Federation”.
By the way, another transport association, a non-commercial partnership called the “Guild of forwarders” is also going to register as an SRO. The vice-president of this non-commercial partnership, Alevtina Kirillova, noted that the Guild worked from the start as an SRO. Since its existence, it has helped all members (more than 300 companies today), so it would be logical to register as a self-regulating organisation. 
But Mrs Kirillova didn’t answer the question about the exact changes in the system of work and cooperation. In her opinion, first of all the status of the SRO should be consolidated more exactly, it would help to define all the responsibilities of such organisations. 
On the other hand, according to federal law №315 “About self-regulating organisations”, an SRO isn’t so inoffensive a structure. In contrast to a non-government organisation, it can fix standards and rules for business realisation and control maintenance. If membership of an SRO was obligatory it means they must follow its rules. 
Of course, then there is the other apprehension for the potential participants of a railway SRO: will it become a kind of Masonic lodge, where the select few and those affiliated with RZD operators will have influence? Does the market actually need such a regulator? Earlier, there was an independent arbiter – the state, but now there can be more biased one. 

The functions are not clear
In any case, according to executive manager of “Council of market”, Dmitry Korolev, the idea of a non-commercial partnership has already been discussed with the Ministry of transport and JSC “RZD” and a lot of questions raised. That means future SRO de facto starts to defend operators’ interests. At the end of last year, the management of RZD suggested building joint working groups for some areas, that are the most important for companies.During the meetings, the groups discussed follow topics: the law, also last documents projects were made by Ministry of transport, making of model agreements, consolidation of operator status, rolling-stock control etc. But operators are in no hurry to enter the “Council of market”. This non-commercial partnership was registered on the 15th of July 2009, so more than a year ago. 26 operators have become members of this organisation; these are big companies with big private rolling stocks. According to some company representatives, they still don’t know the difference between an SRO and other existing branch organisations, or whether there would be any changes on the market because, earlier, operators’ opinions weren’t taken into account at all. 
Besides, the Council will have a lot of things to do also organizationally. Mr Andryushin proposed to make changes in the Charter of non-commercial partnerships. At the time VKM-Trans wasn’t eligible to enter the new SRO because, according to the article 3 of section 3 in Charter, “membership applicants should have their own stock, and the number of carriages should be more than 1,000”. It means the company which is a de-facto operator but runs rents rolling-stock, can’t become an SRO member. 
Since then, leasing companies have been able to become the members, they have their own rolling stocks, but they are actually not operators (for example, Brunswick Rail Service became a member of the Council of market). According to W.Andryushin, this rules eliminate a lot of operators, even though the creation of such an organisation was to defend operators. At the same time, aside from the uncertainty surrounding its creation and development, SROs face the problem of creating a separate self-regulating company for each kind of transportation. 
The director-general of Refservice, Pavel Ivankin, believes there is the need to make a separate SRO for the branch of perishable goods transportation. In his opinion, JSC Refservice works in a very specialised segment that is socially important and so it would be more efficient to create such as specific organisation. This is a possibility after an SRO appears for railway operators (in compliance with general federal law №315) and after all the details and functions have been defined and improved. 
By Nadezhda Vtorushina
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    [DETAIL_TEXT] => 
The Power of Unity
It is well known that there are some scopes of activity where membership of a self regulating organisation is a precondition for further professional and commercial enterprise. Exactly that trend is observed in building and other branches, where the integration process of self regulating is full swing.
As for rolling-stock companies working in railway (the operators, who have their own carriages and forwarders, who don’t). they are not bound to enter any SRO. But of course they are well able to do this in compliance with the law “About self regulating organisations.” Last year a prototype of the first such organisation was set up. 
At the moment, a non-profit partnership “Council of participants in the railway rolling-stock operator’s services market” (Council of market) unites 26 big operator companies including the daughter companies of JSC RZD (JSC Freight One and TransContainer and affiliated with “RZD” company “Rusagrotrans”). It is planned to register this non-profit company as an SRO; it has by this time the required number of participants. But this is a formal request. The most important item on the agenda is the need for an SRO on the Russian railway transport market.
According to Dmitry Yeremeev – adviser to the President on non-profit partnerships – the creation of JSC “Freight One” (the biggest daughter and dependent company, which has a large rolling stock) has qualitatively changed the railway transport market situation, and it has created new problems, particularly the optimisation of its legal base, transport technologies, costs etc. 
“The situation today requires more activity to answer new problems, - among them are the deficit of infrastructure traffic capacity, which appeared because of complications in the control of empty stock, the maintenance of the interests of operators and infrastructure, the build-up of the services market for wagons leaving when inventory stock is lacking, a legislative and regulatory gap on the reformation process and the improvement of the tariff system and pay system for the natural monopoly”, - notes Mr Yeremeev.
Experts believe there are also additional risks when we speak of business efficiency and the appeal for rolling-stock owners. These are the imperfections of the legal base, and the lack of coordination between market participants on exploitation and optimal use of stock. To keep and develop the institution of operators, the companies should actively help by forming the modern technical and economic base for transport functioning via self-organisation. So the most optimal way here is the creation of a self-regulated organisation. 
Specialists at the “Council of market” consider that an SRO is required both for state and for operators. The State needs a mechanism of market development coordination, which could defend its interests and solve the problems not of only individuals, but of all associates. The operators need such a mechanism to defend their business and to curb state ascendancy in this area. In other words, one of the main SRO functions is the defence of businessmen’s interests via cooperation with authorities. Theoretically, here is a double effect: fewer problems for state government, and more independence and influence for specialists. 
By the way it seems that the Federal railway agency (Roszheldor) is ready to share some of its functions with an SRO. According to the deputy head of the agency, Alan Lushnikov, this will take place when all the risks for all the market participants have been identified. A representative of the Federal tariff service also mentioned that, once the sharing of functions is legalised, they will take part in this discussion. 
But some experts express other opinions about SROs. For example, they think that the activity of such an organisation is first of all directed at being jointly answerable to third parties for possible injury to SRO members. It is not about taking some functions from the government or to protect its members.
However, representatives of operators retort that this cannot be the main objective because companies working in the railway transport sector, which is regulated throughout, are in theory more liable than building companies. So members of “Council of market” think that the build-up of a self-regulating organisation is first of all essential for the protection of operator association from “external influence”.
At the same time, according to the managing director of JSC Sovfracht Andrey Shtribi, SRO functioning as an arbiter is a very interesting idea. “It’s much more effective and it saves money: disputes can be settled faster and cheaper than in a conventional court,” said the expert. But Mr Yeremeev insists that the major objective for operators in a non-profit partnership is the reduction of business risks. And now, at a time when the SRO is in embryonic form, we should decide on its exact rights and responsibilities. 
Managers at the “Council of market” asked private companies to help them define the main risks of operators and, as consequence, define the areas of authority for an SRO, but they didn’t receive a clear answer. Possibly the reason lies in deep differences between operators, who have different purposes and ways of working. 
Some of them are very close to freight owners and sometimes their interests are mutually exclusive. For example, the managing director of “Uralkhim-Trans” Sergey Momzelidze noted that some operators, who always have a guaranteed workload, don’t need to join an SRO. Indeed, a lot of transport companies affiliated with freight owners don’t run the risk of losing work and don’t have problems with accountability to their customers. 

Why is an SRO better than an association? 
The managing director of VKM-Trans, Valeriy Andryushin, among other market participants have a logical question: where is the difference between SRO activity and other non-government communities and associations for operators? 
Different legal and technological undertakings and initiatives have already been developed by many such associations, but the Ministry of Transport and RZD didn’t consider their opinion. So where is the guarantee that the “Council of market” could make progress? Do they need the status of an SRO at all? For example, non-government organisations also have the right to initiate legislation. Unfortunately, market participants don’t have an exact answer to all these questions. On the one hand, an SRO and communities have the same objectives. Possibly, an SRO would have in future more ability to defend the members interests, but it will be in future when law about self-regulation will be developed and improved, so here is the matter also the entry of regulations about SRO in federal law about railway transport in Russian Federation” and “Charter of railway transport in Russian Federation”.
By the way, another transport association, a non-commercial partnership called the “Guild of forwarders” is also going to register as an SRO. The vice-president of this non-commercial partnership, Alevtina Kirillova, noted that the Guild worked from the start as an SRO. Since its existence, it has helped all members (more than 300 companies today), so it would be logical to register as a self-regulating organisation. 
But Mrs Kirillova didn’t answer the question about the exact changes in the system of work and cooperation. In her opinion, first of all the status of the SRO should be consolidated more exactly, it would help to define all the responsibilities of such organisations. 
On the other hand, according to federal law №315 “About self-regulating organisations”, an SRO isn’t so inoffensive a structure. In contrast to a non-government organisation, it can fix standards and rules for business realisation and control maintenance. If membership of an SRO was obligatory it means they must follow its rules. 
Of course, then there is the other apprehension for the potential participants of a railway SRO: will it become a kind of Masonic lodge, where the select few and those affiliated with RZD operators will have influence? Does the market actually need such a regulator? Earlier, there was an independent arbiter – the state, but now there can be more biased one. 

The functions are not clear
In any case, according to executive manager of “Council of market”, Dmitry Korolev, the idea of a non-commercial partnership has already been discussed with the Ministry of transport and JSC “RZD” and a lot of questions raised. That means future SRO de facto starts to defend operators’ interests. At the end of last year, the management of RZD suggested building joint working groups for some areas, that are the most important for companies.During the meetings, the groups discussed follow topics: the law, also last documents projects were made by Ministry of transport, making of model agreements, consolidation of operator status, rolling-stock control etc. But operators are in no hurry to enter the “Council of market”. This non-commercial partnership was registered on the 15th of July 2009, so more than a year ago. 26 operators have become members of this organisation; these are big companies with big private rolling stocks. According to some company representatives, they still don’t know the difference between an SRO and other existing branch organisations, or whether there would be any changes on the market because, earlier, operators’ opinions weren’t taken into account at all. 
Besides, the Council will have a lot of things to do also organizationally. Mr Andryushin proposed to make changes in the Charter of non-commercial partnerships. At the time VKM-Trans wasn’t eligible to enter the new SRO because, according to the article 3 of section 3 in Charter, “membership applicants should have their own stock, and the number of carriages should be more than 1,000”. It means the company which is a de-facto operator but runs rents rolling-stock, can’t become an SRO member. 
Since then, leasing companies have been able to become the members, they have their own rolling stocks, but they are actually not operators (for example, Brunswick Rail Service became a member of the Council of market). According to W.Andryushin, this rules eliminate a lot of operators, even though the creation of such an organisation was to defend operators. At the same time, aside from the uncertainty surrounding its creation and development, SROs face the problem of creating a separate self-regulating company for each kind of transportation. 
The director-general of Refservice, Pavel Ivankin, believes there is the need to make a separate SRO for the branch of perishable goods transportation. In his opinion, JSC Refservice works in a very specialised segment that is socially important and so it would be more efficient to create such as specific organisation. This is a possibility after an SRO appears for railway operators (in compliance with general federal law №315) and after all the details and functions have been defined and improved. 
By Nadezhda Vtorushina
    [~DETAIL_TEXT] => 
The Power of Unity
It is well known that there are some scopes of activity where membership of a self regulating organisation is a precondition for further professional and commercial enterprise. Exactly that trend is observed in building and other branches, where the integration process of self regulating is full swing.
As for rolling-stock companies working in railway (the operators, who have their own carriages and forwarders, who don’t). they are not bound to enter any SRO. But of course they are well able to do this in compliance with the law “About self regulating organisations.” Last year a prototype of the first such organisation was set up. 
At the moment, a non-profit partnership “Council of participants in the railway rolling-stock operator’s services market” (Council of market) unites 26 big operator companies including the daughter companies of JSC RZD (JSC Freight One and TransContainer and affiliated with “RZD” company “Rusagrotrans”). It is planned to register this non-profit company as an SRO; it has by this time the required number of participants. But this is a formal request. The most important item on the agenda is the need for an SRO on the Russian railway transport market.
According to Dmitry Yeremeev – adviser to the President on non-profit partnerships – the creation of JSC “Freight One” (the biggest daughter and dependent company, which has a large rolling stock) has qualitatively changed the railway transport market situation, and it has created new problems, particularly the optimisation of its legal base, transport technologies, costs etc. 
“The situation today requires more activity to answer new problems, - among them are the deficit of infrastructure traffic capacity, which appeared because of complications in the control of empty stock, the maintenance of the interests of operators and infrastructure, the build-up of the services market for wagons leaving when inventory stock is lacking, a legislative and regulatory gap on the reformation process and the improvement of the tariff system and pay system for the natural monopoly”, - notes Mr Yeremeev.
Experts believe there are also additional risks when we speak of business efficiency and the appeal for rolling-stock owners. These are the imperfections of the legal base, and the lack of coordination between market participants on exploitation and optimal use of stock. To keep and develop the institution of operators, the companies should actively help by forming the modern technical and economic base for transport functioning via self-organisation. So the most optimal way here is the creation of a self-regulated organisation. 
Specialists at the “Council of market” consider that an SRO is required both for state and for operators. The State needs a mechanism of market development coordination, which could defend its interests and solve the problems not of only individuals, but of all associates. The operators need such a mechanism to defend their business and to curb state ascendancy in this area. In other words, one of the main SRO functions is the defence of businessmen’s interests via cooperation with authorities. Theoretically, here is a double effect: fewer problems for state government, and more independence and influence for specialists. 
By the way it seems that the Federal railway agency (Roszheldor) is ready to share some of its functions with an SRO. According to the deputy head of the agency, Alan Lushnikov, this will take place when all the risks for all the market participants have been identified. A representative of the Federal tariff service also mentioned that, once the sharing of functions is legalised, they will take part in this discussion. 
But some experts express other opinions about SROs. For example, they think that the activity of such an organisation is first of all directed at being jointly answerable to third parties for possible injury to SRO members. It is not about taking some functions from the government or to protect its members.
However, representatives of operators retort that this cannot be the main objective because companies working in the railway transport sector, which is regulated throughout, are in theory more liable than building companies. So members of “Council of market” think that the build-up of a self-regulating organisation is first of all essential for the protection of operator association from “external influence”.
At the same time, according to the managing director of JSC Sovfracht Andrey Shtribi, SRO functioning as an arbiter is a very interesting idea. “It’s much more effective and it saves money: disputes can be settled faster and cheaper than in a conventional court,” said the expert. But Mr Yeremeev insists that the major objective for operators in a non-profit partnership is the reduction of business risks. And now, at a time when the SRO is in embryonic form, we should decide on its exact rights and responsibilities. 
Managers at the “Council of market” asked private companies to help them define the main risks of operators and, as consequence, define the areas of authority for an SRO, but they didn’t receive a clear answer. Possibly the reason lies in deep differences between operators, who have different purposes and ways of working. 
Some of them are very close to freight owners and sometimes their interests are mutually exclusive. For example, the managing director of “Uralkhim-Trans” Sergey Momzelidze noted that some operators, who always have a guaranteed workload, don’t need to join an SRO. Indeed, a lot of transport companies affiliated with freight owners don’t run the risk of losing work and don’t have problems with accountability to their customers. 

Why is an SRO better than an association? 
The managing director of VKM-Trans, Valeriy Andryushin, among other market participants have a logical question: where is the difference between SRO activity and other non-government communities and associations for operators? 
Different legal and technological undertakings and initiatives have already been developed by many such associations, but the Ministry of Transport and RZD didn’t consider their opinion. So where is the guarantee that the “Council of market” could make progress? Do they need the status of an SRO at all? For example, non-government organisations also have the right to initiate legislation. Unfortunately, market participants don’t have an exact answer to all these questions. On the one hand, an SRO and communities have the same objectives. Possibly, an SRO would have in future more ability to defend the members interests, but it will be in future when law about self-regulation will be developed and improved, so here is the matter also the entry of regulations about SRO in federal law about railway transport in Russian Federation” and “Charter of railway transport in Russian Federation”.
By the way, another transport association, a non-commercial partnership called the “Guild of forwarders” is also going to register as an SRO. The vice-president of this non-commercial partnership, Alevtina Kirillova, noted that the Guild worked from the start as an SRO. Since its existence, it has helped all members (more than 300 companies today), so it would be logical to register as a self-regulating organisation. 
But Mrs Kirillova didn’t answer the question about the exact changes in the system of work and cooperation. In her opinion, first of all the status of the SRO should be consolidated more exactly, it would help to define all the responsibilities of such organisations. 
On the other hand, according to federal law №315 “About self-regulating organisations”, an SRO isn’t so inoffensive a structure. In contrast to a non-government organisation, it can fix standards and rules for business realisation and control maintenance. If membership of an SRO was obligatory it means they must follow its rules. 
Of course, then there is the other apprehension for the potential participants of a railway SRO: will it become a kind of Masonic lodge, where the select few and those affiliated with RZD operators will have influence? Does the market actually need such a regulator? Earlier, there was an independent arbiter – the state, but now there can be more biased one. 

The functions are not clear
In any case, according to executive manager of “Council of market”, Dmitry Korolev, the idea of a non-commercial partnership has already been discussed with the Ministry of transport and JSC “RZD” and a lot of questions raised. That means future SRO de facto starts to defend operators’ interests. At the end of last year, the management of RZD suggested building joint working groups for some areas, that are the most important for companies.During the meetings, the groups discussed follow topics: the law, also last documents projects were made by Ministry of transport, making of model agreements, consolidation of operator status, rolling-stock control etc. But operators are in no hurry to enter the “Council of market”. This non-commercial partnership was registered on the 15th of July 2009, so more than a year ago. 26 operators have become members of this organisation; these are big companies with big private rolling stocks. According to some company representatives, they still don’t know the difference between an SRO and other existing branch organisations, or whether there would be any changes on the market because, earlier, operators’ opinions weren’t taken into account at all. 
Besides, the Council will have a lot of things to do also organizationally. Mr Andryushin proposed to make changes in the Charter of non-commercial partnerships. At the time VKM-Trans wasn’t eligible to enter the new SRO because, according to the article 3 of section 3 in Charter, “membership applicants should have their own stock, and the number of carriages should be more than 1,000”. It means the company which is a de-facto operator but runs rents rolling-stock, can’t become an SRO member. 
Since then, leasing companies have been able to become the members, they have their own rolling stocks, but they are actually not operators (for example, Brunswick Rail Service became a member of the Council of market). According to W.Andryushin, this rules eliminate a lot of operators, even though the creation of such an organisation was to defend operators. At the same time, aside from the uncertainty surrounding its creation and development, SROs face the problem of creating a separate self-regulating company for each kind of transportation. 
The director-general of Refservice, Pavel Ivankin, believes there is the need to make a separate SRO for the branch of perishable goods transportation. In his opinion, JSC Refservice works in a very specialised segment that is socially important and so it would be more efficient to create such as specific organisation. This is a possibility after an SRO appears for railway operators (in compliance with general federal law №315) and after all the details and functions have been defined and improved. 
By Nadezhda Vtorushina
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    [DETAIL_TEXT] => – Mr Rudinov, tell us please what TD RZD’s main activities are. 

– Our company carries out foreign trade activities and represents RZD on the markets in foreign countries; it supplies rolling stock for the carrier’s needs, provides its subsidiaries with material and technical resources and key operating assets; it also serves as a centralised procurement and sales unit for ferrous and non-ferrous scrap metals. 

– Can you please tell us more about each direction? 

– Certainly. Let us start with the Department of Foreign Economic Activities, which offers a wide range of spare parts and components for rolling stock, transport technology and various railway equipment. 
Working in this market sector today, our company has experience in organising export deliveries of parts and other materials for manufacturing and repair purposes, railway castings and other production. Also, this department provides services to Russian companies working in the railway sector promoting their production and services abroad. In the coming years, TD RZD’s priorities in foreign economic activities will be supplying Iran, North Korea, Mongolia, Serbia, Cuba and other countries. 
Rail track materials are among the main types of production provided by the company. The company ships rails, sleepers, gravel, fixing materials and other track materials. We have supplied a good deal of production for railways during our company’s participation in projects with RZD to build railways in such countries as Mongolia, Armenia and North Korea. 
Next is the Department of Infrastructure Projects, which provides the full range of engineering services to prepare and implement railway projects abroad, including those under “turnkey” conditions. 
The main consumer of this service is RZD. In order to fulfil its instructions regarding creation, modernisation and reconstruction of transport infrastructure abroad, the department searches for infrastructure projects, makes a preliminary assessment and explores opportunities and conditions for the carrier to participate in the chosen projects. 
If RZD decides to participate in a project, this department prepares tender proposals, interacts with foreign customers and provides support during the project. 
During the implementation of infrastructure projects, the department solves problems regarding the design, construction, reconstruction and maintenance of railway facilities abroad, including those involving foreign entities and foreign labour. 
Asia-Pacific countries, the Middle East, the CIS and Latin America are considered to be the priority markets in this area. The Department has already completed several projects in Iran, India, Saudi Arabia and other countries. Works are ongoing in Serbia and North Korea, and a project in Cuba is under consideration. 
Supplies for RZD’s subsidiaries is among the key activities of TD RZD’s Material & Technical Provision Department. The process of this business includes improving the supply chain that provides material & technical resources and equipment for the needs of RZD’s subsidiaries, both in their general and investment activities. 
The development of this department is taking place in three key areas. First one is creation of an electronic exchange for material assets, which will make it possible to serve RZD by organising tenders between its companies both in the sphere of material & technical provision and selling rolling stock or scrap metals. 
The second direction is creation an automated material management centre, which is to maximise service quality in supplying material and technical resources, making delivery times shorter via thorough planning of delivery logistics, increasing turnover of material resources and safeguarding the good of TD RZD customers. 
During the implementation of logistic activities in material and technical provision, the department is to establish a sectoral stock management system with the use of logistics distribution centres. 
And finally, the third direction is a network of logistics centres (18 of them, according to preliminary estimates) will be created to centralise the sectoral inventory of enterprises located in the service range of up to 350 kilometres. The result of the inventory centralisation, in which each enterprise is supplied with 24 hours’ worth of stock every day, will considerably increase material turnover, reduce inventory norms at enterprises and release working capital funds. Wholesale centralised supplies of material and technical resources will optimise purchasing prices and increase the economic efficiency of RZD’s supply system. 
RZD Trading House is also empowered to bring order to the procurement and sales of ferrous and non-ferrous metals in RZD. A special Department of Scrap Metals Procurement and Sales has been created in order to properly fulfil this function. 
The main current activity of this department for RZD is the centralised storage and sale of scrap metal. The structure of the department allows for the organisation of all stages of this business process. It includes: Production Department, Development Department, Scrap Metal Sales Department, Wagon Spare Parts Department and 15 regional business divisions. 
The next department in TD RZD is Supply Chain, which provides traction rolling stock, motor-carriages (electric trains, diesel trains and rail buses) and passenger carriages, following the investment program of RZD and its affiliates. TD RZD delivers wagons and locomotives manufactured using the latest technologies and materials which meet all safety and comfort requirements. 
A large part of the department’s work is carrying out reclamation and making claims during the warranty period of the rolling stock’s life. The development of the vehicle and equipment production market is promising to increase the workload for this department. Currently, it delivers rolling stock to 17 railways in the Russian Federation. 

– It is obvious that your company has a serious approach to business. Also, as far as I know, you have recently launched a new site? 

– You are right. This year, on the 20th of May, a new RZD Trading House website was put into operation, and now our portal is well-structured and customer focused. 
The concept for the new version of the site www.tdrzd.ru differs from the previous one. The main goal set at its creation was to increase the information content of the resource, which should provide maximum flexibility for our partners, customers and the wider Internet audience in obtaining data about TD RZD. 
The new resource is based on modern technologies and takes into account the experience gained during the operation of the previous version. It is distinguished by its completely updated design and a high degree of interactivity and visualisation. 

– What would you like to say to your potential partners? 

– Our company is able to provide our partners with all the necessary goods and related services, and to offer integrated solutions using the opportunities afforded by Russian railway enterprises. 
I would like to emphasise that TD RZD is seeking to establish open relations. We always welcome interesting cooperation. It is easy to work with us! 
Interviewed by Yaroslav Novgorodsky
    [~DETAIL_TEXT] => – Mr Rudinov, tell us please what TD RZD’s main activities are. 

– Our company carries out foreign trade activities and represents RZD on the markets in foreign countries; it supplies rolling stock for the carrier’s needs, provides its subsidiaries with material and technical resources and key operating assets; it also serves as a centralised procurement and sales unit for ferrous and non-ferrous scrap metals. 

– Can you please tell us more about each direction? 

– Certainly. Let us start with the Department of Foreign Economic Activities, which offers a wide range of spare parts and components for rolling stock, transport technology and various railway equipment. 
Working in this market sector today, our company has experience in organising export deliveries of parts and other materials for manufacturing and repair purposes, railway castings and other production. Also, this department provides services to Russian companies working in the railway sector promoting their production and services abroad. In the coming years, TD RZD’s priorities in foreign economic activities will be supplying Iran, North Korea, Mongolia, Serbia, Cuba and other countries. 
Rail track materials are among the main types of production provided by the company. The company ships rails, sleepers, gravel, fixing materials and other track materials. We have supplied a good deal of production for railways during our company’s participation in projects with RZD to build railways in such countries as Mongolia, Armenia and North Korea. 
Next is the Department of Infrastructure Projects, which provides the full range of engineering services to prepare and implement railway projects abroad, including those under “turnkey” conditions. 
The main consumer of this service is RZD. In order to fulfil its instructions regarding creation, modernisation and reconstruction of transport infrastructure abroad, the department searches for infrastructure projects, makes a preliminary assessment and explores opportunities and conditions for the carrier to participate in the chosen projects. 
If RZD decides to participate in a project, this department prepares tender proposals, interacts with foreign customers and provides support during the project. 
During the implementation of infrastructure projects, the department solves problems regarding the design, construction, reconstruction and maintenance of railway facilities abroad, including those involving foreign entities and foreign labour. 
Asia-Pacific countries, the Middle East, the CIS and Latin America are considered to be the priority markets in this area. The Department has already completed several projects in Iran, India, Saudi Arabia and other countries. Works are ongoing in Serbia and North Korea, and a project in Cuba is under consideration. 
Supplies for RZD’s subsidiaries is among the key activities of TD RZD’s Material & Technical Provision Department. The process of this business includes improving the supply chain that provides material & technical resources and equipment for the needs of RZD’s subsidiaries, both in their general and investment activities. 
The development of this department is taking place in three key areas. First one is creation of an electronic exchange for material assets, which will make it possible to serve RZD by organising tenders between its companies both in the sphere of material & technical provision and selling rolling stock or scrap metals. 
The second direction is creation an automated material management centre, which is to maximise service quality in supplying material and technical resources, making delivery times shorter via thorough planning of delivery logistics, increasing turnover of material resources and safeguarding the good of TD RZD customers. 
During the implementation of logistic activities in material and technical provision, the department is to establish a sectoral stock management system with the use of logistics distribution centres. 
And finally, the third direction is a network of logistics centres (18 of them, according to preliminary estimates) will be created to centralise the sectoral inventory of enterprises located in the service range of up to 350 kilometres. The result of the inventory centralisation, in which each enterprise is supplied with 24 hours’ worth of stock every day, will considerably increase material turnover, reduce inventory norms at enterprises and release working capital funds. Wholesale centralised supplies of material and technical resources will optimise purchasing prices and increase the economic efficiency of RZD’s supply system. 
RZD Trading House is also empowered to bring order to the procurement and sales of ferrous and non-ferrous metals in RZD. A special Department of Scrap Metals Procurement and Sales has been created in order to properly fulfil this function. 
The main current activity of this department for RZD is the centralised storage and sale of scrap metal. The structure of the department allows for the organisation of all stages of this business process. It includes: Production Department, Development Department, Scrap Metal Sales Department, Wagon Spare Parts Department and 15 regional business divisions. 
The next department in TD RZD is Supply Chain, which provides traction rolling stock, motor-carriages (electric trains, diesel trains and rail buses) and passenger carriages, following the investment program of RZD and its affiliates. TD RZD delivers wagons and locomotives manufactured using the latest technologies and materials which meet all safety and comfort requirements. 
A large part of the department’s work is carrying out reclamation and making claims during the warranty period of the rolling stock’s life. The development of the vehicle and equipment production market is promising to increase the workload for this department. Currently, it delivers rolling stock to 17 railways in the Russian Federation. 

– It is obvious that your company has a serious approach to business. Also, as far as I know, you have recently launched a new site? 

– You are right. This year, on the 20th of May, a new RZD Trading House website was put into operation, and now our portal is well-structured and customer focused. 
The concept for the new version of the site www.tdrzd.ru differs from the previous one. The main goal set at its creation was to increase the information content of the resource, which should provide maximum flexibility for our partners, customers and the wider Internet audience in obtaining data about TD RZD. 
The new resource is based on modern technologies and takes into account the experience gained during the operation of the previous version. It is distinguished by its completely updated design and a high degree of interactivity and visualisation. 

– What would you like to say to your potential partners? 

