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Trade volumes between Russia and India more than doubled in the last five years. This was supported even during an economic crisis. Following the results of 2012, the volume of commodity turnover between the countries, according to preliminary estimates, grew by 24.5% and made over $11 billion. And still, according to experts, today’s level of economic interaction between
the countries is much lower than its possible potential.
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[DETAIL_TEXT] => Both Diamonds and Helicopters
Trade and investments between India and Russia developed quite dynamically in recent years. According to the Ministry of Economic Development of the Russian Federation, since 2007 commodity turnover between the countries more than doubled. And there is no imbalance in this growth – both export, and import are growing quickly. Despite the opinion that trade and economic cooperation between Russia and India has a military and technical nature, leading positions are taken by goods of civil assignment. According to experts, they make at least 80% of the Russian-Indian commodity turnover. The main export goods from Russia are aircraft equipment and spare parts, mineral fertilizers, energy carriers, the equipment for nuclear power stations, steel rolling, the control machinery, the electric power equipment, diamonds. From India Russia usually delivers medicines, tea, tobacco raw materials, fruits and vegetables, knitted and textile products, vehicles.
And still one of the most important aspects of the Russian-Indian relations is military and technical cooperation and cooperation in the power engineering sphere. It was proved again by the result of official visit of the President of Russia Vladimir Putin to India in December, 2012. So, within the summit, contracts for delivery of the Russian helicopter machinery and technological sets for building the airplanes were signed. In particular, Rosoboronexport signed next contracts: with the Hindustan Aeronautics company for delivery of 42 technological sets for license production of the SU-30MKI fighters on the amount of $1.6 billion; and also with the Ministry of Defense of India on delivery of 71 MI-17V-5 helicopters by total cost of $1.3 billion.
Let’s remind, that only with India does Russia implement a long-term program on military technical cooperation. By the way, recently it was prolonged till 2020. The volume of the signed contracts within the previous ten-year program reached $30 billion. According to experts, more than 30% of the total Russian military export goes to India. Thus recently the accent in the sphere of military and technical cooperation moved to an area of licenses for production in India, carrying out there research and development, and also creation of joint ventures.
So, during the December meeting of heads of states the agreement was signed on creation of a joint venture between Russian Helicopters JSC and the Indian company Elcom Systems Private Limited in India, where Russian helicopters of the Mi and Ka brands will be manufactured. “The joint venture will produce major parts of helicopters and then make final assembly of machines, and also carry out both flight tests and ground tests. It is envisaged that the joint venture will begin with production of aggregates for the light Russian Ka-226T helicopter”, a representative of Russian Helicopters said.
There is an experience of such cooperation. “Now a number of essentially important projects in this sphere are being implemented: creation of the fifth generation fighter of, the multiple objective transport airplanes, production of hyper acoustic BraMos cruise missiles, T-90C tanks. Military engineers and designers of our countries carry out joint research and work on development in more than 40 areas”, said the ambassador of Russia to India Alexander Kadakin.
Within the idea of India on diversification of military deliveries, such an approach can become a serious trump for the Russian side. In any case Russia, according to Mr Kadakin, is ready for competition in the Indian market. “We have many serious practices which can be offered to partners. In particular, we intend to increase our presence in air defense sector”, the ambassador said. “We would like to take part also in the tender for purchase of six diesel electric submarines”.
Nuclear Power Plant Constructed, Next Is Space
Russian-Indian cooperation in the power engineering sphere is also developing rapidly. In particular, progress on construction of a nuclear power plant “Kudankulam” in India was outlined. The construction is carried out with technical assistance of Russia. The station will be built within the Interstate agreement of 1988 and amendments of 1998. The customer is the Nuclear Power Corporation of India Limited (NPCIL). Since 2012 the project has been run by the united company of Nizhny Novgorod Engineering Company Atomenergoproekt JSC and Atomstroyexport JSC. The company works on development of the engineering design and working documentation, architectural supervision of construction of buildings and facilities, technical support while mounting and commissioning the nuclear power plant, etc. In turn, NPCIL executes construction, installation and commissioning on a nuclear power plant site, and also station input into operation. Supply of equipment to the nuclear power plant is carried out by many Russian enterprises, for example, reactors are made by Izhora plants, the polar crane – by Uralmash plant.
Construction of the first power unit “Kudankulam” is completed. As expected, the second phase will be finished in 2013. The agreement on construction of the third and fourth power units is almost ready for signing. According to Secretary of the Security Council of the Russian Federation Nikolay Patrushev, the signed “road map” between Russia and India in 2010 states that 14-16 nuclear power units should be in serial construction.
Both countries have a mutual interest in the field of exploration of oil and gas production in both states, and also in creation of the joint extracting and processing ventures in Russia, India, and also in third party countries. In particular, during the summit held in December the Indian state oil companies expressed interest in acquisition of a share in reconnoitered and developed together with the Russian oil and gas companies fields and in projects on liquefaction of natural gas in Russia, and also in purchase of Russian crude oil and supply of the liquefied natural gas to India. They also talked about involvement of the Indian Oil and Natural Gas Corp. (ONGC) in the extraction sector in Russia, and “Rosneft” – in a processing sector in India.
By the way, ONGC already presents in the Russian market. The company participates in the development of oil fields and gas in the project “Sakhalin-I”, and it also has acquired the Imperial Energy company, who is developing oil fields in the Tomsk region in Russia.
Signed in October, 2012 by the Gazprom Marketing and Trading company (sunsidiary of Gazprom) the contract with the Indian GAIL on supply of the liquefied natural gas (LNG) became one of the latest significant events in the field of cooperation between the countries in the sphere of power engineering. The document provides the delivery of 2.5 million tons a year of LNG to India within 20 years. “The volume of gas consuming in India in 2020 will be 1.7 times more, than today. This market is very perspective for us, and we consider it in our plans on creation of export capacities within East gas program”, Alexey Miller, CEO of Gazprom said.
Recently the Russian-Indian cooperation in the field of space exploration has also grown. In particular, the Global navigation satellite system (GLONASS) actively moves ahead in India. In December, 2012, Navigation-Information Systems JSC (NIS) and the Indian companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) signed the cooperation agreement in the sphere of navigation activities. The document provides use of the solution of NIS and available infrastructure 
of BSNL and MTNL for provision of services using satellite signals of GLONASS and GPS in India. It is a question of services in the field of telematics, development of the navigation software for the equipment of the BSNL and MTNL companies, use of call-centers for helping the population on the basis of navigation.
Course on approaching
However, despite the fact that trade and economic cooperation between Russia and India grows every year, experts consider the modern levels of co-operation of the states rather low. Considering the scales of economic systems of both countries, and also the high level of the political relations, volumes of commodity turnover and investments could be much bigger. The principal reason of such situation, according to a row of experts, is ineffective straight lines (“business – business”) contacts between the companies. During the Soviet Union business generally developed between the state companies, but with the decay of the USSR these communications were erased, and haven’t been rebuilt yet.
“It is an open secret that the major share of the Russian export is provided with implementation of large contracts at intergovernmental level: export of production of large mechanical engineering within serial construction of the nuclear power plant or upgrade of iron and steel works. However, such projects are one-offs”, Mr Kadakin said. “Today in Russian-Indian trade and economic relations development of contacts through the private business, interested in implementation of joint long-term investment projects in case of the minimum state involvement, should become priority”.
Meanwhile, the potential of economic cooperation between Russia and India is huge. Among prospective interconnection areas, in addition to power engineering and arms, experts name the telecommunications and IT sector, pharmaceutics and biotechnologies, automotive industry, production of chemical fertilizers. Besides, there are great opportunities in the field of construction and engineering services for Russian companies in India. The Government of the republic has plans to double expenditures on infrastructure projects, particularly on a construction of roads, ports, power stations. It is planned to allocate about $1 trillion for these purposes in the next five years.
Considering the growth potential, and also perspectives of trade and economic cooperation between Russia and India, during the December summit the President of Russia Vladimir Putin set the task to double commodity turnover with India in three years. By 2015 it will reach $20 billion. Experts are sure that this level can be reached only if business communities of both countries will find new forms of cooperation.
By Olga Gorbunova
viewpoint
Vladimir Putin,
President of Russia:
– The growing economic potential of Russia and India in many respects is complementary. Our commodity turnover overcame the consequences of the global crisis, and in 2012 we expect a record index – over $10 billion. Our following purpose is to make $20 billion by 2015. For this purpose it is necessary to use all reserves, to support direct contacts of a business community, to stimulate creation of effective investment, technological, industrial alliances in the most dynamic, perspective spheres. For example, in power engineering, first of all in the nuclear-power engineering.
We wait to receive notable return from long-term projects in ferrous metallurgy, production of hydrocarbons, the car- and aircraft industry, the chemical industry, pharmaceutics, in IT and biotechnologies. Wide perspectives are opened by sharing of the Russian global navigation satellite system GLONASS. We intend to provide the extension of practical interaction in this important area.
License production and joint development of the advanced arms, instead of simply purchase of military products, becomes the key direction of military and technical cooperation. Basic attention is paid to creation of the multifunction fighter and the multiple objective transport airplane.
It is sure that such multivectoral cooperation will allow our countries not only to improve leading line items on a number of high-tech projects, but also will help to push on successfully joint production on the markets of the third states.
Manmohan Singh,
Prime Minister of India:
– Deep integration of Russia into the global economy will give the chance for interaction between a business community of our countries. Growth in our bilateral trade in 2012 makes more than 30%. We have big perspectives and outstanding potential in such spheres, as pharmaceutics, fertilizers, mining business, steel, information technologies, civil aviation, telecommunications, infrastructure, processing of food, innovation and service. We will work here to use more opportunities.
We asked our intergovernmental and business groups to recommend specific spheres for increase in bilateral trade and investments.
We have good dynamics in the field of cooperation in science and technologies. We welcome the beginning of operation of the Indian-Russian joint scientific and technological center. This center will help us with development and commercialisation of perspective technologies, including nanotechnologies, biomedicine and operation in the sphere of supercomputers.
Alexander Kadakin,
Ambassador of Russia to India:
– Business is a live self-regulating mechanism. If the Indian vendor understands that it is more favorable to buy components from us, instead of in Europe or Asia because Russian technologies are not only cheaper, but also have better quality, therefore attraction of any state and political resource for cooperation isn’t required. The role of the state will be brought together in this case to creation of necessary conditions in which the Russian business in India and Indian in Russia would feel itself comfortably. Good example here is the program on creation of the joint pharmaceutical ventures in the territory of Russia with attraction of the Indian capital and technologies. We hope that this experience will be used for other branches.
[~DETAIL_TEXT] => Both Diamonds and Helicopters
Trade and investments between India and Russia developed quite dynamically in recent years. According to the Ministry of Economic Development of the Russian Federation, since 2007 commodity turnover between the countries more than doubled. And there is no imbalance in this growth – both export, and import are growing quickly. Despite the opinion that trade and economic cooperation between Russia and India has a military and technical nature, leading positions are taken by goods of civil assignment. According to experts, they make at least 80% of the Russian-Indian commodity turnover. The main export goods from Russia are aircraft equipment and spare parts, mineral fertilizers, energy carriers, the equipment for nuclear power stations, steel rolling, the control machinery, the electric power equipment, diamonds. From India Russia usually delivers medicines, tea, tobacco raw materials, fruits and vegetables, knitted and textile products, vehicles.
And still one of the most important aspects of the Russian-Indian relations is military and technical cooperation and cooperation in the power engineering sphere. It was proved again by the result of official visit of the President of Russia Vladimir Putin to India in December, 2012. So, within the summit, contracts for delivery of the Russian helicopter machinery and technological sets for building the airplanes were signed. In particular, Rosoboronexport signed next contracts: with the Hindustan Aeronautics company for delivery of 42 technological sets for license production of the SU-30MKI fighters on the amount of $1.6 billion; and also with the Ministry of Defense of India on delivery of 71 MI-17V-5 helicopters by total cost of $1.3 billion.
Let’s remind, that only with India does Russia implement a long-term program on military technical cooperation. By the way, recently it was prolonged till 2020. The volume of the signed contracts within the previous ten-year program reached $30 billion. According to experts, more than 30% of the total Russian military export goes to India. Thus recently the accent in the sphere of military and technical cooperation moved to an area of licenses for production in India, carrying out there research and development, and also creation of joint ventures.
So, during the December meeting of heads of states the agreement was signed on creation of a joint venture between Russian Helicopters JSC and the Indian company Elcom Systems Private Limited in India, where Russian helicopters of the Mi and Ka brands will be manufactured. “The joint venture will produce major parts of helicopters and then make final assembly of machines, and also carry out both flight tests and ground tests. It is envisaged that the joint venture will begin with production of aggregates for the light Russian Ka-226T helicopter”, a representative of Russian Helicopters said.
There is an experience of such cooperation. “Now a number of essentially important projects in this sphere are being implemented: creation of the fifth generation fighter of, the multiple objective transport airplanes, production of hyper acoustic BraMos cruise missiles, T-90C tanks. Military engineers and designers of our countries carry out joint research and work on development in more than 40 areas”, said the ambassador of Russia to India Alexander Kadakin.
Within the idea of India on diversification of military deliveries, such an approach can become a serious trump for the Russian side. In any case Russia, according to Mr Kadakin, is ready for competition in the Indian market. “We have many serious practices which can be offered to partners. In particular, we intend to increase our presence in air defense sector”, the ambassador said. “We would like to take part also in the tender for purchase of six diesel electric submarines”.
Nuclear Power Plant Constructed, Next Is Space
Russian-Indian cooperation in the power engineering sphere is also developing rapidly. In particular, progress on construction of a nuclear power plant “Kudankulam” in India was outlined. The construction is carried out with technical assistance of Russia. The station will be built within the Interstate agreement of 1988 and amendments of 1998. The customer is the Nuclear Power Corporation of India Limited (NPCIL). Since 2012 the project has been run by the united company of Nizhny Novgorod Engineering Company Atomenergoproekt JSC and Atomstroyexport JSC. The company works on development of the engineering design and working documentation, architectural supervision of construction of buildings and facilities, technical support while mounting and commissioning the nuclear power plant, etc. In turn, NPCIL executes construction, installation and commissioning on a nuclear power plant site, and also station input into operation. Supply of equipment to the nuclear power plant is carried out by many Russian enterprises, for example, reactors are made by Izhora plants, the polar crane – by Uralmash plant.
Construction of the first power unit “Kudankulam” is completed. As expected, the second phase will be finished in 2013. The agreement on construction of the third and fourth power units is almost ready for signing. According to Secretary of the Security Council of the Russian Federation Nikolay Patrushev, the signed “road map” between Russia and India in 2010 states that 14-16 nuclear power units should be in serial construction.
Both countries have a mutual interest in the field of exploration of oil and gas production in both states, and also in creation of the joint extracting and processing ventures in Russia, India, and also in third party countries. In particular, during the summit held in December the Indian state oil companies expressed interest in acquisition of a share in reconnoitered and developed together with the Russian oil and gas companies fields and in projects on liquefaction of natural gas in Russia, and also in purchase of Russian crude oil and supply of the liquefied natural gas to India. They also talked about involvement of the Indian Oil and Natural Gas Corp. (ONGC) in the extraction sector in Russia, and “Rosneft” – in a processing sector in India.
By the way, ONGC already presents in the Russian market. The company participates in the development of oil fields and gas in the project “Sakhalin-I”, and it also has acquired the Imperial Energy company, who is developing oil fields in the Tomsk region in Russia.
Signed in October, 2012 by the Gazprom Marketing and Trading company (sunsidiary of Gazprom) the contract with the Indian GAIL on supply of the liquefied natural gas (LNG) became one of the latest significant events in the field of cooperation between the countries in the sphere of power engineering. The document provides the delivery of 2.5 million tons a year of LNG to India within 20 years. “The volume of gas consuming in India in 2020 will be 1.7 times more, than today. This market is very perspective for us, and we consider it in our plans on creation of export capacities within East gas program”, Alexey Miller, CEO of Gazprom said.
Recently the Russian-Indian cooperation in the field of space exploration has also grown. In particular, the Global navigation satellite system (GLONASS) actively moves ahead in India. In December, 2012, Navigation-Information Systems JSC (NIS) and the Indian companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) signed the cooperation agreement in the sphere of navigation activities. The document provides use of the solution of NIS and available infrastructure of BSNL and MTNL for provision of services using satellite signals of GLONASS and GPS in India. It is a question of services in the field of telematics, development of the navigation software for the equipment of the BSNL and MTNL companies, use of call-centers for helping the population on the basis of navigation.