– Our company is able to provide our partners with all the necessary goods and related services, and to offer integrated solutions using the opportunities afforded by Russian railway enterprises. 
I would like to emphasise that TD RZD is seeking to establish open relations. We always welcome interesting cooperation. It is easy to work with us! 
Interviewed by Yaroslav Novgorodsky
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    [DETAIL_TEXT] => – Mr Rudinov, tell us please what TD RZD’s main activities are. 

– Our company carries out foreign trade activities and represents RZD on the markets in foreign countries; it supplies rolling stock for the carrier’s needs, provides its subsidiaries with material and technical resources and key operating assets; it also serves as a centralised procurement and sales unit for ferrous and non-ferrous scrap metals. 

– Can you please tell us more about each direction? 

– Certainly. Let us start with the Department of Foreign Economic Activities, which offers a wide range of spare parts and components for rolling stock, transport technology and various railway equipment. 
Working in this market sector today, our company has experience in organising export deliveries of parts and other materials for manufacturing and repair purposes, railway castings and other production. Also, this department provides services to Russian companies working in the railway sector promoting their production and services abroad. In the coming years, TD RZD’s priorities in foreign economic activities will be supplying Iran, North Korea, Mongolia, Serbia, Cuba and other countries. 
Rail track materials are among the main types of production provided by the company. The company ships rails, sleepers, gravel, fixing materials and other track materials. We have supplied a good deal of production for railways during our company’s participation in projects with RZD to build railways in such countries as Mongolia, Armenia and North Korea. 
Next is the Department of Infrastructure Projects, which provides the full range of engineering services to prepare and implement railway projects abroad, including those under “turnkey” conditions. 
The main consumer of this service is RZD. In order to fulfil its instructions regarding creation, modernisation and reconstruction of transport infrastructure abroad, the department searches for infrastructure projects, makes a preliminary assessment and explores opportunities and conditions for the carrier to participate in the chosen projects. 
If RZD decides to participate in a project, this department prepares tender proposals, interacts with foreign customers and provides support during the project. 
During the implementation of infrastructure projects, the department solves problems regarding the design, construction, reconstruction and maintenance of railway facilities abroad, including those involving foreign entities and foreign labour. 
Asia-Pacific countries, the Middle East, the CIS and Latin America are considered to be the priority markets in this area. The Department has already completed several projects in Iran, India, Saudi Arabia and other countries. Works are ongoing in Serbia and North Korea, and a project in Cuba is under consideration. 
Supplies for RZD’s subsidiaries is among the key activities of TD RZD’s Material & Technical Provision Department. The process of this business includes improving the supply chain that provides material & technical resources and equipment for the needs of RZD’s subsidiaries, both in their general and investment activities. 
The development of this department is taking place in three key areas. First one is creation of an electronic exchange for material assets, which will make it possible to serve RZD by organising tenders between its companies both in the sphere of material & technical provision and selling rolling stock or scrap metals. 
The second direction is creation an automated material management centre, which is to maximise service quality in supplying material and technical resources, making delivery times shorter via thorough planning of delivery logistics, increasing turnover of material resources and safeguarding the good of TD RZD customers. 
During the implementation of logistic activities in material and technical provision, the department is to establish a sectoral stock management system with the use of logistics distribution centres. 
And finally, the third direction is a network of logistics centres (18 of them, according to preliminary estimates) will be created to centralise the sectoral inventory of enterprises located in the service range of up to 350 kilometres. The result of the inventory centralisation, in which each enterprise is supplied with 24 hours’ worth of stock every day, will considerably increase material turnover, reduce inventory norms at enterprises and release working capital funds. Wholesale centralised supplies of material and technical resources will optimise purchasing prices and increase the economic efficiency of RZD’s supply system. 
RZD Trading House is also empowered to bring order to the procurement and sales of ferrous and non-ferrous metals in RZD. A special Department of Scrap Metals Procurement and Sales has been created in order to properly fulfil this function. 
The main current activity of this department for RZD is the centralised storage and sale of scrap metal. The structure of the department allows for the organisation of all stages of this business process. It includes: Production Department, Development Department, Scrap Metal Sales Department, Wagon Spare Parts Department and 15 regional business divisions. 
The next department in TD RZD is Supply Chain, which provides traction rolling stock, motor-carriages (electric trains, diesel trains and rail buses) and passenger carriages, following the investment program of RZD and its affiliates. TD RZD delivers wagons and locomotives manufactured using the latest technologies and materials which meet all safety and comfort requirements. 
A large part of the department’s work is carrying out reclamation and making claims during the warranty period of the rolling stock’s life. The development of the vehicle and equipment production market is promising to increase the workload for this department. Currently, it delivers rolling stock to 17 railways in the Russian Federation. 

– It is obvious that your company has a serious approach to business. Also, as far as I know, you have recently launched a new site? 

– You are right. This year, on the 20th of May, a new RZD Trading House website was put into operation, and now our portal is well-structured and customer focused. 
The concept for the new version of the site www.tdrzd.ru differs from the previous one. The main goal set at its creation was to increase the information content of the resource, which should provide maximum flexibility for our partners, customers and the wider Internet audience in obtaining data about TD RZD. 
The new resource is based on modern technologies and takes into account the experience gained during the operation of the previous version. It is distinguished by its completely updated design and a high degree of interactivity and visualisation. 

– What would you like to say to your potential partners? 

– Our company is able to provide our partners with all the necessary goods and related services, and to offer integrated solutions using the opportunities afforded by Russian railway enterprises. 
I would like to emphasise that TD RZD is seeking to establish open relations. We always welcome interesting cooperation. It is easy to work with us! 
Interviewed by Yaroslav Novgorodsky
    [~DETAIL_TEXT] => – Mr Rudinov, tell us please what TD RZD’s main activities are. 

– Our company carries out foreign trade activities and represents RZD on the markets in foreign countries; it supplies rolling stock for the carrier’s needs, provides its subsidiaries with material and technical resources and key operating assets; it also serves as a centralised procurement and sales unit for ferrous and non-ferrous scrap metals. 

– Can you please tell us more about each direction? 

– Certainly. Let us start with the Department of Foreign Economic Activities, which offers a wide range of spare parts and components for rolling stock, transport technology and various railway equipment. 
Working in this market sector today, our company has experience in organising export deliveries of parts and other materials for manufacturing and repair purposes, railway castings and other production. Also, this department provides services to Russian companies working in the railway sector promoting their production and services abroad. In the coming years, TD RZD’s priorities in foreign economic activities will be supplying Iran, North Korea, Mongolia, Serbia, Cuba and other countries. 
Rail track materials are among the main types of production provided by the company. The company ships rails, sleepers, gravel, fixing materials and other track materials. We have supplied a good deal of production for railways during our company’s participation in projects with RZD to build railways in such countries as Mongolia, Armenia and North Korea. 
Next is the Department of Infrastructure Projects, which provides the full range of engineering services to prepare and implement railway projects abroad, including those under “turnkey” conditions. 
The main consumer of this service is RZD. In order to fulfil its instructions regarding creation, modernisation and reconstruction of transport infrastructure abroad, the department searches for infrastructure projects, makes a preliminary assessment and explores opportunities and conditions for the carrier to participate in the chosen projects. 
If RZD decides to participate in a project, this department prepares tender proposals, interacts with foreign customers and provides support during the project. 
During the implementation of infrastructure projects, the department solves problems regarding the design, construction, reconstruction and maintenance of railway facilities abroad, including those involving foreign entities and foreign labour. 
Asia-Pacific countries, the Middle East, the CIS and Latin America are considered to be the priority markets in this area. The Department has already completed several projects in Iran, India, Saudi Arabia and other countries. Works are ongoing in Serbia and North Korea, and a project in Cuba is under consideration. 
Supplies for RZD’s subsidiaries is among the key activities of TD RZD’s Material & Technical Provision Department. The process of this business includes improving the supply chain that provides material & technical resources and equipment for the needs of RZD’s subsidiaries, both in their general and investment activities. 
The development of this department is taking place in three key areas. First one is creation of an electronic exchange for material assets, which will make it possible to serve RZD by organising tenders between its companies both in the sphere of material & technical provision and selling rolling stock or scrap metals. 
The second direction is creation an automated material management centre, which is to maximise service quality in supplying material and technical resources, making delivery times shorter via thorough planning of delivery logistics, increasing turnover of material resources and safeguarding the good of TD RZD customers. 
During the implementation of logistic activities in material and technical provision, the department is to establish a sectoral stock management system with the use of logistics distribution centres. 
And finally, the third direction is a network of logistics centres (18 of them, according to preliminary estimates) will be created to centralise the sectoral inventory of enterprises located in the service range of up to 350 kilometres. The result of the inventory centralisation, in which each enterprise is supplied with 24 hours’ worth of stock every day, will considerably increase material turnover, reduce inventory norms at enterprises and release working capital funds. Wholesale centralised supplies of material and technical resources will optimise purchasing prices and increase the economic efficiency of RZD’s supply system. 
RZD Trading House is also empowered to bring order to the procurement and sales of ferrous and non-ferrous metals in RZD. A special Department of Scrap Metals Procurement and Sales has been created in order to properly fulfil this function. 
The main current activity of this department for RZD is the centralised storage and sale of scrap metal. The structure of the department allows for the organisation of all stages of this business process. It includes: Production Department, Development Department, Scrap Metal Sales Department, Wagon Spare Parts Department and 15 regional business divisions. 
The next department in TD RZD is Supply Chain, which provides traction rolling stock, motor-carriages (electric trains, diesel trains and rail buses) and passenger carriages, following the investment program of RZD and its affiliates. TD RZD delivers wagons and locomotives manufactured using the latest technologies and materials which meet all safety and comfort requirements. 
A large part of the department’s work is carrying out reclamation and making claims during the warranty period of the rolling stock’s life. The development of the vehicle and equipment production market is promising to increase the workload for this department. Currently, it delivers rolling stock to 17 railways in the Russian Federation. 

– It is obvious that your company has a serious approach to business. Also, as far as I know, you have recently launched a new site? 

– You are right. This year, on the 20th of May, a new RZD Trading House website was put into operation, and now our portal is well-structured and customer focused. 
The concept for the new version of the site www.tdrzd.ru differs from the previous one. The main goal set at its creation was to increase the information content of the resource, which should provide maximum flexibility for our partners, customers and the wider Internet audience in obtaining data about TD RZD. 
The new resource is based on modern technologies and takes into account the experience gained during the operation of the previous version. It is distinguished by its completely updated design and a high degree of interactivity and visualisation. 

– What would you like to say to your potential partners? 

– Our company is able to provide our partners with all the necessary goods and related services, and to offer integrated solutions using the opportunities afforded by Russian railway enterprises. 
I would like to emphasise that TD RZD is seeking to establish open relations. We always welcome interesting cooperation. It is easy to work with us! 
Interviewed by Yaroslav Novgorodsky
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    [DETAIL_TEXT] => 
Coming Here Proved the right move 
– Mr Rogan, what’s the core of your company’s business in Russia and how long have you been operating here?

– Priority Freight acquired AJR Logistics, an international forwarding company with Russian clients and a Russian affiliate company, in 2009 as a way of safely entering the Russian market.  Both Priority Freight and the original AJR Logistics Russian business focused on supporting our clients’ lean business practices and reducing the amount of time that their goods spend in transit.  
We achieve this by providing rapid collection, guaranteed capacity on airlift and the fastest customs clearance service for VOR (Vehicle Off Road) type and factory shutdown consignments. Our container service for strategic inbound logistics flows parallels our air service with similar advantages and for regular shipments. We offer fast multi modal transport for containerised traffic using both sea and rail in addition to normal overland truck routes. Most of the flows are between the EU, Japan and Russia, but we have a world-wide network that is constantly in use. I first came to Russia in 2004 and spent nearly a year learning some of the nuances and then started trading in 2005. 

– What was behind the decision for your company to start doing business here? 

– My 28 years in the logistics industry had been predominantly spent in the European and US markets with some Middle and Far East experience. In 2004 I looked to develop new niche markets and examined the BRIC economies. Russia was attractive when compared with Brazil, China and India. Despite the current economic crisis, Russia is and will continue to grow in importance as a strategic market for consumer goods due to its energy exporting ability. This was true in 2004 when the original business was founded and is just as applicable during the crisis. The barriers to market entry are higher than in other countries, but worth it, since Russia will continue to be one of the most interesting countries for long-term business investment for many years.

– What’s the development strategy of Priority Freight in Russia? 

– Priority Freight is a niche logistics provider that offers a selection of services required by the automotive and many other manufacturing sectors. We have developed a solid list of clients based on our expertise and will continue to work along the same lines. Although we are focused on growth, we are aware that if the company becomes too large, we run the risk of losing the flexibility and precise coordination that our clients require. 

You Need More Than Good Intentions and Common Sense
– In particular, what differentiates doing business in Russia from doing business in other countries? I mean in terms of clients, partners, regulation, and even the weather. 

– Everything is a bit different. Bureaucracy here is much more complex and opaque in all areas (taxes, employment, transport, customs, etc.) than in many other countries, so you have to have an extensive local knowledge base to operate a business successfully. Good intentions and common sense are usually not enough.  
Historically, the goal of Russian bureaucracy has been to support and protect the state, not facilitate private business or entrepreneurship.  The Russian government has recently begun several initiatives to make business and development in Russia easier, but it remains to be seen how fast that will translate into real positive changes.  
The weather is extreme, meaning that equipment and infrastructure have to be built accordingly. Roads, airports and seaports and all the associated equipment have to be made to withstand a temperature spectrum that spans at least eighty degrees in any given year. Despite the best efforts of engineers, there are main supply roads that are closed for five months of the year since no one has been able to develop paving and drainage systems that can cope with the local environment.   
The biggest difference in doing business in Russia is the lack of trust in the market. The causes are numerous and not relevant here, but the result is that you need to spend much more time getting to know new partners, clients or service providers to develop the level of trust needed to do effective business than in other countries.  

– What’s your opinion, is competition between logistics companies in Russia tough? Is there special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is it all the same regardless of the origin of a company? 

– Competition in Russia is hard, but does not generally run along Russian vs. foreign lines. Many Russian logistics companies developed out of an industrial conglomerate or a specific region, and so specialise in providing services to a specific industry or geographical area.  It is often not economical for a foreign company to compete with a regional supplier for geographical or bureaucratic reasons so foreign companies will often remain at a national level and use the local companies as sub-contractors for specific regional projects, avoiding direct competition.
Competition is more effectively divided between the market giants and the other niche companies.  The lack of trust in the market mentioned earlier means that companies look for the largest, most well--known supplier they can find in order to minimise their exposure to fraud or other types of loss. It is therefore not unusual for a client to choose the largest logistics provider available, regardless of how well the provider does or does not mesh with the client’s operation and goals. 

– What is your estimation of the quality of transport services in Russia compared with those in Europe?

– Objectively speaking, the comparison is not always accurate since Russia has a much greater geographic spread and population dispersion than Europe. Subjectively, most Russian transport services do not operate at the same level as their European counterparts. Network dispersion combined with factors such as local bureaucracy and weather create a very challenging environment for any type of transport development.

– Transport infrastructure is often poorly developed in Russia. Where are the most difficult bottle-necks? 

– Our historical primary focus, air cargo is probably the most developed segment of Russia’s infrastructure. In proportion to geographical size and economic potential the road network is quite underdeveloped. Russian/Soviet logistics were rail-based, so the basic network is present, but service suffers from a lack of modernisation and the RZD monopoly.   
– What is important for a foreign logistics services provider\shipper to note when operating in Russia? If you are contacted by a Western shipper who wants his cargoes to be transported into Russia, what would you recommend? 
– Russia has a much higher level of bureaucracy than most other countries.  The amount and detail of shipment and clearance documents as well as advance planning for the shipment itself is much greater and requires more experienced staff than in other countries. There is a large and often dangerous assumption on the part of many corporations that operations in Russian can’t be different from the UK or US even if they are told otherwise. A large part of our work with new clients is getting them adjusted to the way things need to be done in order to have successful, long-term shipments to Russia.  

Crisis: Not Fearful, But May Have Long-Term Consequences 
– Talking about the kind of cargoes you are dealing with, do you see any new trends here? I mean, are some kinds of cargo becoming more popular while others decline?

– Most of our cargo volume is a function of Russian interest in nonessential consumer goods as opposed to strategic/infrastructure projects. Our volumes dropped along with all the other companies in the market when Russia’s disposable income disappeared during the crisis. However the crisis is temporary and I think that you will see an increase in consumer goods in the same proportions as pre-2008. 

– When you hire Russian specialists, are there any difficulties in cross-cultural communication?

– Overall, the differences are not that great. In my experience as a manager, when you give someone a task in the US for example, they are expected to view the task as part of a whole and overlap into other areas without additional instruction if necessary. Russians have more of a tendency to do only the specific task assigned.

– The Russian Customs service is well-known for the difficulties it creates for the business community. What kind of problems do you face regarding customs operations?

– As you know, Russian Customs implemented a new set of regulations and guidelines on July 1.Customs are still getting acquainted with the new rules and all of their practical implementation, so everyone is on a bit of a learning curve  Also, various government initiatives have resulted in the Customs Service upper management increasing the amount of pressure on the operational staff for better performance (faster, more accurate, more ethical), resulting in staff who cannot make basic decisions during the clearance process for fear of getting it wrong and being punished by superiors. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– Right now it has not made any company’s life easier, since everyone, Customs included, are a bit confused on some of the nuances.  In a couple of months, companies that are focused regionally on Russia and Kazakhstan should see benefits and the market as a whole will probably see some improvements in a year or so.

– And, of course, the crisis, it’d have been odd if I had not asked you about this. You’ve already mentioned it, but: how has it influenced the sphere in which you are working? Does it bring any threats to Russian logistics?

– Many of the smaller companies were forced out of the market when the demand for consumer goods imports dropped. Many companies that are still here do not have the capital or market insight to undertake any new developments so for the most part , everyone is still being very conservative. The crisis has delayed much-needed large scale infrastructure and logistics projects for several years and that will in turn affect how effective logistics in Russia can be for the next several years. 
Interviewed by Ivan Stupachenko 
    [~DETAIL_TEXT] => 
Coming Here Proved the right move 
– Mr Rogan, what’s the core of your company’s business in Russia and how long have you been operating here?

– Priority Freight acquired AJR Logistics, an international forwarding company with Russian clients and a Russian affiliate company, in 2009 as a way of safely entering the Russian market.  Both Priority Freight and the original AJR Logistics Russian business focused on supporting our clients’ lean business practices and reducing the amount of time that their goods spend in transit.  
We achieve this by providing rapid collection, guaranteed capacity on airlift and the fastest customs clearance service for VOR (Vehicle Off Road) type and factory shutdown consignments. Our container service for strategic inbound logistics flows parallels our air service with similar advantages and for regular shipments. We offer fast multi modal transport for containerised traffic using both sea and rail in addition to normal overland truck routes. Most of the flows are between the EU, Japan and Russia, but we have a world-wide network that is constantly in use. I first came to Russia in 2004 and spent nearly a year learning some of the nuances and then started trading in 2005. 

– What was behind the decision for your company to start doing business here? 

– My 28 years in the logistics industry had been predominantly spent in the European and US markets with some Middle and Far East experience. In 2004 I looked to develop new niche markets and examined the BRIC economies. Russia was attractive when compared with Brazil, China and India. Despite the current economic crisis, Russia is and will continue to grow in importance as a strategic market for consumer goods due to its energy exporting ability. This was true in 2004 when the original business was founded and is just as applicable during the crisis. The barriers to market entry are higher than in other countries, but worth it, since Russia will continue to be one of the most interesting countries for long-term business investment for many years.

– What’s the development strategy of Priority Freight in Russia? 

– Priority Freight is a niche logistics provider that offers a selection of services required by the automotive and many other manufacturing sectors. We have developed a solid list of clients based on our expertise and will continue to work along the same lines. Although we are focused on growth, we are aware that if the company becomes too large, we run the risk of losing the flexibility and precise coordination that our clients require. 

You Need More Than Good Intentions and Common Sense
– In particular, what differentiates doing business in Russia from doing business in other countries? I mean in terms of clients, partners, regulation, and even the weather. 

– Everything is a bit different. Bureaucracy here is much more complex and opaque in all areas (taxes, employment, transport, customs, etc.) than in many other countries, so you have to have an extensive local knowledge base to operate a business successfully. Good intentions and common sense are usually not enough.  
Historically, the goal of Russian bureaucracy has been to support and protect the state, not facilitate private business or entrepreneurship.  The Russian government has recently begun several initiatives to make business and development in Russia easier, but it remains to be seen how fast that will translate into real positive changes.  
The weather is extreme, meaning that equipment and infrastructure have to be built accordingly. Roads, airports and seaports and all the associated equipment have to be made to withstand a temperature spectrum that spans at least eighty degrees in any given year. Despite the best efforts of engineers, there are main supply roads that are closed for five months of the year since no one has been able to develop paving and drainage systems that can cope with the local environment.   
The biggest difference in doing business in Russia is the lack of trust in the market. The causes are numerous and not relevant here, but the result is that you need to spend much more time getting to know new partners, clients or service providers to develop the level of trust needed to do effective business than in other countries.  

– What’s your opinion, is competition between logistics companies in Russia tough? Is there special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is it all the same regardless of the origin of a company? 

– Competition in Russia is hard, but does not generally run along Russian vs. foreign lines. Many Russian logistics companies developed out of an industrial conglomerate or a specific region, and so specialise in providing services to a specific industry or geographical area.  It is often not economical for a foreign company to compete with a regional supplier for geographical or bureaucratic reasons so foreign companies will often remain at a national level and use the local companies as sub-contractors for specific regional projects, avoiding direct competition.
Competition is more effectively divided between the market giants and the other niche companies.  The lack of trust in the market mentioned earlier means that companies look for the largest, most well--known supplier they can find in order to minimise their exposure to fraud or other types of loss. It is therefore not unusual for a client to choose the largest logistics provider available, regardless of how well the provider does or does not mesh with the client’s operation and goals. 

– What is your estimation of the quality of transport services in Russia compared with those in Europe?

– Objectively speaking, the comparison is not always accurate since Russia has a much greater geographic spread and population dispersion than Europe. Subjectively, most Russian transport services do not operate at the same level as their European counterparts. Network dispersion combined with factors such as local bureaucracy and weather create a very challenging environment for any type of transport development.

– Transport infrastructure is often poorly developed in Russia. Where are the most difficult bottle-necks? 

– Our historical primary focus, air cargo is probably the most developed segment of Russia’s infrastructure. In proportion to geographical size and economic potential the road network is quite underdeveloped. Russian/Soviet logistics were rail-based, so the basic network is present, but service suffers from a lack of modernisation and the RZD monopoly.   
– What is important for a foreign logistics services provider\shipper to note when operating in Russia? If you are contacted by a Western shipper who wants his cargoes to be transported into Russia, what would you recommend? 
– Russia has a much higher level of bureaucracy than most other countries.  The amount and detail of shipment and clearance documents as well as advance planning for the shipment itself is much greater and requires more experienced staff than in other countries. There is a large and often dangerous assumption on the part of many corporations that operations in Russian can’t be different from the UK or US even if they are told otherwise. A large part of our work with new clients is getting them adjusted to the way things need to be done in order to have successful, long-term shipments to Russia.  

Crisis: Not Fearful, But May Have Long-Term Consequences 
– Talking about the kind of cargoes you are dealing with, do you see any new trends here? I mean, are some kinds of cargo becoming more popular while others decline?

– Most of our cargo volume is a function of Russian interest in nonessential consumer goods as opposed to strategic/infrastructure projects. Our volumes dropped along with all the other companies in the market when Russia’s disposable income disappeared during the crisis. However the crisis is temporary and I think that you will see an increase in consumer goods in the same proportions as pre-2008. 

– When you hire Russian specialists, are there any difficulties in cross-cultural communication?

– Overall, the differences are not that great. In my experience as a manager, when you give someone a task in the US for example, they are expected to view the task as part of a whole and overlap into other areas without additional instruction if necessary. Russians have more of a tendency to do only the specific task assigned.

– The Russian Customs service is well-known for the difficulties it creates for the business community. What kind of problems do you face regarding customs operations?

– As you know, Russian Customs implemented a new set of regulations and guidelines on July 1.Customs are still getting acquainted with the new rules and all of their practical implementation, so everyone is on a bit of a learning curve  Also, various government initiatives have resulted in the Customs Service upper management increasing the amount of pressure on the operational staff for better performance (faster, more accurate, more ethical), resulting in staff who cannot make basic decisions during the clearance process for fear of getting it wrong and being punished by superiors. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– Right now it has not made any company’s life easier, since everyone, Customs included, are a bit confused on some of the nuances.  In a couple of months, companies that are focused regionally on Russia and Kazakhstan should see benefits and the market as a whole will probably see some improvements in a year or so.

– And, of course, the crisis, it’d have been odd if I had not asked you about this. You’ve already mentioned it, but: how has it influenced the sphere in which you are working? Does it bring any threats to Russian logistics?

– Many of the smaller companies were forced out of the market when the demand for consumer goods imports dropped. Many companies that are still here do not have the capital or market insight to undertake any new developments so for the most part , everyone is still being very conservative. The crisis has delayed much-needed large scale infrastructure and logistics projects for several years and that will in turn affect how effective logistics in Russia can be for the next several years. 
Interviewed by Ivan Stupachenko 
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/21.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />Alexander Rogan, managing director of Priority Freight Limited, is very familiar with the experience of doing business in Russia. Even when the smog descended on Moscow several weeks this summer, he was working hard in the Russian capital, proving  that logistics companies must be able to perform in any conditions. He shares his views on the national transport system and issues specific to operating a logistics business.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/21.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />Alexander Rogan, managing director of Priority Freight Limited, is very familiar with the experience of doing business in Russia. Even when the smog descended on Moscow several weeks this summer, he was working hard in the Russian capital, proving  that logistics companies must be able to perform in any conditions. He shares his views on the national transport system and issues specific to operating a logistics business.
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    [DETAIL_TEXT] => 
Coming Here Proved the right move 
– Mr Rogan, what’s the core of your company’s business in Russia and how long have you been operating here?

– Priority Freight acquired AJR Logistics, an international forwarding company with Russian clients and a Russian affiliate company, in 2009 as a way of safely entering the Russian market.  Both Priority Freight and the original AJR Logistics Russian business focused on supporting our clients’ lean business practices and reducing the amount of time that their goods spend in transit.  
We achieve this by providing rapid collection, guaranteed capacity on airlift and the fastest customs clearance service for VOR (Vehicle Off Road) type and factory shutdown consignments. Our container service for strategic inbound logistics flows parallels our air service with similar advantages and for regular shipments. We offer fast multi modal transport for containerised traffic using both sea and rail in addition to normal overland truck routes. Most of the flows are between the EU, Japan and Russia, but we have a world-wide network that is constantly in use. I first came to Russia in 2004 and spent nearly a year learning some of the nuances and then started trading in 2005. 

– What was behind the decision for your company to start doing business here? 

– My 28 years in the logistics industry had been predominantly spent in the European and US markets with some Middle and Far East experience. In 2004 I looked to develop new niche markets and examined the BRIC economies. Russia was attractive when compared with Brazil, China and India. Despite the current economic crisis, Russia is and will continue to grow in importance as a strategic market for consumer goods due to its energy exporting ability. This was true in 2004 when the original business was founded and is just as applicable during the crisis. The barriers to market entry are higher than in other countries, but worth it, since Russia will continue to be one of the most interesting countries for long-term business investment for many years.

– What’s the development strategy of Priority Freight in Russia? 

– Priority Freight is a niche logistics provider that offers a selection of services required by the automotive and many other manufacturing sectors. We have developed a solid list of clients based on our expertise and will continue to work along the same lines. Although we are focused on growth, we are aware that if the company becomes too large, we run the risk of losing the flexibility and precise coordination that our clients require. 

You Need More Than Good Intentions and Common Sense
– In particular, what differentiates doing business in Russia from doing business in other countries? I mean in terms of clients, partners, regulation, and even the weather. 

– Everything is a bit different. Bureaucracy here is much more complex and opaque in all areas (taxes, employment, transport, customs, etc.) than in many other countries, so you have to have an extensive local knowledge base to operate a business successfully. Good intentions and common sense are usually not enough.  
Historically, the goal of Russian bureaucracy has been to support and protect the state, not facilitate private business or entrepreneurship.  The Russian government has recently begun several initiatives to make business and development in Russia easier, but it remains to be seen how fast that will translate into real positive changes.  
The weather is extreme, meaning that equipment and infrastructure have to be built accordingly. Roads, airports and seaports and all the associated equipment have to be made to withstand a temperature spectrum that spans at least eighty degrees in any given year. Despite the best efforts of engineers, there are main supply roads that are closed for five months of the year since no one has been able to develop paving and drainage systems that can cope with the local environment.   
The biggest difference in doing business in Russia is the lack of trust in the market. The causes are numerous and not relevant here, but the result is that you need to spend much more time getting to know new partners, clients or service providers to develop the level of trust needed to do effective business than in other countries.  