Course on approaching
However, despite the fact that trade and economic cooperation between Russia and India grows every year, experts consider the modern levels of co-operation of the states rather low. Considering the scales of economic systems of both countries, and also the high level of the political relations, volumes of commodity turnover and investments could be much bigger. The principal reason of such situation, according to a row of experts, is ineffective straight lines (“business – business”) contacts between the companies. During the Soviet Union business generally developed between the state companies, but with the decay of the USSR these communications were erased, and haven’t been rebuilt yet.
“It is an open secret that the major share of the Russian export is provided with implementation of large contracts at intergovernmental level: export of production of large mechanical engineering within serial construction of the nuclear power plant or upgrade of iron and steel works. However, such projects are one-offs”, Mr Kadakin said. “Today in Russian-Indian trade and economic relations development of contacts through the private business, interested in implementation of joint long-term investment projects in case of the minimum state involvement, should become priority”.
Meanwhile, the potential of economic cooperation between Russia and India is huge. Among prospective interconnection areas, in addition to power engineering and arms, experts name the telecommunications and IT sector, pharmaceutics and biotechnologies, automotive industry, production of chemical fertilizers. Besides, there are great opportunities in the field of construction and engineering services for Russian companies in India. The Government of the republic has plans to double expenditures on infrastructure projects, particularly on a construction of roads, ports, power stations. It is planned to allocate about $1 trillion for these purposes in the next five years.
Considering the growth potential, and also perspectives of trade and economic cooperation between Russia and India, during the December summit the President of Russia Vladimir Putin set the task to double commodity turnover with India in three years. By 2015 it will reach $20 billion. Experts are sure that this level can be reached only if business communities of both countries will find new forms of cooperation.
By Olga Gorbunova
viewpoint
Vladimir Putin,
President of Russia:
– The growing economic potential of Russia and India in many respects is complementary. Our commodity turnover overcame the consequences of the global crisis, and in 2012 we expect a record index – over $10 billion. Our following purpose is to make $20 billion by 2015. For this purpose it is necessary to use all reserves, to support direct contacts of a business community, to stimulate creation of effective investment, technological, industrial alliances in the most dynamic, perspective spheres. For example, in power engineering, first of all in the nuclear-power engineering.
We wait to receive notable return from long-term projects in ferrous metallurgy, production of hydrocarbons, the car- and aircraft industry, the chemical industry, pharmaceutics, in IT and biotechnologies. Wide perspectives are opened by sharing of the Russian global navigation satellite system GLONASS. We intend to provide the extension of practical interaction in this important area.
License production and joint development of the advanced arms, instead of simply purchase of military products, becomes the key direction of military and technical cooperation. Basic attention is paid to creation of the multifunction fighter and the multiple objective transport airplane.
It is sure that such multivectoral cooperation will allow our countries not only to improve leading line items on a number of high-tech projects, but also will help to push on successfully joint production on the markets of the third states.
Manmohan Singh,
Prime Minister of India:
– Deep integration of Russia into the global economy will give the chance for interaction between a business community of our countries. Growth in our bilateral trade in 2012 makes more than 30%. We have big perspectives and outstanding potential in such spheres, as pharmaceutics, fertilizers, mining business, steel, information technologies, civil aviation, telecommunications, infrastructure, processing of food, innovation and service. We will work here to use more opportunities.
We asked our intergovernmental and business groups to recommend specific spheres for increase in bilateral trade and investments.
We have good dynamics in the field of cooperation in science and technologies. We welcome the beginning of operation of the Indian-Russian joint scientific and technological center. This center will help us with development and commercialisation of perspective technologies, including nanotechnologies, biomedicine and operation in the sphere of supercomputers.
Alexander Kadakin,
Ambassador of Russia to India:
– Business is a live self-regulating mechanism. If the Indian vendor understands that it is more favorable to buy components from us, instead of in Europe or Asia because Russian technologies are not only cheaper, but also have better quality, therefore attraction of any state and political resource for cooperation isn’t required. The role of the state will be brought together in this case to creation of necessary conditions in which the Russian business in India and Indian in Russia would feel itself comfortably. Good example here is the program on creation of the joint pharmaceutical ventures in the territory of Russia with attraction of the Indian capital and technologies. We hope that this experience will be used for other branches.
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the countries is much lower than its possible potential.
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[DETAIL_TEXT] => Both Diamonds and Helicopters
Trade and investments between India and Russia developed quite dynamically in recent years. According to the Ministry of Economic Development of the Russian Federation, since 2007 commodity turnover between the countries more than doubled. And there is no imbalance in this growth – both export, and import are growing quickly. Despite the opinion that trade and economic cooperation between Russia and India has a military and technical nature, leading positions are taken by goods of civil assignment. According to experts, they make at least 80% of the Russian-Indian commodity turnover. The main export goods from Russia are aircraft equipment and spare parts, mineral fertilizers, energy carriers, the equipment for nuclear power stations, steel rolling, the control machinery, the electric power equipment, diamonds. From India Russia usually delivers medicines, tea, tobacco raw materials, fruits and vegetables, knitted and textile products, vehicles.
And still one of the most important aspects of the Russian-Indian relations is military and technical cooperation and cooperation in the power engineering sphere. It was proved again by the result of official visit of the President of Russia Vladimir Putin to India in December, 2012. So, within the summit, contracts for delivery of the Russian helicopter machinery and technological sets for building the airplanes were signed. In particular, Rosoboronexport signed next contracts: with the Hindustan Aeronautics company for delivery of 42 technological sets for license production of the SU-30MKI fighters on the amount of $1.6 billion; and also with the Ministry of Defense of India on delivery of 71 MI-17V-5 helicopters by total cost of $1.3 billion.
Let’s remind, that only with India does Russia implement a long-term program on military technical cooperation. By the way, recently it was prolonged till 2020. The volume of the signed contracts within the previous ten-year program reached $30 billion. According to experts, more than 30% of the total Russian military export goes to India. Thus recently the accent in the sphere of military and technical cooperation moved to an area of licenses for production in India, carrying out there research and development, and also creation of joint ventures.
So, during the December meeting of heads of states the agreement was signed on creation of a joint venture between Russian Helicopters JSC and the Indian company Elcom Systems Private Limited in India, where Russian helicopters of the Mi and Ka brands will be manufactured. “The joint venture will produce major parts of helicopters and then make final assembly of machines, and also carry out both flight tests and ground tests. It is envisaged that the joint venture will begin with production of aggregates for the light Russian Ka-226T helicopter”, a representative of Russian Helicopters said.
There is an experience of such cooperation. “Now a number of essentially important projects in this sphere are being implemented: creation of the fifth generation fighter of, the multiple objective transport airplanes, production of hyper acoustic BraMos cruise missiles, T-90C tanks. Military engineers and designers of our countries carry out joint research and work on development in more than 40 areas”, said the ambassador of Russia to India Alexander Kadakin.
Within the idea of India on diversification of military deliveries, such an approach can become a serious trump for the Russian side. In any case Russia, according to Mr Kadakin, is ready for competition in the Indian market. “We have many serious practices which can be offered to partners. In particular, we intend to increase our presence in air defense sector”, the ambassador said. “We would like to take part also in the tender for purchase of six diesel electric submarines”.
Nuclear Power Plant Constructed, Next Is Space
Russian-Indian cooperation in the power engineering sphere is also developing rapidly. In particular, progress on construction of a nuclear power plant “Kudankulam” in India was outlined. The construction is carried out with technical assistance of Russia. The station will be built within the Interstate agreement of 1988 and amendments of 1998. The customer is the Nuclear Power Corporation of India Limited (NPCIL). Since 2012 the project has been run by the united company of Nizhny Novgorod Engineering Company Atomenergoproekt JSC and Atomstroyexport JSC. The company works on development of the engineering design and working documentation, architectural supervision of construction of buildings and facilities, technical support while mounting and commissioning the nuclear power plant, etc. In turn, NPCIL executes construction, installation and commissioning on a nuclear power plant site, and also station input into operation. Supply of equipment to the nuclear power plant is carried out by many Russian enterprises, for example, reactors are made by Izhora plants, the polar crane – by Uralmash plant.
Construction of the first power unit “Kudankulam” is completed. As expected, the second phase will be finished in 2013. The agreement on construction of the third and fourth power units is almost ready for signing. According to Secretary of the Security Council of the Russian Federation Nikolay Patrushev, the signed “road map” between Russia and India in 2010 states that 14-16 nuclear power units should be in serial construction.
Both countries have a mutual interest in the field of exploration of oil and gas production in both states, and also in creation of the joint extracting and processing ventures in Russia, India, and also in third party countries. In particular, during the summit held in December the Indian state oil companies expressed interest in acquisition of a share in reconnoitered and developed together with the Russian oil and gas companies fields and in projects on liquefaction of natural gas in Russia, and also in purchase of Russian crude oil and supply of the liquefied natural gas to India. They also talked about involvement of the Indian Oil and Natural Gas Corp. (ONGC) in the extraction sector in Russia, and “Rosneft” – in a processing sector in India.
By the way, ONGC already presents in the Russian market. The company participates in the development of oil fields and gas in the project “Sakhalin-I”, and it also has acquired the Imperial Energy company, who is developing oil fields in the Tomsk region in Russia.
Signed in October, 2012 by the Gazprom Marketing and Trading company (sunsidiary of Gazprom) the contract with the Indian GAIL on supply of the liquefied natural gas (LNG) became one of the latest significant events in the field of cooperation between the countries in the sphere of power engineering. The document provides the delivery of 2.5 million tons a year of LNG to India within 20 years. “The volume of gas consuming in India in 2020 will be 1.7 times more, than today. This market is very perspective for us, and we consider it in our plans on creation of export capacities within East gas program”, Alexey Miller, CEO of Gazprom said.
Recently the Russian-Indian cooperation in the field of space exploration has also grown. In particular, the Global navigation satellite system (GLONASS) actively moves ahead in India. In December, 2012, Navigation-Information Systems JSC (NIS) and the Indian companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) signed the cooperation agreement in the sphere of navigation activities. The document provides use of the solution of NIS and available infrastructure of BSNL and MTNL for provision of services using satellite signals of GLONASS and GPS in India. It is a question of services in the field of telematics, development of the navigation software for the equipment of the BSNL and MTNL companies, use of call-centers for helping the population on the basis of navigation.
Course on approaching
However, despite the fact that trade and economic cooperation between Russia and India grows every year, experts consider the modern levels of co-operation of the states rather low. Considering the scales of economic systems of both countries, and also the high level of the political relations, volumes of commodity turnover and investments could be much bigger. The principal reason of such situation, according to a row of experts, is ineffective straight lines (“business – business”) contacts between the companies. During the Soviet Union business generally developed between the state companies, but with the decay of the USSR these communications were erased, and haven’t been rebuilt yet.
“It is an open secret that the major share of the Russian export is provided with implementation of large contracts at intergovernmental level: export of production of large mechanical engineering within serial construction of the nuclear power plant or upgrade of iron and steel works. However, such projects are one-offs”, Mr Kadakin said. “Today in Russian-Indian trade and economic relations development of contacts through the private business, interested in implementation of joint long-term investment projects in case of the minimum state involvement, should become priority”.
Meanwhile, the potential of economic cooperation between Russia and India is huge. Among prospective interconnection areas, in addition to power engineering and arms, experts name the telecommunications and IT sector, pharmaceutics and biotechnologies, automotive industry, production of chemical fertilizers. Besides, there are great opportunities in the field of construction and engineering services for Russian companies in India. The Government of the republic has plans to double expenditures on infrastructure projects, particularly on a construction of roads, ports, power stations. It is planned to allocate about $1 trillion for these purposes in the next five years.
Considering the growth potential, and also perspectives of trade and economic cooperation between Russia and India, during the December summit the President of Russia Vladimir Putin set the task to double commodity turnover with India in three years. By 2015 it will reach $20 billion. Experts are sure that this level can be reached only if business communities of both countries will find new forms of cooperation.
By Olga Gorbunova
viewpoint
Vladimir Putin,
President of Russia:
– The growing economic potential of Russia and India in many respects is complementary. Our commodity turnover overcame the consequences of the global crisis, and in 2012 we expect a record index – over $10 billion. Our following purpose is to make $20 billion by 2015. For this purpose it is necessary to use all reserves, to support direct contacts of a business community, to stimulate creation of effective investment, technological, industrial alliances in the most dynamic, perspective spheres. For example, in power engineering, first of all in the nuclear-power engineering.
We wait to receive notable return from long-term projects in ferrous metallurgy, production of hydrocarbons, the car- and aircraft industry, the chemical industry, pharmaceutics, in IT and biotechnologies. Wide perspectives are opened by sharing of the Russian global navigation satellite system GLONASS. We intend to provide the extension of practical interaction in this important area.
License production and joint development of the advanced arms, instead of simply purchase of military products, becomes the key direction of military and technical cooperation. Basic attention is paid to creation of the multifunction fighter and the multiple objective transport airplane.
It is sure that such multivectoral cooperation will allow our countries not only to improve leading line items on a number of high-tech projects, but also will help to push on successfully joint production on the markets of the third states.
Manmohan Singh,
Prime Minister of India:
– Deep integration of Russia into the global economy will give the chance for interaction between a business community of our countries. Growth in our bilateral trade in 2012 makes more than 30%. We have big perspectives and outstanding potential in such spheres, as pharmaceutics, fertilizers, mining business, steel, information technologies, civil aviation, telecommunications, infrastructure, processing of food, innovation and service. We will work here to use more opportunities.
We asked our intergovernmental and business groups to recommend specific spheres for increase in bilateral trade and investments.
We have good dynamics in the field of cooperation in science and technologies. We welcome the beginning of operation of the Indian-Russian joint scientific and technological center. This center will help us with development and commercialisation of perspective technologies, including nanotechnologies, biomedicine and operation in the sphere of supercomputers.
Alexander Kadakin,
Ambassador of Russia to India:
– Business is a live self-regulating mechanism. If the Indian vendor understands that it is more favorable to buy components from us, instead of in Europe or Asia because Russian technologies are not only cheaper, but also have better quality, therefore attraction of any state and political resource for cooperation isn’t required. The role of the state will be brought together in this case to creation of necessary conditions in which the Russian business in India and Indian in Russia would feel itself comfortably. Good example here is the program on creation of the joint pharmaceutical ventures in the territory of Russia with attraction of the Indian capital and technologies. We hope that this experience will be used for other branches.
[~DETAIL_TEXT] => Both Diamonds and Helicopters
Trade and investments between India and Russia developed quite dynamically in recent years. According to the Ministry of Economic Development of the Russian Federation, since 2007 commodity turnover between the countries more than doubled. And there is no imbalance in this growth – both export, and import are growing quickly. Despite the opinion that trade and economic cooperation between Russia and India has a military and technical nature, leading positions are taken by goods of civil assignment. According to experts, they make at least 80% of the Russian-Indian commodity turnover. The main export goods from Russia are aircraft equipment and spare parts, mineral fertilizers, energy carriers, the equipment for nuclear power stations, steel rolling, the control machinery, the electric power equipment, diamonds. From India Russia usually delivers medicines, tea, tobacco raw materials, fruits and vegetables, knitted and textile products, vehicles.
And still one of the most important aspects of the Russian-Indian relations is military and technical cooperation and cooperation in the power engineering sphere. It was proved again by the result of official visit of the President of Russia Vladimir Putin to India in December, 2012. So, within the summit, contracts for delivery of the Russian helicopter machinery and technological sets for building the airplanes were signed. In particular, Rosoboronexport signed next contracts: with the Hindustan Aeronautics company for delivery of 42 technological sets for license production of the SU-30MKI fighters on the amount of $1.6 billion; and also with the Ministry of Defense of India on delivery of 71 MI-17V-5 helicopters by total cost of $1.3 billion.
Let’s remind, that only with India does Russia implement a long-term program on military technical cooperation. By the way, recently it was prolonged till 2020. The volume of the signed contracts within the previous ten-year program reached $30 billion. According to experts, more than 30% of the total Russian military export goes to India. Thus recently the accent in the sphere of military and technical cooperation moved to an area of licenses for production in India, carrying out there research and development, and also creation of joint ventures.
So, during the December meeting of heads of states the agreement was signed on creation of a joint venture between Russian Helicopters JSC and the Indian company Elcom Systems Private Limited in India, where Russian helicopters of the Mi and Ka brands will be manufactured. “The joint venture will produce major parts of helicopters and then make final assembly of machines, and also carry out both flight tests and ground tests. It is envisaged that the joint venture will begin with production of aggregates for the light Russian Ka-226T helicopter”, a representative of Russian Helicopters said.