– What’s your opinion, is competition between logistics companies in Russia tough? Is there special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is it all the same regardless of the origin of a company? 

– Competition in Russia is hard, but does not generally run along Russian vs. foreign lines. Many Russian logistics companies developed out of an industrial conglomerate or a specific region, and so specialise in providing services to a specific industry or geographical area.  It is often not economical for a foreign company to compete with a regional supplier for geographical or bureaucratic reasons so foreign companies will often remain at a national level and use the local companies as sub-contractors for specific regional projects, avoiding direct competition.
Competition is more effectively divided between the market giants and the other niche companies.  The lack of trust in the market mentioned earlier means that companies look for the largest, most well--known supplier they can find in order to minimise their exposure to fraud or other types of loss. It is therefore not unusual for a client to choose the largest logistics provider available, regardless of how well the provider does or does not mesh with the client’s operation and goals. 

– What is your estimation of the quality of transport services in Russia compared with those in Europe?

– Objectively speaking, the comparison is not always accurate since Russia has a much greater geographic spread and population dispersion than Europe. Subjectively, most Russian transport services do not operate at the same level as their European counterparts. Network dispersion combined with factors such as local bureaucracy and weather create a very challenging environment for any type of transport development.

– Transport infrastructure is often poorly developed in Russia. Where are the most difficult bottle-necks? 

– Our historical primary focus, air cargo is probably the most developed segment of Russia’s infrastructure. In proportion to geographical size and economic potential the road network is quite underdeveloped. Russian/Soviet logistics were rail-based, so the basic network is present, but service suffers from a lack of modernisation and the RZD monopoly.   
– What is important for a foreign logistics services provider\shipper to note when operating in Russia? If you are contacted by a Western shipper who wants his cargoes to be transported into Russia, what would you recommend? 
– Russia has a much higher level of bureaucracy than most other countries.  The amount and detail of shipment and clearance documents as well as advance planning for the shipment itself is much greater and requires more experienced staff than in other countries. There is a large and often dangerous assumption on the part of many corporations that operations in Russian can’t be different from the UK or US even if they are told otherwise. A large part of our work with new clients is getting them adjusted to the way things need to be done in order to have successful, long-term shipments to Russia.  

Crisis: Not Fearful, But May Have Long-Term Consequences 
– Talking about the kind of cargoes you are dealing with, do you see any new trends here? I mean, are some kinds of cargo becoming more popular while others decline?

– Most of our cargo volume is a function of Russian interest in nonessential consumer goods as opposed to strategic/infrastructure projects. Our volumes dropped along with all the other companies in the market when Russia’s disposable income disappeared during the crisis. However the crisis is temporary and I think that you will see an increase in consumer goods in the same proportions as pre-2008. 

– When you hire Russian specialists, are there any difficulties in cross-cultural communication?

– Overall, the differences are not that great. In my experience as a manager, when you give someone a task in the US for example, they are expected to view the task as part of a whole and overlap into other areas without additional instruction if necessary. Russians have more of a tendency to do only the specific task assigned.

– The Russian Customs service is well-known for the difficulties it creates for the business community. What kind of problems do you face regarding customs operations?

– As you know, Russian Customs implemented a new set of regulations and guidelines on July 1.Customs are still getting acquainted with the new rules and all of their practical implementation, so everyone is on a bit of a learning curve  Also, various government initiatives have resulted in the Customs Service upper management increasing the amount of pressure on the operational staff for better performance (faster, more accurate, more ethical), resulting in staff who cannot make basic decisions during the clearance process for fear of getting it wrong and being punished by superiors. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– Right now it has not made any company’s life easier, since everyone, Customs included, are a bit confused on some of the nuances.  In a couple of months, companies that are focused regionally on Russia and Kazakhstan should see benefits and the market as a whole will probably see some improvements in a year or so.

– And, of course, the crisis, it’d have been odd if I had not asked you about this. You’ve already mentioned it, but: how has it influenced the sphere in which you are working? Does it bring any threats to Russian logistics?

– Many of the smaller companies were forced out of the market when the demand for consumer goods imports dropped. Many companies that are still here do not have the capital or market insight to undertake any new developments so for the most part , everyone is still being very conservative. The crisis has delayed much-needed large scale infrastructure and logistics projects for several years and that will in turn affect how effective logistics in Russia can be for the next several years. 
Interviewed by Ivan Stupachenko 
    [~DETAIL_TEXT] => 
Coming Here Proved the right move 
– Mr Rogan, what’s the core of your company’s business in Russia and how long have you been operating here?

– Priority Freight acquired AJR Logistics, an international forwarding company with Russian clients and a Russian affiliate company, in 2009 as a way of safely entering the Russian market.  Both Priority Freight and the original AJR Logistics Russian business focused on supporting our clients’ lean business practices and reducing the amount of time that their goods spend in transit.  
We achieve this by providing rapid collection, guaranteed capacity on airlift and the fastest customs clearance service for VOR (Vehicle Off Road) type and factory shutdown consignments. Our container service for strategic inbound logistics flows parallels our air service with similar advantages and for regular shipments. We offer fast multi modal transport for containerised traffic using both sea and rail in addition to normal overland truck routes. Most of the flows are between the EU, Japan and Russia, but we have a world-wide network that is constantly in use. I first came to Russia in 2004 and spent nearly a year learning some of the nuances and then started trading in 2005. 

– What was behind the decision for your company to start doing business here? 

– My 28 years in the logistics industry had been predominantly spent in the European and US markets with some Middle and Far East experience. In 2004 I looked to develop new niche markets and examined the BRIC economies. Russia was attractive when compared with Brazil, China and India. Despite the current economic crisis, Russia is and will continue to grow in importance as a strategic market for consumer goods due to its energy exporting ability. This was true in 2004 when the original business was founded and is just as applicable during the crisis. The barriers to market entry are higher than in other countries, but worth it, since Russia will continue to be one of the most interesting countries for long-term business investment for many years.

– What’s the development strategy of Priority Freight in Russia? 

– Priority Freight is a niche logistics provider that offers a selection of services required by the automotive and many other manufacturing sectors. We have developed a solid list of clients based on our expertise and will continue to work along the same lines. Although we are focused on growth, we are aware that if the company becomes too large, we run the risk of losing the flexibility and precise coordination that our clients require. 

You Need More Than Good Intentions and Common Sense
– In particular, what differentiates doing business in Russia from doing business in other countries? I mean in terms of clients, partners, regulation, and even the weather. 

– Everything is a bit different. Bureaucracy here is much more complex and opaque in all areas (taxes, employment, transport, customs, etc.) than in many other countries, so you have to have an extensive local knowledge base to operate a business successfully. Good intentions and common sense are usually not enough.  
Historically, the goal of Russian bureaucracy has been to support and protect the state, not facilitate private business or entrepreneurship.  The Russian government has recently begun several initiatives to make business and development in Russia easier, but it remains to be seen how fast that will translate into real positive changes.  
The weather is extreme, meaning that equipment and infrastructure have to be built accordingly. Roads, airports and seaports and all the associated equipment have to be made to withstand a temperature spectrum that spans at least eighty degrees in any given year. Despite the best efforts of engineers, there are main supply roads that are closed for five months of the year since no one has been able to develop paving and drainage systems that can cope with the local environment.   
The biggest difference in doing business in Russia is the lack of trust in the market. The causes are numerous and not relevant here, but the result is that you need to spend much more time getting to know new partners, clients or service providers to develop the level of trust needed to do effective business than in other countries.  

– What’s your opinion, is competition between logistics companies in Russia tough? Is there special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is it all the same regardless of the origin of a company? 

– Competition in Russia is hard, but does not generally run along Russian vs. foreign lines. Many Russian logistics companies developed out of an industrial conglomerate or a specific region, and so specialise in providing services to a specific industry or geographical area.  It is often not economical for a foreign company to compete with a regional supplier for geographical or bureaucratic reasons so foreign companies will often remain at a national level and use the local companies as sub-contractors for specific regional projects, avoiding direct competition.
Competition is more effectively divided between the market giants and the other niche companies.  The lack of trust in the market mentioned earlier means that companies look for the largest, most well--known supplier they can find in order to minimise their exposure to fraud or other types of loss. It is therefore not unusual for a client to choose the largest logistics provider available, regardless of how well the provider does or does not mesh with the client’s operation and goals. 

– What is your estimation of the quality of transport services in Russia compared with those in Europe?

– Objectively speaking, the comparison is not always accurate since Russia has a much greater geographic spread and population dispersion than Europe. Subjectively, most Russian transport services do not operate at the same level as their European counterparts. Network dispersion combined with factors such as local bureaucracy and weather create a very challenging environment for any type of transport development.

– Transport infrastructure is often poorly developed in Russia. Where are the most difficult bottle-necks? 

– Our historical primary focus, air cargo is probably the most developed segment of Russia’s infrastructure. In proportion to geographical size and economic potential the road network is quite underdeveloped. Russian/Soviet logistics were rail-based, so the basic network is present, but service suffers from a lack of modernisation and the RZD monopoly.   
– What is important for a foreign logistics services provider\shipper to note when operating in Russia? If you are contacted by a Western shipper who wants his cargoes to be transported into Russia, what would you recommend? 
– Russia has a much higher level of bureaucracy than most other countries.  The amount and detail of shipment and clearance documents as well as advance planning for the shipment itself is much greater and requires more experienced staff than in other countries. There is a large and often dangerous assumption on the part of many corporations that operations in Russian can’t be different from the UK or US even if they are told otherwise. A large part of our work with new clients is getting them adjusted to the way things need to be done in order to have successful, long-term shipments to Russia.  

Crisis: Not Fearful, But May Have Long-Term Consequences 
– Talking about the kind of cargoes you are dealing with, do you see any new trends here? I mean, are some kinds of cargo becoming more popular while others decline?

– Most of our cargo volume is a function of Russian interest in nonessential consumer goods as opposed to strategic/infrastructure projects. Our volumes dropped along with all the other companies in the market when Russia’s disposable income disappeared during the crisis. However the crisis is temporary and I think that you will see an increase in consumer goods in the same proportions as pre-2008. 

– When you hire Russian specialists, are there any difficulties in cross-cultural communication?

– Overall, the differences are not that great. In my experience as a manager, when you give someone a task in the US for example, they are expected to view the task as part of a whole and overlap into other areas without additional instruction if necessary. Russians have more of a tendency to do only the specific task assigned.

– The Russian Customs service is well-known for the difficulties it creates for the business community. What kind of problems do you face regarding customs operations?

– As you know, Russian Customs implemented a new set of regulations and guidelines on July 1.Customs are still getting acquainted with the new rules and all of their practical implementation, so everyone is on a bit of a learning curve  Also, various government initiatives have resulted in the Customs Service upper management increasing the amount of pressure on the operational staff for better performance (faster, more accurate, more ethical), resulting in staff who cannot make basic decisions during the clearance process for fear of getting it wrong and being punished by superiors. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– Right now it has not made any company’s life easier, since everyone, Customs included, are a bit confused on some of the nuances.  In a couple of months, companies that are focused regionally on Russia and Kazakhstan should see benefits and the market as a whole will probably see some improvements in a year or so.

– And, of course, the crisis, it’d have been odd if I had not asked you about this. You’ve already mentioned it, but: how has it influenced the sphere in which you are working? Does it bring any threats to Russian logistics?

– Many of the smaller companies were forced out of the market when the demand for consumer goods imports dropped. Many companies that are still here do not have the capital or market insight to undertake any new developments so for the most part , everyone is still being very conservative. The crisis has delayed much-needed large scale infrastructure and logistics projects for several years and that will in turn affect how effective logistics in Russia can be for the next several years. 
Interviewed by Ivan Stupachenko 
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/21.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />Alexander Rogan, managing director of Priority Freight Limited, is very familiar with the experience of doing business in Russia. Even when the smog descended on Moscow several weeks this summer, he was working hard in the Russian capital, proving  that logistics companies must be able to perform in any conditions. He shares his views on the national transport system and issues specific to operating a logistics business.
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    [DETAIL_TEXT] => 
Russian Machines Launches Leasing and Transport Company 
Russian Machines Corporation owned by Oleg Deripaska wants not only to make wagons, but transport cargoes as well. Enterprises of the Basic Element may become its first clients.
Alexander Filatov, CEO of Russian Machines, has told journalists that the corporation is going to launch a leasing and transport company.The new subsidiary of RKTM-group, RKTM-trans by name, will specialise in operational leasing of railcars made by Russian Transport Machine Building Corporation (RKTM), he said. Also, in the next four years, it will create a park consisting of 20,000 wagons (mainly gondola cars and tank-wagons) and will become a railway operator, added Mr Filatov. “We follow the example of the world’s largest wagon manufacturers.”  
Approximately RUR 40 billion will be spent on purchasing wagons. This sum will be loaned, and the railcars will be bought to fulfill specific long-term contracts.
In the words of Mr Filatov, the first clients of RKTM-trans may be subsidiaries of the Basic Element, owned by Oleg Deripaska. They transport about 70 million tons of cargoes by railway annually, using 70,000 wagons. Thus, it would be logical if they used the leasing and perhaps transport services of a structure with which they have kinship. 

VTB buys into Russian Railways’ bank 
VTB has finally resolved to buy a stake of no more than 20 percent in TransCreditBank. Considering that the deal is valued at RUR 5 billion – 6 billion (approximately $161.92 million - 194.3million), and TransCreditBank’s capitalisation is currently hovering at around RUR 34 billion (approximately $1.1 billion), VTB is likely to obtain 14-17% in its authorised capital. The deal is expected to be closed by the autumn of 2010.
A source at TransCreditBank told journalists that the deal had no economic value, but was of a purely political nature. The acquisition of a stake in Russian Railways’ base bank will have no effect on the management team, and TransCreditBank ‘s development strategy will remain unchanged. TransCreditBank will not be included under the VTB umbrella brand. 

Freight One signs two new contracts for delivery of gondolas	
As part of Freight One’s program to upgrade its rolling stock, in the middle of July 2010, the company signed two new contracts for the delivery of gondolas with Vagonmash and Barnaul Car Repair Plant. Freight One is acquiring 300 Type 12-132 cars from Vagonmash. The first deliveries were in July. Barnaul Car Repair Plant is manufacturing 200 model 12-9780 gondolas for Freight One. According to the delivery schedule, Freight One should get the new cars before the end of October 2010.
Updating its freight car fleet is one of Freight One’s strategic objectives. In 2009, the company acquired about 8,000 units of rolling stock from Russian car makers. In 2010, Freight One plans to spend its own money on no less than 15,000 cars of various types. Given the current shortage of gondolas on the Russian railway network, purchasing precisely this kind of rolling stock is a priority for the company. Earlier this year, Freight One signed two major contracts with Uralvagonzavod and Promtractor Wagon for the purchase of gondolas. However, as of July 10, the deliveries under both contracts were behind schedule. To maintain the company’s investment program, Freight One decided to place new orders with Russian railcar plants that have spare capacity by the end of 2010.

Transmashholding to supply RZD with 200 innovative electric passenger locomotives 	
Transmashholding and RZD on May 27, 2010, concluded a contract for the supply of 200 dual-system passenger EP20 locomotives of the new generation between 2012 and 2020. 
The contract was concluded in Sochi within the framework of the V International Rail Business Forum “1520 Strategic Partnership”. It was signed by the RZD President Vladimir Yakunin and the Chairman of the Board of Directors of Transmashholding, Andrey Bokarev. 
The locomotive was developed by the joint engineering company, established by Transmashholding and French concern Alstom Transport under the General Partnership Agreement for development and production of the new rolling stock and railway components, signed on the May 1, 2010 in Paris in the presence of the presidents of the Russian Federation and France. 
High-tech and future engineering solutions are used in the design of the new locomotive, providing fundamentally better operational characteristics, design reliability and more comfortable working conditions for drivers in comparison with locomotives of the previous generation. 
Electric locomotives will be produced at Novocherkassk Electric Locomotive Plant. 
It is planned that the first EP20 locomotives will be produced in 2011. After that, they will be fully tested and pass state certification. Then 36 locomotives will be handed over to RZD in 2012-2013 and they will be used in passenger transport management on the Moscow-Sochi route, including during the Winter Olympic Games. 
EP20 is the first Russian electric locomotive, which is capable to haul trains at a speed of 200kph. The locomotive will be equipped with asynchronous drive on the basis of IGBT-transistors. The technical solutions involved will reduce maintenance needs, increase run time between repairs and provide energy savings. 
EP20 will become a framework for electric locomotives on which will be developed a family of passenger and freight electric locomotives of various types. The concept of a new generation locomotive platform will increase unit and systems unification for a new series of passenger electric locomotives – to 85% for EP2 and EP3 and to 70-75% for freight electric locomotives E2, E3, 2ES4, 2ES5. 

United Metallurgical Company (OMK) forged railway wheels.  Quality on time 
This year, VSW has put into operation an NDT acceptance line for automatic quality testing, making it possible to enhance wheel quality.
Certified to ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007 the company has started IRIS certification according to Russian and European railways demand. 
The high quality of OMK wheels has been found acceptable by American, European, and Russian railroads. VSW is engaged in extensive certification efforts, annually obtaining two or three new certificates from national railroads. For example, this year VSW has received certification from Hungary’s railroads. VSW never stops working on new types of wheels for different regions, including design and technology development for its new products. This year, VSW has start commercial production of two new railway wheels for the European market  
OMK has awarded contracts for the supply of wheels to India, Slovakia, Czech Republic and has signed a Memorandum of Cooperation with Siemens AG Germany for electric trains for Russian Railways. 

Russian Railways to develop combined transport system
On July 7, 2010, in St Petersburg, the Head of Russian Railways’ Central Transport Control Directorate, Alexei Mironov spoke at a session on “Combined Transport – The Need to Stimulate Efficiency” during the second UIC Global Rail Freight Conference. Mr Mironov said the company had substantially improved the quality of its rail freight transit services.
In particular, the rail network is now able to transport cargo across Russia from the Pacific Ocean to the western borders in 11 days, i.e. at a speed of more than 1,000 km per day. “Customs documentation procedures for freight have been simplified, and a range of other measures have been taken to simplify the procedure for crossing borders. A simplified procedure has been put in place for declaring cargo transported in containers, which has reduced the idling time of containers on the border from 3-5 days to a few hours. 
The application of modern information technologies enables us to control the movement of carriages and containers in real time,” Mr Mironov said. A large amount of work has been carried out on improving the tariff system. Together with shipping companies, sea ports, and foreign railway companies, competitive transit tariffs from the ports of Japan, South Korea, and China to Europe, the CIS, and the European part of Russia are being developed. 
Competitive tariff rates have already been set on the Russian rail network for large-tonnage containers travelling on the Trans-Siberian Railway, on routes via Russia’s Far East ports.
When transporting transit goods on the North-South International Transport Corridor, the delivery time compared to sea routes is reduced by between a third and a half, and the cost of transporting one container from Germany or Finland to India is substantially less than by sea. 
“An important step in the development of intermodal transport on the West-East transport corridor was the decision taken by the heads of the German, Polish, Belarusian and Russian rail networks to create a four-way joint venture, whose main function is to manage projects and optimise the goods transport process on international transport corridor No. 2”, Mironov said.
Russia’s cooperation with Germany and China on developing the China – Russia – Germany transcontinental freight route is currently being actively developed. Mr Mironov said work on introducing progressive combined transport technologies in Russia, in particular of flat wagons carrying trailers or full road trains, needs to be stepped up. 
He noted that the company has gained specific experience from test runs of flat cars carrying trailers, and that this rolling stock has been developed and tested. Mr Mironov noted in conclusion that Russian Railways is already able to provide combined transport at the highest level of quality and on terms that are economically favourable to cargo owners. To broaden the scale of joint transport business activities, the company is prepared to work with all interested cargo owners.

You may not know ... 
Railway rates for moving freight across the territory of the former USSR will now be possible to calculate to the last cent in Europe. This becomes possible thanks to the fact that the St Petersburg company CTM has entered the EU market with its English version of the RAIL-Tariff software. 
No doubt that operators working with Russian partners in CIS Baltic countries will get interested in it. Many European firms are choosing partners in Russia not knowing how their service prices are formed. It is not well-known that the price for transportation is common for everybody. Although, availability of such knowledge allows for clear orientation in transportation prices. 
Previously, an independent calculation of railway tariff had been rather problematic for European companies for several reasons. For example, rates are changed quite often, and it may happen that the information which has just been updated suddenly becomes outdated. Also, it is necessary to consider a lot of regulatory documents, in order to make calculations accurate. This all is time-consuming and open to errors. 
When the English-language version of the RAIL-Tariff software is launched, all companies working with Russian partners will be able to make the most accurate calculation of rail freight prices charged to them on the territory of the former USSR based on the information about current rates and ratios. The software is regularly and automatically updated through the Internet, which guarantees relevance of the information and correct calculations. 
St Petersburg company CTM, the developer of the RAIL-Tariff software, gives an opportunity to install English- language software Rail-Tariff from its web-site www.railctm.com  and use it for free for two weeks, in order to allow European businesses to fully assess its merits.
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Russian Machines Launches Leasing and Transport Company 
Russian Machines Corporation owned by Oleg Deripaska wants not only to make wagons, but transport cargoes as well. Enterprises of the Basic Element may become its first clients.
Alexander Filatov, CEO of Russian Machines, has told journalists that the corporation is going to launch a leasing and transport company.The new subsidiary of RKTM-group, RKTM-trans by name, will specialise in operational leasing of railcars made by Russian Transport Machine Building Corporation (RKTM), he said. Also, in the next four years, it will create a park consisting of 20,000 wagons (mainly gondola cars and tank-wagons) and will become a railway operator, added Mr Filatov. “We follow the example of the world’s largest wagon manufacturers.”  
Approximately RUR 40 billion will be spent on purchasing wagons. This sum will be loaned, and the railcars will be bought to fulfill specific long-term contracts.
In the words of Mr Filatov, the first clients of RKTM-trans may be subsidiaries of the Basic Element, owned by Oleg Deripaska. They transport about 70 million tons of cargoes by railway annually, using 70,000 wagons. Thus, it would be logical if they used the leasing and perhaps transport services of a structure with which they have kinship. 

VTB buys into Russian Railways’ bank 
VTB has finally resolved to buy a stake of no more than 20 percent in TransCreditBank. Considering that the deal is valued at RUR 5 billion – 6 billion (approximately $161.92 million - 194.3million), and TransCreditBank’s capitalisation is currently hovering at around RUR 34 billion (approximately $1.1 billion), VTB is likely to obtain 14-17% in its authorised capital. The deal is expected to be closed by the autumn of 2010.
A source at TransCreditBank told journalists that the deal had no economic value, but was of a purely political nature. The acquisition of a stake in Russian Railways’ base bank will have no effect on the management team, and TransCreditBank ‘s development strategy will remain unchanged. TransCreditBank will not be included under the VTB umbrella brand. 

Freight One signs two new contracts for delivery of gondolas	
As part of Freight One’s program to upgrade its rolling stock, in the middle of July 2010, the company signed two new contracts for the delivery of gondolas with Vagonmash and Barnaul Car Repair Plant. Freight One is acquiring 300 Type 12-132 cars from Vagonmash. The first deliveries were in July. Barnaul Car Repair Plant is manufacturing 200 model 12-9780 gondolas for Freight One. According to the delivery schedule, Freight One should get the new cars before the end of October 2010.
Updating its freight car fleet is one of Freight One’s strategic objectives. In 2009, the company acquired about 8,000 units of rolling stock from Russian car makers. In 2010, Freight One plans to spend its own money on no less than 15,000 cars of various types. Given the current shortage of gondolas on the Russian railway network, purchasing precisely this kind of rolling stock is a priority for the company. Earlier this year, Freight One signed two major contracts with Uralvagonzavod and Promtractor Wagon for the purchase of gondolas. However, as of July 10, the deliveries under both contracts were behind schedule. To maintain the company’s investment program, Freight One decided to place new orders with Russian railcar plants that have spare capacity by the end of 2010.

Transmashholding to supply RZD with 200 innovative electric passenger locomotives 	
Transmashholding and RZD on May 27, 2010, concluded a contract for the supply of 200 dual-system passenger EP20 locomotives of the new generation between 2012 and 2020. 
The contract was concluded in Sochi within the framework of the V International Rail Business Forum “1520 Strategic Partnership”. It was signed by the RZD President Vladimir Yakunin and the Chairman of the Board of Directors of Transmashholding, Andrey Bokarev. 
The locomotive was developed by the joint engineering company, established by Transmashholding and French concern Alstom Transport under the General Partnership Agreement for development and production of the new rolling stock and railway components, signed on the May 1, 2010 in Paris in the presence of the presidents of the Russian Federation and France. 
High-tech and future engineering solutions are used in the design of the new locomotive, providing fundamentally better operational characteristics, design reliability and more comfortable working conditions for drivers in comparison with locomotives of the previous generation. 
Electric locomotives will be produced at Novocherkassk Electric Locomotive Plant. 
It is planned that the first EP20 locomotives will be produced in 2011. After that, they will be fully tested and pass state certification. Then 36 locomotives will be handed over to RZD in 2012-2013 and they will be used in passenger transport management on the Moscow-Sochi route, including during the Winter Olympic Games. 
EP20 is the first Russian electric locomotive, which is capable to haul trains at a speed of 200kph. The locomotive will be equipped with asynchronous drive on the basis of IGBT-transistors. The technical solutions involved will reduce maintenance needs, increase run time between repairs and provide energy savings. 
EP20 will become a framework for electric locomotives on which will be developed a family of passenger and freight electric locomotives of various types. The concept of a new generation locomotive platform will increase unit and systems unification for a new series of passenger electric locomotives – to 85% for EP2 and EP3 and to 70-75% for freight electric locomotives E2, E3, 2ES4, 2ES5. 

United Metallurgical Company (OMK) forged railway wheels.  Quality on time 
This year, VSW has put into operation an NDT acceptance line for automatic quality testing, making it possible to enhance wheel quality.
Certified to ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007 the company has started IRIS certification according to Russian and European railways demand. 
The high quality of OMK wheels has been found acceptable by American, European, and Russian railroads. VSW is engaged in extensive certification efforts, annually obtaining two or three new certificates from national railroads. For example, this year VSW has received certification from Hungary’s railroads. VSW never stops working on new types of wheels for different regions, including design and technology development for its new products. This year, VSW has start commercial production of two new railway wheels for the European market  
OMK has awarded contracts for the supply of wheels to India, Slovakia, Czech Republic and has signed a Memorandum of Cooperation with Siemens AG Germany for electric trains for Russian Railways. 

Russian Railways to develop combined transport system
On July 7, 2010, in St Petersburg, the Head of Russian Railways’ Central Transport Control Directorate, Alexei Mironov spoke at a session on “Combined Transport – The Need to Stimulate Efficiency” during the second UIC Global Rail Freight Conference. Mr Mironov said the company had substantially improved the quality of its rail freight transit services.
In particular, the rail network is now able to transport cargo across Russia from the Pacific Ocean to the western borders in 11 days, i.e. at a speed of more than 1,000 km per day. “Customs documentation procedures for freight have been simplified, and a range of other measures have been taken to simplify the procedure for crossing borders. A simplified procedure has been put in place for declaring cargo transported in containers, which has reduced the idling time of containers on the border from 3-5 days to a few hours. 
The application of modern information technologies enables us to control the movement of carriages and containers in real time,” Mr Mironov said. A large amount of work has been carried out on improving the tariff system. Together with shipping companies, sea ports, and foreign railway companies, competitive transit tariffs from the ports of Japan, South Korea, and China to Europe, the CIS, and the European part of Russia are being developed. 
Competitive tariff rates have already been set on the Russian rail network for large-tonnage containers travelling on the Trans-Siberian Railway, on routes via Russia’s Far East ports.
When transporting transit goods on the North-South International Transport Corridor, the delivery time compared to sea routes is reduced by between a third and a half, and the cost of transporting one container from Germany or Finland to India is substantially less than by sea. 
“An important step in the development of intermodal transport on the West-East transport corridor was the decision taken by the heads of the German, Polish, Belarusian and Russian rail networks to create a four-way joint venture, whose main function is to manage projects and optimise the goods transport process on international transport corridor No. 2”, Mironov said.
Russia’s cooperation with Germany and China on developing the China – Russia – Germany transcontinental freight route is currently being actively developed. Mr Mironov said work on introducing progressive combined transport technologies in Russia, in particular of flat wagons carrying trailers or full road trains, needs to be stepped up. 
He noted that the company has gained specific experience from test runs of flat cars carrying trailers, and that this rolling stock has been developed and tested. Mr Mironov noted in conclusion that Russian Railways is already able to provide combined transport at the highest level of quality and on terms that are economically favourable to cargo owners. To broaden the scale of joint transport business activities, the company is prepared to work with all interested cargo owners.

You may not know ... 
Railway rates for moving freight across the territory of the former USSR will now be possible to calculate to the last cent in Europe. This becomes possible thanks to the fact that the St Petersburg company CTM has entered the EU market with its English version of the RAIL-Tariff software. 
No doubt that operators working with Russian partners in CIS Baltic countries will get interested in it. Many European firms are choosing partners in Russia not knowing how their service prices are formed. It is not well-known that the price for transportation is common for everybody. Although, availability of such knowledge allows for clear orientation in transportation prices. 
Previously, an independent calculation of railway tariff had been rather problematic for European companies for several reasons. For example, rates are changed quite often, and it may happen that the information which has just been updated suddenly becomes outdated. Also, it is necessary to consider a lot of regulatory documents, in order to make calculations accurate. This all is time-consuming and open to errors. 
When the English-language version of the RAIL-Tariff software is launched, all companies working with Russian partners will be able to make the most accurate calculation of rail freight prices charged to them on the territory of the former USSR based on the information about current rates and ratios. The software is regularly and automatically updated through the Internet, which guarantees relevance of the information and correct calculations. 
St Petersburg company CTM, the developer of the RAIL-Tariff software, gives an opportunity to install English- language software Rail-Tariff from its web-site www.railctm.com  and use it for free for two weeks, in order to allow European businesses to fully assess its merits.
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Russian Machines Launches Leasing and Transport Company 
Russian Machines Corporation owned by Oleg Deripaska wants not only to make wagons, but transport cargoes as well. Enterprises of the Basic Element may become its first clients.
Alexander Filatov, CEO of Russian Machines, has told journalists that the corporation is going to launch a leasing and transport company.The new subsidiary of RKTM-group, RKTM-trans by name, will specialise in operational leasing of railcars made by Russian Transport Machine Building Corporation (RKTM), he said. Also, in the next four years, it will create a park consisting of 20,000 wagons (mainly gondola cars and tank-wagons) and will become a railway operator, added Mr Filatov. “We follow the example of the world’s largest wagon manufacturers.”  
Approximately RUR 40 billion will be spent on purchasing wagons. This sum will be loaned, and the railcars will be bought to fulfill specific long-term contracts.
In the words of Mr Filatov, the first clients of RKTM-trans may be subsidiaries of the Basic Element, owned by Oleg Deripaska. They transport about 70 million tons of cargoes by railway annually, using 70,000 wagons. Thus, it would be logical if they used the leasing and perhaps transport services of a structure with which they have kinship. 

VTB buys into Russian Railways’ bank 
VTB has finally resolved to buy a stake of no more than 20 percent in TransCreditBank. Considering that the deal is valued at RUR 5 billion – 6 billion (approximately $161.92 million - 194.3million), and TransCreditBank’s capitalisation is currently hovering at around RUR 34 billion (approximately $1.1 billion), VTB is likely to obtain 14-17% in its authorised capital. The deal is expected to be closed by the autumn of 2010.
A source at TransCreditBank told journalists that the deal had no economic value, but was of a purely political nature. The acquisition of a stake in Russian Railways’ base bank will have no effect on the management team, and TransCreditBank ‘s development strategy will remain unchanged. TransCreditBank will not be included under the VTB umbrella brand. 

Freight One signs two new contracts for delivery of gondolas	
As part of Freight One’s program to upgrade its rolling stock, in the middle of July 2010, the company signed two new contracts for the delivery of gondolas with Vagonmash and Barnaul Car Repair Plant. Freight One is acquiring 300 Type 12-132 cars from Vagonmash. The first deliveries were in July. Barnaul Car Repair Plant is manufacturing 200 model 12-9780 gondolas for Freight One. According to the delivery schedule, Freight One should get the new cars before the end of October 2010.
Updating its freight car fleet is one of Freight One’s strategic objectives. In 2009, the company acquired about 8,000 units of rolling stock from Russian car makers. In 2010, Freight One plans to spend its own money on no less than 15,000 cars of various types. Given the current shortage of gondolas on the Russian railway network, purchasing precisely this kind of rolling stock is a priority for the company. Earlier this year, Freight One signed two major contracts with Uralvagonzavod and Promtractor Wagon for the purchase of gondolas. However, as of July 10, the deliveries under both contracts were behind schedule. To maintain the company’s investment program, Freight One decided to place new orders with Russian railcar plants that have spare capacity by the end of 2010.

Transmashholding to supply RZD with 200 innovative electric passenger locomotives 	
Transmashholding and RZD on May 27, 2010, concluded a contract for the supply of 200 dual-system passenger EP20 locomotives of the new generation between 2012 and 2020. 
The contract was concluded in Sochi within the framework of the V International Rail Business Forum “1520 Strategic Partnership”. It was signed by the RZD President Vladimir Yakunin and the Chairman of the Board of Directors of Transmashholding, Andrey Bokarev. 
The locomotive was developed by the joint engineering company, established by Transmashholding and French concern Alstom Transport under the General Partnership Agreement for development and production of the new rolling stock and railway components, signed on the May 1, 2010 in Paris in the presence of the presidents of the Russian Federation and France. 
High-tech and future engineering solutions are used in the design of the new locomotive, providing fundamentally better operational characteristics, design reliability and more comfortable working conditions for drivers in comparison with locomotives of the previous generation. 
Electric locomotives will be produced at Novocherkassk Electric Locomotive Plant. 
It is planned that the first EP20 locomotives will be produced in 2011. After that, they will be fully tested and pass state certification. Then 36 locomotives will be handed over to RZD in 2012-2013 and they will be used in passenger transport management on the Moscow-Sochi route, including during the Winter Olympic Games. 
EP20 is the first Russian electric locomotive, which is capable to haul trains at a speed of 200kph. The locomotive will be equipped with asynchronous drive on the basis of IGBT-transistors. The technical solutions involved will reduce maintenance needs, increase run time between repairs and provide energy savings. 
EP20 will become a framework for electric locomotives on which will be developed a family of passenger and freight electric locomotives of various types. The concept of a new generation locomotive platform will increase unit and systems unification for a new series of passenger electric locomotives – to 85% for EP2 and EP3 and to 70-75% for freight electric locomotives E2, E3, 2ES4, 2ES5. 

United Metallurgical Company (OMK) forged railway wheels.  Quality on time 
This year, VSW has put into operation an NDT acceptance line for automatic quality testing, making it possible to enhance wheel quality.
Certified to ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007 the company has started IRIS certification according to Russian and European railways demand. 
The high quality of OMK wheels has been found acceptable by American, European, and Russian railroads. VSW is engaged in extensive certification efforts, annually obtaining two or three new certificates from national railroads. For example, this year VSW has received certification from Hungary’s railroads. VSW never stops working on new types of wheels for different regions, including design and technology development for its new products. This year, VSW has start commercial production of two new railway wheels for the European market  
OMK has awarded contracts for the supply of wheels to India, Slovakia, Czech Republic and has signed a Memorandum of Cooperation with Siemens AG Germany for electric trains for Russian Railways. 

Russian Railways to develop combined transport system
On July 7, 2010, in St Petersburg, the Head of Russian Railways’ Central Transport Control Directorate, Alexei Mironov spoke at a session on “Combined Transport – The Need to Stimulate Efficiency” during the second UIC Global Rail Freight Conference. Mr Mironov said the company had substantially improved the quality of its rail freight transit services.
In particular, the rail network is now able to transport cargo across Russia from the Pacific Ocean to the western borders in 11 days, i.e. at a speed of more than 1,000 km per day. “Customs documentation procedures for freight have been simplified, and a range of other measures have been taken to simplify the procedure for crossing borders. A simplified procedure has been put in place for declaring cargo transported in containers, which has reduced the idling time of containers on the border from 3-5 days to a few hours. 
The application of modern information technologies enables us to control the movement of carriages and containers in real time,” Mr Mironov said. A large amount of work has been carried out on improving the tariff system. Together with shipping companies, sea ports, and foreign railway companies, competitive transit tariffs from the ports of Japan, South Korea, and China to Europe, the CIS, and the European part of Russia are being developed. 
Competitive tariff rates have already been set on the Russian rail network for large-tonnage containers travelling on the Trans-Siberian Railway, on routes via Russia’s Far East ports.
When transporting transit goods on the North-South International Transport Corridor, the delivery time compared to sea routes is reduced by between a third and a half, and the cost of transporting one container from Germany or Finland to India is substantially less than by sea. 
“An important step in the development of intermodal transport on the West-East transport corridor was the decision taken by the heads of the German, Polish, Belarusian and Russian rail networks to create a four-way joint venture, whose main function is to manage projects and optimise the goods transport process on international transport corridor No. 2”, Mironov said.
Russia’s cooperation with Germany and China on developing the China – Russia – Germany transcontinental freight route is currently being actively developed. Mr Mironov said work on introducing progressive combined transport technologies in Russia, in particular of flat wagons carrying trailers or full road trains, needs to be stepped up. 
He noted that the company has gained specific experience from test runs of flat cars carrying trailers, and that this rolling stock has been developed and tested. Mr Mironov noted in conclusion that Russian Railways is already able to provide combined transport at the highest level of quality and on terms that are economically favourable to cargo owners. To broaden the scale of joint transport business activities, the company is prepared to work with all interested cargo owners.

You may not know ... 
Railway rates for moving freight across the territory of the former USSR will now be possible to calculate to the last cent in Europe. This becomes possible thanks to the fact that the St Petersburg company CTM has entered the EU market with its English version of the RAIL-Tariff software. 
No doubt that operators working with Russian partners in CIS Baltic countries will get interested in it. Many European firms are choosing partners in Russia not knowing how their service prices are formed. It is not well-known that the price for transportation is common for everybody. Although, availability of such knowledge allows for clear orientation in transportation prices. 
Previously, an independent calculation of railway tariff had been rather problematic for European companies for several reasons. For example, rates are changed quite often, and it may happen that the information which has just been updated suddenly becomes outdated. Also, it is necessary to consider a lot of regulatory documents, in order to make calculations accurate. This all is time-consuming and open to errors. 
When the English-language version of the RAIL-Tariff software is launched, all companies working with Russian partners will be able to make the most accurate calculation of rail freight prices charged to them on the territory of the former USSR based on the information about current rates and ratios. The software is regularly and automatically updated through the Internet, which guarantees relevance of the information and correct calculations. 
St Petersburg company CTM, the developer of the RAIL-Tariff software, gives an opportunity to install English- language software Rail-Tariff from its web-site www.railctm.com  and use it for free for two weeks, in order to allow European businesses to fully assess its merits.
    [~DETAIL_TEXT] => 
Russian Machines Launches Leasing and Transport Company 
Russian Machines Corporation owned by Oleg Deripaska wants not only to make wagons, but transport cargoes as well. Enterprises of the Basic Element may become its first clients.
Alexander Filatov, CEO of Russian Machines, has told journalists that the corporation is going to launch a leasing and transport company.The new subsidiary of RKTM-group, RKTM-trans by name, will specialise in operational leasing of railcars made by Russian Transport Machine Building Corporation (RKTM), he said. Also, in the next four years, it will create a park consisting of 20,000 wagons (mainly gondola cars and tank-wagons) and will become a railway operator, added Mr Filatov. “We follow the example of the world’s largest wagon manufacturers.”  
Approximately RUR 40 billion will be spent on purchasing wagons. This sum will be loaned, and the railcars will be bought to fulfill specific long-term contracts.
In the words of Mr Filatov, the first clients of RKTM-trans may be subsidiaries of the Basic Element, owned by Oleg Deripaska. They transport about 70 million tons of cargoes by railway annually, using 70,000 wagons. Thus, it would be logical if they used the leasing and perhaps transport services of a structure with which they have kinship. 

VTB buys into Russian Railways’ bank 
VTB has finally resolved to buy a stake of no more than 20 percent in TransCreditBank. Considering that the deal is valued at RUR 5 billion – 6 billion (approximately $161.92 million - 194.3million), and TransCreditBank’s capitalisation is currently hovering at around RUR 34 billion (approximately $1.1 billion), VTB is likely to obtain 14-17% in its authorised capital. The deal is expected to be closed by the autumn of 2010.
A source at TransCreditBank told journalists that the deal had no economic value, but was of a purely political nature. The acquisition of a stake in Russian Railways’ base bank will have no effect on the management team, and TransCreditBank ‘s development strategy will remain unchanged. TransCreditBank will not be included under the VTB umbrella brand. 

Freight One signs two new contracts for delivery of gondolas	
As part of Freight One’s program to upgrade its rolling stock, in the middle of July 2010, the company signed two new contracts for the delivery of gondolas with Vagonmash and Barnaul Car Repair Plant. Freight One is acquiring 300 Type 12-132 cars from Vagonmash. The first deliveries were in July. Barnaul Car Repair Plant is manufacturing 200 model 12-9780 gondolas for Freight One. According to the delivery schedule, Freight One should get the new cars before the end of October 2010.
Updating its freight car fleet is one of Freight One’s strategic objectives. In 2009, the company acquired about 8,000 units of rolling stock from Russian car makers. In 2010, Freight One plans to spend its own money on no less than 15,000 cars of various types. Given the current shortage of gondolas on the Russian railway network, purchasing precisely this kind of rolling stock is a priority for the company. Earlier this year, Freight One signed two major contracts with Uralvagonzavod and Promtractor Wagon for the purchase of gondolas. However, as of July 10, the deliveries under both contracts were behind schedule. To maintain the company’s investment program, Freight One decided to place new orders with Russian railcar plants that have spare capacity by the end of 2010.

Transmashholding to supply RZD with 200 innovative electric passenger locomotives 	
Transmashholding and RZD on May 27, 2010, concluded a contract for the supply of 200 dual-system passenger EP20 locomotives of the new generation between 2012 and 2020. 
The contract was concluded in Sochi within the framework of the V International Rail Business Forum “1520 Strategic Partnership”. It was signed by the RZD President Vladimir Yakunin and the Chairman of the Board of Directors of Transmashholding, Andrey Bokarev. 
The locomotive was developed by the joint engineering company, established by Transmashholding and French concern Alstom Transport under the General Partnership Agreement for development and production of the new rolling stock and railway components, signed on the May 1, 2010 in Paris in the presence of the presidents of the Russian Federation and France. 
High-tech and future engineering solutions are used in the design of the new locomotive, providing fundamentally better operational characteristics, design reliability and more comfortable working conditions for drivers in comparison with locomotives of the previous generation. 
Electric locomotives will be produced at Novocherkassk Electric Locomotive Plant. 
It is planned that the first EP20 locomotives will be produced in 2011. After that, they will be fully tested and pass state certification. Then 36 locomotives will be handed over to RZD in 2012-2013 and they will be used in passenger transport management on the Moscow-Sochi route, including during the Winter Olympic Games. 
EP20 is the first Russian electric locomotive, which is capable to haul trains at a speed of 200kph. The locomotive will be equipped with asynchronous drive on the basis of IGBT-transistors. The technical solutions involved will reduce maintenance needs, increase run time between repairs and provide energy savings. 
EP20 will become a framework for electric locomotives on which will be developed a family of passenger and freight electric locomotives of various types. The concept of a new generation locomotive platform will increase unit and systems unification for a new series of passenger electric locomotives – to 85% for EP2 and EP3 and to 70-75% for freight electric locomotives E2, E3, 2ES4, 2ES5. 

United Metallurgical Company (OMK) forged railway wheels.  Quality on time 
This year, VSW has put into operation an NDT acceptance line for automatic quality testing, making it possible to enhance wheel quality.
Certified to ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007 the company has started IRIS certification according to Russian and European railways demand. 
The high quality of OMK wheels has been found acceptable by American, European, and Russian railroads. VSW is engaged in extensive certification efforts, annually obtaining two or three new certificates from national railroads. For example, this year VSW has received certification from Hungary’s railroads. VSW never stops working on new types of wheels for different regions, including design and technology development for its new products. This year, VSW has start commercial production of two new railway wheels for the European market  
OMK has awarded contracts for the supply of wheels to India, Slovakia, Czech Republic and has signed a Memorandum of Cooperation with Siemens AG Germany for electric trains for Russian Railways. 

Russian Railways to develop combined transport system
On July 7, 2010, in St Petersburg, the Head of Russian Railways’ Central Transport Control Directorate, Alexei Mironov spoke at a session on “Combined Transport – The Need to Stimulate Efficiency” during the second UIC Global Rail Freight Conference. Mr Mironov said the company had substantially improved the quality of its rail freight transit services.
In particular, the rail network is now able to transport cargo across Russia from the Pacific Ocean to the western borders in 11 days, i.e. at a speed of more than 1,000 km per day. “Customs documentation procedures for freight have been simplified, and a range of other measures have been taken to simplify the procedure for crossing borders. A simplified procedure has been put in place for declaring cargo transported in containers, which has reduced the idling time of containers on the border from 3-5 days to a few hours. 
The application of modern information technologies enables us to control the movement of carriages and containers in real time,” Mr Mironov said. A large amount of work has been carried out on improving the tariff system. Together with shipping companies, sea ports, and foreign railway companies, competitive transit tariffs from the ports of Japan, South Korea, and China to Europe, the CIS, and the European part of Russia are being developed. 
Competitive tariff rates have already been set on the Russian rail network for large-tonnage containers travelling on the Trans-Siberian Railway, on routes via Russia’s Far East ports.
When transporting transit goods on the North-South International Transport Corridor, the delivery time compared to sea routes is reduced by between a third and a half, and the cost of transporting one container from Germany or Finland to India is substantially less than by sea. 
“An important step in the development of intermodal transport on the West-East transport corridor was the decision taken by the heads of the German, Polish, Belarusian and Russian rail networks to create a four-way joint venture, whose main function is to manage projects and optimise the goods transport process on international transport corridor No. 2”, Mironov said.
Russia’s cooperation with Germany and China on developing the China – Russia – Germany transcontinental freight route is currently being actively developed. Mr Mironov said work on introducing progressive combined transport technologies in Russia, in particular of flat wagons carrying trailers or full road trains, needs to be stepped up. 
He noted that the company has gained specific experience from test runs of flat cars carrying trailers, and that this rolling stock has been developed and tested. Mr Mironov noted in conclusion that Russian Railways is already able to provide combined transport at the highest level of quality and on terms that are economically favourable to cargo owners. To broaden the scale of joint transport business activities, the company is prepared to work with all interested cargo owners.

You may not know ... 
Railway rates for moving freight across the territory of the former USSR will now be possible to calculate to the last cent in Europe. This becomes possible thanks to the fact that the St Petersburg company CTM has entered the EU market with its English version of the RAIL-Tariff software. 
No doubt that operators working with Russian partners in CIS Baltic countries will get interested in it. Many European firms are choosing partners in Russia not knowing how their service prices are formed. It is not well-known that the price for transportation is common for everybody. Although, availability of such knowledge allows for clear orientation in transportation prices. 
Previously, an independent calculation of railway tariff had been rather problematic for European companies for several reasons. For example, rates are changed quite often, and it may happen that the information which has just been updated suddenly becomes outdated. Also, it is necessary to consider a lot of regulatory documents, in order to make calculations accurate. This all is time-consuming and open to errors. 
When the English-language version of the RAIL-Tariff software is launched, all companies working with Russian partners will be able to make the most accurate calculation of rail freight prices charged to them on the territory of the former USSR based on the information about current rates and ratios. The software is regularly and automatically updated through the Internet, which guarantees relevance of the information and correct calculations. 
St Petersburg company CTM, the developer of the RAIL-Tariff software, gives an opportunity to install English- language software Rail-Tariff from its web-site www.railctm.com  and use it for free for two weeks, in order to allow European businesses to fully assess its merits.
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Turning to the West
The total container throughput of Russian maritime ports in the first quarter of 2010 surged by 37.3% compared to January-March last year. Containerised cargoes exports gained 31.7% and import – 56.5%.
Among key factors driving these positive dynamics are the rouble strengthening against the dollar and euro, which has made the import of cargoes to Russia more profitable. Besides, Russian companies started buying equipment more actively.  As a result, by July 2010 overall container traffic rose by 36.4%. 
Turnover of the National Container Company (NCC), the Russian market leader that owns First Container Terminal (FCT) in St Petersburg and NUTEP in Novorossiysk, has exceeded pre-crisis levels. 
Up to July 2010, NCC had handled 619,600 TEU (32% up compared to the first half of 2009, or 4.3% up to the same period of “pre-crisis” 2008). 
Terminals in the North-West region handle over 63% of all container traffic transshipped in Russian maritime ports. The greater part of the cargo flow goes through the Sea port of St Petersburg, with about 30 stevedoring companies operating there. Its cargo turnover amounted to 880,700 TEU (+47% on 2009 and only -9% on 2008). The largest companies that are equipped with up-to-date machinery have been less effected by the crisis. But some of the smaller ones saw turnover fall significantly or even ceased activity. 
One of the biggest operators in the Sea port of St Petersburg is the First Container Terminal (FCT).  In 2009 it showed one of the best results in the industry after seeing its volumes of container transshipment fall by only by 12%. The company succeeded in diversifying cargo services in time and attracting new customers. Thanks to these measures, in the very beginning of 2010 FCT recouped its losses and started to enhance turnover.
Cooperation with Russian Railways was one of the factors driving this growth. A new regular container train from Moscow to St Petersburg launched by Russian Railways and FCT in May 2010 helped to streamline shipping operations connected to the shipping lines of Maersk, MSC, CMA-CGM. The train is to transport about 10% of FCT cargoes. 
FCT, according to its development plan, intends to expand its business into a new area, build a new berth, and in future to move its office buildings and railways outside the industrial zone of the terminal. FCT’s overall capacity now approaches 1.1 million TEU, with the maximum possible capacity being 1.6 million TEU.
Moreover, NCC plans to develop a 200,000 TEU-capacity dry port named “Logistics terminal” that is located in Shushary industrial zone (in the St Petersburg area). 
Another market leader that has achieved good results this year is Petrolesport. The company handled 132,990 TEU in the first quarter of 2010, a more than two-fold rise. Export volumes tripled while imports have grown 2.2 times there. So the exports/imports balance of the terminal improved, and that made it more attractive for marine carriers. One of the causes of these improvements was the extension of the Maersk shipping line from South America to St Petersburg. When Maersk opened the new service, it promised that, on its way back from Russia, it would carry Russian cargoes for export. 2010 has already shown the first results: Petrolesport turnover in January-June demonstrated 73% growth year-on-year, to 222,900 TEU. According to the plans announced, the investment program of the stevedoring company is to boost Petrolesport’s capacity up to 1.8 million TEU by 2015. 
Positive dynamics were also shown by Moby Dick and Rusmarin, stevedoring companies specialising in container handling. Moby Dick’s turnover exceeded 62,500 TEU (up 32.4%). The sea port of St Petersburg group of companies reduced container turnover during the crisis by diversifying services, but it plans to catch up with a project for a new container terminal.  The terminal will be constructed on the site of the Fourth stevedoring company. Several ship-to-shore Кonecranes and 10 RTG-cranes with a 50-ton cargo capacity have already been delivered to the construction site. 
If the investment programs of all the stevedoring companies in the sea port of St Petersburg arе implemented successfully, its overall cargo capacity could reach 4 million TEU per year, thus making it one of the most significant Baltic ports. 
Baltic Stevedoring Company (Kaliningrad) also registered growth in the current year. On half-year results its stevedores handled 2.6 times more containers than last year. This specialised terminal is not competing with the sea port of St Petersburg; it has its own niche as a connector between Russia and Germany. 

The South is getting warmed up
As early as this spring, experts forecast cargo turnover rises in the Black Sea ports. Novorossiysk terminals survived the crisis without lasting damage and returned to pre-crisis levels in the first quarter of 2010 thanks to international trade and rebuilding of machinery. There were plans to handle Super Post Panamax-class vessels after the dredging of several berths. 
The success of the Black Sea ports is based on the growth of global container turnover on Asia-Europe routes. According to the European Liner Affairs Association (ELAA), cargo flow from Asia to Europe will continue to increase, so the future for South Russian container terminals could be bright. 
Novorossiysk Commercial Sea Port  handled 203,900 TEU in the first half of 2010 (+68.2%), 8% up on pre-crisis figures. NCC stevedoring companies are considering further expanding their businesses in Novorossiysk. In 2009 they purchased a new crane STS Liebherr and four RTG Konecranes. As a result, the total capacity of NCC terminals was boosted to 215,000 TEU per year, and the ambition is to reach 550,000 TEU. In 2010, NCC is going to extend the berth in Novorossiysk to be able to handle larger ships or two ships at a time. 

Far East: TRAFFIC IS GROWING 
Vladivostok container terminal increased its total turnover by 55% during this period and, with 134,500 TEU, exceeded pre-crisis levels. Container throughput at the sea port of Vladivostok grew 70% and amounted to 148,300 TEU. The growth is driven by earlier investment in new equipment and infrastructure renewal. The total capacity of the port is 350,000 TEU per year. Container throughput at Vostochniy port reached 104,900 TEU (up 32.6% ). Still, the Far East ports had suffered a lot during the crisis and a complete recovery is going to take a long time. Cargo flow from the Asian and Pacific regions is a good basis for development. 
It is remarkable that, this year, container handling growth in Russian ports exceeded average world rates. For example, cargo turnover in Chinese ports in the first half of 2010 rose by 22.1%. US ports registered a 15-20% surge against that of last year. Many experts forecast further, though slower, growth in container turnover in the second half of the year. The complete recovery of the Russian container shipping industry depends primarily on Far East stevedoring activity. It is expected to speed up by late 2010 or early 2011.
Until now, Russian ports have coped with rising volumes of container traffic, and demand has balanced with supply. However, if container turnover continues to grow steadily, the country risks a capacity shortfall by 2011. Outdated container shipping infrastructure prevents cargo volumes increasing, and that may lead to tariff growth. Low tariffs were one of the factors in turnover increase, so their growth is able to slow down container business development. 
By Andrey Lazarev
    [~DETAIL_TEXT] => 
Turning to the West
The total container throughput of Russian maritime ports in the first quarter of 2010 surged by 37.3% compared to January-March last year. Containerised cargoes exports gained 31.7% and import – 56.5%.
Among key factors driving these positive dynamics are the rouble strengthening against the dollar and euro, which has made the import of cargoes to Russia more profitable. Besides, Russian companies started buying equipment more actively.  As a result, by July 2010 overall container traffic rose by 36.4%. 
Turnover of the National Container Company (NCC), the Russian market leader that owns First Container Terminal (FCT) in St Petersburg and NUTEP in Novorossiysk, has exceeded pre-crisis levels. 
Up to July 2010, NCC had handled 619,600 TEU (32% up compared to the first half of 2009, or 4.3% up to the same period of “pre-crisis” 2008). 
Terminals in the North-West region handle over 63% of all container traffic transshipped in Russian maritime ports. The greater part of the cargo flow goes through the Sea port of St Petersburg, with about 30 stevedoring companies operating there. Its cargo turnover amounted to 880,700 TEU (+47% on 2009 and only -9% on 2008). The largest companies that are equipped with up-to-date machinery have been less effected by the crisis. But some of the smaller ones saw turnover fall significantly or even ceased activity. 
One of the biggest operators in the Sea port of St Petersburg is the First Container Terminal (FCT).  In 2009 it showed one of the best results in the industry after seeing its volumes of container transshipment fall by only by 12%. The company succeeded in diversifying cargo services in time and attracting new customers. Thanks to these measures, in the very beginning of 2010 FCT recouped its losses and started to enhance turnover.
Cooperation with Russian Railways was one of the factors driving this growth. A new regular container train from Moscow to St Petersburg launched by Russian Railways and FCT in May 2010 helped to streamline shipping operations connected to the shipping lines of Maersk, MSC, CMA-CGM. The train is to transport about 10% of FCT cargoes. 
FCT, according to its development plan, intends to expand its business into a new area, build a new berth, and in future to move its office buildings and railways outside the industrial zone of the terminal. FCT’s overall capacity now approaches 1.1 million TEU, with the maximum possible capacity being 1.6 million TEU.
Moreover, NCC plans to develop a 200,000 TEU-capacity dry port named “Logistics terminal” that is located in Shushary industrial zone (in the St Petersburg area). 
Another market leader that has achieved good results this year is Petrolesport. The company handled 132,990 TEU in the first quarter of 2010, a more than two-fold rise. Export volumes tripled while imports have grown 2.2 times there. So the exports/imports balance of the terminal improved, and that made it more attractive for marine carriers. One of the causes of these improvements was the extension of the Maersk shipping line from South America to St Petersburg. When Maersk opened the new service, it promised that, on its way back from Russia, it would carry Russian cargoes for export. 2010 has already shown the first results: Petrolesport turnover in January-June demonstrated 73% growth year-on-year, to 222,900 TEU. According to the plans announced, the investment program of the stevedoring company is to boost Petrolesport’s capacity up to 1.8 million TEU by 2015. 
Positive dynamics were also shown by Moby Dick and Rusmarin, stevedoring companies specialising in container handling. Moby Dick’s turnover exceeded 62,500 TEU (up 32.4%). The sea port of St Petersburg group of companies reduced container turnover during the crisis by diversifying services, but it plans to catch up with a project for a new container terminal.  The terminal will be constructed on the site of the Fourth stevedoring company. Several ship-to-shore Кonecranes and 10 RTG-cranes with a 50-ton cargo capacity have already been delivered to the construction site. 
If the investment programs of all the stevedoring companies in the sea port of St Petersburg arе implemented successfully, its overall cargo capacity could reach 4 million TEU per year, thus making it one of the most significant Baltic ports. 
Baltic Stevedoring Company (Kaliningrad) also registered growth in the current year. On half-year results its stevedores handled 2.6 times more containers than last year. This specialised terminal is not competing with the sea port of St Petersburg; it has its own niche as a connector between Russia and Germany. 