There is an experience of such cooperation. “Now a number of essentially important projects in this sphere are being implemented: creation of the fifth generation fighter of, the multiple objective transport airplanes, production of hyper acoustic BraMos cruise missiles, T-90C tanks. Military engineers and designers of our countries carry out joint research and work on development in more than 40 areas”, said the ambassador of Russia to India Alexander Kadakin.
Within the idea of India on diversification of military deliveries, such an approach can become a serious trump for the Russian side. In any case Russia, according to Mr Kadakin, is ready for competition in the Indian market. “We have many serious practices which can be offered to partners. In particular, we intend to increase our presence in air defense sector”, the ambassador said. “We would like to take part also in the tender for purchase of six diesel electric submarines”.
Nuclear Power Plant Constructed, Next Is Space
Russian-Indian cooperation in the power engineering sphere is also developing rapidly. In particular, progress on construction of a nuclear power plant “Kudankulam” in India was outlined. The construction is carried out with technical assistance of Russia. The station will be built within the Interstate agreement of 1988 and amendments of 1998. The customer is the Nuclear Power Corporation of India Limited (NPCIL). Since 2012 the project has been run by the united company of Nizhny Novgorod Engineering Company Atomenergoproekt JSC and Atomstroyexport JSC. The company works on development of the engineering design and working documentation, architectural supervision of construction of buildings and facilities, technical support while mounting and commissioning the nuclear power plant, etc. In turn, NPCIL executes construction, installation and commissioning on a nuclear power plant site, and also station input into operation. Supply of equipment to the nuclear power plant is carried out by many Russian enterprises, for example, reactors are made by Izhora plants, the polar crane – by Uralmash plant.
Construction of the first power unit “Kudankulam” is completed. As expected, the second phase will be finished in 2013. The agreement on construction of the third and fourth power units is almost ready for signing. According to Secretary of the Security Council of the Russian Federation Nikolay Patrushev, the signed “road map” between Russia and India in 2010 states that 14-16 nuclear power units should be in serial construction.
Both countries have a mutual interest in the field of exploration of oil and gas production in both states, and also in creation of the joint extracting and processing ventures in Russia, India, and also in third party countries. In particular, during the summit held in December the Indian state oil companies expressed interest in acquisition of a share in reconnoitered and developed together with the Russian oil and gas companies fields and in projects on liquefaction of natural gas in Russia, and also in purchase of Russian crude oil and supply of the liquefied natural gas to India. They also talked about involvement of the Indian Oil and Natural Gas Corp. (ONGC) in the extraction sector in Russia, and “Rosneft” – in a processing sector in India.
By the way, ONGC already presents in the Russian market. The company participates in the development of oil fields and gas in the project “Sakhalin-I”, and it also has acquired the Imperial Energy company, who is developing oil fields in the Tomsk region in Russia.
Signed in October, 2012 by the Gazprom Marketing and Trading company (sunsidiary of Gazprom) the contract with the Indian GAIL on supply of the liquefied natural gas (LNG) became one of the latest significant events in the field of cooperation between the countries in the sphere of power engineering. The document provides the delivery of 2.5 million tons a year of LNG to India within 20 years. “The volume of gas consuming in India in 2020 will be 1.7 times more, than today. This market is very perspective for us, and we consider it in our plans on creation of export capacities within East gas program”, Alexey Miller, CEO of Gazprom said.
Recently the Russian-Indian cooperation in the field of space exploration has also grown. In particular, the Global navigation satellite system (GLONASS) actively moves ahead in India. In December, 2012, Navigation-Information Systems JSC (NIS) and the Indian companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) signed the cooperation agreement in the sphere of navigation activities. The document provides use of the solution of NIS and available infrastructure of BSNL and MTNL for provision of services using satellite signals of GLONASS and GPS in India. It is a question of services in the field of telematics, development of the navigation software for the equipment of the BSNL and MTNL companies, use of call-centers for helping the population on the basis of navigation.
Course on approaching
However, despite the fact that trade and economic cooperation between Russia and India grows every year, experts consider the modern levels of co-operation of the states rather low. Considering the scales of economic systems of both countries, and also the high level of the political relations, volumes of commodity turnover and investments could be much bigger. The principal reason of such situation, according to a row of experts, is ineffective straight lines (“business – business”) contacts between the companies. During the Soviet Union business generally developed between the state companies, but with the decay of the USSR these communications were erased, and haven’t been rebuilt yet.
“It is an open secret that the major share of the Russian export is provided with implementation of large contracts at intergovernmental level: export of production of large mechanical engineering within serial construction of the nuclear power plant or upgrade of iron and steel works. However, such projects are one-offs”, Mr Kadakin said. “Today in Russian-Indian trade and economic relations development of contacts through the private business, interested in implementation of joint long-term investment projects in case of the minimum state involvement, should become priority”.
Meanwhile, the potential of economic cooperation between Russia and India is huge. Among prospective interconnection areas, in addition to power engineering and arms, experts name the telecommunications and IT sector, pharmaceutics and biotechnologies, automotive industry, production of chemical fertilizers. Besides, there are great opportunities in the field of construction and engineering services for Russian companies in India. The Government of the republic has plans to double expenditures on infrastructure projects, particularly on a construction of roads, ports, power stations. It is planned to allocate about $1 trillion for these purposes in the next five years.
Considering the growth potential, and also perspectives of trade and economic cooperation between Russia and India, during the December summit the President of Russia Vladimir Putin set the task to double commodity turnover with India in three years. By 2015 it will reach $20 billion. Experts are sure that this level can be reached only if business communities of both countries will find new forms of cooperation.
By Olga Gorbunova
viewpoint
Vladimir Putin,
President of Russia:
– The growing economic potential of Russia and India in many respects is complementary. Our commodity turnover overcame the consequences of the global crisis, and in 2012 we expect a record index – over $10 billion. Our following purpose is to make $20 billion by 2015. For this purpose it is necessary to use all reserves, to support direct contacts of a business community, to stimulate creation of effective investment, technological, industrial alliances in the most dynamic, perspective spheres. For example, in power engineering, first of all in the nuclear-power engineering.
We wait to receive notable return from long-term projects in ferrous metallurgy, production of hydrocarbons, the car- and aircraft industry, the chemical industry, pharmaceutics, in IT and biotechnologies. Wide perspectives are opened by sharing of the Russian global navigation satellite system GLONASS. We intend to provide the extension of practical interaction in this important area.
License production and joint development of the advanced arms, instead of simply purchase of military products, becomes the key direction of military and technical cooperation. Basic attention is paid to creation of the multifunction fighter and the multiple objective transport airplane.
It is sure that such multivectoral cooperation will allow our countries not only to improve leading line items on a number of high-tech projects, but also will help to push on successfully joint production on the markets of the third states.
Manmohan Singh,
Prime Minister of India:
– Deep integration of Russia into the global economy will give the chance for interaction between a business community of our countries. Growth in our bilateral trade in 2012 makes more than 30%. We have big perspectives and outstanding potential in such spheres, as pharmaceutics, fertilizers, mining business, steel, information technologies, civil aviation, telecommunications, infrastructure, processing of food, innovation and service. We will work here to use more opportunities.
We asked our intergovernmental and business groups to recommend specific spheres for increase in bilateral trade and investments.
We have good dynamics in the field of cooperation in science and technologies. We welcome the beginning of operation of the Indian-Russian joint scientific and technological center. This center will help us with development and commercialisation of perspective technologies, including nanotechnologies, biomedicine and operation in the sphere of supercomputers.
Alexander Kadakin,
Ambassador of Russia to India:
– Business is a live self-regulating mechanism. If the Indian vendor understands that it is more favorable to buy components from us, instead of in Europe or Asia because Russian technologies are not only cheaper, but also have better quality, therefore attraction of any state and political resource for cooperation isn’t required. The role of the state will be brought together in this case to creation of necessary conditions in which the Russian business in India and Indian in Russia would feel itself comfortably. Good example here is the program on creation of the joint pharmaceutical ventures in the territory of Russia with attraction of the Indian capital and technologies. We hope that this experience will be used for other branches.
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Last spring RZD signed a contract with Indian Railways for delivery
of 40 LNG-powered locomotives, which will be built at Lyudinovsky diesel locomotive plant. What Russian technologies is India going to buy?
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[DETAIL_TEXT] => The first LNG-powered locomotive started to work at the beginning of 2008. Since that time it was recognised as the most powerful locomotive of this type in the world. It runs on liquefied natural gas — 8.3 MW. It can reach a speed of 100 kph, and after a refuel, can pass 750 km. Moreover, experts say, such machines work very well in mountain conditions. The locomotive is also environmentally friendly, as its emissions into the atmosphere are 10 times lower than it is required even by strict European standards.
The LNG-powered locomotive is completely suitable for northern regions of Russia, such as the Far East (Baikal-Amur route), because there is a large volume of gas, but no electrified railroads. According to RZD, the use of such types of machines can reduce operational expenses of railroad workers by almost 45%, in comparison with diesel locomotives. Besides, the new locomotive can be used as a mobile power station too.
According to Senior Vice President of Russian Railways Valentin Gapanovich, the project of LNG-powered locomotives is very far sighted, because it creates real opportunities for the development of domestic technologies and makes them competitive at the international market.
The tender for delivery of LNG-locomotives started some years ago. General Electric Company was also interested in the Indian market, and stated that India would be a major player in railways and locomotives in the future. But Russian Railways was the only participant, who had a great advantage over other companies, because only RZD had real experience in creation of such machines. Therefore Russia presented the technology, which completely satisfied the Indian side. But of course, LNG-powered locomotive should be adapted for the specific Indian climate.
To build these machines by 2020, RZD signed an agreement with Sinara group. The project on development of design documentation of the locomotive will be financed by the Russian company. Indian Railways are going to finance operations on adaptation of the power plant of the LNG-locomotive.
Still there are some problems to be solved. The first one is connected with the ability of Russian plants to build the machines, because Indian Railways might need 300 such locomotives in future. The second question is how it will be fuelled. Experts believe, it will be a cooperation with Gazprom. The main problem, however, is the engine. The sector responsible for engine construction was stagnant for many years, so RZD wasn’t sure if company could use the present technologies. But now there is no hesitation.
However, it will take some years for new locomotives to arrive to India. The testing of them on Indian railways should begin in 2-3 years.
What other Russian technologies are used in India now? Since 2002 Remputmash exports track machines and other equipment to India. And according to the latest news, this company is going to set up a subsidiary RPM Track Machines Ltd in India. According to a representative of RPM, the major goal is to create a subsidiary that will provide machine maintenance and repair services in India. Therefore, the company will set up a spare parts warehouse and hire staff comprising of Russian and Indian engineers. The project should help RPM to maintain its currently high level of exports.
RZD is going to develop the cooperation with India, and is interested in other projects in this country, Vice President of the Russian company Alexander Saltanov said. “The Indian projects are interesting to us. Our experts and representatives of our daughter companies are in close cooperation with Indian partners. There are different projects – infrastructural, and connected with the development of new modern rolling stock,” said Mr Saltanov.
By Christina Alexandrova
[~DETAIL_TEXT] => The first LNG-powered locomotive started to work at the beginning of 2008. Since that time it was recognised as the most powerful locomotive of this type in the world. It runs on liquefied natural gas — 8.3 MW. It can reach a speed of 100 kph, and after a refuel, can pass 750 km. Moreover, experts say, such machines work very well in mountain conditions. The locomotive is also environmentally friendly, as its emissions into the atmosphere are 10 times lower than it is required even by strict European standards.
The LNG-powered locomotive is completely suitable for northern regions of Russia, such as the Far East (Baikal-Amur route), because there is a large volume of gas, but no electrified railroads. According to RZD, the use of such types of machines can reduce operational expenses of railroad workers by almost 45%, in comparison with diesel locomotives. Besides, the new locomotive can be used as a mobile power station too.
According to Senior Vice President of Russian Railways Valentin Gapanovich, the project of LNG-powered locomotives is very far sighted, because it creates real opportunities for the development of domestic technologies and makes them competitive at the international market.
The tender for delivery of LNG-locomotives started some years ago. General Electric Company was also interested in the Indian market, and stated that India would be a major player in railways and locomotives in the future. But Russian Railways was the only participant, who had a great advantage over other companies, because only RZD had real experience in creation of such machines. Therefore Russia presented the technology, which completely satisfied the Indian side. But of course, LNG-powered locomotive should be adapted for the specific Indian climate.
To build these machines by 2020, RZD signed an agreement with Sinara group. The project on development of design documentation of the locomotive will be financed by the Russian company. Indian Railways are going to finance operations on adaptation of the power plant of the LNG-locomotive.
Still there are some problems to be solved. The first one is connected with the ability of Russian plants to build the machines, because Indian Railways might need 300 such locomotives in future. The second question is how it will be fuelled. Experts believe, it will be a cooperation with Gazprom. The main problem, however, is the engine. The sector responsible for engine construction was stagnant for many years, so RZD wasn’t sure if company could use the present technologies. But now there is no hesitation.
However, it will take some years for new locomotives to arrive to India. The testing of them on Indian railways should begin in 2-3 years.
What other Russian technologies are used in India now? Since 2002 Remputmash exports track machines and other equipment to India. And according to the latest news, this company is going to set up a subsidiary RPM Track Machines Ltd in India. According to a representative of RPM, the major goal is to create a subsidiary that will provide machine maintenance and repair services in India. Therefore, the company will set up a spare parts warehouse and hire staff comprising of Russian and Indian engineers. The project should help RPM to maintain its currently high level of exports.
RZD is going to develop the cooperation with India, and is interested in other projects in this country, Vice President of the Russian company Alexander Saltanov said. “The Indian projects are interesting to us. Our experts and representatives of our daughter companies are in close cooperation with Indian partners. There are different projects – infrastructural, and connected with the development of new modern rolling stock,” said Mr Saltanov.
By Christina Alexandrova
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[DETAIL_TEXT] => The first LNG-powered locomotive started to work at the beginning of 2008. Since that time it was recognised as the most powerful locomotive of this type in the world. It runs on liquefied natural gas — 8.3 MW. It can reach a speed of 100 kph, and after a refuel, can pass 750 km. Moreover, experts say, such machines work very well in mountain conditions. The locomotive is also environmentally friendly, as its emissions into the atmosphere are 10 times lower than it is required even by strict European standards.
The LNG-powered locomotive is completely suitable for northern regions of Russia, such as the Far East (Baikal-Amur route), because there is a large volume of gas, but no electrified railroads. According to RZD, the use of such types of machines can reduce operational expenses of railroad workers by almost 45%, in comparison with diesel locomotives. Besides, the new locomotive can be used as a mobile power station too.
According to Senior Vice President of Russian Railways Valentin Gapanovich, the project of LNG-powered locomotives is very far sighted, because it creates real opportunities for the development of domestic technologies and makes them competitive at the international market.
The tender for delivery of LNG-locomotives started some years ago. General Electric Company was also interested in the Indian market, and stated that India would be a major player in railways and locomotives in the future. But Russian Railways was the only participant, who had a great advantage over other companies, because only RZD had real experience in creation of such machines. Therefore Russia presented the technology, which completely satisfied the Indian side. But of course, LNG-powered locomotive should be adapted for the specific Indian climate.
To build these machines by 2020, RZD signed an agreement with Sinara group. The project on development of design documentation of the locomotive will be financed by the Russian company. Indian Railways are going to finance operations on adaptation of the power plant of the LNG-locomotive.
Still there are some problems to be solved. The first one is connected with the ability of Russian plants to build the machines, because Indian Railways might need 300 such locomotives in future. The second question is how it will be fuelled. Experts believe, it will be a cooperation with Gazprom. The main problem, however, is the engine. The sector responsible for engine construction was stagnant for many years, so RZD wasn’t sure if company could use the present technologies. But now there is no hesitation.
However, it will take some years for new locomotives to arrive to India. The testing of them on Indian railways should begin in 2-3 years.
What other Russian technologies are used in India now? Since 2002 Remputmash exports track machines and other equipment to India. And according to the latest news, this company is going to set up a subsidiary RPM Track Machines Ltd in India. According to a representative of RPM, the major goal is to create a subsidiary that will provide machine maintenance and repair services in India. Therefore, the company will set up a spare parts warehouse and hire staff comprising of Russian and Indian engineers. The project should help RPM to maintain its currently high level of exports.
RZD is going to develop the cooperation with India, and is interested in other projects in this country, Vice President of the Russian company Alexander Saltanov said. “The Indian projects are interesting to us. Our experts and representatives of our daughter companies are in close cooperation with Indian partners. There are different projects – infrastructural, and connected with the development of new modern rolling stock,” said Mr Saltanov.