The South is getting warmed up
As early as this spring, experts forecast cargo turnover rises in the Black Sea ports. Novorossiysk terminals survived the crisis without lasting damage and returned to pre-crisis levels in the first quarter of 2010 thanks to international trade and rebuilding of machinery. There were plans to handle Super Post Panamax-class vessels after the dredging of several berths. 
The success of the Black Sea ports is based on the growth of global container turnover on Asia-Europe routes. According to the European Liner Affairs Association (ELAA), cargo flow from Asia to Europe will continue to increase, so the future for South Russian container terminals could be bright. 
Novorossiysk Commercial Sea Port  handled 203,900 TEU in the first half of 2010 (+68.2%), 8% up on pre-crisis figures. NCC stevedoring companies are considering further expanding their businesses in Novorossiysk. In 2009 they purchased a new crane STS Liebherr and four RTG Konecranes. As a result, the total capacity of NCC terminals was boosted to 215,000 TEU per year, and the ambition is to reach 550,000 TEU. In 2010, NCC is going to extend the berth in Novorossiysk to be able to handle larger ships or two ships at a time. 

Far East: TRAFFIC IS GROWING 
Vladivostok container terminal increased its total turnover by 55% during this period and, with 134,500 TEU, exceeded pre-crisis levels. Container throughput at the sea port of Vladivostok grew 70% and amounted to 148,300 TEU. The growth is driven by earlier investment in new equipment and infrastructure renewal. The total capacity of the port is 350,000 TEU per year. Container throughput at Vostochniy port reached 104,900 TEU (up 32.6% ). Still, the Far East ports had suffered a lot during the crisis and a complete recovery is going to take a long time. Cargo flow from the Asian and Pacific regions is a good basis for development. 
It is remarkable that, this year, container handling growth in Russian ports exceeded average world rates. For example, cargo turnover in Chinese ports in the first half of 2010 rose by 22.1%. US ports registered a 15-20% surge against that of last year. Many experts forecast further, though slower, growth in container turnover in the second half of the year. The complete recovery of the Russian container shipping industry depends primarily on Far East stevedoring activity. It is expected to speed up by late 2010 or early 2011.
Until now, Russian ports have coped with rising volumes of container traffic, and demand has balanced with supply. However, if container turnover continues to grow steadily, the country risks a capacity shortfall by 2011. Outdated container shipping infrastructure prevents cargo volumes increasing, and that may lead to tariff growth. Low tariffs were one of the factors in turnover increase, so their growth is able to slow down container business development. 
By Andrey Lazarev
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Turning to the West
The total container throughput of Russian maritime ports in the first quarter of 2010 surged by 37.3% compared to January-March last year. Containerised cargoes exports gained 31.7% and import – 56.5%.
Among key factors driving these positive dynamics are the rouble strengthening against the dollar and euro, which has made the import of cargoes to Russia more profitable. Besides, Russian companies started buying equipment more actively.  As a result, by July 2010 overall container traffic rose by 36.4%. 
Turnover of the National Container Company (NCC), the Russian market leader that owns First Container Terminal (FCT) in St Petersburg and NUTEP in Novorossiysk, has exceeded pre-crisis levels. 
Up to July 2010, NCC had handled 619,600 TEU (32% up compared to the first half of 2009, or 4.3% up to the same period of “pre-crisis” 2008). 
Terminals in the North-West region handle over 63% of all container traffic transshipped in Russian maritime ports. The greater part of the cargo flow goes through the Sea port of St Petersburg, with about 30 stevedoring companies operating there. Its cargo turnover amounted to 880,700 TEU (+47% on 2009 and only -9% on 2008). The largest companies that are equipped with up-to-date machinery have been less effected by the crisis. But some of the smaller ones saw turnover fall significantly or even ceased activity. 
One of the biggest operators in the Sea port of St Petersburg is the First Container Terminal (FCT).  In 2009 it showed one of the best results in the industry after seeing its volumes of container transshipment fall by only by 12%. The company succeeded in diversifying cargo services in time and attracting new customers. Thanks to these measures, in the very beginning of 2010 FCT recouped its losses and started to enhance turnover.
Cooperation with Russian Railways was one of the factors driving this growth. A new regular container train from Moscow to St Petersburg launched by Russian Railways and FCT in May 2010 helped to streamline shipping operations connected to the shipping lines of Maersk, MSC, CMA-CGM. The train is to transport about 10% of FCT cargoes. 
FCT, according to its development plan, intends to expand its business into a new area, build a new berth, and in future to move its office buildings and railways outside the industrial zone of the terminal. FCT’s overall capacity now approaches 1.1 million TEU, with the maximum possible capacity being 1.6 million TEU.
Moreover, NCC plans to develop a 200,000 TEU-capacity dry port named “Logistics terminal” that is located in Shushary industrial zone (in the St Petersburg area). 
Another market leader that has achieved good results this year is Petrolesport. The company handled 132,990 TEU in the first quarter of 2010, a more than two-fold rise. Export volumes tripled while imports have grown 2.2 times there. So the exports/imports balance of the terminal improved, and that made it more attractive for marine carriers. One of the causes of these improvements was the extension of the Maersk shipping line from South America to St Petersburg. When Maersk opened the new service, it promised that, on its way back from Russia, it would carry Russian cargoes for export. 2010 has already shown the first results: Petrolesport turnover in January-June demonstrated 73% growth year-on-year, to 222,900 TEU. According to the plans announced, the investment program of the stevedoring company is to boost Petrolesport’s capacity up to 1.8 million TEU by 2015. 
Positive dynamics were also shown by Moby Dick and Rusmarin, stevedoring companies specialising in container handling. Moby Dick’s turnover exceeded 62,500 TEU (up 32.4%). The sea port of St Petersburg group of companies reduced container turnover during the crisis by diversifying services, but it plans to catch up with a project for a new container terminal.  The terminal will be constructed on the site of the Fourth stevedoring company. Several ship-to-shore Кonecranes and 10 RTG-cranes with a 50-ton cargo capacity have already been delivered to the construction site. 
If the investment programs of all the stevedoring companies in the sea port of St Petersburg arе implemented successfully, its overall cargo capacity could reach 4 million TEU per year, thus making it one of the most significant Baltic ports. 
Baltic Stevedoring Company (Kaliningrad) also registered growth in the current year. On half-year results its stevedores handled 2.6 times more containers than last year. This specialised terminal is not competing with the sea port of St Petersburg; it has its own niche as a connector between Russia and Germany. 

The South is getting warmed up
As early as this spring, experts forecast cargo turnover rises in the Black Sea ports. Novorossiysk terminals survived the crisis without lasting damage and returned to pre-crisis levels in the first quarter of 2010 thanks to international trade and rebuilding of machinery. There were plans to handle Super Post Panamax-class vessels after the dredging of several berths. 
The success of the Black Sea ports is based on the growth of global container turnover on Asia-Europe routes. According to the European Liner Affairs Association (ELAA), cargo flow from Asia to Europe will continue to increase, so the future for South Russian container terminals could be bright. 
Novorossiysk Commercial Sea Port  handled 203,900 TEU in the first half of 2010 (+68.2%), 8% up on pre-crisis figures. NCC stevedoring companies are considering further expanding their businesses in Novorossiysk. In 2009 they purchased a new crane STS Liebherr and four RTG Konecranes. As a result, the total capacity of NCC terminals was boosted to 215,000 TEU per year, and the ambition is to reach 550,000 TEU. In 2010, NCC is going to extend the berth in Novorossiysk to be able to handle larger ships or two ships at a time. 

Far East: TRAFFIC IS GROWING 
Vladivostok container terminal increased its total turnover by 55% during this period and, with 134,500 TEU, exceeded pre-crisis levels. Container throughput at the sea port of Vladivostok grew 70% and amounted to 148,300 TEU. The growth is driven by earlier investment in new equipment and infrastructure renewal. The total capacity of the port is 350,000 TEU per year. Container throughput at Vostochniy port reached 104,900 TEU (up 32.6% ). Still, the Far East ports had suffered a lot during the crisis and a complete recovery is going to take a long time. Cargo flow from the Asian and Pacific regions is a good basis for development. 
It is remarkable that, this year, container handling growth in Russian ports exceeded average world rates. For example, cargo turnover in Chinese ports in the first half of 2010 rose by 22.1%. US ports registered a 15-20% surge against that of last year. Many experts forecast further, though slower, growth in container turnover in the second half of the year. The complete recovery of the Russian container shipping industry depends primarily on Far East stevedoring activity. It is expected to speed up by late 2010 or early 2011.
Until now, Russian ports have coped with rising volumes of container traffic, and demand has balanced with supply. However, if container turnover continues to grow steadily, the country risks a capacity shortfall by 2011. Outdated container shipping infrastructure prevents cargo volumes increasing, and that may lead to tariff growth. Low tariffs were one of the factors in turnover increase, so their growth is able to slow down container business development. 
By Andrey Lazarev
    [~DETAIL_TEXT] => 
Turning to the West
The total container throughput of Russian maritime ports in the first quarter of 2010 surged by 37.3% compared to January-March last year. Containerised cargoes exports gained 31.7% and import – 56.5%.
Among key factors driving these positive dynamics are the rouble strengthening against the dollar and euro, which has made the import of cargoes to Russia more profitable. Besides, Russian companies started buying equipment more actively.  As a result, by July 2010 overall container traffic rose by 36.4%. 
Turnover of the National Container Company (NCC), the Russian market leader that owns First Container Terminal (FCT) in St Petersburg and NUTEP in Novorossiysk, has exceeded pre-crisis levels. 
Up to July 2010, NCC had handled 619,600 TEU (32% up compared to the first half of 2009, or 4.3% up to the same period of “pre-crisis” 2008). 
Terminals in the North-West region handle over 63% of all container traffic transshipped in Russian maritime ports. The greater part of the cargo flow goes through the Sea port of St Petersburg, with about 30 stevedoring companies operating there. Its cargo turnover amounted to 880,700 TEU (+47% on 2009 and only -9% on 2008). The largest companies that are equipped with up-to-date machinery have been less effected by the crisis. But some of the smaller ones saw turnover fall significantly or even ceased activity. 
One of the biggest operators in the Sea port of St Petersburg is the First Container Terminal (FCT).  In 2009 it showed one of the best results in the industry after seeing its volumes of container transshipment fall by only by 12%. The company succeeded in diversifying cargo services in time and attracting new customers. Thanks to these measures, in the very beginning of 2010 FCT recouped its losses and started to enhance turnover.
Cooperation with Russian Railways was one of the factors driving this growth. A new regular container train from Moscow to St Petersburg launched by Russian Railways and FCT in May 2010 helped to streamline shipping operations connected to the shipping lines of Maersk, MSC, CMA-CGM. The train is to transport about 10% of FCT cargoes. 
FCT, according to its development plan, intends to expand its business into a new area, build a new berth, and in future to move its office buildings and railways outside the industrial zone of the terminal. FCT’s overall capacity now approaches 1.1 million TEU, with the maximum possible capacity being 1.6 million TEU.
Moreover, NCC plans to develop a 200,000 TEU-capacity dry port named “Logistics terminal” that is located in Shushary industrial zone (in the St Petersburg area). 
Another market leader that has achieved good results this year is Petrolesport. The company handled 132,990 TEU in the first quarter of 2010, a more than two-fold rise. Export volumes tripled while imports have grown 2.2 times there. So the exports/imports balance of the terminal improved, and that made it more attractive for marine carriers. One of the causes of these improvements was the extension of the Maersk shipping line from South America to St Petersburg. When Maersk opened the new service, it promised that, on its way back from Russia, it would carry Russian cargoes for export. 2010 has already shown the first results: Petrolesport turnover in January-June demonstrated 73% growth year-on-year, to 222,900 TEU. According to the plans announced, the investment program of the stevedoring company is to boost Petrolesport’s capacity up to 1.8 million TEU by 2015. 
Positive dynamics were also shown by Moby Dick and Rusmarin, stevedoring companies specialising in container handling. Moby Dick’s turnover exceeded 62,500 TEU (up 32.4%). The sea port of St Petersburg group of companies reduced container turnover during the crisis by diversifying services, but it plans to catch up with a project for a new container terminal.  The terminal will be constructed on the site of the Fourth stevedoring company. Several ship-to-shore Кonecranes and 10 RTG-cranes with a 50-ton cargo capacity have already been delivered to the construction site. 
If the investment programs of all the stevedoring companies in the sea port of St Petersburg arе implemented successfully, its overall cargo capacity could reach 4 million TEU per year, thus making it one of the most significant Baltic ports. 
Baltic Stevedoring Company (Kaliningrad) also registered growth in the current year. On half-year results its stevedores handled 2.6 times more containers than last year. This specialised terminal is not competing with the sea port of St Petersburg; it has its own niche as a connector between Russia and Germany. 

The South is getting warmed up
As early as this spring, experts forecast cargo turnover rises in the Black Sea ports. Novorossiysk terminals survived the crisis without lasting damage and returned to pre-crisis levels in the first quarter of 2010 thanks to international trade and rebuilding of machinery. There were plans to handle Super Post Panamax-class vessels after the dredging of several berths. 
The success of the Black Sea ports is based on the growth of global container turnover on Asia-Europe routes. According to the European Liner Affairs Association (ELAA), cargo flow from Asia to Europe will continue to increase, so the future for South Russian container terminals could be bright. 
Novorossiysk Commercial Sea Port  handled 203,900 TEU in the first half of 2010 (+68.2%), 8% up on pre-crisis figures. NCC stevedoring companies are considering further expanding their businesses in Novorossiysk. In 2009 they purchased a new crane STS Liebherr and four RTG Konecranes. As a result, the total capacity of NCC terminals was boosted to 215,000 TEU per year, and the ambition is to reach 550,000 TEU. In 2010, NCC is going to extend the berth in Novorossiysk to be able to handle larger ships or two ships at a time. 

Far East: TRAFFIC IS GROWING 
Vladivostok container terminal increased its total turnover by 55% during this period and, with 134,500 TEU, exceeded pre-crisis levels. Container throughput at the sea port of Vladivostok grew 70% and amounted to 148,300 TEU. The growth is driven by earlier investment in new equipment and infrastructure renewal. The total capacity of the port is 350,000 TEU per year. Container throughput at Vostochniy port reached 104,900 TEU (up 32.6% ). Still, the Far East ports had suffered a lot during the crisis and a complete recovery is going to take a long time. Cargo flow from the Asian and Pacific regions is a good basis for development. 
It is remarkable that, this year, container handling growth in Russian ports exceeded average world rates. For example, cargo turnover in Chinese ports in the first half of 2010 rose by 22.1%. US ports registered a 15-20% surge against that of last year. Many experts forecast further, though slower, growth in container turnover in the second half of the year. The complete recovery of the Russian container shipping industry depends primarily on Far East stevedoring activity. It is expected to speed up by late 2010 or early 2011.
Until now, Russian ports have coped with rising volumes of container traffic, and demand has balanced with supply. However, if container turnover continues to grow steadily, the country risks a capacity shortfall by 2011. Outdated container shipping infrastructure prevents cargo volumes increasing, and that may lead to tariff growth. Low tariffs were one of the factors in turnover increase, so their growth is able to slow down container business development. 
By Andrey Lazarev
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LUCRATIVE MARKET 
Germany has been the main partner in foreign trade operations with Russia over the last decade. However, imports into Russia from Germany significantly dominates over exports from the RF. Airfreight imports in the first 11 months of 2009 hit 2,5000 tons, but the imbalance between imports and exports in Russia has also grown over this period. 
Now the proportion is 12:1. Cargo flows from Germany mainly consist of various types of industrial products, medical supplies and consumer goods. The receiving points are not only Moscow airports, but also regional ones in the Ural, Siberia and Volga regions. 
Federal unitary enterprise State Transport Company “Russia” reports that its most extensive network of airfreight services is located in Germany. They ship cargoes from Berlin, Hamburg, Hannover, Dusseldorf and Munich,. Cargo turnover on the air route St Petersburg - Frankfurt am Main is the biggest. 
Russian air carriers choose German airports for cargo flow consolidation. “Cargoes are shipped by trucks to destinations in Germany, and then a consolidated flow directs them to South-East Asia. As far as Russia is concerned, air carriers mostly make technical stops there for refueling and the volume of discharged goods is quite small,” commented Oleg Panteleev, Head of AviaPort Agency Analytical Department. 
There are two main groups of air carriers, particularly on the Russia – Germany route. On the one hand, there are specialised airfreight operators, such as AirBridgeCargo, Volga-Dnepr, Aeroflot. They handle transit transportation on the line China – Russia – Europe and back.  Their competitive advantage is the capability to ship bulky cargoes. In this case transportation tariffs are relatively high as there are no alternatives for the fast delivery of bulky cargoes.
 Operators of passenger air vehicles that use their underload capacities for cargo transportation make up the other group. Their advantages are operational efficiency due to the frequent flights, wide coverage of the territory as well as lower transport tariffs. In the case of transit transportation, passenger operators are preferable because they have a wide regional network in Russia. Besides, they are ranked as customs carriers, which allows the possibility of transferring transit cargoes without needing custom clearance in a transit airport. 
Alexander Ushnurtsev, Director of S7 CARGO said that for airfreight operators the cargo flow from China to Europe was the most important. On the way back from Europe they can be useful too, as they ship oversize cargo for relatively low transportation tariffs. The shortcoming is that they fly to a limited number of cities (Moscow, Khabarovsk, Novosibirsk) and don’t transport cargo to the regions. However, Volga-Dnepr, for example, organises transportation by truck from the airports to the regions. As for passenger aircraft operators, their carrying capacity is limited so they cannot transport bulky or heavy items. 
Airfreight operators note that, over the last few years, cargo flow between Russia and Germany has been steadily growing. Still, the world economic crisis had its effect on this process. 
In the 1st half of 2006, cargo turnover between the two countries increased by 38%, which exceeds the growth rate of cargo turnover between Russia and the Central European states. AirBrigeCargo reported that in 2008 its airfreight turnover leapt by 17% compared to 2007. 
But in recession-hit 2009, a negative trend appeared: AirBrigeCargo lost 36% of its tonnage.  According to the RF Ministry of Economic Development’s data, in January - March 2009 trade volumes between Russia and Germany were worth $7.3 billion, which meant a 54% decrease compared to the same period of 2008! Russian exports in particular had fallen by 66.5% and Russian imports by 36.7%. The share of Germany in Russia’s foreign trade fell from 9.7% to 8.1% in this period.
The German – Russian cargo turnover of State Transport Company “Russia” reached 30% of the overall volume of the company’s international cargo transportation in 2008. In 2009, this volume decreased to 22%. As for S7 Airlines, its turnover grew by 16% in 2008, and in 2009 returned to 2007 levels due to the redirection of some cargoes to other types of transport.
 Mr Ushnurtsev remarked that Russia – Germany air freight is economically efficient primarily for express and expensive cargoes, as the recession period figures proved. 
Express delivery air operators confirmed this opinion. They said that over the last few years the international express-delivery industry has shown stable growth on the Russia – Germany route. This route is a kind of indicator of the wider economic climate. 
Experts confirmed that the crisis hardly influenced air freight on this route. Direct transportation volumes from Europe to Russia visibly declined.  “Europe suffered big losses because of the freight cargo decrease. Consignors now prefer slower, but more economical transport,” says Mr Panteleev.
 But it is not the most difficult problem facing this business. Many of the carriers decided not to cease the operation of spare vehicles, which caused excess transport capacities. Passenger air companies for their part started to provide their services at price-dumping levels. “All this together caused margin losses for most of the European lines,” said the Head of AviaPort.

The forecast is rather optimistic
“Today the situation is rather stable, and so cargo turnover remains stable too,” said Jury Shevchenko, DHL Express CIS Operations Director. “It’s difficult to make forecasts on further development today; however, our airfreight development forecast is optimistic”.  
“The cargo turnover of our customers grows every year,” added Irina Menshova, Head of STS Logistics Department. “Last year there was a certain slowdown, and airfreight transportations decreased by 6% compared to 2008, but now there’s a recovery”. In her opinion the reason for the decline was that many customers of the company preferred transporting by road. 
Specialists at DPD also say the recovery is now on. “Today the demand for air freight between Germany and Russia is being satisfied quite well,” said Evgeny Privalov, Head of DPD International Transportation Department. “Most air companies carry cargoes on their regular passenger direct and transfer flights. Moreover, a few years ago specialised cargo flights with increased-capacity aircraft took off (Boeing-747, MD-11, Il-96-400Т, Tu-204). So now there are more possibilities for shipment of bulky and heavy cargoes.” 
Indeed, we see a positive trend for German – Russian airfreight growth in 2010. Analysts forecast further development of air freight traffic on this route, namely in terms of growth of flight frequency, entry of new Russian and foreign operators and expansion of coverage.  
Experts forecast that this year imports from Germany to Russia will grow by 10%. “We are expecting an increase in airfreight activity this year despite the economic recession. We can see it from the contracts that were signed by our main customers and from the market’s general trends,” noted Ms Menshova. “Airfreight growth is related to the launch of new airlines and increasing activity on the existing routes”.  Mr Shevchenko from DHL agreed that business ties between Russia and Germany were traditionally strong and we can expect that the demand for airfreight, for fast delivery, will be consistently high.  

What is stopping them gaining height? 
However, several serious problems must be solved for any optimistic forecast to be made. One of the main obstacles to the industry’s development is the complexity of cargoes’ customs clearance in Russia. “The problem is not in the intergovernmental regulations, but in Russian legislation that does not contribute to international trade development and cargo transit via our country,” complains Mr Panteleev. 
“Today customs clearance legislation is being amended, and the trend is that the role of transit transportation is going to be reduced even more, particularly for internal customs transit,” said Mr Ushnurtsev. “At the same time current airport infrastructure does not correspond to the needs. Customs are getting overloaded, and time spent on customs procedures grows as a result, which makes freight services less effective. DPD experts also agreed that the complexity and unpredictability of Russian customs regulations was one of the main factors that kept cargo flows down on many routes, including on the Germany – Russia direction. 
“Lots of documentation, too many restrictions and prohibitions, enabling documentation for everything, long and opaque customs procedures, imperfections and contradictions in customs regulations – this is just part of the list that distinguishes work in our country from work in Germany,” complains Mr Privalov. “I hope that we’ll follow the course for integration into the European community and liberalisation of customs procedures that was set by our Government years ago. There is no doubt the Russian and German economies and citizens can only win in this case”. 
AirBridgeCargo confirmed that current customs legislation did not encourage airfreight development. The industry specialists are sure that there’s a great need for reform of customs legislation which would stimulate the development of up-to-date and effective technologies for customs processing in airports. 
On «AviaPort» Director opinion Russian air companies suffer catastrophic lack of airline hubs. All the biggest airports of Europe and the whole world are combined transport hubs. 
AirBridgeCargo experts said the main factor that is putting the brakes on the industry’s development was low engineering capabilities of Russian airports. Current airport infrastructure does not allow for handling of constantly growing cargo flows due to a lack of personnel and loading equipment. 
Secondly, cargo turnover between Germany and Russia is recovering slowly, just as with investments in both states’ economies. 
The third negative factor is that Russian freight operators still have not moved to using E-freight, an electronic document management system. “This problem is quite urgent as electronic document management is going to become the world standard by 2014,” stated Mr Panteleev. The other problem he mentioned was an undeveloped internal market. Russian air carriers are not able to establish an extensive network of cargo delivery inside the country.
 As a result of these technical problems we lose time, which is the main competitive advantage of airfreight. 
Experts from S7 noted that every participant in the airfreight market should be capable of providing high-quality logistic services. For example S7 CARGO, the trade and organisation agent of S7 freight transportations, started to also provide customs broker service. Today the service package based on the “one stop” principle (shipping and customs procedures in one place) is very competitive. 
We may conclude that, according to the experts, estimated cargo turnover between Russia and Germany will grow. Starting points for most of the cargo flows will be in Germany, from where it will go to Russia and further on to China and Korea. “The main task for Russian air carriers is to increase their competitive advantage to get a good share of this industry. It’s important to prevent the potential loss of cargo flows to other routes via Kazakhstan and Uzbekistan,” Mr Panteleev concluded. 
by Stanislav Russkov

viewpoint
Alexander Ushnurtsev, 
“S7 CARGO” Executive Director:
– The main problems for air carriers are rising airport maintenance costs and high customs charges for imported aeroplanes. Companies working on the Russia – Germany route are no exception. Besides, the crisis has sharpened competition between different types of carrier vehicles. Today the Russian government is taking measures to support rail, in other words, helping to redirect cargoes away from other transport to railways. 

Oleg Panteleev, 
Director of “AviaPort” Agency Analytical Department:
– I would say it’s not correct to discuss the problems of the Russian – German airfreight industry. We have a history of good intergovernmental regulation with this country. Most of the carriers can easily get slots in German freight airports, for example, in Frankfurt-Hahn airport, and in more busy airports if it’s not a rush hour.
    [~DETAIL_TEXT] => 
LUCRATIVE MARKET 
Germany has been the main partner in foreign trade operations with Russia over the last decade. However, imports into Russia from Germany significantly dominates over exports from the RF. Airfreight imports in the first 11 months of 2009 hit 2,5000 tons, but the imbalance between imports and exports in Russia has also grown over this period. 
Now the proportion is 12:1. Cargo flows from Germany mainly consist of various types of industrial products, medical supplies and consumer goods. The receiving points are not only Moscow airports, but also regional ones in the Ural, Siberia and Volga regions. 
Federal unitary enterprise State Transport Company “Russia” reports that its most extensive network of airfreight services is located in Germany. They ship cargoes from Berlin, Hamburg, Hannover, Dusseldorf and Munich,. Cargo turnover on the air route St Petersburg - Frankfurt am Main is the biggest. 
Russian air carriers choose German airports for cargo flow consolidation. “Cargoes are shipped by trucks to destinations in Germany, and then a consolidated flow directs them to South-East Asia. As far as Russia is concerned, air carriers mostly make technical stops there for refueling and the volume of discharged goods is quite small,” commented Oleg Panteleev, Head of AviaPort Agency Analytical Department. 
There are two main groups of air carriers, particularly on the Russia – Germany route. On the one hand, there are specialised airfreight operators, such as AirBridgeCargo, Volga-Dnepr, Aeroflot. They handle transit transportation on the line China – Russia – Europe and back.  Their competitive advantage is the capability to ship bulky cargoes. In this case transportation tariffs are relatively high as there are no alternatives for the fast delivery of bulky cargoes.
 Operators of passenger air vehicles that use their underload capacities for cargo transportation make up the other group. Their advantages are operational efficiency due to the frequent flights, wide coverage of the territory as well as lower transport tariffs. In the case of transit transportation, passenger operators are preferable because they have a wide regional network in Russia. Besides, they are ranked as customs carriers, which allows the possibility of transferring transit cargoes without needing custom clearance in a transit airport. 
Alexander Ushnurtsev, Director of S7 CARGO said that for airfreight operators the cargo flow from China to Europe was the most important. On the way back from Europe they can be useful too, as they ship oversize cargo for relatively low transportation tariffs. The shortcoming is that they fly to a limited number of cities (Moscow, Khabarovsk, Novosibirsk) and don’t transport cargo to the regions. However, Volga-Dnepr, for example, organises transportation by truck from the airports to the regions. As for passenger aircraft operators, their carrying capacity is limited so they cannot transport bulky or heavy items. 
Airfreight operators note that, over the last few years, cargo flow between Russia and Germany has been steadily growing. Still, the world economic crisis had its effect on this process. 
In the 1st half of 2006, cargo turnover between the two countries increased by 38%, which exceeds the growth rate of cargo turnover between Russia and the Central European states. AirBrigeCargo reported that in 2008 its airfreight turnover leapt by 17% compared to 2007. 
But in recession-hit 2009, a negative trend appeared: AirBrigeCargo lost 36% of its tonnage.  According to the RF Ministry of Economic Development’s data, in January - March 2009 trade volumes between Russia and Germany were worth $7.3 billion, which meant a 54% decrease compared to the same period of 2008! Russian exports in particular had fallen by 66.5% and Russian imports by 36.7%. The share of Germany in Russia’s foreign trade fell from 9.7% to 8.1% in this period.
The German – Russian cargo turnover of State Transport Company “Russia” reached 30% of the overall volume of the company’s international cargo transportation in 2008. In 2009, this volume decreased to 22%. As for S7 Airlines, its turnover grew by 16% in 2008, and in 2009 returned to 2007 levels due to the redirection of some cargoes to other types of transport.
 Mr Ushnurtsev remarked that Russia – Germany air freight is economically efficient primarily for express and expensive cargoes, as the recession period figures proved. 
Express delivery air operators confirmed this opinion. They said that over the last few years the international express-delivery industry has shown stable growth on the Russia – Germany route. This route is a kind of indicator of the wider economic climate. 
Experts confirmed that the crisis hardly influenced air freight on this route. Direct transportation volumes from Europe to Russia visibly declined.  “Europe suffered big losses because of the freight cargo decrease. Consignors now prefer slower, but more economical transport,” says Mr Panteleev.
 But it is not the most difficult problem facing this business. Many of the carriers decided not to cease the operation of spare vehicles, which caused excess transport capacities. Passenger air companies for their part started to provide their services at price-dumping levels. “All this together caused margin losses for most of the European lines,” said the Head of AviaPort.