By Christina Alexandrova
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The LNG-powered locomotive is completely suitable for northern regions of Russia, such as the Far East (Baikal-Amur route), because there is a large volume of gas, but no electrified railroads. According to RZD, the use of such types of machines can reduce operational expenses of railroad workers by almost 45%, in comparison with diesel locomotives. Besides, the new locomotive can be used as a mobile power station too.
According to Senior Vice President of Russian Railways Valentin Gapanovich, the project of LNG-powered locomotives is very far sighted, because it creates real opportunities for the development of domestic technologies and makes them competitive at the international market.
The tender for delivery of LNG-locomotives started some years ago. General Electric Company was also interested in the Indian market, and stated that India would be a major player in railways and locomotives in the future. But Russian Railways was the only participant, who had a great advantage over other companies, because only RZD had real experience in creation of such machines. Therefore Russia presented the technology, which completely satisfied the Indian side. But of course, LNG-powered locomotive should be adapted for the specific Indian climate.
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Still there are some problems to be solved. The first one is connected with the ability of Russian plants to build the machines, because Indian Railways might need 300 such locomotives in future. The second question is how it will be fuelled. Experts believe, it will be a cooperation with Gazprom. The main problem, however, is the engine. The sector responsible for engine construction was stagnant for many years, so RZD wasn’t sure if company could use the present technologies. But now there is no hesitation.
However, it will take some years for new locomotives to arrive to India. The testing of them on Indian railways should begin in 2-3 years.
What other Russian technologies are used in India now? Since 2002 Remputmash exports track machines and other equipment to India. And according to the latest news, this company is going to set up a subsidiary RPM Track Machines Ltd in India. According to a representative of RPM, the major goal is to create a subsidiary that will provide machine maintenance and repair services in India. Therefore, the company will set up a spare parts warehouse and hire staff comprising of Russian and Indian engineers. The project should help RPM to maintain its currently high level of exports.
RZD is going to develop the cooperation with India, and is interested in other projects in this country, Vice President of the Russian company Alexander Saltanov said. “The Indian projects are interesting to us. Our experts and representatives of our daughter companies are in close cooperation with Indian partners. There are different projects – infrastructural, and connected with the development of new modern rolling stock,” said Mr Saltanov.
By Christina Alexandrova
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A direct railway-ferry line was opened officially between Russia and Turkey on February 19. A new infrastructure complex will provide the combined ferry-railway communication between port Samsun and port Kavkaz.
Thus this project is expected to become an important link in transport connection between CIS countries, Bulgaria and Romania.
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[DETAIL_TEXT] => Long Preparation
Implementation of this new project will allow RZD to transport freight to Turkey, and the Turkish trains, in turn, will be able to use the Russian tracks, which will reduce transportation time. The new transport artery will connect Turkey with Russia, CIS countries, Romania, Bulgaria and other countries. At the first stage it is planned to transport 200,000 tons of freight annually on this route. This project should bring a lot of economical benefits to Turkey, experts say. The new economic cluster will probably help Turkey to get a membership of the Shanghai Cooperation Organisation together with such large forces, as Russia and China, and also to unite with Central Asian republics – Kyrgyzstan, Tajikistan and Kazakhstan.
In 2009 RZD bought 51% stakes of Black Sea Ferry Investment (BFI) shipping company, the operator of a train ferry from Kavkaz to Poti (Georgia). According to the experts, Russian company spent about $1-5 million. That time the market had a doubt that Samsun-Kavkaz route will bring a good income, but anyway RZD should have benefit from transportation on Kavkaz — Poti line. Doubts were connected with the fact that the railway infrastructure of Turkish port was not developed.
However arrangement of Kavkaz – Samsun railway ferry line on the basis of Intergovernmental Agreement on arrangement of mixed international railway ferry transportation service was signed on May 12, 2010 in Ankara between the Government of the Russian Federation and the Government of the Republic of Turkey. But the shipments on this line were performed incidentally due to the lack of cars, only 1-2 times a month.
The project was being discussed for more than five years, and it should have been fully implemented in 2010. The official opening of a ferry line was planned for the beginning of March, 2011. For this purpose, a ferry terminal with a mooring wall 160 m long and the railway ferry bridge with 5 tracks (both 1520 and 1435 gauge) was built in Samsun. It also included transshipment equipment, which is suitable for overloading cars of CIS standard to euro standard cars. According to BFI, to provide timely and uninterrupted railcar servicing in Samsun Port, Turkish company Upm Nakliyat ve Dis constructed a modern 1,520 mm and 1,435 mm gauge railway ferry complex of total capacity of 200 railcars. The ferry complex in Samsun Port accepts shallow draft ferries and carries out railcar roll on/roll of operations through a transfer ramp by locomotives.
A large warehouse was constructed in Kavkaz to store oversized cargo imported from Turkey, it can operate six trains at the same time. According to RZD, this ferry will be similar to the lines between the port of Kavkaz and the port of Poti (Georgia) and between Kavkaz and Varna (Bulgaria), where the capacity is 50 cargo wagons per ferry. There are also types of ferries which can carry passengers and cars.
The ferries to use on the Samsun-Kavkaz route can carry railcars, rolling stock equipment, international standard containers, dangerous cargo and oversized freights. The length of vessel is 150.32 m, deadweight is around 6,500 tons, while the load line draft of 3.80 m allows operating in shallow Kavkaz Port. This ferry is notable for having both Russian and European standard gauge. Loading and unloading are carried out in one phase that considerably reduces the shore-based terminal expenses. The port has a ship to shore bridge system to serve the railway-maritime-highway combined transport from North European countries to Iran and Middle East states. The system and the yard behind have been designed according to the multimodal ferryboats carrying rail and road vehicles.
Railway wagons are placed on five railway lines of upper deck. Tank cars capacity is 50 units, freight car capacity is 38 units, and passenger car capacity is 22 units.
It is an open secret that since 2011 Turkey is extremely interested in the Russian market even much more than in trade with the European Union. The research of public opinion confirmed it two years ago. The Assembly of Exporters of Turkey asked 24 export companies, and all of them put Russia at the first place among the other target markets.
At the beginning of January, 2011 the first trial shipment took place. The ferry delivered 18 railway cars with the freight for Central Asia to the Russian port. At first, these cars were sent from Turkish town Adana to Samsun, where wheelset of 1435 mm was changed for 1520 mm. Two days later they arrived at railway station in Kavkaz, accompanied by all the necessary documentation. Both sides viewed this experiment positively.
A Link to a Ring
Freight ferry lines from Russia to Turkey existed even at the Soviet period. But after 1991, all the major ports were left for the Ukraine, and now Russia has only Novorossiysk in this region, which is operating at full capacity. The main benefit of the new line is time saving. Transfer reloading takes about one day now, but loading of rail cars on the ferry can take only 5 hours.
Despite a lack of transshipment capacity, the Kavkaz port plays important role in distribution of cargo streams in the Black Sea basin. Originally it was built for ferry lines connecting Russia and Ukraine. But today Russia is going to establish communication with other countries of the Black Sea basin through this port. The Kavkaz port is shallow, therefore it can process vessels with a deadweight no more than 5,000 tons.
According to the results of 2012 the transfer reloading of the port Kavkaz grew up to 9.4 million tons (+13.4% on the 2011). The turnover structure is typical for Black Sea port, therefore the export of fuel resources dominates there. More than a half of the freights handled by the Kavkaz are oil products, mineral fertilizers, also timber and ferrous metals.
Port Samsun is the largest port of Turkey on the Black sea. Besides, it is the only port on the Black sea coast in Turkey, which has railway communications. Nowadays, the major cargoes there are iron ore, grain, wood, freight cars, and packed freight. There is an ability to process cargo both from Asia and Europe. Also Samsun serves export, import, transit and ro-ro lines with Ukraine, and is included in the TRACECA projects.
By the way, the Kavkaz – Samsun route is also a part of the international project “Black Sea Ring”, the creation of united transport system in the whole Black Sea region.
But according to experts, there is a risk, and this project could become redundant, because now it is more profitable to send cargo from the port of Novorossiysk. Port transfer should be cheaper than transportation of railcars by ferry, because sea vessel contains up to 30 thousand tons of cargo, but 50 cars on ferry can carry not more than 3 thousand tons. Therefore such a way of transportation can be as expensive as transfer by air. But this train ferry can be in demand by companies, which carry goods for long distances.
But the majority is sure, that this route would be demanded, because the idea came at the time when Russia was suffering from a shortage of port facilities for large deliveries. The new ferry connection should definitely help to increase trade volumes between Turkey and take pressure off the roads, which, combined with ferries.
It seems that RZD sees Turkey as an important link in its international mission. For example, last year the daughter of Russian Railways, RZD-Logistics organised intermodal transportation service from Turkey to Russia. The first shipment was made from Turkish port Gulluk to port of the Rostov-on-Don. This new international project can draw attention of players of the transport market. According to representatives of RZD-Logistics, the service will include freight of a vessel, delivery by sea, agency service and terminal service in port of unloading, registration of transportation documents, railway transportation and address delivery of freight.
By Christina Alexandrova
[~DETAIL_TEXT] => Long Preparation
Implementation of this new project will allow RZD to transport freight to Turkey, and the Turkish trains, in turn, will be able to use the Russian tracks, which will reduce transportation time. The new transport artery will connect Turkey with Russia, CIS countries, Romania, Bulgaria and other countries. At the first stage it is planned to transport 200,000 tons of freight annually on this route. This project should bring a lot of economical benefits to Turkey, experts say. The new economic cluster will probably help Turkey to get a membership of the Shanghai Cooperation Organisation together with such large forces, as Russia and China, and also to unite with Central Asian republics – Kyrgyzstan, Tajikistan and Kazakhstan.
In 2009 RZD bought 51% stakes of Black Sea Ferry Investment (BFI) shipping company, the operator of a train ferry from Kavkaz to Poti (Georgia). According to the experts, Russian company spent about $1-5 million. That time the market had a doubt that Samsun-Kavkaz route will bring a good income, but anyway RZD should have benefit from transportation on Kavkaz — Poti line. Doubts were connected with the fact that the railway infrastructure of Turkish port was not developed.
However arrangement of Kavkaz – Samsun railway ferry line on the basis of Intergovernmental Agreement on arrangement of mixed international railway ferry transportation service was signed on May 12, 2010 in Ankara between the Government of the Russian Federation and the Government of the Republic of Turkey. But the shipments on this line were performed incidentally due to the lack of cars, only 1-2 times a month.
The project was being discussed for more than five years, and it should have been fully implemented in 2010. The official opening of a ferry line was planned for the beginning of March, 2011. For this purpose, a ferry terminal with a mooring wall 160 m long and the railway ferry bridge with 5 tracks (both 1520 and 1435 gauge) was built in Samsun. It also included transshipment equipment, which is suitable for overloading cars of CIS standard to euro standard cars. According to BFI, to provide timely and uninterrupted railcar servicing in Samsun Port, Turkish company Upm Nakliyat ve Dis constructed a modern 1,520 mm and 1,435 mm gauge railway ferry complex of total capacity of 200 railcars. The ferry complex in Samsun Port accepts shallow draft ferries and carries out railcar roll on/roll of operations through a transfer ramp by locomotives.
A large warehouse was constructed in Kavkaz to store oversized cargo imported from Turkey, it can operate six trains at the same time. According to RZD, this ferry will be similar to the lines between the port of Kavkaz and the port of Poti (Georgia) and between Kavkaz and Varna (Bulgaria), where the capacity is 50 cargo wagons per ferry. There are also types of ferries which can carry passengers and cars.
The ferries to use on the Samsun-Kavkaz route can carry railcars, rolling stock equipment, international standard containers, dangerous cargo and oversized freights. The length of vessel is 150.32 m, deadweight is around 6,500 tons, while the load line draft of 3.80 m allows operating in shallow Kavkaz Port. This ferry is notable for having both Russian and European standard gauge. Loading and unloading are carried out in one phase that considerably reduces the shore-based terminal expenses. The port has a ship to shore bridge system to serve the railway-maritime-highway combined transport from North European countries to Iran and Middle East states. The system and the yard behind have been designed according to the multimodal ferryboats carrying rail and road vehicles.
Railway wagons are placed on five railway lines of upper deck. Tank cars capacity is 50 units, freight car capacity is 38 units, and passenger car capacity is 22 units.
It is an open secret that since 2011 Turkey is extremely interested in the Russian market even much more than in trade with the European Union. The research of public opinion confirmed it two years ago. The Assembly of Exporters of Turkey asked 24 export companies, and all of them put Russia at the first place among the other target markets.
At the beginning of January, 2011 the first trial shipment took place. The ferry delivered 18 railway cars with the freight for Central Asia to the Russian port. At first, these cars were sent from Turkish town Adana to Samsun, where wheelset of 1435 mm was changed for 1520 mm. Two days later they arrived at railway station in Kavkaz, accompanied by all the necessary documentation. Both sides viewed this experiment positively.
A Link to a Ring
Freight ferry lines from Russia to Turkey existed even at the Soviet period. But after 1991, all the major ports were left for the Ukraine, and now Russia has only Novorossiysk in this region, which is operating at full capacity. The main benefit of the new line is time saving. Transfer reloading takes about one day now, but loading of rail cars on the ferry can take only 5 hours.
Despite a lack of transshipment capacity, the Kavkaz port plays important role in distribution of cargo streams in the Black Sea basin. Originally it was built for ferry lines connecting Russia and Ukraine. But today Russia is going to establish communication with other countries of the Black Sea basin through this port. The Kavkaz port is shallow, therefore it can process vessels with a deadweight no more than 5,000 tons.
According to the results of 2012 the transfer reloading of the port Kavkaz grew up to 9.4 million tons (+13.4% on the 2011). The turnover structure is typical for Black Sea port, therefore the export of fuel resources dominates there. More than a half of the freights handled by the Kavkaz are oil products, mineral fertilizers, also timber and ferrous metals.
Port Samsun is the largest port of Turkey on the Black sea. Besides, it is the only port on the Black sea coast in Turkey, which has railway communications. Nowadays, the major cargoes there are iron ore, grain, wood, freight cars, and packed freight. There is an ability to process cargo both from Asia and Europe. Also Samsun serves export, import, transit and ro-ro lines with Ukraine, and is included in the TRACECA projects.
By the way, the Kavkaz – Samsun route is also a part of the international project “Black Sea Ring”, the creation of united transport system in the whole Black Sea region.
But according to experts, there is a risk, and this project could become redundant, because now it is more profitable to send cargo from the port of Novorossiysk. Port transfer should be cheaper than transportation of railcars by ferry, because sea vessel contains up to 30 thousand tons of cargo, but 50 cars on ferry can carry not more than 3 thousand tons. Therefore such a way of transportation can be as expensive as transfer by air. But this train ferry can be in demand by companies, which carry goods for long distances.
But the majority is sure, that this route would be demanded, because the idea came at the time when Russia was suffering from a shortage of port facilities for large deliveries. The new ferry connection should definitely help to increase trade volumes between Turkey and take pressure off the roads, which, combined with ferries.
It seems that RZD sees Turkey as an important link in its international mission. For example, last year the daughter of Russian Railways, RZD-Logistics organised intermodal transportation service from Turkey to Russia. The first shipment was made from Turkish port Gulluk to port of the Rostov-on-Don. This new international project can draw attention of players of the transport market. According to representatives of RZD-Logistics, the service will include freight of a vessel, delivery by sea, agency service and terminal service in port of unloading, registration of transportation documents, railway transportation and address delivery of freight.
By Christina Alexandrova
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Thus this project is expected to become an important link in transport connection between CIS countries, Bulgaria and Romania.</p>
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Implementation of this new project will allow RZD to transport freight to Turkey, and the Turkish trains, in turn, will be able to use the Russian tracks, which will reduce transportation time. The new transport artery will connect Turkey with Russia, CIS countries, Romania, Bulgaria and other countries. At the first stage it is planned to transport 200,000 tons of freight annually on this route. This project should bring a lot of economical benefits to Turkey, experts say. The new economic cluster will probably help Turkey to get a membership of the Shanghai Cooperation Organisation together with such large forces, as Russia and China, and also to unite with Central Asian republics – Kyrgyzstan, Tajikistan and Kazakhstan.
In 2009 RZD bought 51% stakes of Black Sea Ferry Investment (BFI) shipping company, the operator of a train ferry from Kavkaz to Poti (Georgia). According to the experts, Russian company spent about $1-5 million. That time the market had a doubt that Samsun-Kavkaz route will bring a good income, but anyway RZD should have benefit from transportation on Kavkaz — Poti line. Doubts were connected with the fact that the railway infrastructure of Turkish port was not developed.