The forecast is rather optimistic
“Today the situation is rather stable, and so cargo turnover remains stable too,” said Jury Shevchenko, DHL Express CIS Operations Director. “It’s difficult to make forecasts on further development today; however, our airfreight development forecast is optimistic”.  
“The cargo turnover of our customers grows every year,” added Irina Menshova, Head of STS Logistics Department. “Last year there was a certain slowdown, and airfreight transportations decreased by 6% compared to 2008, but now there’s a recovery”. In her opinion the reason for the decline was that many customers of the company preferred transporting by road. 
Specialists at DPD also say the recovery is now on. “Today the demand for air freight between Germany and Russia is being satisfied quite well,” said Evgeny Privalov, Head of DPD International Transportation Department. “Most air companies carry cargoes on their regular passenger direct and transfer flights. Moreover, a few years ago specialised cargo flights with increased-capacity aircraft took off (Boeing-747, MD-11, Il-96-400Т, Tu-204). So now there are more possibilities for shipment of bulky and heavy cargoes.” 
Indeed, we see a positive trend for German – Russian airfreight growth in 2010. Analysts forecast further development of air freight traffic on this route, namely in terms of growth of flight frequency, entry of new Russian and foreign operators and expansion of coverage.  
Experts forecast that this year imports from Germany to Russia will grow by 10%. “We are expecting an increase in airfreight activity this year despite the economic recession. We can see it from the contracts that were signed by our main customers and from the market’s general trends,” noted Ms Menshova. “Airfreight growth is related to the launch of new airlines and increasing activity on the existing routes”.  Mr Shevchenko from DHL agreed that business ties between Russia and Germany were traditionally strong and we can expect that the demand for airfreight, for fast delivery, will be consistently high.  

What is stopping them gaining height? 
However, several serious problems must be solved for any optimistic forecast to be made. One of the main obstacles to the industry’s development is the complexity of cargoes’ customs clearance in Russia. “The problem is not in the intergovernmental regulations, but in Russian legislation that does not contribute to international trade development and cargo transit via our country,” complains Mr Panteleev. 
“Today customs clearance legislation is being amended, and the trend is that the role of transit transportation is going to be reduced even more, particularly for internal customs transit,” said Mr Ushnurtsev. “At the same time current airport infrastructure does not correspond to the needs. Customs are getting overloaded, and time spent on customs procedures grows as a result, which makes freight services less effective. DPD experts also agreed that the complexity and unpredictability of Russian customs regulations was one of the main factors that kept cargo flows down on many routes, including on the Germany – Russia direction. 
“Lots of documentation, too many restrictions and prohibitions, enabling documentation for everything, long and opaque customs procedures, imperfections and contradictions in customs regulations – this is just part of the list that distinguishes work in our country from work in Germany,” complains Mr Privalov. “I hope that we’ll follow the course for integration into the European community and liberalisation of customs procedures that was set by our Government years ago. There is no doubt the Russian and German economies and citizens can only win in this case”. 
AirBridgeCargo confirmed that current customs legislation did not encourage airfreight development. The industry specialists are sure that there’s a great need for reform of customs legislation which would stimulate the development of up-to-date and effective technologies for customs processing in airports. 
On «AviaPort» Director opinion Russian air companies suffer catastrophic lack of airline hubs. All the biggest airports of Europe and the whole world are combined transport hubs. 
AirBridgeCargo experts said the main factor that is putting the brakes on the industry’s development was low engineering capabilities of Russian airports. Current airport infrastructure does not allow for handling of constantly growing cargo flows due to a lack of personnel and loading equipment. 
Secondly, cargo turnover between Germany and Russia is recovering slowly, just as with investments in both states’ economies. 
The third negative factor is that Russian freight operators still have not moved to using E-freight, an electronic document management system. “This problem is quite urgent as electronic document management is going to become the world standard by 2014,” stated Mr Panteleev. The other problem he mentioned was an undeveloped internal market. Russian air carriers are not able to establish an extensive network of cargo delivery inside the country.
 As a result of these technical problems we lose time, which is the main competitive advantage of airfreight. 
Experts from S7 noted that every participant in the airfreight market should be capable of providing high-quality logistic services. For example S7 CARGO, the trade and organisation agent of S7 freight transportations, started to also provide customs broker service. Today the service package based on the “one stop” principle (shipping and customs procedures in one place) is very competitive. 
We may conclude that, according to the experts, estimated cargo turnover between Russia and Germany will grow. Starting points for most of the cargo flows will be in Germany, from where it will go to Russia and further on to China and Korea. “The main task for Russian air carriers is to increase their competitive advantage to get a good share of this industry. It’s important to prevent the potential loss of cargo flows to other routes via Kazakhstan and Uzbekistan,” Mr Panteleev concluded. 
by Stanislav Russkov

viewpoint
Alexander Ushnurtsev, 
“S7 CARGO” Executive Director:
– The main problems for air carriers are rising airport maintenance costs and high customs charges for imported aeroplanes. Companies working on the Russia – Germany route are no exception. Besides, the crisis has sharpened competition between different types of carrier vehicles. Today the Russian government is taking measures to support rail, in other words, helping to redirect cargoes away from other transport to railways. 

Oleg Panteleev, 
Director of “AviaPort” Agency Analytical Department:
– I would say it’s not correct to discuss the problems of the Russian – German airfreight industry. We have a history of good intergovernmental regulation with this country. Most of the carriers can easily get slots in German freight airports, for example, in Frankfurt-Hahn airport, and in more busy airports if it’s not a rush hour.
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LUCRATIVE MARKET 
Germany has been the main partner in foreign trade operations with Russia over the last decade. However, imports into Russia from Germany significantly dominates over exports from the RF. Airfreight imports in the first 11 months of 2009 hit 2,5000 tons, but the imbalance between imports and exports in Russia has also grown over this period. 
Now the proportion is 12:1. Cargo flows from Germany mainly consist of various types of industrial products, medical supplies and consumer goods. The receiving points are not only Moscow airports, but also regional ones in the Ural, Siberia and Volga regions. 
Federal unitary enterprise State Transport Company “Russia” reports that its most extensive network of airfreight services is located in Germany. They ship cargoes from Berlin, Hamburg, Hannover, Dusseldorf and Munich,. Cargo turnover on the air route St Petersburg - Frankfurt am Main is the biggest. 
Russian air carriers choose German airports for cargo flow consolidation. “Cargoes are shipped by trucks to destinations in Germany, and then a consolidated flow directs them to South-East Asia. As far as Russia is concerned, air carriers mostly make technical stops there for refueling and the volume of discharged goods is quite small,” commented Oleg Panteleev, Head of AviaPort Agency Analytical Department. 
There are two main groups of air carriers, particularly on the Russia – Germany route. On the one hand, there are specialised airfreight operators, such as AirBridgeCargo, Volga-Dnepr, Aeroflot. They handle transit transportation on the line China – Russia – Europe and back.  Their competitive advantage is the capability to ship bulky cargoes. In this case transportation tariffs are relatively high as there are no alternatives for the fast delivery of bulky cargoes.
 Operators of passenger air vehicles that use their underload capacities for cargo transportation make up the other group. Their advantages are operational efficiency due to the frequent flights, wide coverage of the territory as well as lower transport tariffs. In the case of transit transportation, passenger operators are preferable because they have a wide regional network in Russia. Besides, they are ranked as customs carriers, which allows the possibility of transferring transit cargoes without needing custom clearance in a transit airport. 
Alexander Ushnurtsev, Director of S7 CARGO said that for airfreight operators the cargo flow from China to Europe was the most important. On the way back from Europe they can be useful too, as they ship oversize cargo for relatively low transportation tariffs. The shortcoming is that they fly to a limited number of cities (Moscow, Khabarovsk, Novosibirsk) and don’t transport cargo to the regions. However, Volga-Dnepr, for example, organises transportation by truck from the airports to the regions. As for passenger aircraft operators, their carrying capacity is limited so they cannot transport bulky or heavy items. 
Airfreight operators note that, over the last few years, cargo flow between Russia and Germany has been steadily growing. Still, the world economic crisis had its effect on this process. 
In the 1st half of 2006, cargo turnover between the two countries increased by 38%, which exceeds the growth rate of cargo turnover between Russia and the Central European states. AirBrigeCargo reported that in 2008 its airfreight turnover leapt by 17% compared to 2007. 
But in recession-hit 2009, a negative trend appeared: AirBrigeCargo lost 36% of its tonnage.  According to the RF Ministry of Economic Development’s data, in January - March 2009 trade volumes between Russia and Germany were worth $7.3 billion, which meant a 54% decrease compared to the same period of 2008! Russian exports in particular had fallen by 66.5% and Russian imports by 36.7%. The share of Germany in Russia’s foreign trade fell from 9.7% to 8.1% in this period.
The German – Russian cargo turnover of State Transport Company “Russia” reached 30% of the overall volume of the company’s international cargo transportation in 2008. In 2009, this volume decreased to 22%. As for S7 Airlines, its turnover grew by 16% in 2008, and in 2009 returned to 2007 levels due to the redirection of some cargoes to other types of transport.
 Mr Ushnurtsev remarked that Russia – Germany air freight is economically efficient primarily for express and expensive cargoes, as the recession period figures proved. 
Express delivery air operators confirmed this opinion. They said that over the last few years the international express-delivery industry has shown stable growth on the Russia – Germany route. This route is a kind of indicator of the wider economic climate. 
Experts confirmed that the crisis hardly influenced air freight on this route. Direct transportation volumes from Europe to Russia visibly declined.  “Europe suffered big losses because of the freight cargo decrease. Consignors now prefer slower, but more economical transport,” says Mr Panteleev.
 But it is not the most difficult problem facing this business. Many of the carriers decided not to cease the operation of spare vehicles, which caused excess transport capacities. Passenger air companies for their part started to provide their services at price-dumping levels. “All this together caused margin losses for most of the European lines,” said the Head of AviaPort.

The forecast is rather optimistic
“Today the situation is rather stable, and so cargo turnover remains stable too,” said Jury Shevchenko, DHL Express CIS Operations Director. “It’s difficult to make forecasts on further development today; however, our airfreight development forecast is optimistic”.  
“The cargo turnover of our customers grows every year,” added Irina Menshova, Head of STS Logistics Department. “Last year there was a certain slowdown, and airfreight transportations decreased by 6% compared to 2008, but now there’s a recovery”. In her opinion the reason for the decline was that many customers of the company preferred transporting by road. 
Specialists at DPD also say the recovery is now on. “Today the demand for air freight between Germany and Russia is being satisfied quite well,” said Evgeny Privalov, Head of DPD International Transportation Department. “Most air companies carry cargoes on their regular passenger direct and transfer flights. Moreover, a few years ago specialised cargo flights with increased-capacity aircraft took off (Boeing-747, MD-11, Il-96-400Т, Tu-204). So now there are more possibilities for shipment of bulky and heavy cargoes.” 
Indeed, we see a positive trend for German – Russian airfreight growth in 2010. Analysts forecast further development of air freight traffic on this route, namely in terms of growth of flight frequency, entry of new Russian and foreign operators and expansion of coverage.  
Experts forecast that this year imports from Germany to Russia will grow by 10%. “We are expecting an increase in airfreight activity this year despite the economic recession. We can see it from the contracts that were signed by our main customers and from the market’s general trends,” noted Ms Menshova. “Airfreight growth is related to the launch of new airlines and increasing activity on the existing routes”.  Mr Shevchenko from DHL agreed that business ties between Russia and Germany were traditionally strong and we can expect that the demand for airfreight, for fast delivery, will be consistently high.  

What is stopping them gaining height? 
However, several serious problems must be solved for any optimistic forecast to be made. One of the main obstacles to the industry’s development is the complexity of cargoes’ customs clearance in Russia. “The problem is not in the intergovernmental regulations, but in Russian legislation that does not contribute to international trade development and cargo transit via our country,” complains Mr Panteleev. 
“Today customs clearance legislation is being amended, and the trend is that the role of transit transportation is going to be reduced even more, particularly for internal customs transit,” said Mr Ushnurtsev. “At the same time current airport infrastructure does not correspond to the needs. Customs are getting overloaded, and time spent on customs procedures grows as a result, which makes freight services less effective. DPD experts also agreed that the complexity and unpredictability of Russian customs regulations was one of the main factors that kept cargo flows down on many routes, including on the Germany – Russia direction. 
“Lots of documentation, too many restrictions and prohibitions, enabling documentation for everything, long and opaque customs procedures, imperfections and contradictions in customs regulations – this is just part of the list that distinguishes work in our country from work in Germany,” complains Mr Privalov. “I hope that we’ll follow the course for integration into the European community and liberalisation of customs procedures that was set by our Government years ago. There is no doubt the Russian and German economies and citizens can only win in this case”. 
AirBridgeCargo confirmed that current customs legislation did not encourage airfreight development. The industry specialists are sure that there’s a great need for reform of customs legislation which would stimulate the development of up-to-date and effective technologies for customs processing in airports. 
On «AviaPort» Director opinion Russian air companies suffer catastrophic lack of airline hubs. All the biggest airports of Europe and the whole world are combined transport hubs. 
AirBridgeCargo experts said the main factor that is putting the brakes on the industry’s development was low engineering capabilities of Russian airports. Current airport infrastructure does not allow for handling of constantly growing cargo flows due to a lack of personnel and loading equipment. 
Secondly, cargo turnover between Germany and Russia is recovering slowly, just as with investments in both states’ economies. 
The third negative factor is that Russian freight operators still have not moved to using E-freight, an electronic document management system. “This problem is quite urgent as electronic document management is going to become the world standard by 2014,” stated Mr Panteleev. The other problem he mentioned was an undeveloped internal market. Russian air carriers are not able to establish an extensive network of cargo delivery inside the country.
 As a result of these technical problems we lose time, which is the main competitive advantage of airfreight. 
Experts from S7 noted that every participant in the airfreight market should be capable of providing high-quality logistic services. For example S7 CARGO, the trade and organisation agent of S7 freight transportations, started to also provide customs broker service. Today the service package based on the “one stop” principle (shipping and customs procedures in one place) is very competitive. 
We may conclude that, according to the experts, estimated cargo turnover between Russia and Germany will grow. Starting points for most of the cargo flows will be in Germany, from where it will go to Russia and further on to China and Korea. “The main task for Russian air carriers is to increase their competitive advantage to get a good share of this industry. It’s important to prevent the potential loss of cargo flows to other routes via Kazakhstan and Uzbekistan,” Mr Panteleev concluded. 
by Stanislav Russkov

viewpoint
Alexander Ushnurtsev, 
“S7 CARGO” Executive Director:
– The main problems for air carriers are rising airport maintenance costs and high customs charges for imported aeroplanes. Companies working on the Russia – Germany route are no exception. Besides, the crisis has sharpened competition between different types of carrier vehicles. Today the Russian government is taking measures to support rail, in other words, helping to redirect cargoes away from other transport to railways. 

Oleg Panteleev, 
Director of “AviaPort” Agency Analytical Department:
– I would say it’s not correct to discuss the problems of the Russian – German airfreight industry. We have a history of good intergovernmental regulation with this country. Most of the carriers can easily get slots in German freight airports, for example, in Frankfurt-Hahn airport, and in more busy airports if it’s not a rush hour.
    [~DETAIL_TEXT] => 
LUCRATIVE MARKET 
Germany has been the main partner in foreign trade operations with Russia over the last decade. However, imports into Russia from Germany significantly dominates over exports from the RF. Airfreight imports in the first 11 months of 2009 hit 2,5000 tons, but the imbalance between imports and exports in Russia has also grown over this period. 
Now the proportion is 12:1. Cargo flows from Germany mainly consist of various types of industrial products, medical supplies and consumer goods. The receiving points are not only Moscow airports, but also regional ones in the Ural, Siberia and Volga regions. 
Federal unitary enterprise State Transport Company “Russia” reports that its most extensive network of airfreight services is located in Germany. They ship cargoes from Berlin, Hamburg, Hannover, Dusseldorf and Munich,. Cargo turnover on the air route St Petersburg - Frankfurt am Main is the biggest. 
Russian air carriers choose German airports for cargo flow consolidation. “Cargoes are shipped by trucks to destinations in Germany, and then a consolidated flow directs them to South-East Asia. As far as Russia is concerned, air carriers mostly make technical stops there for refueling and the volume of discharged goods is quite small,” commented Oleg Panteleev, Head of AviaPort Agency Analytical Department. 
There are two main groups of air carriers, particularly on the Russia – Germany route. On the one hand, there are specialised airfreight operators, such as AirBridgeCargo, Volga-Dnepr, Aeroflot. They handle transit transportation on the line China – Russia – Europe and back.  Their competitive advantage is the capability to ship bulky cargoes. In this case transportation tariffs are relatively high as there are no alternatives for the fast delivery of bulky cargoes.
 Operators of passenger air vehicles that use their underload capacities for cargo transportation make up the other group. Their advantages are operational efficiency due to the frequent flights, wide coverage of the territory as well as lower transport tariffs. In the case of transit transportation, passenger operators are preferable because they have a wide regional network in Russia. Besides, they are ranked as customs carriers, which allows the possibility of transferring transit cargoes without needing custom clearance in a transit airport. 
Alexander Ushnurtsev, Director of S7 CARGO said that for airfreight operators the cargo flow from China to Europe was the most important. On the way back from Europe they can be useful too, as they ship oversize cargo for relatively low transportation tariffs. The shortcoming is that they fly to a limited number of cities (Moscow, Khabarovsk, Novosibirsk) and don’t transport cargo to the regions. However, Volga-Dnepr, for example, organises transportation by truck from the airports to the regions. As for passenger aircraft operators, their carrying capacity is limited so they cannot transport bulky or heavy items. 
Airfreight operators note that, over the last few years, cargo flow between Russia and Germany has been steadily growing. Still, the world economic crisis had its effect on this process. 
In the 1st half of 2006, cargo turnover between the two countries increased by 38%, which exceeds the growth rate of cargo turnover between Russia and the Central European states. AirBrigeCargo reported that in 2008 its airfreight turnover leapt by 17% compared to 2007. 
But in recession-hit 2009, a negative trend appeared: AirBrigeCargo lost 36% of its tonnage.  According to the RF Ministry of Economic Development’s data, in January - March 2009 trade volumes between Russia and Germany were worth $7.3 billion, which meant a 54% decrease compared to the same period of 2008! Russian exports in particular had fallen by 66.5% and Russian imports by 36.7%. The share of Germany in Russia’s foreign trade fell from 9.7% to 8.1% in this period.
The German – Russian cargo turnover of State Transport Company “Russia” reached 30% of the overall volume of the company’s international cargo transportation in 2008. In 2009, this volume decreased to 22%. As for S7 Airlines, its turnover grew by 16% in 2008, and in 2009 returned to 2007 levels due to the redirection of some cargoes to other types of transport.
 Mr Ushnurtsev remarked that Russia – Germany air freight is economically efficient primarily for express and expensive cargoes, as the recession period figures proved. 
Express delivery air operators confirmed this opinion. They said that over the last few years the international express-delivery industry has shown stable growth on the Russia – Germany route. This route is a kind of indicator of the wider economic climate. 
Experts confirmed that the crisis hardly influenced air freight on this route. Direct transportation volumes from Europe to Russia visibly declined.  “Europe suffered big losses because of the freight cargo decrease. Consignors now prefer slower, but more economical transport,” says Mr Panteleev.
 But it is not the most difficult problem facing this business. Many of the carriers decided not to cease the operation of spare vehicles, which caused excess transport capacities. Passenger air companies for their part started to provide their services at price-dumping levels. “All this together caused margin losses for most of the European lines,” said the Head of AviaPort.

The forecast is rather optimistic
“Today the situation is rather stable, and so cargo turnover remains stable too,” said Jury Shevchenko, DHL Express CIS Operations Director. “It’s difficult to make forecasts on further development today; however, our airfreight development forecast is optimistic”.  
“The cargo turnover of our customers grows every year,” added Irina Menshova, Head of STS Logistics Department. “Last year there was a certain slowdown, and airfreight transportations decreased by 6% compared to 2008, but now there’s a recovery”. In her opinion the reason for the decline was that many customers of the company preferred transporting by road. 
Specialists at DPD also say the recovery is now on. “Today the demand for air freight between Germany and Russia is being satisfied quite well,” said Evgeny Privalov, Head of DPD International Transportation Department. “Most air companies carry cargoes on their regular passenger direct and transfer flights. Moreover, a few years ago specialised cargo flights with increased-capacity aircraft took off (Boeing-747, MD-11, Il-96-400Т, Tu-204). So now there are more possibilities for shipment of bulky and heavy cargoes.” 
Indeed, we see a positive trend for German – Russian airfreight growth in 2010. Analysts forecast further development of air freight traffic on this route, namely in terms of growth of flight frequency, entry of new Russian and foreign operators and expansion of coverage.  
Experts forecast that this year imports from Germany to Russia will grow by 10%. “We are expecting an increase in airfreight activity this year despite the economic recession. We can see it from the contracts that were signed by our main customers and from the market’s general trends,” noted Ms Menshova. “Airfreight growth is related to the launch of new airlines and increasing activity on the existing routes”.  Mr Shevchenko from DHL agreed that business ties between Russia and Germany were traditionally strong and we can expect that the demand for airfreight, for fast delivery, will be consistently high.  

What is stopping them gaining height? 
However, several serious problems must be solved for any optimistic forecast to be made. One of the main obstacles to the industry’s development is the complexity of cargoes’ customs clearance in Russia. “The problem is not in the intergovernmental regulations, but in Russian legislation that does not contribute to international trade development and cargo transit via our country,” complains Mr Panteleev. 
“Today customs clearance legislation is being amended, and the trend is that the role of transit transportation is going to be reduced even more, particularly for internal customs transit,” said Mr Ushnurtsev. “At the same time current airport infrastructure does not correspond to the needs. Customs are getting overloaded, and time spent on customs procedures grows as a result, which makes freight services less effective. DPD experts also agreed that the complexity and unpredictability of Russian customs regulations was one of the main factors that kept cargo flows down on many routes, including on the Germany – Russia direction. 
“Lots of documentation, too many restrictions and prohibitions, enabling documentation for everything, long and opaque customs procedures, imperfections and contradictions in customs regulations – this is just part of the list that distinguishes work in our country from work in Germany,” complains Mr Privalov. “I hope that we’ll follow the course for integration into the European community and liberalisation of customs procedures that was set by our Government years ago. There is no doubt the Russian and German economies and citizens can only win in this case”. 
AirBridgeCargo confirmed that current customs legislation did not encourage airfreight development. The industry specialists are sure that there’s a great need for reform of customs legislation which would stimulate the development of up-to-date and effective technologies for customs processing in airports. 
On «AviaPort» Director opinion Russian air companies suffer catastrophic lack of airline hubs. All the biggest airports of Europe and the whole world are combined transport hubs. 
AirBridgeCargo experts said the main factor that is putting the brakes on the industry’s development was low engineering capabilities of Russian airports. Current airport infrastructure does not allow for handling of constantly growing cargo flows due to a lack of personnel and loading equipment. 
Secondly, cargo turnover between Germany and Russia is recovering slowly, just as with investments in both states’ economies. 
The third negative factor is that Russian freight operators still have not moved to using E-freight, an electronic document management system. “This problem is quite urgent as electronic document management is going to become the world standard by 2014,” stated Mr Panteleev. The other problem he mentioned was an undeveloped internal market. Russian air carriers are not able to establish an extensive network of cargo delivery inside the country.
 As a result of these technical problems we lose time, which is the main competitive advantage of airfreight. 
Experts from S7 noted that every participant in the airfreight market should be capable of providing high-quality logistic services. For example S7 CARGO, the trade and organisation agent of S7 freight transportations, started to also provide customs broker service. Today the service package based on the “one stop” principle (shipping and customs procedures in one place) is very competitive. 
We may conclude that, according to the experts, estimated cargo turnover between Russia and Germany will grow. Starting points for most of the cargo flows will be in Germany, from where it will go to Russia and further on to China and Korea. “The main task for Russian air carriers is to increase their competitive advantage to get a good share of this industry. It’s important to prevent the potential loss of cargo flows to other routes via Kazakhstan and Uzbekistan,” Mr Panteleev concluded. 
by Stanislav Russkov

viewpoint
Alexander Ushnurtsev, 
“S7 CARGO” Executive Director:
– The main problems for air carriers are rising airport maintenance costs and high customs charges for imported aeroplanes. Companies working on the Russia – Germany route are no exception. Besides, the crisis has sharpened competition between different types of carrier vehicles. Today the Russian government is taking measures to support rail, in other words, helping to redirect cargoes away from other transport to railways. 

Oleg Panteleev, 
Director of “AviaPort” Agency Analytical Department:
– I would say it’s not correct to discuss the problems of the Russian – German airfreight industry. We have a history of good intergovernmental regulation with this country. Most of the carriers can easily get slots in German freight airports, for example, in Frankfurt-Hahn airport, and in more busy airports if it’s not a rush hour.
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Sparring partners
Traditional rivalry between motor and railway transports is particularly noticeable in the sector of car products transportation. The position of RZD has always been weak here. According to 2009 results, only 766,000 tons of cars were transported. By comparison, in 2008 RZD shipped 1.23 million tons of this cargo so last year’s decline was 37, 7%. At the beginning of 2010 the trend continued and first quarter results showed 150,000 tons of this cargo were taken; or 22, 5 % less than in the same period in 2009. In addition, last year sales of cars dropped sharply (on average about 35-50 % every month), but this year the industry has turned a corner and activity is beginning again. 
The half-year results are very positive. According to the European Business Association (EBA) – between January and June 768,800 cars and light commercial vehicles were sold in Russia. This is 3% more than in the same period in 2009. Despite the marginal growth, experts have grounds for optimism: sales volume last year returned to those of 2005, but now the sales of leading foreign brands are increasing and are similar to the volume of 2006. 
Also, according to the EBA, sales of new cars and light commercial vehicles grew 45% in June compared with the same month of 2009. “The development on the car market has changed significantly in the second quarter of 2010. Demand has grown and is still growing. Not only utilization program but also the common improvement of the macroeconomic situation and growth of the consumer optimism were the reasons of increase. Now success of each company depends on its ability to quickly expand its manufacturing and supply operations. We even expect some shortage of cars during the third quarter and a sharp sales increase at the end of the year”, says Martin Jan, vice-chairman of Car manufacturers Committee in the EBA.
So not only crisis impact is the reason for reduction of cargo traffics in the RZD-network. It will be recalled that in the middle of last year company experts explained the low cargo base under the cars nomenclature with “a non-presentation of cars for transportation”.  That is JSC “RZD” is ready to work, but the cargo isn’t there and is switched over to sea or road delivery. 
Why did this happen? As you know, since April 2009 there was in force the Dec­ree № 194 of the Russian Federation government (dated March 4, 2009). This confirmed the cooperation process between cargo owner, carrier and carriage owner in the transportation of cars. So there is no fare for Far-Eastern federal district. 
For three quarters of 2009, the volume of car transportations with a preferential rate was not more than 1,500 units. Dmitry Nikolayev, general manager of JSC RailTransAvto (RTA), affirms that his company has transported more than 3,500 cars since the Decree has been in operation. For comparison, the number of Japanese cars - imported by the Far-Eastern ports of Russia - stands at 30,000 units.  The simple reason is that people in this region prefer high-quality, safe and well-equipped right-hand drive Japanese cars to domestic cars.