However arrangement of Kavkaz – Samsun railway ferry line on the basis of Intergovernmental Agreement on arrangement of mixed international railway ferry transportation service was signed on May 12, 2010 in Ankara between the Government of the Russian Federation and the Government of the Republic of Turkey. But the shipments on this line were performed incidentally due to the lack of cars, only 1-2 times a month.
The project was being discussed for more than five years, and it should have been fully implemented in 2010. The official opening of a ferry line was planned for the beginning of March, 2011. For this purpose, a ferry terminal with a mooring wall 160 m long and the railway ferry bridge with 5 tracks (both 1520 and 1435 gauge) was built in Samsun. It also included transshipment equipment, which is suitable for overloading cars of CIS standard to euro standard cars. According to BFI, to provide timely and uninterrupted railcar servicing in Samsun Port, Turkish company Upm Nakliyat ve Dis constructed a modern 1,520 mm and 1,435 mm gauge railway ferry complex of total capacity of 200 railcars. The ferry complex in Samsun Port accepts shallow draft ferries and carries out railcar roll on/roll of operations through a transfer ramp by locomotives.
A large warehouse was constructed in Kavkaz to store oversized cargo imported from Turkey, it can operate six trains at the same time. According to RZD, this ferry will be similar to the lines between the port of Kavkaz and the port of Poti (Georgia) and between Kavkaz and Varna (Bulgaria), where the capacity is 50 cargo wagons per ferry. There are also types of ferries which can carry passengers and cars.
The ferries to use on the Samsun-Kavkaz route can carry railcars, rolling stock equipment, international standard containers, dangerous cargo and oversized freights. The length of vessel is 150.32 m, deadweight is around 6,500 tons, while the load line draft of 3.80 m allows operating in shallow Kavkaz Port. This ferry is notable for having both Russian and European standard gauge. Loading and unloading are carried out in one phase that considerably reduces the shore-based terminal expenses. The port has a ship to shore bridge system to serve the railway-maritime-highway combined transport from North European countries to Iran and Middle East states. The system and the yard behind have been designed according to the multimodal ferryboats carrying rail and road vehicles.
Railway wagons are placed on five railway lines of upper deck. Tank cars capacity is 50 units, freight car capacity is 38 units, and passenger car capacity is 22 units.
It is an open secret that since 2011 Turkey is extremely interested in the Russian market even much more than in trade with the European Union. The research of public opinion confirmed it two years ago. The Assembly of Exporters of Turkey asked 24 export companies, and all of them put Russia at the first place among the other target markets.
At the beginning of January, 2011 the first trial shipment took place. The ferry delivered 18 railway cars with the freight for Central Asia to the Russian port. At first, these cars were sent from Turkish town Adana to Samsun, where wheelset of 1435 mm was changed for 1520 mm. Two days later they arrived at railway station in Kavkaz, accompanied by all the necessary documentation. Both sides viewed this experiment positively.
A Link to a Ring
Freight ferry lines from Russia to Turkey existed even at the Soviet period. But after 1991, all the major ports were left for the Ukraine, and now Russia has only Novorossiysk in this region, which is operating at full capacity. The main benefit of the new line is time saving. Transfer reloading takes about one day now, but loading of rail cars on the ferry can take only 5 hours.
Despite a lack of transshipment capacity, the Kavkaz port plays important role in distribution of cargo streams in the Black Sea basin. Originally it was built for ferry lines connecting Russia and Ukraine. But today Russia is going to establish communication with other countries of the Black Sea basin through this port. The Kavkaz port is shallow, therefore it can process vessels with a deadweight no more than 5,000 tons.
According to the results of 2012 the transfer reloading of the port Kavkaz grew up to 9.4 million tons (+13.4% on the 2011). The turnover structure is typical for Black Sea port, therefore the export of fuel resources dominates there. More than a half of the freights handled by the Kavkaz are oil products, mineral fertilizers, also timber and ferrous metals.
Port Samsun is the largest port of Turkey on the Black sea. Besides, it is the only port on the Black sea coast in Turkey, which has railway communications. Nowadays, the major cargoes there are iron ore, grain, wood, freight cars, and packed freight. There is an ability to process cargo both from Asia and Europe. Also Samsun serves export, import, transit and ro-ro lines with Ukraine, and is included in the TRACECA projects.
By the way, the Kavkaz – Samsun route is also a part of the international project “Black Sea Ring”, the creation of united transport system in the whole Black Sea region.
But according to experts, there is a risk, and this project could become redundant, because now it is more profitable to send cargo from the port of Novorossiysk. Port transfer should be cheaper than transportation of railcars by ferry, because sea vessel contains up to 30 thousand tons of cargo, but 50 cars on ferry can carry not more than 3 thousand tons. Therefore such a way of transportation can be as expensive as transfer by air. But this train ferry can be in demand by companies, which carry goods for long distances.
But the majority is sure, that this route would be demanded, because the idea came at the time when Russia was suffering from a shortage of port facilities for large deliveries. The new ferry connection should definitely help to increase trade volumes between Turkey and take pressure off the roads, which, combined with ferries.
It seems that RZD sees Turkey as an important link in its international mission. For example, last year the daughter of Russian Railways, RZD-Logistics organised intermodal transportation service from Turkey to Russia. The first shipment was made from Turkish port Gulluk to port of the Rostov-on-Don. This new international project can draw attention of players of the transport market. According to representatives of RZD-Logistics, the service will include freight of a vessel, delivery by sea, agency service and terminal service in port of unloading, registration of transportation documents, railway transportation and address delivery of freight.
By Christina Alexandrova
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Implementation of this new project will allow RZD to transport freight to Turkey, and the Turkish trains, in turn, will be able to use the Russian tracks, which will reduce transportation time. The new transport artery will connect Turkey with Russia, CIS countries, Romania, Bulgaria and other countries. At the first stage it is planned to transport 200,000 tons of freight annually on this route. This project should bring a lot of economical benefits to Turkey, experts say. The new economic cluster will probably help Turkey to get a membership of the Shanghai Cooperation Organisation together with such large forces, as Russia and China, and also to unite with Central Asian republics – Kyrgyzstan, Tajikistan and Kazakhstan.
In 2009 RZD bought 51% stakes of Black Sea Ferry Investment (BFI) shipping company, the operator of a train ferry from Kavkaz to Poti (Georgia). According to the experts, Russian company spent about $1-5 million. That time the market had a doubt that Samsun-Kavkaz route will bring a good income, but anyway RZD should have benefit from transportation on Kavkaz — Poti line. Doubts were connected with the fact that the railway infrastructure of Turkish port was not developed.
However arrangement of Kavkaz – Samsun railway ferry line on the basis of Intergovernmental Agreement on arrangement of mixed international railway ferry transportation service was signed on May 12, 2010 in Ankara between the Government of the Russian Federation and the Government of the Republic of Turkey. But the shipments on this line were performed incidentally due to the lack of cars, only 1-2 times a month.
The project was being discussed for more than five years, and it should have been fully implemented in 2010. The official opening of a ferry line was planned for the beginning of March, 2011. For this purpose, a ferry terminal with a mooring wall 160 m long and the railway ferry bridge with 5 tracks (both 1520 and 1435 gauge) was built in Samsun. It also included transshipment equipment, which is suitable for overloading cars of CIS standard to euro standard cars. According to BFI, to provide timely and uninterrupted railcar servicing in Samsun Port, Turkish company Upm Nakliyat ve Dis constructed a modern 1,520 mm and 1,435 mm gauge railway ferry complex of total capacity of 200 railcars. The ferry complex in Samsun Port accepts shallow draft ferries and carries out railcar roll on/roll of operations through a transfer ramp by locomotives.
A large warehouse was constructed in Kavkaz to store oversized cargo imported from Turkey, it can operate six trains at the same time. According to RZD, this ferry will be similar to the lines between the port of Kavkaz and the port of Poti (Georgia) and between Kavkaz and Varna (Bulgaria), where the capacity is 50 cargo wagons per ferry. There are also types of ferries which can carry passengers and cars.
The ferries to use on the Samsun-Kavkaz route can carry railcars, rolling stock equipment, international standard containers, dangerous cargo and oversized freights. The length of vessel is 150.32 m, deadweight is around 6,500 tons, while the load line draft of 3.80 m allows operating in shallow Kavkaz Port. This ferry is notable for having both Russian and European standard gauge. Loading and unloading are carried out in one phase that considerably reduces the shore-based terminal expenses. The port has a ship to shore bridge system to serve the railway-maritime-highway combined transport from North European countries to Iran and Middle East states. The system and the yard behind have been designed according to the multimodal ferryboats carrying rail and road vehicles.
Railway wagons are placed on five railway lines of upper deck. Tank cars capacity is 50 units, freight car capacity is 38 units, and passenger car capacity is 22 units.
It is an open secret that since 2011 Turkey is extremely interested in the Russian market even much more than in trade with the European Union. The research of public opinion confirmed it two years ago. The Assembly of Exporters of Turkey asked 24 export companies, and all of them put Russia at the first place among the other target markets.
At the beginning of January, 2011 the first trial shipment took place. The ferry delivered 18 railway cars with the freight for Central Asia to the Russian port. At first, these cars were sent from Turkish town Adana to Samsun, where wheelset of 1435 mm was changed for 1520 mm. Two days later they arrived at railway station in Kavkaz, accompanied by all the necessary documentation. Both sides viewed this experiment positively.
A Link to a Ring
Freight ferry lines from Russia to Turkey existed even at the Soviet period. But after 1991, all the major ports were left for the Ukraine, and now Russia has only Novorossiysk in this region, which is operating at full capacity. The main benefit of the new line is time saving. Transfer reloading takes about one day now, but loading of rail cars on the ferry can take only 5 hours.
Despite a lack of transshipment capacity, the Kavkaz port plays important role in distribution of cargo streams in the Black Sea basin. Originally it was built for ferry lines connecting Russia and Ukraine. But today Russia is going to establish communication with other countries of the Black Sea basin through this port. The Kavkaz port is shallow, therefore it can process vessels with a deadweight no more than 5,000 tons.
According to the results of 2012 the transfer reloading of the port Kavkaz grew up to 9.4 million tons (+13.4% on the 2011). The turnover structure is typical for Black Sea port, therefore the export of fuel resources dominates there. More than a half of the freights handled by the Kavkaz are oil products, mineral fertilizers, also timber and ferrous metals.
Port Samsun is the largest port of Turkey on the Black sea. Besides, it is the only port on the Black sea coast in Turkey, which has railway communications. Nowadays, the major cargoes there are iron ore, grain, wood, freight cars, and packed freight. There is an ability to process cargo both from Asia and Europe. Also Samsun serves export, import, transit and ro-ro lines with Ukraine, and is included in the TRACECA projects.
By the way, the Kavkaz – Samsun route is also a part of the international project “Black Sea Ring”, the creation of united transport system in the whole Black Sea region.
But according to experts, there is a risk, and this project could become redundant, because now it is more profitable to send cargo from the port of Novorossiysk. Port transfer should be cheaper than transportation of railcars by ferry, because sea vessel contains up to 30 thousand tons of cargo, but 50 cars on ferry can carry not more than 3 thousand tons. Therefore such a way of transportation can be as expensive as transfer by air. But this train ferry can be in demand by companies, which carry goods for long distances.
But the majority is sure, that this route would be demanded, because the idea came at the time when Russia was suffering from a shortage of port facilities for large deliveries. The new ferry connection should definitely help to increase trade volumes between Turkey and take pressure off the roads, which, combined with ferries.
It seems that RZD sees Turkey as an important link in its international mission. For example, last year the daughter of Russian Railways, RZD-Logistics organised intermodal transportation service from Turkey to Russia. The first shipment was made from Turkish port Gulluk to port of the Rostov-on-Don. This new international project can draw attention of players of the transport market. According to representatives of RZD-Logistics, the service will include freight of a vessel, delivery by sea, agency service and terminal service in port of unloading, registration of transportation documents, railway transportation and address delivery of freight.
By Christina Alexandrova
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Russia and France are not neighbours, but these countries are connected by railways. And therefore there is a long history of cooperation between RZD and SNCF. Last year both companies made their relations even stronger. What effect will it have in the future?
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Last year the partnership between France and Russia became stronger. First, RZD opened its representative office at the center of the French capital – on the Champs Elysée. According to the CEO of the Russian company, this fact emphasises the significance of the Russian-French cooperation in the railway sphere.
“RZD has a lot of projects to be carried out in cooperation with French companies, and the representative office will help to activate the joint work,” said Alexander Saltanov, Vice President of RZD at the opening ceremony. According to him, the parties are now sharing experience about high-speed railways construction.
With the start of regular trains from Moscow to Nice and Paris the passenger turnover on these routes grew by 250%. It shows that even if there is a flight connection, people still choose to travel by trains across Europe.
During this year the Directorate of Railway Stations, a subsidiary of Russian Railways, and the Stations and Communications division at the French national railway SNCF, are going to work together on the development and improvement of service quality, investment attractiveness and the creation of a barrier-free environment for people with disabilities.
It is planned that delegations from the French railways stations Paris Saint-Lazare and Toulouse-Matabiau will visit the Baltic Station in St Petersburg and the station complex in Samara, while Russian delegations from Belarusian station in Moscow and Sochi and Yekaterinburg stations will visit the Gare de L’Est in Paris and Nice and Strasbourg stations.
According to RZD, during the trips, joint Franco-Russian seminars are planned on a variety of subjects, including “Enhancing the Effectiveness of Transportation Security”, “The Practice of Raising Investment for Station Reconstruction Projects”, “Preparing Stations for the Olympics” and “Increasing Efficiency: Increasing Profit by Optimising Costs and Developing New Services at Stations”.
“The French model of organising the station business is one of the most advanced in the world. Every year, more than one hundred of our employees undergo training at SNCF’s railway stations as part of our programme to increase their qualifications. At the moment, we are actively exchanging our experience regarding the quality control of services and are discussing prospects for the joint implementation of projects to reconstruct and modernise stations”, said Directorate head Sergei Abramov.
“Now we have projects in the field of freight transportation, in particular, the idea of regular container trains is being discussed now. We also cooperate with French partners on the development of high-speed railways, station infrastructure and also in the sphere of creation of the advanced rolling stock”, Mr Yakunin said.
For example, last year French manufacturer Alstom together with their Russian partner Transmashholding presented the first electric locomotive of EP20. Ceremony took place at Novocherkassk Electric Locomotive Plant where all EP20 will be built.
EP20 opens the first line of products by engineering center TRTrans, a joint venture by TMH and Alstom. It is the first Russian electric locomotive, capable of carrying passenger trains at speeds of up to 200 kph. The main advantage of this electric locomotive is its ability to work on two types of lines – with direct current and alternating current. Therefore if the route of the train passes on the sections working at different currents, a locomotive change isn’t required.
According to the contract, 36 locomotives will be transferred to RZD and will be used for the organisation of passenger traffic on a route Moscow-Sochi, also during Winter Olympic Games.
Another significant event in the French- Russian partnership that took place last year in Paris, was a meeting of the General assembly of the International Union of the Railroads (UIC), where Mr Yakunin took up a position of the chairman of this organisation for a two-year term. This year UIC will celebrate 90 years, and, according to the CEO of RZD, Russia was at the origins of its creation. “I don’t want to go into details”, he wrote in his blog in Livejournal. – “But the history of our membership in UIC is rather dramatic. Since 2006 Russian Railways became the full member of the Union again. And with the unique status – we are the only company who has membership in two regional assemblies – European and Asian”.
UIC, undoubtedly, is one of the most effective platforms for cooperation of railway business, and RZD is going to follow three major principles of its development: involvement of all participants, integration and innovations.
Relying on these principles, the company is going to work on unification of standards in the field of railway machinery, infrastructure, and technologies. Also the object of UIC is development of the global transport corridors, connecting centers of economic activity. And Russian company will do its best to accelerate this process.
Investing in the Future
That is for sure a good target. But achieving it will be not so easy. For example, the acquisition of a 75% shareholding in the French logistic operator GEFCO, the most discussed transaction of the last year, was criticised by experts for its inopportuneness. However the senior management of RZD think that the asset will bring in high revenues in the future.
According to the terms of the transaction the Russian carrier acquires the 75% of GEFCO for €800 million. Thus 25% remains at the former owner. It is clear that PSA Peugeot Citroen want to get rid of unprofitable assets now. But what is the interest of RZD?
All experts are sure, the Russian railway carrier stakes on the future. And maybe in the long term, in only two-three years, this asset can be offered to a third-party investor. Of course, if the price suits the Russian Railways and if the logistics department is transferred to private hands. If not, the company will continue to run the logistics sector itself, and then GEFCO can be integrated into the general network and become an operator in the European Union territory, that will expand the influence of RZD in the external market.
Senior managers at RZD are sure that the GEFCO purchase, by all means, will have a positive influence on monopolist activities. According to Vice President for the International Activities of RZD Alexander Saltanov, it will help a carrier to attract great volumes of transit freight traffic on a transcontinental route Europe – Asia. “Besides, having the modern logistics technologies of a 4PL operator, GEFCO will promote the increase of efficiency of systems of supply”, he considered.
Experts say that RZD, having used the opportunity, actually acquired new competences: the approved successful technologies and high-skilled experts, who can put these technologies into practice.
But it is too early to speak about the GEFCO activity now, the market will be able to sum up the results only at the end of the year. However present statistics looks quite optimistic. So, according to the data provided by PSA, GEFCO revenue for the first 6 months of the expiring year was €1.88 billion, and by the end of the second half of the year it doubled. Thus, the effect for the Russian Railways, according to the experts, in the long term shall make €900 million annually in 5-years perspective. It should be really profitable.
Even more reasonable the purchase of GEFCO looks in the light of strategic plans of the Russian Railways on IPO, because for successful placement of the company, it is necessary to show the good reporting with a big cash flow. And this asset is perfectly suitable.
Let’s remind that the international logistics operator GEFCO is the leading supplier of the integrated logistic services of level 3PL/4PL and one of the ten largest logistic operators in Europe. GEFCO controls more than 300 offices in 32 countries worldwide located on four continents. Therefore as it was already mentioned, purchase of such asset is, certainly, investment in the future.
By Christina Alexandrova
our reference
Some facts about Russian and French cooperation in railway sector:
• Now two trains are being operated on the route Russia–France: Moscow – Nice and Moscow – Paris. Both of these routes which are serviced by FPK (a daughter company of RZD) are the longest routes in Europe. The length of each of them is more than 3,000 kilometers.
• Container trains are being operated between Russia and France. They work on the route Brest – Krasnoye – Vorotynsk. More than 500 such trains proceed every year in both directions.
• The management of railway stations of RZD has a close cooperation with Stations and Communications Department of SNCF in the field of partnership between stations of the two countries. This program is going to last for 5 years. Five couples of railway stations are going to become sworn brothers: Belarusian station in Moscow and East station in Paris, Sochi and Nice, Vladivostok and Marseille San Charles (Marseille), Baltic station (St Petersburg) and Saint-Lazare (Paris), Samara and Toulouse.
[~DETAIL_TEXT] => Joint Work in All Aspects
Last year the partnership between France and Russia became stronger. First, RZD opened its representative office at the center of the French capital – on the Champs Elysée. According to the CEO of the Russian company, this fact emphasises the significance of the Russian-French cooperation in the railway sphere.
“RZD has a lot of projects to be carried out in cooperation with French companies, and the representative office will help to activate the joint work,” said Alexander Saltanov, Vice President of RZD at the opening ceremony. According to him, the parties are now sharing experience about high-speed railways construction.
With the start of regular trains from Moscow to Nice and Paris the passenger turnover on these routes grew by 250%. It shows that even if there is a flight connection, people still choose to travel by trains across Europe.
During this year the Directorate of Railway Stations, a subsidiary of Russian Railways, and the Stations and Communications division at the French national railway SNCF, are going to work together on the development and improvement of service quality, investment attractiveness and the creation of a barrier-free environment for people with disabilities.
It is planned that delegations from the French railways stations Paris Saint-Lazare and Toulouse-Matabiau will visit the Baltic Station in St Petersburg and the station complex in Samara, while Russian delegations from Belarusian station in Moscow and Sochi and Yekaterinburg stations will visit the Gare de L’Est in Paris and Nice and Strasbourg stations.
According to RZD, during the trips, joint Franco-Russian seminars are planned on a variety of subjects, including “Enhancing the Effectiveness of Transportation Security”, “The Practice of Raising Investment for Station Reconstruction Projects”, “Preparing Stations for the Olympics” and “Increasing Efficiency: Increasing Profit by Optimising Costs and Developing New Services at Stations”.
“The French model of organising the station business is one of the most advanced in the world. Every year, more than one hundred of our employees undergo training at SNCF’s railway stations as part of our programme to increase their qualifications. At the moment, we are actively exchanging our experience regarding the quality control of services and are discussing prospects for the joint implementation of projects to reconstruct and modernise stations”, said Directorate head Sergei Abramov.
“Now we have projects in the field of freight transportation, in particular, the idea of regular container trains is being discussed now. We also cooperate with French partners on the development of high-speed railways, station infrastructure and also in the sphere of creation of the advanced rolling stock”, Mr Yakunin said.
For example, last year French manufacturer Alstom together with their Russian partner Transmashholding presented the first electric locomotive of EP20. Ceremony took place at Novocherkassk Electric Locomotive Plant where all EP20 will be built.
EP20 opens the first line of products by engineering center TRTrans, a joint venture by TMH and Alstom. It is the first Russian electric locomotive, capable of carrying passenger trains at speeds of up to 200 kph. The main advantage of this electric locomotive is its ability to work on two types of lines – with direct current and alternating current. Therefore if the route of the train passes on the sections working at different currents, a locomotive change isn’t required.
According to the contract, 36 locomotives will be transferred to RZD and will be used for the organisation of passenger traffic on a route Moscow-Sochi, also during Winter Olympic Games.
Another significant event in the French- Russian partnership that took place last year in Paris, was a meeting of the General assembly of the International Union of the Railroads (UIC), where Mr Yakunin took up a position of the chairman of this organisation for a two-year term. This year UIC will celebrate 90 years, and, according to the CEO of RZD, Russia was at the origins of its creation. “I don’t want to go into details”, he wrote in his blog in Livejournal. – “But the history of our membership in UIC is rather dramatic. Since 2006 Russian Railways became the full member of the Union again. And with the unique status – we are the only company who has membership in two regional assemblies – European and Asian”.
UIC, undoubtedly, is one of the most effective platforms for cooperation of railway business, and RZD is going to follow three major principles of its development: involvement of all participants, integration and innovations.
Relying on these principles, the company is going to work on unification of standards in the field of railway machinery, infrastructure, and technologies. Also the object of UIC is development of the global transport corridors, connecting centers of economic activity. And Russian company will do its best to accelerate this process.
Investing in the Future
That is for sure a good target. But achieving it will be not so easy. For example, the acquisition of a 75% shareholding in the French logistic operator GEFCO, the most discussed transaction of the last year, was criticised by experts for its inopportuneness. However the senior management of RZD think that the asset will bring in high revenues in the future.
According to the terms of the transaction the Russian carrier acquires the 75% of GEFCO for €800 million. Thus 25% remains at the former owner. It is clear that PSA Peugeot Citroen want to get rid of unprofitable assets now. But what is the interest of RZD?
All experts are sure, the Russian railway carrier stakes on the future. And maybe in the long term, in only two-three years, this asset can be offered to a third-party investor. Of course, if the price suits the Russian Railways and if the logistics department is transferred to private hands. If not, the company will continue to run the logistics sector itself, and then GEFCO can be integrated into the general network and become an operator in the European Union territory, that will expand the influence of RZD in the external market.
Senior managers at RZD are sure that the GEFCO purchase, by all means, will have a positive influence on monopolist activities. According to Vice President for the International Activities of RZD Alexander Saltanov, it will help a carrier to attract great volumes of transit freight traffic on a transcontinental route Europe – Asia. “Besides, having the modern logistics technologies of a 4PL operator, GEFCO will promote the increase of efficiency of systems of supply”, he considered.
Experts say that RZD, having used the opportunity, actually acquired new competences: the approved successful technologies and high-skilled experts, who can put these technologies into practice.
But it is too early to speak about the GEFCO activity now, the market will be able to sum up the results only at the end of the year. However present statistics looks quite optimistic. So, according to the data provided by PSA, GEFCO revenue for the first 6 months of the expiring year was €1.88 billion, and by the end of the second half of the year it doubled. Thus, the effect for the Russian Railways, according to the experts, in the long term shall make €900 million annually in 5-years perspective. It should be really profitable.
Even more reasonable the purchase of GEFCO looks in the light of strategic plans of the Russian Railways on IPO, because for successful placement of the company, it is necessary to show the good reporting with a big cash flow. And this asset is perfectly suitable.
Let’s remind that the international logistics operator GEFCO is the leading supplier of the integrated logistic services of level 3PL/4PL and one of the ten largest logistic operators in Europe. GEFCO controls more than 300 offices in 32 countries worldwide located on four continents. Therefore as it was already mentioned, purchase of such asset is, certainly, investment in the future.
By Christina Alexandrova
our reference
Some facts about Russian and French cooperation in railway sector:
• Now two trains are being operated on the route Russia–France: Moscow – Nice and Moscow – Paris. Both of these routes which are serviced by FPK (a daughter company of RZD) are the longest routes in Europe. The length of each of them is more than 3,000 kilometers.
• Container trains are being operated between Russia and France. They work on the route Brest – Krasnoye – Vorotynsk. More than 500 such trains proceed every year in both directions.
• The management of railway stations of RZD has a close cooperation with Stations and Communications Department of SNCF in the field of partnership between stations of the two countries. This program is going to last for 5 years. Five couples of railway stations are going to become sworn brothers: Belarusian station in Moscow and East station in Paris, Sochi and Nice, Vladivostok and Marseille San Charles (Marseille), Baltic station (St Petersburg) and Saint-Lazare (Paris), Samara and Toulouse.
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Last year the partnership between France and Russia became stronger. First, RZD opened its representative office at the center of the French capital – on the Champs Elysée. According to the CEO of the Russian company, this fact emphasises the significance of the Russian-French cooperation in the railway sphere.
“RZD has a lot of projects to be carried out in cooperation with French companies, and the representative office will help to activate the joint work,” said Alexander Saltanov, Vice President of RZD at the opening ceremony. According to him, the parties are now sharing experience about high-speed railways construction.
With the start of regular trains from Moscow to Nice and Paris the passenger turnover on these routes grew by 250%. It shows that even if there is a flight connection, people still choose to travel by trains across Europe.
During this year the Directorate of Railway Stations, a subsidiary of Russian Railways, and the Stations and Communications division at the French national railway SNCF, are going to work together on the development and improvement of service quality, investment attractiveness and the creation of a barrier-free environment for people with disabilities.
It is planned that delegations from the French railways stations Paris Saint-Lazare and Toulouse-Matabiau will visit the Baltic Station in St Petersburg and the station complex in Samara, while Russian delegations from Belarusian station in Moscow and Sochi and Yekaterinburg stations will visit the Gare de L’Est in Paris and Nice and Strasbourg stations.
According to RZD, during the trips, joint Franco-Russian seminars are planned on a variety of subjects, including “Enhancing the Effectiveness of Transportation Security”, “The Practice of Raising Investment for Station Reconstruction Projects”, “Preparing Stations for the Olympics” and “Increasing Efficiency: Increasing Profit by Optimising Costs and Developing New Services at Stations”.
“The French model of organising the station business is one of the most advanced in the world. Every year, more than one hundred of our employees undergo training at SNCF’s railway stations as part of our programme to increase their qualifications. At the moment, we are actively exchanging our experience regarding the quality control of services and are discussing prospects for the joint implementation of projects to reconstruct and modernise stations”, said Directorate head Sergei Abramov.
“Now we have projects in the field of freight transportation, in particular, the idea of regular container trains is being discussed now. We also cooperate with French partners on the development of high-speed railways, station infrastructure and also in the sphere of creation of the advanced rolling stock”, Mr Yakunin said.
For example, last year French manufacturer Alstom together with their Russian partner Transmashholding presented the first electric locomotive of EP20. Ceremony took place at Novocherkassk Electric Locomotive Plant where all EP20 will be built.
EP20 opens the first line of products by engineering center TRTrans, a joint venture by TMH and Alstom. It is the first Russian electric locomotive, capable of carrying passenger trains at speeds of up to 200 kph. The main advantage of this electric locomotive is its ability to work on two types of lines – with direct current and alternating current. Therefore if the route of the train passes on the sections working at different currents, a locomotive change isn’t required.
According to the contract, 36 locomotives will be transferred to RZD and will be used for the organisation of passenger traffic on a route Moscow-Sochi, also during Winter Olympic Games.
Another significant event in the French- Russian partnership that took place last year in Paris, was a meeting of the General assembly of the International Union of the Railroads (UIC), where Mr Yakunin took up a position of the chairman of this organisation for a two-year term. This year UIC will celebrate 90 years, and, according to the CEO of RZD, Russia was at the origins of its creation. “I don’t want to go into details”, he wrote in his blog in Livejournal. – “But the history of our membership in UIC is rather dramatic. Since 2006 Russian Railways became the full member of the Union again. And with the unique status – we are the only company who has membership in two regional assemblies – European and Asian”.
UIC, undoubtedly, is one of the most effective platforms for cooperation of railway business, and RZD is going to follow three major principles of its development: involvement of all participants, integration and innovations.
Relying on these principles, the company is going to work on unification of standards in the field of railway machinery, infrastructure, and technologies. Also the object of UIC is development of the global transport corridors, connecting centers of economic activity. And Russian company will do its best to accelerate this process.
Investing in the Future
That is for sure a good target. But achieving it will be not so easy. For example, the acquisition of a 75% shareholding in the French logistic operator GEFCO, the most discussed transaction of the last year, was criticised by experts for its inopportuneness. However the senior management of RZD think that the asset will bring in high revenues in the future.
According to the terms of the transaction the Russian carrier acquires the 75% of GEFCO for €800 million. Thus 25% remains at the former owner. It is clear that PSA Peugeot Citroen want to get rid of unprofitable assets now. But what is the interest of RZD?
All experts are sure, the Russian railway carrier stakes on the future. And maybe in the long term, in only two-three years, this asset can be offered to a third-party investor. Of course, if the price suits the Russian Railways and if the logistics department is transferred to private hands. If not, the company will continue to run the logistics sector itself, and then GEFCO can be integrated into the general network and become an operator in the European Union territory, that will expand the influence of RZD in the external market.
Senior managers at RZD are sure that the GEFCO purchase, by all means, will have a positive influence on monopolist activities. According to Vice President for the International Activities of RZD Alexander Saltanov, it will help a carrier to attract great volumes of transit freight traffic on a transcontinental route Europe – Asia. “Besides, having the modern logistics technologies of a 4PL operator, GEFCO will promote the increase of efficiency of systems of supply”, he considered.
Experts say that RZD, having used the opportunity, actually acquired new competences: the approved successful technologies and high-skilled experts, who can put these technologies into practice.
But it is too early to speak about the GEFCO activity now, the market will be able to sum up the results only at the end of the year. However present statistics looks quite optimistic. So, according to the data provided by PSA, GEFCO revenue for the first 6 months of the expiring year was €1.88 billion, and by the end of the second half of the year it doubled. Thus, the effect for the Russian Railways, according to the experts, in the long term shall make €900 million annually in 5-years perspective. It should be really profitable.
Even more reasonable the purchase of GEFCO looks in the light of strategic plans of the Russian Railways on IPO, because for successful placement of the company, it is necessary to show the good reporting with a big cash flow. And this asset is perfectly suitable.
Let’s remind that the international logistics operator GEFCO is the leading supplier of the integrated logistic services of level 3PL/4PL and one of the ten largest logistic operators in Europe. GEFCO controls more than 300 offices in 32 countries worldwide located on four continents. Therefore as it was already mentioned, purchase of such asset is, certainly, investment in the future.
By Christina Alexandrova
our reference
Some facts about Russian and French cooperation in railway sector:
• Now two trains are being operated on the route Russia–France: Moscow – Nice and Moscow – Paris. Both of these routes which are serviced by FPK (a daughter company of RZD) are the longest routes in Europe. The length of each of them is more than 3,000 kilometers.
• Container trains are being operated between Russia and France. They work on the route Brest – Krasnoye – Vorotynsk. More than 500 such trains proceed every year in both directions.
• The management of railway stations of RZD has a close cooperation with Stations and Communications Department of SNCF in the field of partnership between stations of the two countries. This program is going to last for 5 years. Five couples of railway stations are going to become sworn brothers: Belarusian station in Moscow and East station in Paris, Sochi and Nice, Vladivostok and Marseille San Charles (Marseille), Baltic station (St Petersburg) and Saint-Lazare (Paris), Samara and Toulouse.