Railway delivery: to be or not to be?
It seems, the cars will continue to flow gradually from railway delivery to alternative types of transport. But car manufacturers and logistics providers at the conference “Automotive Logistics Russia 2010” –expressed unanimously – their willingness to cooperate with RZD. Particularly according to the head of logistics at Reanult’s – office in Russia, Jean Philippe Zhuande, “a planned escalating of manufacturing capacities in the future will create the opportunity to increase volumes of transportation of car components to six trains a month.” 
As he said, there are small volumes of car components and ready cars that are transported by the railway. And these cars run to the Far East within the state funding of discount rates program. “Transportation of car components and finished goods for manufacturers on the Russian Railways network has its advantages; in particular it is very reliable”, says J Ph Zhuande. “But if we compare tariffs for transportation of car components for automobile carriers and RZD, we’d see that the railway invariably loses on price. Besides, the cargo is transferred twice longer by the railway than by road. In spite of the fact that RZD is a very reliable company, its service is not flexible. Number of carriages is fixed, as well as days of departure, which does not allow clients to make changes according to their needs,” he added. 
It should be noted that the key centers of motor vehicle manufacturing in Russia are in the Northwest, in the Kaliningrad district, and also in the Moscow Region and in Central Russia, on the Volga. The lion’s share of car components goes today by sea from PECC and the USA to the ports in St Petersburg and Kaliningrad. They also go to the central part of the country – where European car manufacturers are located – by rail or motor transport.
Meanwhile, the experts are assured that the traffic of motor vehicles and components should pass to the railway. In particular, experts of Major holding underline that it is more convenient to deliver Japanese and Korean car parts by rail even though a considerable number of Japanese concerns have settled down near St Petersburg and can choose sea delivery. Specialists in GEFCO Company are going to occupy the empty niche of logistical services for car manufacturers and explained the advantage of sea transport. 
“Sea transport is, of course, able to transport more cargo and incurs less cost, but very soon the price for such transportations will increase. Besides, in certain cases we waste time. For example, it’s possible to bring cars and auto components from the Far East to Moscow or St Petersburg by rail 20 days quicker than by sea”, declared Christian Zbylut, the vice-president of international development in GEFCO group.


Demurrage costs millions
However, even in such a politically significant project, which was under the control of state government and JSC Russian Railways, there were a lot of difficulties.  The increase of throughput capacity of the station Perspektivnaya did not help the German concern to arrange a smooth work process with RZD. In 2010 Volkswagen Group Rus has expanded the volumes of output and, as result, has increased goods traffic on the Russian Railways network. According to representatives of the Kaluga region, despite all reasonable efforts, the capacities of stations are not enough anymore. As a result, for the first four months of 2010 the enterprise lost 12, 5 million roubles because of train demurrage. The region administration noticed that there were always failures with deliveries to the station, but in the second quarter, taking into account a growth of sales of cars and an increase in release volumes, these problems became especially noticeable. The representative of this administration informed this data anonymity. The representatives of the Moscow railway don’t want to explain, why such a situation has arisen.
In their turn, the factory representatives are certainly correct in their comments. “Now we take over from Europe 10 to 14 trains a week with accessories for the manufacture, and also for assemblage on SKD-technology. In 2010 we and our partners have flexibly and in due time processed the cargoes arriving by rail. And in the future we count on the continuation of successful cooperation”, - tells Stefani Heggels, Head of logistics at the Volkswagen of Grup Rus factory in Kaluga.
Meanwhile, even despite the specified difficulties, the company “Industrial logistics” , created in the Kaluga region for the purpose of region infrastructure development, assured that they can occupy in the future  a considerable niche in the transportation  sphere of hi-tech production on the Russian Railways network. 
“Today’s stream of accessories and raw materials is impossible to transport by vehicles on deadline. It’s RZD’s deal. For example, we had to carry out a lot of work with Samsung before we could restructure its goods traffic along the rails. As a result, since this year we regularly have container trains of 31-36 cars running from Nakhodka to Obninskoye. The distance is 9000 km and takes  seven days. The choice of such a scheme of delivery has allowed the company to lower its logistical expenses, and the prepared infrastructure of the territories (namely – the container terminal at Obninskoye) allows to service in time the goods arriving for Samsung,” – explained the general director of  Industrial logistics company Sergey Sluzhaev.
We will see if Russian and French logistics, and also the receivers of hi-tech goods, can adjust to work successfully with JSC Russian Railways. 
By Maria Shevchenko
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Sparring partners
Traditional rivalry between motor and railway transports is particularly noticeable in the sector of car products transportation. The position of RZD has always been weak here. According to 2009 results, only 766,000 tons of cars were transported. By comparison, in 2008 RZD shipped 1.23 million tons of this cargo so last year’s decline was 37, 7%. At the beginning of 2010 the trend continued and first quarter results showed 150,000 tons of this cargo were taken; or 22, 5 % less than in the same period in 2009. In addition, last year sales of cars dropped sharply (on average about 35-50 % every month), but this year the industry has turned a corner and activity is beginning again. 
The half-year results are very positive. According to the European Business Association (EBA) – between January and June 768,800 cars and light commercial vehicles were sold in Russia. This is 3% more than in the same period in 2009. Despite the marginal growth, experts have grounds for optimism: sales volume last year returned to those of 2005, but now the sales of leading foreign brands are increasing and are similar to the volume of 2006. 
Also, according to the EBA, sales of new cars and light commercial vehicles grew 45% in June compared with the same month of 2009. “The development on the car market has changed significantly in the second quarter of 2010. Demand has grown and is still growing. Not only utilization program but also the common improvement of the macroeconomic situation and growth of the consumer optimism were the reasons of increase. Now success of each company depends on its ability to quickly expand its manufacturing and supply operations. We even expect some shortage of cars during the third quarter and a sharp sales increase at the end of the year”, says Martin Jan, vice-chairman of Car manufacturers Committee in the EBA.
So not only crisis impact is the reason for reduction of cargo traffics in the RZD-network. It will be recalled that in the middle of last year company experts explained the low cargo base under the cars nomenclature with “a non-presentation of cars for transportation”.  That is JSC “RZD” is ready to work, but the cargo isn’t there and is switched over to sea or road delivery. 
Why did this happen? As you know, since April 2009 there was in force the Dec­ree № 194 of the Russian Federation government (dated March 4, 2009). This confirmed the cooperation process between cargo owner, carrier and carriage owner in the transportation of cars. So there is no fare for Far-Eastern federal district. 
For three quarters of 2009, the volume of car transportations with a preferential rate was not more than 1,500 units. Dmitry Nikolayev, general manager of JSC RailTransAvto (RTA), affirms that his company has transported more than 3,500 cars since the Decree has been in operation. For comparison, the number of Japanese cars - imported by the Far-Eastern ports of Russia - stands at 30,000 units.  The simple reason is that people in this region prefer high-quality, safe and well-equipped right-hand drive Japanese cars to domestic cars.

Railway delivery: to be or not to be?
It seems, the cars will continue to flow gradually from railway delivery to alternative types of transport. But car manufacturers and logistics providers at the conference “Automotive Logistics Russia 2010” –expressed unanimously – their willingness to cooperate with RZD. Particularly according to the head of logistics at Reanult’s – office in Russia, Jean Philippe Zhuande, “a planned escalating of manufacturing capacities in the future will create the opportunity to increase volumes of transportation of car components to six trains a month.” 
As he said, there are small volumes of car components and ready cars that are transported by the railway. And these cars run to the Far East within the state funding of discount rates program. “Transportation of car components and finished goods for manufacturers on the Russian Railways network has its advantages; in particular it is very reliable”, says J Ph Zhuande. “But if we compare tariffs for transportation of car components for automobile carriers and RZD, we’d see that the railway invariably loses on price. Besides, the cargo is transferred twice longer by the railway than by road. In spite of the fact that RZD is a very reliable company, its service is not flexible. Number of carriages is fixed, as well as days of departure, which does not allow clients to make changes according to their needs,” he added. 
It should be noted that the key centers of motor vehicle manufacturing in Russia are in the Northwest, in the Kaliningrad district, and also in the Moscow Region and in Central Russia, on the Volga. The lion’s share of car components goes today by sea from PECC and the USA to the ports in St Petersburg and Kaliningrad. They also go to the central part of the country – where European car manufacturers are located – by rail or motor transport.
Meanwhile, the experts are assured that the traffic of motor vehicles and components should pass to the railway. In particular, experts of Major holding underline that it is more convenient to deliver Japanese and Korean car parts by rail even though a considerable number of Japanese concerns have settled down near St Petersburg and can choose sea delivery. Specialists in GEFCO Company are going to occupy the empty niche of logistical services for car manufacturers and explained the advantage of sea transport. 
“Sea transport is, of course, able to transport more cargo and incurs less cost, but very soon the price for such transportations will increase. Besides, in certain cases we waste time. For example, it’s possible to bring cars and auto components from the Far East to Moscow or St Petersburg by rail 20 days quicker than by sea”, declared Christian Zbylut, the vice-president of international development in GEFCO group.


Demurrage costs millions
However, even in such a politically significant project, which was under the control of state government and JSC Russian Railways, there were a lot of difficulties.  The increase of throughput capacity of the station Perspektivnaya did not help the German concern to arrange a smooth work process with RZD. In 2010 Volkswagen Group Rus has expanded the volumes of output and, as result, has increased goods traffic on the Russian Railways network. According to representatives of the Kaluga region, despite all reasonable efforts, the capacities of stations are not enough anymore. As a result, for the first four months of 2010 the enterprise lost 12, 5 million roubles because of train demurrage. The region administration noticed that there were always failures with deliveries to the station, but in the second quarter, taking into account a growth of sales of cars and an increase in release volumes, these problems became especially noticeable. The representative of this administration informed this data anonymity. The representatives of the Moscow railway don’t want to explain, why such a situation has arisen.
In their turn, the factory representatives are certainly correct in their comments. “Now we take over from Europe 10 to 14 trains a week with accessories for the manufacture, and also for assemblage on SKD-technology. In 2010 we and our partners have flexibly and in due time processed the cargoes arriving by rail. And in the future we count on the continuation of successful cooperation”, - tells Stefani Heggels, Head of logistics at the Volkswagen of Grup Rus factory in Kaluga.
Meanwhile, even despite the specified difficulties, the company “Industrial logistics” , created in the Kaluga region for the purpose of region infrastructure development, assured that they can occupy in the future  a considerable niche in the transportation  sphere of hi-tech production on the Russian Railways network. 
“Today’s stream of accessories and raw materials is impossible to transport by vehicles on deadline. It’s RZD’s deal. For example, we had to carry out a lot of work with Samsung before we could restructure its goods traffic along the rails. As a result, since this year we regularly have container trains of 31-36 cars running from Nakhodka to Obninskoye. The distance is 9000 km and takes  seven days. The choice of such a scheme of delivery has allowed the company to lower its logistical expenses, and the prepared infrastructure of the territories (namely – the container terminal at Obninskoye) allows to service in time the goods arriving for Samsung,” – explained the general director of  Industrial logistics company Sergey Sluzhaev.
We will see if Russian and French logistics, and also the receivers of hi-tech goods, can adjust to work successfully with JSC Russian Railways. 
By Maria Shevchenko
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/16.jpg" border="1" alt=" " hspace="5" width="200" height="235" align="left" />Car manufacturers are happy to increase the volumes car parts and finished goods transported by rail. But in their opinion a principal cause preventing this happening is the inflexible policy of JSC Russian Railways and also an underdeveloped logistical infrastructure. However experts note that these questions will be decided in the near future by the daughter companies of the rail monopoly and by private operators who will build terminals and organize delivery services.
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Sparring partners
Traditional rivalry between motor and railway transports is particularly noticeable in the sector of car products transportation. The position of RZD has always been weak here. According to 2009 results, only 766,000 tons of cars were transported. By comparison, in 2008 RZD shipped 1.23 million tons of this cargo so last year’s decline was 37, 7%. At the beginning of 2010 the trend continued and first quarter results showed 150,000 tons of this cargo were taken; or 22, 5 % less than in the same period in 2009. In addition, last year sales of cars dropped sharply (on average about 35-50 % every month), but this year the industry has turned a corner and activity is beginning again. 
The half-year results are very positive. According to the European Business Association (EBA) – between January and June 768,800 cars and light commercial vehicles were sold in Russia. This is 3% more than in the same period in 2009. Despite the marginal growth, experts have grounds for optimism: sales volume last year returned to those of 2005, but now the sales of leading foreign brands are increasing and are similar to the volume of 2006. 
Also, according to the EBA, sales of new cars and light commercial vehicles grew 45% in June compared with the same month of 2009. “The development on the car market has changed significantly in the second quarter of 2010. Demand has grown and is still growing. Not only utilization program but also the common improvement of the macroeconomic situation and growth of the consumer optimism were the reasons of increase. Now success of each company depends on its ability to quickly expand its manufacturing and supply operations. We even expect some shortage of cars during the third quarter and a sharp sales increase at the end of the year”, says Martin Jan, vice-chairman of Car manufacturers Committee in the EBA.
So not only crisis impact is the reason for reduction of cargo traffics in the RZD-network. It will be recalled that in the middle of last year company experts explained the low cargo base under the cars nomenclature with “a non-presentation of cars for transportation”.  That is JSC “RZD” is ready to work, but the cargo isn’t there and is switched over to sea or road delivery. 
Why did this happen? As you know, since April 2009 there was in force the Dec­ree № 194 of the Russian Federation government (dated March 4, 2009). This confirmed the cooperation process between cargo owner, carrier and carriage owner in the transportation of cars. So there is no fare for Far-Eastern federal district. 
For three quarters of 2009, the volume of car transportations with a preferential rate was not more than 1,500 units. Dmitry Nikolayev, general manager of JSC RailTransAvto (RTA), affirms that his company has transported more than 3,500 cars since the Decree has been in operation. For comparison, the number of Japanese cars - imported by the Far-Eastern ports of Russia - stands at 30,000 units.  The simple reason is that people in this region prefer high-quality, safe and well-equipped right-hand drive Japanese cars to domestic cars.

Railway delivery: to be or not to be?
It seems, the cars will continue to flow gradually from railway delivery to alternative types of transport. But car manufacturers and logistics providers at the conference “Automotive Logistics Russia 2010” –expressed unanimously – their willingness to cooperate with RZD. Particularly according to the head of logistics at Reanult’s – office in Russia, Jean Philippe Zhuande, “a planned escalating of manufacturing capacities in the future will create the opportunity to increase volumes of transportation of car components to six trains a month.” 
As he said, there are small volumes of car components and ready cars that are transported by the railway. And these cars run to the Far East within the state funding of discount rates program. “Transportation of car components and finished goods for manufacturers on the Russian Railways network has its advantages; in particular it is very reliable”, says J Ph Zhuande. “But if we compare tariffs for transportation of car components for automobile carriers and RZD, we’d see that the railway invariably loses on price. Besides, the cargo is transferred twice longer by the railway than by road. In spite of the fact that RZD is a very reliable company, its service is not flexible. Number of carriages is fixed, as well as days of departure, which does not allow clients to make changes according to their needs,” he added. 
It should be noted that the key centers of motor vehicle manufacturing in Russia are in the Northwest, in the Kaliningrad district, and also in the Moscow Region and in Central Russia, on the Volga. The lion’s share of car components goes today by sea from PECC and the USA to the ports in St Petersburg and Kaliningrad. They also go to the central part of the country – where European car manufacturers are located – by rail or motor transport.
Meanwhile, the experts are assured that the traffic of motor vehicles and components should pass to the railway. In particular, experts of Major holding underline that it is more convenient to deliver Japanese and Korean car parts by rail even though a considerable number of Japanese concerns have settled down near St Petersburg and can choose sea delivery. Specialists in GEFCO Company are going to occupy the empty niche of logistical services for car manufacturers and explained the advantage of sea transport. 
“Sea transport is, of course, able to transport more cargo and incurs less cost, but very soon the price for such transportations will increase. Besides, in certain cases we waste time. For example, it’s possible to bring cars and auto components from the Far East to Moscow or St Petersburg by rail 20 days quicker than by sea”, declared Christian Zbylut, the vice-president of international development in GEFCO group.


Demurrage costs millions
However, even in such a politically significant project, which was under the control of state government and JSC Russian Railways, there were a lot of difficulties.  The increase of throughput capacity of the station Perspektivnaya did not help the German concern to arrange a smooth work process with RZD. In 2010 Volkswagen Group Rus has expanded the volumes of output and, as result, has increased goods traffic on the Russian Railways network. According to representatives of the Kaluga region, despite all reasonable efforts, the capacities of stations are not enough anymore. As a result, for the first four months of 2010 the enterprise lost 12, 5 million roubles because of train demurrage. The region administration noticed that there were always failures with deliveries to the station, but in the second quarter, taking into account a growth of sales of cars and an increase in release volumes, these problems became especially noticeable. The representative of this administration informed this data anonymity. The representatives of the Moscow railway don’t want to explain, why such a situation has arisen.
In their turn, the factory representatives are certainly correct in their comments. “Now we take over from Europe 10 to 14 trains a week with accessories for the manufacture, and also for assemblage on SKD-technology. In 2010 we and our partners have flexibly and in due time processed the cargoes arriving by rail. And in the future we count on the continuation of successful cooperation”, - tells Stefani Heggels, Head of logistics at the Volkswagen of Grup Rus factory in Kaluga.
Meanwhile, even despite the specified difficulties, the company “Industrial logistics” , created in the Kaluga region for the purpose of region infrastructure development, assured that they can occupy in the future  a considerable niche in the transportation  sphere of hi-tech production on the Russian Railways network. 
“Today’s stream of accessories and raw materials is impossible to transport by vehicles on deadline. It’s RZD’s deal. For example, we had to carry out a lot of work with Samsung before we could restructure its goods traffic along the rails. As a result, since this year we regularly have container trains of 31-36 cars running from Nakhodka to Obninskoye. The distance is 9000 km and takes  seven days. The choice of such a scheme of delivery has allowed the company to lower its logistical expenses, and the prepared infrastructure of the territories (namely – the container terminal at Obninskoye) allows to service in time the goods arriving for Samsung,” – explained the general director of  Industrial logistics company Sergey Sluzhaev.
We will see if Russian and French logistics, and also the receivers of hi-tech goods, can adjust to work successfully with JSC Russian Railways. 
By Maria Shevchenko
    [~DETAIL_TEXT] => 
Sparring partners
Traditional rivalry between motor and railway transports is particularly noticeable in the sector of car products transportation. The position of RZD has always been weak here. According to 2009 results, only 766,000 tons of cars were transported. By comparison, in 2008 RZD shipped 1.23 million tons of this cargo so last year’s decline was 37, 7%. At the beginning of 2010 the trend continued and first quarter results showed 150,000 tons of this cargo were taken; or 22, 5 % less than in the same period in 2009. In addition, last year sales of cars dropped sharply (on average about 35-50 % every month), but this year the industry has turned a corner and activity is beginning again. 
The half-year results are very positive. According to the European Business Association (EBA) – between January and June 768,800 cars and light commercial vehicles were sold in Russia. This is 3% more than in the same period in 2009. Despite the marginal growth, experts have grounds for optimism: sales volume last year returned to those of 2005, but now the sales of leading foreign brands are increasing and are similar to the volume of 2006. 
Also, according to the EBA, sales of new cars and light commercial vehicles grew 45% in June compared with the same month of 2009. “The development on the car market has changed significantly in the second quarter of 2010. Demand has grown and is still growing. Not only utilization program but also the common improvement of the macroeconomic situation and growth of the consumer optimism were the reasons of increase. Now success of each company depends on its ability to quickly expand its manufacturing and supply operations. We even expect some shortage of cars during the third quarter and a sharp sales increase at the end of the year”, says Martin Jan, vice-chairman of Car manufacturers Committee in the EBA.
So not only crisis impact is the reason for reduction of cargo traffics in the RZD-network. It will be recalled that in the middle of last year company experts explained the low cargo base under the cars nomenclature with “a non-presentation of cars for transportation”.  That is JSC “RZD” is ready to work, but the cargo isn’t there and is switched over to sea or road delivery. 
Why did this happen? As you know, since April 2009 there was in force the Dec­ree № 194 of the Russian Federation government (dated March 4, 2009). This confirmed the cooperation process between cargo owner, carrier and carriage owner in the transportation of cars. So there is no fare for Far-Eastern federal district. 
For three quarters of 2009, the volume of car transportations with a preferential rate was not more than 1,500 units. Dmitry Nikolayev, general manager of JSC RailTransAvto (RTA), affirms that his company has transported more than 3,500 cars since the Decree has been in operation. For comparison, the number of Japanese cars - imported by the Far-Eastern ports of Russia - stands at 30,000 units.  The simple reason is that people in this region prefer high-quality, safe and well-equipped right-hand drive Japanese cars to domestic cars.

Railway delivery: to be or not to be?
It seems, the cars will continue to flow gradually from railway delivery to alternative types of transport. But car manufacturers and logistics providers at the conference “Automotive Logistics Russia 2010” –expressed unanimously – their willingness to cooperate with RZD. Particularly according to the head of logistics at Reanult’s – office in Russia, Jean Philippe Zhuande, “a planned escalating of manufacturing capacities in the future will create the opportunity to increase volumes of transportation of car components to six trains a month.” 
As he said, there are small volumes of car components and ready cars that are transported by the railway. And these cars run to the Far East within the state funding of discount rates program. “Transportation of car components and finished goods for manufacturers on the Russian Railways network has its advantages; in particular it is very reliable”, says J Ph Zhuande. “But if we compare tariffs for transportation of car components for automobile carriers and RZD, we’d see that the railway invariably loses on price. Besides, the cargo is transferred twice longer by the railway than by road. In spite of the fact that RZD is a very reliable company, its service is not flexible. Number of carriages is fixed, as well as days of departure, which does not allow clients to make changes according to their needs,” he added. 
It should be noted that the key centers of motor vehicle manufacturing in Russia are in the Northwest, in the Kaliningrad district, and also in the Moscow Region and in Central Russia, on the Volga. The lion’s share of car components goes today by sea from PECC and the USA to the ports in St Petersburg and Kaliningrad. They also go to the central part of the country – where European car manufacturers are located – by rail or motor transport.
Meanwhile, the experts are assured that the traffic of motor vehicles and components should pass to the railway. In particular, experts of Major holding underline that it is more convenient to deliver Japanese and Korean car parts by rail even though a considerable number of Japanese concerns have settled down near St Petersburg and can choose sea delivery. Specialists in GEFCO Company are going to occupy the empty niche of logistical services for car manufacturers and explained the advantage of sea transport. 
“Sea transport is, of course, able to transport more cargo and incurs less cost, but very soon the price for such transportations will increase. Besides, in certain cases we waste time. For example, it’s possible to bring cars and auto components from the Far East to Moscow or St Petersburg by rail 20 days quicker than by sea”, declared Christian Zbylut, the vice-president of international development in GEFCO group.


Demurrage costs millions
However, even in such a politically significant project, which was under the control of state government and JSC Russian Railways, there were a lot of difficulties.  The increase of throughput capacity of the station Perspektivnaya did not help the German concern to arrange a smooth work process with RZD. In 2010 Volkswagen Group Rus has expanded the volumes of output and, as result, has increased goods traffic on the Russian Railways network. According to representatives of the Kaluga region, despite all reasonable efforts, the capacities of stations are not enough anymore. As a result, for the first four months of 2010 the enterprise lost 12, 5 million roubles because of train demurrage. The region administration noticed that there were always failures with deliveries to the station, but in the second quarter, taking into account a growth of sales of cars and an increase in release volumes, these problems became especially noticeable. The representative of this administration informed this data anonymity. The representatives of the Moscow railway don’t want to explain, why such a situation has arisen.
In their turn, the factory representatives are certainly correct in their comments. “Now we take over from Europe 10 to 14 trains a week with accessories for the manufacture, and also for assemblage on SKD-technology. In 2010 we and our partners have flexibly and in due time processed the cargoes arriving by rail. And in the future we count on the continuation of successful cooperation”, - tells Stefani Heggels, Head of logistics at the Volkswagen of Grup Rus factory in Kaluga.
Meanwhile, even despite the specified difficulties, the company “Industrial logistics” , created in the Kaluga region for the purpose of region infrastructure development, assured that they can occupy in the future  a considerable niche in the transportation  sphere of hi-tech production on the Russian Railways network. 
“Today’s stream of accessories and raw materials is impossible to transport by vehicles on deadline. It’s RZD’s deal. For example, we had to carry out a lot of work with Samsung before we could restructure its goods traffic along the rails. As a result, since this year we regularly have container trains of 31-36 cars running from Nakhodka to Obninskoye. The distance is 9000 km and takes  seven days. The choice of such a scheme of delivery has allowed the company to lower its logistical expenses, and the prepared infrastructure of the territories (namely – the container terminal at Obninskoye) allows to service in time the goods arriving for Samsung,” – explained the general director of  Industrial logistics company Sergey Sluzhaev.
We will see if Russian and French logistics, and also the receivers of hi-tech goods, can adjust to work successfully with JSC Russian Railways. 
By Maria Shevchenko
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/16.jpg" border="1" alt=" " hspace="5" width="200" height="235" align="left" />Car manufacturers are happy to increase the volumes car parts and finished goods transported by rail. But in their opinion a principal cause preventing this happening is the inflexible policy of JSC Russian Railways and also an underdeveloped logistical infrastructure. However experts note that these questions will be decided in the near future by the daughter companies of the rail monopoly and by private operators who will build terminals and organize delivery services.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2010/3/16.jpg" border="1" alt=" " hspace="5" width="200" height="235" align="left" />Car manufacturers are happy to increase the volumes car parts and finished goods transported by rail. But in their opinion a principal cause preventing this happening is the inflexible policy of JSC Russian Railways and also an underdeveloped logistical infrastructure. However experts note that these questions will be decided in the near future by the daughter companies of the rail monopoly and by private operators who will build terminals and organize delivery services.
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Dynamic in the right direction
On the whole, the results of the first half of the year were positive enough for RZD. In the first six months of 2010, the volume of cargo carried on the Russian railway network was 13.6% more than in the same period the previous year. Last year, the figures for January-June were 23.1% below those of January-June 2008. 
Thus, RZD managed to overcome the consequences of the low freight base in the crisis year, and even showed positive dynamics. There is some financial instability in the economy and in the company’s work too. On the whole, in H1 of 2010, the volume of almost all mass cargoes transported by railway (except for grain and cereals) was restored. The negative dynamics of grain loading was caused by the decline in grain volumes last year. 
Another tendency worth mentioning is loading volume running rings around the industrial production indexes this year. In January-May, the latter grew by 10.3% year-on-year, while loading volume increased by 12.9%. One should take into account that the results were so impressive because of the low calculation base, since the most significant decline in industrial production, and consequently in the loading volume during the crisis, took place at the beginning of 2009. 
First class cargoes accounted for 61.2% of the loading volume. Their volume grew by 0.1% compared with the first half of 2009. The share of the second class cargoes was approximately 25.2% (a 0.5% decline). The share of the third class cargoes increased by 0.4% to 13.6%. Thus, there were small changes in the structure of the loading volume. 
Transportation volumes inside Russia grew by 13%. The dynamics of international transportation were also positive – international railway transportation volumes increased by 14.6%. Meanwhile, in H1 of 2009, RZD lost 40% of the segment, so the progress is obvious. Exports increased by 8.8% year-on-year. In H1 of 2009, there was a 9% decline in export transportation as compared with H1 of 2008. In the first six months of 2010, freight transportation via ports increased by 14.4% year-on-year, thus strengthening the tendency of the previous year. 
Transportation via border crossings grew by 3% (in H1 of 2009 there was a 21% decline), so the company proved its activities are efficient. The results of import transportation were the most impressive: transportation volumes grew by 40% in the segment (loading volume of cargoes carried via sea ports increased by 38.2%, and that of cargoes carried via border crossings by 40%). In fact, the company practically managed to reach the results of H1 of 2008, because the decline in import volume in six months of 2009 was 40%. Transit also increased. In H1 of 2009 its volume grew five-fold, and, in the first six months of 2010, it rose by 33.7%.   