[~DETAIL_TEXT] => Joint Work in All Aspects
Last year the partnership between France and Russia became stronger. First, RZD opened its representative office at the center of the French capital – on the Champs Elysée. According to the CEO of the Russian company, this fact emphasises the significance of the Russian-French cooperation in the railway sphere.
“RZD has a lot of projects to be carried out in cooperation with French companies, and the representative office will help to activate the joint work,” said Alexander Saltanov, Vice President of RZD at the opening ceremony. According to him, the parties are now sharing experience about high-speed railways construction.
With the start of regular trains from Moscow to Nice and Paris the passenger turnover on these routes grew by 250%. It shows that even if there is a flight connection, people still choose to travel by trains across Europe.
During this year the Directorate of Railway Stations, a subsidiary of Russian Railways, and the Stations and Communications division at the French national railway SNCF, are going to work together on the development and improvement of service quality, investment attractiveness and the creation of a barrier-free environment for people with disabilities.
It is planned that delegations from the French railways stations Paris Saint-Lazare and Toulouse-Matabiau will visit the Baltic Station in St Petersburg and the station complex in Samara, while Russian delegations from Belarusian station in Moscow and Sochi and Yekaterinburg stations will visit the Gare de L’Est in Paris and Nice and Strasbourg stations.
According to RZD, during the trips, joint Franco-Russian seminars are planned on a variety of subjects, including “Enhancing the Effectiveness of Transportation Security”, “The Practice of Raising Investment for Station Reconstruction Projects”, “Preparing Stations for the Olympics” and “Increasing Efficiency: Increasing Profit by Optimising Costs and Developing New Services at Stations”.
“The French model of organising the station business is one of the most advanced in the world. Every year, more than one hundred of our employees undergo training at SNCF’s railway stations as part of our programme to increase their qualifications. At the moment, we are actively exchanging our experience regarding the quality control of services and are discussing prospects for the joint implementation of projects to reconstruct and modernise stations”, said Directorate head Sergei Abramov.
“Now we have projects in the field of freight transportation, in particular, the idea of regular container trains is being discussed now. We also cooperate with French partners on the development of high-speed railways, station infrastructure and also in the sphere of creation of the advanced rolling stock”, Mr Yakunin said.
For example, last year French manufacturer Alstom together with their Russian partner Transmashholding presented the first electric locomotive of EP20. Ceremony took place at Novocherkassk Electric Locomotive Plant where all EP20 will be built.
EP20 opens the first line of products by engineering center TRTrans, a joint venture by TMH and Alstom. It is the first Russian electric locomotive, capable of carrying passenger trains at speeds of up to 200 kph. The main advantage of this electric locomotive is its ability to work on two types of lines – with direct current and alternating current. Therefore if the route of the train passes on the sections working at different currents, a locomotive change isn’t required.
According to the contract, 36 locomotives will be transferred to RZD and will be used for the organisation of passenger traffic on a route Moscow-Sochi, also during Winter Olympic Games.
Another significant event in the French- Russian partnership that took place last year in Paris, was a meeting of the General assembly of the International Union of the Railroads (UIC), where Mr Yakunin took up a position of the chairman of this organisation for a two-year term. This year UIC will celebrate 90 years, and, according to the CEO of RZD, Russia was at the origins of its creation. “I don’t want to go into details”, he wrote in his blog in Livejournal. – “But the history of our membership in UIC is rather dramatic. Since 2006 Russian Railways became the full member of the Union again. And with the unique status – we are the only company who has membership in two regional assemblies – European and Asian”.
UIC, undoubtedly, is one of the most effective platforms for cooperation of railway business, and RZD is going to follow three major principles of its development: involvement of all participants, integration and innovations.
Relying on these principles, the company is going to work on unification of standards in the field of railway machinery, infrastructure, and technologies. Also the object of UIC is development of the global transport corridors, connecting centers of economic activity. And Russian company will do its best to accelerate this process.
Investing in the Future
That is for sure a good target. But achieving it will be not so easy. For example, the acquisition of a 75% shareholding in the French logistic operator GEFCO, the most discussed transaction of the last year, was criticised by experts for its inopportuneness. However the senior management of RZD think that the asset will bring in high revenues in the future.
According to the terms of the transaction the Russian carrier acquires the 75% of GEFCO for €800 million. Thus 25% remains at the former owner. It is clear that PSA Peugeot Citroen want to get rid of unprofitable assets now. But what is the interest of RZD?
All experts are sure, the Russian railway carrier stakes on the future. And maybe in the long term, in only two-three years, this asset can be offered to a third-party investor. Of course, if the price suits the Russian Railways and if the logistics department is transferred to private hands. If not, the company will continue to run the logistics sector itself, and then GEFCO can be integrated into the general network and become an operator in the European Union territory, that will expand the influence of RZD in the external market.
Senior managers at RZD are sure that the GEFCO purchase, by all means, will have a positive influence on monopolist activities. According to Vice President for the International Activities of RZD Alexander Saltanov, it will help a carrier to attract great volumes of transit freight traffic on a transcontinental route Europe – Asia. “Besides, having the modern logistics technologies of a 4PL operator, GEFCO will promote the increase of efficiency of systems of supply”, he considered.
Experts say that RZD, having used the opportunity, actually acquired new competences: the approved successful technologies and high-skilled experts, who can put these technologies into practice.
But it is too early to speak about the GEFCO activity now, the market will be able to sum up the results only at the end of the year. However present statistics looks quite optimistic. So, according to the data provided by PSA, GEFCO revenue for the first 6 months of the expiring year was €1.88 billion, and by the end of the second half of the year it doubled. Thus, the effect for the Russian Railways, according to the experts, in the long term shall make €900 million annually in 5-years perspective. It should be really profitable.
Even more reasonable the purchase of GEFCO looks in the light of strategic plans of the Russian Railways on IPO, because for successful placement of the company, it is necessary to show the good reporting with a big cash flow. And this asset is perfectly suitable.
Let’s remind that the international logistics operator GEFCO is the leading supplier of the integrated logistic services of level 3PL/4PL and one of the ten largest logistic operators in Europe. GEFCO controls more than 300 offices in 32 countries worldwide located on four continents. Therefore as it was already mentioned, purchase of such asset is, certainly, investment in the future.
By Christina Alexandrova
our reference
Some facts about Russian and French cooperation in railway sector:
• Now two trains are being operated on the route Russia–France: Moscow – Nice and Moscow – Paris. Both of these routes which are serviced by FPK (a daughter company of RZD) are the longest routes in Europe. The length of each of them is more than 3,000 kilometers.
• Container trains are being operated between Russia and France. They work on the route Brest – Krasnoye – Vorotynsk. More than 500 such trains proceed every year in both directions.
• The management of railway stations of RZD has a close cooperation with Stations and Communications Department of SNCF in the field of partnership between stations of the two countries. This program is going to last for 5 years. Five couples of railway stations are going to become sworn brothers: Belarusian station in Moscow and East station in Paris, Sochi and Nice, Vladivostok and Marseille San Charles (Marseille), Baltic station (St Petersburg) and Saint-Lazare (Paris), Samara and Toulouse.
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Russian Railways’ 2012 investment programme was the largest in the last five years. Starting from the current year, however, investment in railway infrastructure will shrink. According to experts, the reduction in the investment budget will have amounted to RUB 2.1 trillion by 2020, which will cause serious economic losses. The company is looking for solutions to the problem, and the key role is given to the state support.
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[DETAIL_TEXT] => A Good Year
It was planned initially that RZD’s 2012 investment programme would be RUB 428 billion. Due to additional financial sources, the company got an opportunity to expand the investment programme to RUB 482 billion, by RUB 86.2 billion more than in 2011.
“Allocation of additional funds for investment in 2012 became possible only due to measures taken to enhance internal performance and the efficient loan policy,” noted Vladimir Yakunin, President of Russian Railways.
In spring 2012, RZD issued its first Eurobonds worth RUB 25 billion. The yield is 8.3% per annum. The bonds mature in 7 years. Also, RZD issued Eurobonds worth $1 billion at 5.7% yield per annum. Their maturity date is 10 years. Taking into account a favourable market situation, RZD organised additional bonds placement in both currencies. The term and rates of additional bond issuances were similar to the first ones, however, due to a high market demand, they were placed at a premium price. The following results of the issuance were fixed: RUB 12.5 billion and $400 million.
Also, RZD issued corporate rouble bonds worth RUB 10 billion. Their yield depends on inflation. Their term is 20 years. It will have a put option in 10 years.
The adjustment of the investment budget allowed increasing investment in renewal of the company’s capital assets. Last year, RUB 75.5 billion was allocated to renewal of the rolling stock fleet. 532 locomotives were bought, a 17.4% increase on 2011. Over 4,400 km of rail tracks were reconstructed, 60% more than in the previous year. All in all, approximately RUB 199.3 billion was spent on projects targeted at removal of infrastructure barriers. These projects aim at an expansion of the carrying capacity in the directions to Russian main ports and at increasing transport availability for people.
Projects for the development of railway infrastructure for XXII winter Olympic Games in Sochi in 2014 remain priorities for RZD. RUB 64.3 billion was allocated for them. Of that, RUB 57.8 billion was spent on the project “Combined Adler – Alpika Service road and rail line.” This is the line which will connect Adler, the Olympic Park, and Krasnaya Polyana.
In the words of Mr Yakunin, despite the fact that the 2012 investment programme exceeded that of the previous year by more than 20%, in comparable prices it was less than in 2008, when the highest investment level was reached. “On the whole, we have a colossal deficit of funds, the result of which is a catastrophic level of the depreciation of basic assets, and a pace of infrastructure expansion smaller than the demand,” the President of the company emphasised.
Locomotives Are a Priority
Meanwhile, the sum planned for 2013 is even less. Taking into account capital already raised, the company’s total investment programme will be RUB 411.4 billion this year, and even less in the next two years – RUB 360 billion in 2014 and RUB 346.1 billion in 2015. The total investment budget of RZD in 2013-2015 is forecast to reach approximately RUB 1.1 trillion.
Priority projects will be those targeted at transportation safety and renewal of rolling stock and infrastructure. The amount of funds invested in railway track reconstruction is supposed to remain at the 2012 level, and investment in rolling stock renewal is to increase. In particular, it is planned to buy at least 700 new locomotives per annum. And this, as Mr Yakunin noted, is practically the entire production programme of the national transport machine building sector.
In the next three years it is planned to reconstruct about 11,000 km of railways. According to specialists of RZD, it should prevent an increase in the length of rail sections with delayed repairs (sections which must have been repaired long ago, but for some reason haven’t been repaired yet).
To match the investment programme in 2013-2015, the loan portfolio of RZD is to grow by RUB 80-90 billion on average. Therefore, it has taken loans in the internal and international capital markets, including placement of Eurobonds. The volume and the currency of each of the placement, as they say in RZD, will depend on the market situation. At the same time, target values of the share of a foreign currency in the loan portfolio structure will be taken into account (not more than 30-40%) as well as short-term loans (their share must not exceed 20% of the loan portfolio).
It is planned to continue the work targeted at increasing the efficiency of the company’s performance based on a better usage of all resources and labour. “Our objective for the next three-year period is to cut expenditure by RUB 24-25 billion annually,” said V. Yakunin.
Projects Can Be Divided
Experts’ estimates show that the company’s own sources of funding are not enough to solve all the infrastructure problems, which were accumulated over decades. And it is completely unrealistic to carry out such enormous infrastructure projects as the development of the Baikal-Amur Railways or preparation of the transport infrastructure for the FIFA World Cup in 2018 at RZD’s own expense.
In accordance with a commitment by Vladimir Putin, the RF President, last year RZD developed a long-term investment programme and a financial plan till 2020. Estimates show that the shortage of its own funds in this period will amount to RUB 2.1 trillion. Of that, RUB 1.1 trillion will be the deficit of funds for the complex development of railway infrastructure.
Meanwhile, an insufficient funding of railway infrastructure can cause serious losses to the country’s budget. Experts think that because of the limited increase in railway transportation till 2020, the total losses of the GDP may vary from RUB 5.5 trillion to RUB 6.4 trillion, and the losses of the budget system – between RUB 1.3 trillion and RUB 1.5 trillion.
RZD estimated the economic efficiency of complex projects of railway development and offered sources to fund them. Based on capital return and commercial efficiency, investment projects were divided in three categories. The first included projects with a payback period of less than 15 years. RZD is ready to fund them at its own expenses and loans within reasonable debt burden.
The second category includes projects with a 15-20 year payback period. RZD cannot fund these projects using loans, because there is no money to be borrowed for this period in the market. A solution is special state-guaranteed bonds (so called “infrastructure bonds”), which will be purchased by the RF Pension Fund for a 30-year period with maximum coupon equal to the inflation +1%.
Investment projects that refer to the third category are commercially unprofitable for RZD, consequently, using any type of borrowing would be unreasonable. The company think that such projects (they are of national importance and, as a rule, rather large) should be funded from the state budget, because the investment will be paid back to the state due to multiplicative effect. In this case, possible funding schemes are an implementation of an investment component in the tariff on cargo transportation, direct investments made by the state of state funds in the form of a contribution to the capital stock of RZD; an increase in the public funding of railway projects within the framework of federal target programmes.
In other words, the state support is essential for railways in this situation. RZD has submitted its offers to the RF Government.
By Evgeniya Egorova
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It was planned initially that RZD’s 2012 investment programme would be RUB 428 billion. Due to additional financial sources, the company got an opportunity to expand the investment programme to RUB 482 billion, by RUB 86.2 billion more than in 2011.
“Allocation of additional funds for investment in 2012 became possible only due to measures taken to enhance internal performance and the efficient loan policy,” noted Vladimir Yakunin, President of Russian Railways.
In spring 2012, RZD issued its first Eurobonds worth RUB 25 billion. The yield is 8.3% per annum. The bonds mature in 7 years. Also, RZD issued Eurobonds worth $1 billion at 5.7% yield per annum. Their maturity date is 10 years. Taking into account a favourable market situation, RZD organised additional bonds placement in both currencies. The term and rates of additional bond issuances were similar to the first ones, however, due to a high market demand, they were placed at a premium price. The following results of the issuance were fixed: RUB 12.5 billion and $400 million.
Also, RZD issued corporate rouble bonds worth RUB 10 billion. Their yield depends on inflation. Their term is 20 years. It will have a put option in 10 years.
The adjustment of the investment budget allowed increasing investment in renewal of the company’s capital assets. Last year, RUB 75.5 billion was allocated to renewal of the rolling stock fleet. 532 locomotives were bought, a 17.4% increase on 2011. Over 4,400 km of rail tracks were reconstructed, 60% more than in the previous year. All in all, approximately RUB 199.3 billion was spent on projects targeted at removal of infrastructure barriers. These projects aim at an expansion of the carrying capacity in the directions to Russian main ports and at increasing transport availability for people.
Projects for the development of railway infrastructure for XXII winter Olympic Games in Sochi in 2014 remain priorities for RZD. RUB 64.3 billion was allocated for them. Of that, RUB 57.8 billion was spent on the project “Combined Adler – Alpika Service road and rail line.” This is the line which will connect Adler, the Olympic Park, and Krasnaya Polyana.
In the words of Mr Yakunin, despite the fact that the 2012 investment programme exceeded that of the previous year by more than 20%, in comparable prices it was less than in 2008, when the highest investment level was reached. “On the whole, we have a colossal deficit of funds, the result of which is a catastrophic level of the depreciation of basic assets, and a pace of infrastructure expansion smaller than the demand,” the President of the company emphasised.
Locomotives Are a Priority
Meanwhile, the sum planned for 2013 is even less. Taking into account capital already raised, the company’s total investment programme will be RUB 411.4 billion this year, and even less in the next two years – RUB 360 billion in 2014 and RUB 346.1 billion in 2015. The total investment budget of RZD in 2013-2015 is forecast to reach approximately RUB 1.1 trillion.
Priority projects will be those targeted at transportation safety and renewal of rolling stock and infrastructure. The amount of funds invested in railway track reconstruction is supposed to remain at the 2012 level, and investment in rolling stock renewal is to increase. In particular, it is planned to buy at least 700 new locomotives per annum. And this, as Mr Yakunin noted, is practically the entire production programme of the national transport machine building sector.
In the next three years it is planned to reconstruct about 11,000 km of railways. According to specialists of RZD, it should prevent an increase in the length of rail sections with delayed repairs (sections which must have been repaired long ago, but for some reason haven’t been repaired yet).