Coal Is the Leader as Usual
Traditionally, coal is the top cargo in domestic transportation. Its share in the total loading volume was 23.3%, 0.3% more in comparison with H1 of 2009. Data on coal extraction show that this market sector is not sure of the future. The dynamics of coal loading at Russian railway stations fluctuated. In June, the volume reduced, although it was still bigger than that of June 2009. On the whole, the demand for this type of fuel was stable in both 2009 and 2010. 
The basic stimulator for loading is exports. It influences transportation: in January 2010, loading on the Russian railway network ticked over. Because of the cold weather, coal handling at sea terminals slowed down, plenty of wagons were accumulating on the railway approaches to ports, export lot formation in January 2010 reduced by 7.9% year-on-year, which caused a further decline in the dynamics. 
However, then export loading gathered pace (in February and March the increase was 7.7% and 21.1% respectively compared with the same period of 2009). In the middle of spring there was a slowdown: from +10.5% in April to +4.3% in May. The dynamics in June were negative: -6.9%.
The second-biggest cargo according to volume is construction materials and cement. Their loading in H1 of 2010 was stable enough, but the growth took place only against the background of very small figures in 2009. In the first five months of the current year, more than 11 million tons of cement (+13.1%) and 47.4 million tons of construction materials (+2.4%) were loaded. In May, cement loading volumes increased by 26.3% year-on-year, and that of construction materials rose by 8.1%.
However, the half-year results demonstrate a rising trend for construction materials and cement transportation volumes. According to RZD’s data, cement transportation increased by 13.7% year-on-year, and that of construction materials rose by 5.2%. The transportation volume of each of the cargoes grew in June 2010 by approximately 15% compared with the same period the previous year. Domestic transportation increased slightly: the rise in cement and construction materials transportation volume was 12.2%, and 2.5% respectively. Export transportation of construction materials fell by 0.7% year-on-year, while outgoing cement transportation volumes grew by 48%. 
The position of oil bulk, of which the share of the total loading volume was 15.3% (-0.2% year-on-year), changed slightly. Obviously, due to the raw material foundation of the Russian economy, railway transportation of oil bulk remained the most stable, and nowadays it is increasing if we compare it with the results of 2008, when there was a peak in the market sector. In future railway will transport less oil, especially when the ESPO is put into operation, but tank wagons operators will have enough cargoes to carry. According to RZD, about 125 million tons of oil and petrochemicals was loaded into tank wagons in the first six months of 2010, 10% more than in the same period in 2009.
Transportation of iron and manganese ores was also positive. Their share was 13.2% of the total loading volume (+0.6%). In June, iron ore loading remained practically the same as in June 2009 – it increased by only 0.8%. Meanwhile, during the crisis period, its loading volume was rather small. Just 49.7 million tons (+11.5%) of raw material for steelmaking was transported. Meanwhile, in January-May there was a 14% growth compared with the same period of 2009. 
The share of such cargoes as timber, ferrous metals and mineral fertilisers in the total loading volume remained practically the same. As for timber transportation, its dynamic is rather irregular. Also, its loading volume in different regions varied. One of the reasons for irregular timber loading is route impassibility in spring, which made transportation of timber rather complicated. Meanwhile, the volume of logging increased last spring – it was the first rise since the beginning of the crisis. Particularly in March it grew by 12.2% year-on-year, in April by 9.1%, and in May by 14.6%.
At first, the growth in timber loading was supported by the demand for paper production. Then, the timber processing industry came to life in anticipation of the summer construction season. And it contributed to the recovery of forest cargo transportation volumes. As a result, in the first seven months of 2010 its volume grew by 5.6% only.
The situation in the ferrous metal transportation sector seems stable as well. 35.6 million tons was transported in the first six months of 2010, a 20.4% increase year-on-year. Thus, ferrous metal is one of the cargoes the loading volume of which grows well this year. The dynamics of mineral fertilisers transportation in the first five and six months of 2010 stabilised and amounted to 21.7-22.5% as compared to the same period of 2009.   
Mr Lemeshko considers that in the second half of the year transportation volumes growth will slow down, because the low start effect will not play such a remarkable role as it did in the beginning of the year. However, specialists at RZD expect that the volume of oil bulk loading will continue to grow rapidly. The reason for this is the common increase in crude oil export transportation after the first line of the Eastern Siberia – the Pacific Ocean pipeline was put into operation. According to the forecasts of specialists at RZD, the loading volume of mineral construction materials will continue to grow. 
Considering the trends of loading dynamics and macroeconomic parameters and the current state of the railways’ cargo base, we can forecast that the increase in the rate of loading in 2010 will exceed the rate of industrial production growth. 
By Maria Shevchenko

viewpoint
Vyacheslav Lemeshko, 
Vice President of RZD:
- The volume of foreign trade cargo carried via port stations and land border crossings increased significantly. Particularly, transportation of export and import production via port stations grew, by 15.7%. The most significant growth – 44.4% – was in the Far East ports. The dynamics of transportation via the terminals of the north-western and southern basins were only +5.9% and 6.1%. 
The volume of export, import and transit cargoes carried via land border crossings grew by 15.1% compared with the first six months of 2009.
The share of oil bulk in total international transportation volumes was significant – approximately 28.7%, a 0.4% decline year-on-year. Coal occupies second place. Its share was 27.2% (-0.2% year-on-year). The share of ferrous metals was 7.8% (-0.7%), that of chemical and mineral fertilisers was 5.8% (+0.7%), that of timber 4.7% (-0.4%), those of construction materials, chemicals and sodium carbonate were 3.3% (+0.3%) and 3.6% (+0.7%) respectively.
 
Eduard Alyrzaev,
CEO of AgroVagon:
- There are two basic reasons for such a decline – the price situation on the grain market and specific problems with transportation. The low price for grain on the international markets makes grain purchases less attractive to traders. As a result, producers and traders failed to agree on price terms and the market slowed down, waiting for external factors able to change the situation. 
The changes in the volume of exports carried by rail were caused not only by foreign trade factors, but also by competition with other transport modes – road and river. A significant volume of export grain is carried to the Azov and the Black sea ports by road. If the distance of such transportation was 300-400 km before, nowadays it exceeds 800 km.
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Dynamic in the right direction
On the whole, the results of the first half of the year were positive enough for RZD. In the first six months of 2010, the volume of cargo carried on the Russian railway network was 13.6% more than in the same period the previous year. Last year, the figures for January-June were 23.1% below those of January-June 2008. 
Thus, RZD managed to overcome the consequences of the low freight base in the crisis year, and even showed positive dynamics. There is some financial instability in the economy and in the company’s work too. On the whole, in H1 of 2010, the volume of almost all mass cargoes transported by railway (except for grain and cereals) was restored. The negative dynamics of grain loading was caused by the decline in grain volumes last year. 
Another tendency worth mentioning is loading volume running rings around the industrial production indexes this year. In January-May, the latter grew by 10.3% year-on-year, while loading volume increased by 12.9%. One should take into account that the results were so impressive because of the low calculation base, since the most significant decline in industrial production, and consequently in the loading volume during the crisis, took place at the beginning of 2009. 
First class cargoes accounted for 61.2% of the loading volume. Their volume grew by 0.1% compared with the first half of 2009. The share of the second class cargoes was approximately 25.2% (a 0.5% decline). The share of the third class cargoes increased by 0.4% to 13.6%. Thus, there were small changes in the structure of the loading volume. 
Transportation volumes inside Russia grew by 13%. The dynamics of international transportation were also positive – international railway transportation volumes increased by 14.6%. Meanwhile, in H1 of 2009, RZD lost 40% of the segment, so the progress is obvious. Exports increased by 8.8% year-on-year. In H1 of 2009, there was a 9% decline in export transportation as compared with H1 of 2008. In the first six months of 2010, freight transportation via ports increased by 14.4% year-on-year, thus strengthening the tendency of the previous year. 
Transportation via border crossings grew by 3% (in H1 of 2009 there was a 21% decline), so the company proved its activities are efficient. The results of import transportation were the most impressive: transportation volumes grew by 40% in the segment (loading volume of cargoes carried via sea ports increased by 38.2%, and that of cargoes carried via border crossings by 40%). In fact, the company practically managed to reach the results of H1 of 2008, because the decline in import volume in six months of 2009 was 40%. Transit also increased. In H1 of 2009 its volume grew five-fold, and, in the first six months of 2010, it rose by 33.7%.   

Coal Is the Leader as Usual
Traditionally, coal is the top cargo in domestic transportation. Its share in the total loading volume was 23.3%, 0.3% more in comparison with H1 of 2009. Data on coal extraction show that this market sector is not sure of the future. The dynamics of coal loading at Russian railway stations fluctuated. In June, the volume reduced, although it was still bigger than that of June 2009. On the whole, the demand for this type of fuel was stable in both 2009 and 2010. 
The basic stimulator for loading is exports. It influences transportation: in January 2010, loading on the Russian railway network ticked over. Because of the cold weather, coal handling at sea terminals slowed down, plenty of wagons were accumulating on the railway approaches to ports, export lot formation in January 2010 reduced by 7.9% year-on-year, which caused a further decline in the dynamics. 
However, then export loading gathered pace (in February and March the increase was 7.7% and 21.1% respectively compared with the same period of 2009). In the middle of spring there was a slowdown: from +10.5% in April to +4.3% in May. The dynamics in June were negative: -6.9%.
The second-biggest cargo according to volume is construction materials and cement. Their loading in H1 of 2010 was stable enough, but the growth took place only against the background of very small figures in 2009. In the first five months of the current year, more than 11 million tons of cement (+13.1%) and 47.4 million tons of construction materials (+2.4%) were loaded. In May, cement loading volumes increased by 26.3% year-on-year, and that of construction materials rose by 8.1%.
However, the half-year results demonstrate a rising trend for construction materials and cement transportation volumes. According to RZD’s data, cement transportation increased by 13.7% year-on-year, and that of construction materials rose by 5.2%. The transportation volume of each of the cargoes grew in June 2010 by approximately 15% compared with the same period the previous year. Domestic transportation increased slightly: the rise in cement and construction materials transportation volume was 12.2%, and 2.5% respectively. Export transportation of construction materials fell by 0.7% year-on-year, while outgoing cement transportation volumes grew by 48%. 
The position of oil bulk, of which the share of the total loading volume was 15.3% (-0.2% year-on-year), changed slightly. Obviously, due to the raw material foundation of the Russian economy, railway transportation of oil bulk remained the most stable, and nowadays it is increasing if we compare it with the results of 2008, when there was a peak in the market sector. In future railway will transport less oil, especially when the ESPO is put into operation, but tank wagons operators will have enough cargoes to carry. According to RZD, about 125 million tons of oil and petrochemicals was loaded into tank wagons in the first six months of 2010, 10% more than in the same period in 2009.
Transportation of iron and manganese ores was also positive. Their share was 13.2% of the total loading volume (+0.6%). In June, iron ore loading remained practically the same as in June 2009 – it increased by only 0.8%. Meanwhile, during the crisis period, its loading volume was rather small. Just 49.7 million tons (+11.5%) of raw material for steelmaking was transported. Meanwhile, in January-May there was a 14% growth compared with the same period of 2009. 
The share of such cargoes as timber, ferrous metals and mineral fertilisers in the total loading volume remained practically the same. As for timber transportation, its dynamic is rather irregular. Also, its loading volume in different regions varied. One of the reasons for irregular timber loading is route impassibility in spring, which made transportation of timber rather complicated. Meanwhile, the volume of logging increased last spring – it was the first rise since the beginning of the crisis. Particularly in March it grew by 12.2% year-on-year, in April by 9.1%, and in May by 14.6%.
At first, the growth in timber loading was supported by the demand for paper production. Then, the timber processing industry came to life in anticipation of the summer construction season. And it contributed to the recovery of forest cargo transportation volumes. As a result, in the first seven months of 2010 its volume grew by 5.6% only.
The situation in the ferrous metal transportation sector seems stable as well. 35.6 million tons was transported in the first six months of 2010, a 20.4% increase year-on-year. Thus, ferrous metal is one of the cargoes the loading volume of which grows well this year. The dynamics of mineral fertilisers transportation in the first five and six months of 2010 stabilised and amounted to 21.7-22.5% as compared to the same period of 2009.   
Mr Lemeshko considers that in the second half of the year transportation volumes growth will slow down, because the low start effect will not play such a remarkable role as it did in the beginning of the year. However, specialists at RZD expect that the volume of oil bulk loading will continue to grow rapidly. The reason for this is the common increase in crude oil export transportation after the first line of the Eastern Siberia – the Pacific Ocean pipeline was put into operation. According to the forecasts of specialists at RZD, the loading volume of mineral construction materials will continue to grow. 
Considering the trends of loading dynamics and macroeconomic parameters and the current state of the railways’ cargo base, we can forecast that the increase in the rate of loading in 2010 will exceed the rate of industrial production growth. 
By Maria Shevchenko

viewpoint
Vyacheslav Lemeshko, 
Vice President of RZD:
- The volume of foreign trade cargo carried via port stations and land border crossings increased significantly. Particularly, transportation of export and import production via port stations grew, by 15.7%. The most significant growth – 44.4% – was in the Far East ports. The dynamics of transportation via the terminals of the north-western and southern basins were only +5.9% and 6.1%. 
The volume of export, import and transit cargoes carried via land border crossings grew by 15.1% compared with the first six months of 2009.
The share of oil bulk in total international transportation volumes was significant – approximately 28.7%, a 0.4% decline year-on-year. Coal occupies second place. Its share was 27.2% (-0.2% year-on-year). The share of ferrous metals was 7.8% (-0.7%), that of chemical and mineral fertilisers was 5.8% (+0.7%), that of timber 4.7% (-0.4%), those of construction materials, chemicals and sodium carbonate were 3.3% (+0.3%) and 3.6% (+0.7%) respectively.
 
Eduard Alyrzaev,
CEO of AgroVagon:
- There are two basic reasons for such a decline – the price situation on the grain market and specific problems with transportation. The low price for grain on the international markets makes grain purchases less attractive to traders. As a result, producers and traders failed to agree on price terms and the market slowed down, waiting for external factors able to change the situation. 
The changes in the volume of exports carried by rail were caused not only by foreign trade factors, but also by competition with other transport modes – road and river. A significant volume of export grain is carried to the Azov and the Black sea ports by road. If the distance of such transportation was 300-400 km before, nowadays it exceeds 800 km.
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Dynamic in the right direction
On the whole, the results of the first half of the year were positive enough for RZD. In the first six months of 2010, the volume of cargo carried on the Russian railway network was 13.6% more than in the same period the previous year. Last year, the figures for January-June were 23.1% below those of January-June 2008. 
Thus, RZD managed to overcome the consequences of the low freight base in the crisis year, and even showed positive dynamics. There is some financial instability in the economy and in the company’s work too. On the whole, in H1 of 2010, the volume of almost all mass cargoes transported by railway (except for grain and cereals) was restored. The negative dynamics of grain loading was caused by the decline in grain volumes last year. 
Another tendency worth mentioning is loading volume running rings around the industrial production indexes this year. In January-May, the latter grew by 10.3% year-on-year, while loading volume increased by 12.9%. One should take into account that the results were so impressive because of the low calculation base, since the most significant decline in industrial production, and consequently in the loading volume during the crisis, took place at the beginning of 2009. 
First class cargoes accounted for 61.2% of the loading volume. Their volume grew by 0.1% compared with the first half of 2009. The share of the second class cargoes was approximately 25.2% (a 0.5% decline). The share of the third class cargoes increased by 0.4% to 13.6%. Thus, there were small changes in the structure of the loading volume. 
Transportation volumes inside Russia grew by 13%. The dynamics of international transportation were also positive – international railway transportation volumes increased by 14.6%. Meanwhile, in H1 of 2009, RZD lost 40% of the segment, so the progress is obvious. Exports increased by 8.8% year-on-year. In H1 of 2009, there was a 9% decline in export transportation as compared with H1 of 2008. In the first six months of 2010, freight transportation via ports increased by 14.4% year-on-year, thus strengthening the tendency of the previous year. 
Transportation via border crossings grew by 3% (in H1 of 2009 there was a 21% decline), so the company proved its activities are efficient. The results of import transportation were the most impressive: transportation volumes grew by 40% in the segment (loading volume of cargoes carried via sea ports increased by 38.2%, and that of cargoes carried via border crossings by 40%). In fact, the company practically managed to reach the results of H1 of 2008, because the decline in import volume in six months of 2009 was 40%. Transit also increased. In H1 of 2009 its volume grew five-fold, and, in the first six months of 2010, it rose by 33.7%.   

Coal Is the Leader as Usual
Traditionally, coal is the top cargo in domestic transportation. Its share in the total loading volume was 23.3%, 0.3% more in comparison with H1 of 2009. Data on coal extraction show that this market sector is not sure of the future. The dynamics of coal loading at Russian railway stations fluctuated. In June, the volume reduced, although it was still bigger than that of June 2009. On the whole, the demand for this type of fuel was stable in both 2009 and 2010. 
The basic stimulator for loading is exports. It influences transportation: in January 2010, loading on the Russian railway network ticked over. Because of the cold weather, coal handling at sea terminals slowed down, plenty of wagons were accumulating on the railway approaches to ports, export lot formation in January 2010 reduced by 7.9% year-on-year, which caused a further decline in the dynamics. 
However, then export loading gathered pace (in February and March the increase was 7.7% and 21.1% respectively compared with the same period of 2009). In the middle of spring there was a slowdown: from +10.5% in April to +4.3% in May. The dynamics in June were negative: -6.9%.
The second-biggest cargo according to volume is construction materials and cement. Their loading in H1 of 2010 was stable enough, but the growth took place only against the background of very small figures in 2009. In the first five months of the current year, more than 11 million tons of cement (+13.1%) and 47.4 million tons of construction materials (+2.4%) were loaded. In May, cement loading volumes increased by 26.3% year-on-year, and that of construction materials rose by 8.1%.
However, the half-year results demonstrate a rising trend for construction materials and cement transportation volumes. According to RZD’s data, cement transportation increased by 13.7% year-on-year, and that of construction materials rose by 5.2%. The transportation volume of each of the cargoes grew in June 2010 by approximately 15% compared with the same period the previous year. Domestic transportation increased slightly: the rise in cement and construction materials transportation volume was 12.2%, and 2.5% respectively. Export transportation of construction materials fell by 0.7% year-on-year, while outgoing cement transportation volumes grew by 48%. 
The position of oil bulk, of which the share of the total loading volume was 15.3% (-0.2% year-on-year), changed slightly. Obviously, due to the raw material foundation of the Russian economy, railway transportation of oil bulk remained the most stable, and nowadays it is increasing if we compare it with the results of 2008, when there was a peak in the market sector. In future railway will transport less oil, especially when the ESPO is put into operation, but tank wagons operators will have enough cargoes to carry. According to RZD, about 125 million tons of oil and petrochemicals was loaded into tank wagons in the first six months of 2010, 10% more than in the same period in 2009.
Transportation of iron and manganese ores was also positive. Their share was 13.2% of the total loading volume (+0.6%). In June, iron ore loading remained practically the same as in June 2009 – it increased by only 0.8%. Meanwhile, during the crisis period, its loading volume was rather small. Just 49.7 million tons (+11.5%) of raw material for steelmaking was transported. Meanwhile, in January-May there was a 14% growth compared with the same period of 2009. 
The share of such cargoes as timber, ferrous metals and mineral fertilisers in the total loading volume remained practically the same. As for timber transportation, its dynamic is rather irregular. Also, its loading volume in different regions varied. One of the reasons for irregular timber loading is route impassibility in spring, which made transportation of timber rather complicated. Meanwhile, the volume of logging increased last spring – it was the first rise since the beginning of the crisis. Particularly in March it grew by 12.2% year-on-year, in April by 9.1%, and in May by 14.6%.
At first, the growth in timber loading was supported by the demand for paper production. Then, the timber processing industry came to life in anticipation of the summer construction season. And it contributed to the recovery of forest cargo transportation volumes. As a result, in the first seven months of 2010 its volume grew by 5.6% only.
The situation in the ferrous metal transportation sector seems stable as well. 35.6 million tons was transported in the first six months of 2010, a 20.4% increase year-on-year. Thus, ferrous metal is one of the cargoes the loading volume of which grows well this year. The dynamics of mineral fertilisers transportation in the first five and six months of 2010 stabilised and amounted to 21.7-22.5% as compared to the same period of 2009.   
Mr Lemeshko considers that in the second half of the year transportation volumes growth will slow down, because the low start effect will not play such a remarkable role as it did in the beginning of the year. However, specialists at RZD expect that the volume of oil bulk loading will continue to grow rapidly. The reason for this is the common increase in crude oil export transportation after the first line of the Eastern Siberia – the Pacific Ocean pipeline was put into operation. According to the forecasts of specialists at RZD, the loading volume of mineral construction materials will continue to grow. 
Considering the trends of loading dynamics and macroeconomic parameters and the current state of the railways’ cargo base, we can forecast that the increase in the rate of loading in 2010 will exceed the rate of industrial production growth. 
By Maria Shevchenko

viewpoint
Vyacheslav Lemeshko, 
Vice President of RZD:
- The volume of foreign trade cargo carried via port stations and land border crossings increased significantly. Particularly, transportation of export and import production via port stations grew, by 15.7%. The most significant growth – 44.4% – was in the Far East ports. The dynamics of transportation via the terminals of the north-western and southern basins were only +5.9% and 6.1%. 
The volume of export, import and transit cargoes carried via land border crossings grew by 15.1% compared with the first six months of 2009.
The share of oil bulk in total international transportation volumes was significant – approximately 28.7%, a 0.4% decline year-on-year. Coal occupies second place. Its share was 27.2% (-0.2% year-on-year). The share of ferrous metals was 7.8% (-0.7%), that of chemical and mineral fertilisers was 5.8% (+0.7%), that of timber 4.7% (-0.4%), those of construction materials, chemicals and sodium carbonate were 3.3% (+0.3%) and 3.6% (+0.7%) respectively.
 
Eduard Alyrzaev,
CEO of AgroVagon:
- There are two basic reasons for such a decline – the price situation on the grain market and specific problems with transportation. The low price for grain on the international markets makes grain purchases less attractive to traders. As a result, producers and traders failed to agree on price terms and the market slowed down, waiting for external factors able to change the situation. 
The changes in the volume of exports carried by rail were caused not only by foreign trade factors, but also by competition with other transport modes – road and river. A significant volume of export grain is carried to the Azov and the Black sea ports by road. If the distance of such transportation was 300-400 km before, nowadays it exceeds 800 km.
    [~DETAIL_TEXT] => 
Dynamic in the right direction
On the whole, the results of the first half of the year were positive enough for RZD. In the first six months of 2010, the volume of cargo carried on the Russian railway network was 13.6% more than in the same period the previous year. Last year, the figures for January-June were 23.1% below those of January-June 2008. 
Thus, RZD managed to overcome the consequences of the low freight base in the crisis year, and even showed positive dynamics. There is some financial instability in the economy and in the company’s work too. On the whole, in H1 of 2010, the volume of almost all mass cargoes transported by railway (except for grain and cereals) was restored. The negative dynamics of grain loading was caused by the decline in grain volumes last year. 
Another tendency worth mentioning is loading volume running rings around the industrial production indexes this year. In January-May, the latter grew by 10.3% year-on-year, while loading volume increased by 12.9%. One should take into account that the results were so impressive because of the low calculation base, since the most significant decline in industrial production, and consequently in the loading volume during the crisis, took place at the beginning of 2009. 
First class cargoes accounted for 61.2% of the loading volume. Their volume grew by 0.1% compared with the first half of 2009. The share of the second class cargoes was approximately 25.2% (a 0.5% decline). The share of the third class cargoes increased by 0.4% to 13.6%. Thus, there were small changes in the structure of the loading volume. 
Transportation volumes inside Russia grew by 13%. The dynamics of international transportation were also positive – international railway transportation volumes increased by 14.6%. Meanwhile, in H1 of 2009, RZD lost 40% of the segment, so the progress is obvious. Exports increased by 8.8% year-on-year. In H1 of 2009, there was a 9% decline in export transportation as compared with H1 of 2008. In the first six months of 2010, freight transportation via ports increased by 14.4% year-on-year, thus strengthening the tendency of the previous year. 
Transportation via border crossings grew by 3% (in H1 of 2009 there was a 21% decline), so the company proved its activities are efficient. The results of import transportation were the most impressive: transportation volumes grew by 40% in the segment (loading volume of cargoes carried via sea ports increased by 38.2%, and that of cargoes carried via border crossings by 40%). In fact, the company practically managed to reach the results of H1 of 2008, because the decline in import volume in six months of 2009 was 40%. Transit also increased. In H1 of 2009 its volume grew five-fold, and, in the first six months of 2010, it rose by 33.7%.   

Coal Is the Leader as Usual
Traditionally, coal is the top cargo in domestic transportation. Its share in the total loading volume was 23.3%, 0.3% more in comparison with H1 of 2009. Data on coal extraction show that this market sector is not sure of the future. The dynamics of coal loading at Russian railway stations fluctuated. In June, the volume reduced, although it was still bigger than that of June 2009. On the whole, the demand for this type of fuel was stable in both 2009 and 2010. 
The basic stimulator for loading is exports. It influences transportation: in January 2010, loading on the Russian railway network ticked over. Because of the cold weather, coal handling at sea terminals slowed down, plenty of wagons were accumulating on the railway approaches to ports, export lot formation in January 2010 reduced by 7.9% year-on-year, which caused a further decline in the dynamics. 
However, then export loading gathered pace (in February and March the increase was 7.7% and 21.1% respectively compared with the same period of 2009). In the middle of spring there was a slowdown: from +10.5% in April to +4.3% in May. The dynamics in June were negative: -6.9%.
The second-biggest cargo according to volume is construction materials and cement. Their loading in H1 of 2010 was stable enough, but the growth took place only against the background of very small figures in 2009. In the first five months of the current year, more than 11 million tons of cement (+13.1%) and 47.4 million tons of construction materials (+2.4%) were loaded. In May, cement loading volumes increased by 26.3% year-on-year, and that of construction materials rose by 8.1%.
However, the half-year results demonstrate a rising trend for construction materials and cement transportation volumes. According to RZD’s data, cement transportation increased by 13.7% year-on-year, and that of construction materials rose by 5.2%. The transportation volume of each of the cargoes grew in June 2010 by approximately 15% compared with the same period the previous year. Domestic transportation increased slightly: the rise in cement and construction materials transportation volume was 12.2%, and 2.5% respectively. Export transportation of construction materials fell by 0.7% year-on-year, while outgoing cement transportation volumes grew by 48%. 
The position of oil bulk, of which the share of the total loading volume was 15.3% (-0.2% year-on-year), changed slightly. Obviously, due to the raw material foundation of the Russian economy, railway transportation of oil bulk remained the most stable, and nowadays it is increasing if we compare it with the results of 2008, when there was a peak in the market sector. In future railway will transport less oil, especially when the ESPO is put into operation, but tank wagons operators will have enough cargoes to carry. According to RZD, about 125 million tons of oil and petrochemicals was loaded into tank wagons in the first six months of 2010, 10% more than in the same period in 2009.
Transportation of iron and manganese ores was also positive. Their share was 13.2% of the total loading volume (+0.6%). In June, iron ore loading remained practically the same as in June 2009 – it increased by only 0.8%. Meanwhile, during the crisis period, its loading volume was rather small. Just 49.7 million tons (+11.5%) of raw material for steelmaking was transported. Meanwhile, in January-May there was a 14% growth compared with the same period of 2009. 
The share of such cargoes as timber, ferrous metals and mineral fertilisers in the total loading volume remained practically the same. As for timber transportation, its dynamic is rather irregular. Also, its loading volume in different regions varied. One of the reasons for irregular timber loading is route impassibility in spring, which made transportation of timber rather complicated. Meanwhile, the volume of logging increased last spring – it was the first rise since the beginning of the crisis. Particularly in March it grew by 12.2% year-on-year, in April by 9.1%, and in May by 14.6%.
At first, the growth in timber loading was supported by the demand for paper production. Then, the timber processing industry came to life in anticipation of the summer construction season. And it contributed to the recovery of forest cargo transportation volumes. As a result, in the first seven months of 2010 its volume grew by 5.6% only.
The situation in the ferrous metal transportation sector seems stable as well. 35.6 million tons was transported in the first six months of 2010, a 20.4% increase year-on-year. Thus, ferrous metal is one of the cargoes the loading volume of which grows well this year. The dynamics of mineral fertilisers transportation in the first five and six months of 2010 stabilised and amounted to 21.7-22.5% as compared to the same period of 2009.   
Mr Lemeshko considers that in the second half of the year transportation volumes growth will slow down, because the low start effect will not play such a remarkable role as it did in the beginning of the year. However, specialists at RZD expect that the volume of oil bulk loading will continue to grow rapidly. The reason for this is the common increase in crude oil export transportation after the first line of the Eastern Siberia – the Pacific Ocean pipeline was put into operation. According to the forecasts of specialists at RZD, the loading volume of mineral construction materials will continue to grow. 
Considering the trends of loading dynamics and macroeconomic parameters and the current state of the railways’ cargo base, we can forecast that the increase in the rate of loading in 2010 will exceed the rate of industrial production growth. 
By Maria Shevchenko

viewpoint
Vyacheslav Lemeshko, 
Vice President of RZD:
- The volume of foreign trade cargo carried via port stations and land border crossings increased significantly. Particularly, transportation of export and import production via port stations grew, by 15.7%. The most significant growth – 44.4% – was in the Far East ports. The dynamics of transportation via the terminals of the north-western and southern basins were only +5.9% and 6.1%. 
The volume of export, import and transit cargoes carried via land border crossings grew by 15.1% compared with the first six months of 2009.
The share of oil bulk in total international transportation volumes was significant – approximately 28.7%, a 0.4% decline year-on-year. Coal occupies second place. Its share was 27.2% (-0.2% year-on-year). The share of ferrous metals was 7.8% (-0.7%), that of chemical and mineral fertilisers was 5.8% (+0.7%), that of timber 4.7% (-0.4%), those of construction materials, chemicals and sodium carbonate were 3.3% (+0.3%) and 3.6% (+0.7%) respectively.
 
Eduard Alyrzaev,
CEO of AgroVagon:
- There are two basic reasons for such a decline – the price situation on the grain market and specific problems with transportation. The low price for grain on the international markets makes grain purchases less attractive to traders. As a result, producers and traders failed to agree on price terms and the market slowed down, waiting for external factors able to change the situation. 
The changes in the volume of exports carried by rail were caused not only by foreign trade factors, but also by competition with other transport modes – road and river. A significant volume of export grain is carried to the Azov and the Black sea ports by road. If the distance of such transportation was 300-400 km before, nowadays it exceeds 800 km.
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