To match the investment programme in 2013-2015, the loan portfolio of RZD is to grow by RUB 80-90 billion on average. Therefore, it has taken loans in the internal and international capital markets, including placement of Eurobonds. The volume and the currency of each of the placement, as they say in RZD, will depend on the market situation. At the same time, target values of the share of a foreign currency in the loan portfolio structure will be taken into account (not more than 30-40%) as well as short-term loans (their share must not exceed 20% of the loan portfolio).
It is planned to continue the work targeted at increasing the efficiency of the company’s performance based on a better usage of all resources and labour. “Our objective for the next three-year period is to cut expenditure by RUB 24-25 billion annually,” said V. Yakunin.
Projects Can Be Divided
Experts’ estimates show that the company’s own sources of funding are not enough to solve all the infrastructure problems, which were accumulated over decades. And it is completely unrealistic to carry out such enormous infrastructure projects as the development of the Baikal-Amur Railways or preparation of the transport infrastructure for the FIFA World Cup in 2018 at RZD’s own expense.
In accordance with a commitment by Vladimir Putin, the RF President, last year RZD developed a long-term investment programme and a financial plan till 2020. Estimates show that the shortage of its own funds in this period will amount to RUB 2.1 trillion. Of that, RUB 1.1 trillion will be the deficit of funds for the complex development of railway infrastructure.
Meanwhile, an insufficient funding of railway infrastructure can cause serious losses to the country’s budget. Experts think that because of the limited increase in railway transportation till 2020, the total losses of the GDP may vary from RUB 5.5 trillion to RUB 6.4 trillion, and the losses of the budget system – between RUB 1.3 trillion and RUB 1.5 trillion.
RZD estimated the economic efficiency of complex projects of railway development and offered sources to fund them. Based on capital return and commercial efficiency, investment projects were divided in three categories. The first included projects with a payback period of less than 15 years. RZD is ready to fund them at its own expenses and loans within reasonable debt burden.
The second category includes projects with a 15-20 year payback period. RZD cannot fund these projects using loans, because there is no money to be borrowed for this period in the market. A solution is special state-guaranteed bonds (so called “infrastructure bonds”), which will be purchased by the RF Pension Fund for a 30-year period with maximum coupon equal to the inflation +1%.
Investment projects that refer to the third category are commercially unprofitable for RZD, consequently, using any type of borrowing would be unreasonable. The company think that such projects (they are of national importance and, as a rule, rather large) should be funded from the state budget, because the investment will be paid back to the state due to multiplicative effect. In this case, possible funding schemes are an implementation of an investment component in the tariff on cargo transportation, direct investments made by the state of state funds in the form of a contribution to the capital stock of RZD; an increase in the public funding of railway projects within the framework of federal target programmes.
In other words, the state support is essential for railways in this situation. RZD has submitted its offers to the RF Government.
By Evgeniya Egorova
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[DETAIL_TEXT] => A Good Year
It was planned initially that RZD’s 2012 investment programme would be RUB 428 billion. Due to additional financial sources, the company got an opportunity to expand the investment programme to RUB 482 billion, by RUB 86.2 billion more than in 2011.
“Allocation of additional funds for investment in 2012 became possible only due to measures taken to enhance internal performance and the efficient loan policy,” noted Vladimir Yakunin, President of Russian Railways.
In spring 2012, RZD issued its first Eurobonds worth RUB 25 billion. The yield is 8.3% per annum. The bonds mature in 7 years. Also, RZD issued Eurobonds worth $1 billion at 5.7% yield per annum. Their maturity date is 10 years. Taking into account a favourable market situation, RZD organised additional bonds placement in both currencies. The term and rates of additional bond issuances were similar to the first ones, however, due to a high market demand, they were placed at a premium price. The following results of the issuance were fixed: RUB 12.5 billion and $400 million.
Also, RZD issued corporate rouble bonds worth RUB 10 billion. Their yield depends on inflation. Their term is 20 years. It will have a put option in 10 years.
The adjustment of the investment budget allowed increasing investment in renewal of the company’s capital assets. Last year, RUB 75.5 billion was allocated to renewal of the rolling stock fleet. 532 locomotives were bought, a 17.4% increase on 2011. Over 4,400 km of rail tracks were reconstructed, 60% more than in the previous year. All in all, approximately RUB 199.3 billion was spent on projects targeted at removal of infrastructure barriers. These projects aim at an expansion of the carrying capacity in the directions to Russian main ports and at increasing transport availability for people.
Projects for the development of railway infrastructure for XXII winter Olympic Games in Sochi in 2014 remain priorities for RZD. RUB 64.3 billion was allocated for them. Of that, RUB 57.8 billion was spent on the project “Combined Adler – Alpika Service road and rail line.” This is the line which will connect Adler, the Olympic Park, and Krasnaya Polyana.
In the words of Mr Yakunin, despite the fact that the 2012 investment programme exceeded that of the previous year by more than 20%, in comparable prices it was less than in 2008, when the highest investment level was reached. “On the whole, we have a colossal deficit of funds, the result of which is a catastrophic level of the depreciation of basic assets, and a pace of infrastructure expansion smaller than the demand,” the President of the company emphasised.
Locomotives Are a Priority
Meanwhile, the sum planned for 2013 is even less. Taking into account capital already raised, the company’s total investment programme will be RUB 411.4 billion this year, and even less in the next two years – RUB 360 billion in 2014 and RUB 346.1 billion in 2015. The total investment budget of RZD in 2013-2015 is forecast to reach approximately RUB 1.1 trillion.
Priority projects will be those targeted at transportation safety and renewal of rolling stock and infrastructure. The amount of funds invested in railway track reconstruction is supposed to remain at the 2012 level, and investment in rolling stock renewal is to increase. In particular, it is planned to buy at least 700 new locomotives per annum. And this, as Mr Yakunin noted, is practically the entire production programme of the national transport machine building sector.
In the next three years it is planned to reconstruct about 11,000 km of railways. According to specialists of RZD, it should prevent an increase in the length of rail sections with delayed repairs (sections which must have been repaired long ago, but for some reason haven’t been repaired yet).
To match the investment programme in 2013-2015, the loan portfolio of RZD is to grow by RUB 80-90 billion on average. Therefore, it has taken loans in the internal and international capital markets, including placement of Eurobonds. The volume and the currency of each of the placement, as they say in RZD, will depend on the market situation. At the same time, target values of the share of a foreign currency in the loan portfolio structure will be taken into account (not more than 30-40%) as well as short-term loans (their share must not exceed 20% of the loan portfolio).
It is planned to continue the work targeted at increasing the efficiency of the company’s performance based on a better usage of all resources and labour. “Our objective for the next three-year period is to cut expenditure by RUB 24-25 billion annually,” said V. Yakunin.
Projects Can Be Divided
Experts’ estimates show that the company’s own sources of funding are not enough to solve all the infrastructure problems, which were accumulated over decades. And it is completely unrealistic to carry out such enormous infrastructure projects as the development of the Baikal-Amur Railways or preparation of the transport infrastructure for the FIFA World Cup in 2018 at RZD’s own expense.
In accordance with a commitment by Vladimir Putin, the RF President, last year RZD developed a long-term investment programme and a financial plan till 2020. Estimates show that the shortage of its own funds in this period will amount to RUB 2.1 trillion. Of that, RUB 1.1 trillion will be the deficit of funds for the complex development of railway infrastructure.
Meanwhile, an insufficient funding of railway infrastructure can cause serious losses to the country’s budget. Experts think that because of the limited increase in railway transportation till 2020, the total losses of the GDP may vary from RUB 5.5 trillion to RUB 6.4 trillion, and the losses of the budget system – between RUB 1.3 trillion and RUB 1.5 trillion.
RZD estimated the economic efficiency of complex projects of railway development and offered sources to fund them. Based on capital return and commercial efficiency, investment projects were divided in three categories. The first included projects with a payback period of less than 15 years. RZD is ready to fund them at its own expenses and loans within reasonable debt burden.
The second category includes projects with a 15-20 year payback period. RZD cannot fund these projects using loans, because there is no money to be borrowed for this period in the market. A solution is special state-guaranteed bonds (so called “infrastructure bonds”), which will be purchased by the RF Pension Fund for a 30-year period with maximum coupon equal to the inflation +1%.
Investment projects that refer to the third category are commercially unprofitable for RZD, consequently, using any type of borrowing would be unreasonable. The company think that such projects (they are of national importance and, as a rule, rather large) should be funded from the state budget, because the investment will be paid back to the state due to multiplicative effect. In this case, possible funding schemes are an implementation of an investment component in the tariff on cargo transportation, direct investments made by the state of state funds in the form of a contribution to the capital stock of RZD; an increase in the public funding of railway projects within the framework of federal target programmes.
In other words, the state support is essential for railways in this situation. RZD has submitted its offers to the RF Government.
By Evgeniya Egorova
[~DETAIL_TEXT] => A Good Year
It was planned initially that RZD’s 2012 investment programme would be RUB 428 billion. Due to additional financial sources, the company got an opportunity to expand the investment programme to RUB 482 billion, by RUB 86.2 billion more than in 2011.
“Allocation of additional funds for investment in 2012 became possible only due to measures taken to enhance internal performance and the efficient loan policy,” noted Vladimir Yakunin, President of Russian Railways.
In spring 2012, RZD issued its first Eurobonds worth RUB 25 billion. The yield is 8.3% per annum. The bonds mature in 7 years. Also, RZD issued Eurobonds worth $1 billion at 5.7% yield per annum. Their maturity date is 10 years. Taking into account a favourable market situation, RZD organised additional bonds placement in both currencies. The term and rates of additional bond issuances were similar to the first ones, however, due to a high market demand, they were placed at a premium price. The following results of the issuance were fixed: RUB 12.5 billion and $400 million.
Also, RZD issued corporate rouble bonds worth RUB 10 billion. Their yield depends on inflation. Their term is 20 years. It will have a put option in 10 years.
The adjustment of the investment budget allowed increasing investment in renewal of the company’s capital assets. Last year, RUB 75.5 billion was allocated to renewal of the rolling stock fleet. 532 locomotives were bought, a 17.4% increase on 2011. Over 4,400 km of rail tracks were reconstructed, 60% more than in the previous year. All in all, approximately RUB 199.3 billion was spent on projects targeted at removal of infrastructure barriers. These projects aim at an expansion of the carrying capacity in the directions to Russian main ports and at increasing transport availability for people.
Projects for the development of railway infrastructure for XXII winter Olympic Games in Sochi in 2014 remain priorities for RZD. RUB 64.3 billion was allocated for them. Of that, RUB 57.8 billion was spent on the project “Combined Adler – Alpika Service road and rail line.” This is the line which will connect Adler, the Olympic Park, and Krasnaya Polyana.
In the words of Mr Yakunin, despite the fact that the 2012 investment programme exceeded that of the previous year by more than 20%, in comparable prices it was less than in 2008, when the highest investment level was reached. “On the whole, we have a colossal deficit of funds, the result of which is a catastrophic level of the depreciation of basic assets, and a pace of infrastructure expansion smaller than the demand,” the President of the company emphasised.
Locomotives Are a Priority
Meanwhile, the sum planned for 2013 is even less. Taking into account capital already raised, the company’s total investment programme will be RUB 411.4 billion this year, and even less in the next two years – RUB 360 billion in 2014 and RUB 346.1 billion in 2015. The total investment budget of RZD in 2013-2015 is forecast to reach approximately RUB 1.1 trillion.
Priority projects will be those targeted at transportation safety and renewal of rolling stock and infrastructure. The amount of funds invested in railway track reconstruction is supposed to remain at the 2012 level, and investment in rolling stock renewal is to increase. In particular, it is planned to buy at least 700 new locomotives per annum. And this, as Mr Yakunin noted, is practically the entire production programme of the national transport machine building sector.
In the next three years it is planned to reconstruct about 11,000 km of railways. According to specialists of RZD, it should prevent an increase in the length of rail sections with delayed repairs (sections which must have been repaired long ago, but for some reason haven’t been repaired yet).
To match the investment programme in 2013-2015, the loan portfolio of RZD is to grow by RUB 80-90 billion on average. Therefore, it has taken loans in the internal and international capital markets, including placement of Eurobonds. The volume and the currency of each of the placement, as they say in RZD, will depend on the market situation. At the same time, target values of the share of a foreign currency in the loan portfolio structure will be taken into account (not more than 30-40%) as well as short-term loans (their share must not exceed 20% of the loan portfolio).
It is planned to continue the work targeted at increasing the efficiency of the company’s performance based on a better usage of all resources and labour. “Our objective for the next three-year period is to cut expenditure by RUB 24-25 billion annually,” said V. Yakunin.
Projects Can Be Divided
Experts’ estimates show that the company’s own sources of funding are not enough to solve all the infrastructure problems, which were accumulated over decades. And it is completely unrealistic to carry out such enormous infrastructure projects as the development of the Baikal-Amur Railways or preparation of the transport infrastructure for the FIFA World Cup in 2018 at RZD’s own expense.
In accordance with a commitment by Vladimir Putin, the RF President, last year RZD developed a long-term investment programme and a financial plan till 2020. Estimates show that the shortage of its own funds in this period will amount to RUB 2.1 trillion. Of that, RUB 1.1 trillion will be the deficit of funds for the complex development of railway infrastructure.
Meanwhile, an insufficient funding of railway infrastructure can cause serious losses to the country’s budget. Experts think that because of the limited increase in railway transportation till 2020, the total losses of the GDP may vary from RUB 5.5 trillion to RUB 6.4 trillion, and the losses of the budget system – between RUB 1.3 trillion and RUB 1.5 trillion.
RZD estimated the economic efficiency of complex projects of railway development and offered sources to fund them. Based on capital return and commercial efficiency, investment projects were divided in three categories. The first included projects with a payback period of less than 15 years. RZD is ready to fund them at its own expenses and loans within reasonable debt burden.
The second category includes projects with a 15-20 year payback period. RZD cannot fund these projects using loans, because there is no money to be borrowed for this period in the market. A solution is special state-guaranteed bonds (so called “infrastructure bonds”), which will be purchased by the RF Pension Fund for a 30-year period with maximum coupon equal to the inflation +1%.
Investment projects that refer to the third category are commercially unprofitable for RZD, consequently, using any type of borrowing would be unreasonable. The company think that such projects (they are of national importance and, as a rule, rather large) should be funded from the state budget, because the investment will be paid back to the state due to multiplicative effect. In this case, possible funding schemes are an implementation of an investment component in the tariff on cargo transportation, direct investments made by the state of state funds in the form of a contribution to the capital stock of RZD; an increase in the public funding of railway projects within the framework of federal target programmes.
In other words, the state support is essential for railways in this situation. RZD has submitted its offers to the RF Government.
By Evgeniya Egorova
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Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
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[DETAIL_TEXT] => RZD’s Losses from Commuter Transportation Will Reach RUB 18.5 Billion in 2013
Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
In the words of Mr Yakunin, the draft budgets of Russian regions envisage RUB 7.4 billion of subsidies to compensate for the lost revenue because of state regulation of tariffs. It is just half of the sum needed.
“The lack of 100% compensation for the reduced revenue destabilises the work of commuter passenger companies and can make their activity irregular in some regions and even in the whole country,” said Vladimir Yakunin.
Belarus to Invest $1 Billion into Logistics by 2015
Over $1 billion in investments will be raised by 2015 to improve the logistics sector in Belarus.
In line with the logistics development program set to run until 2015, Belarus is implementing 48 investment projects for which over $380 million in investment was raised. The total amount of investments to be raised into the sector is expected to exceed $1 billion by 2015. The total area of A class storage facilities that are to be constructed by 2015 is more than 700,000 square meters.
Belarus is now working to enhance the competitiveness of its infrastructure and to create additional conditions for the efficient operation of logistics centers compared to logistics centers of the neighboring countries that have many years of relevant experience.
Pilot Sale of 5% Stake in RZD to State Funds Can Take Place in 2013-2014
The pilot sale of a 5% shareholding in RZD to state funds can take place in 2013-2014, according to the company’s presentation for investors, prepared for bond placement.
It is planned that RZD will place new shares, therefore, the money it will get will be invested in infrastructure projects.
Recently officials said that a 5% stake in RZD would be sold in 2013. Then, that it should happen not earlier than in 2015-2016. “Another 20% must be sold during an IPO,” runs the presentation. This plan has been adjusted with the Vice Prime Minister and the Ministry of Economic Development, according to RZD’s presentation.
Preparation of Railway Infrastructure for the 2018 FIFA World Cup Is Estimated at RUB 400 Billion
According to the preliminary information of the RF Transport Ministry, approximately RUB 400 billion ($13.25 billion) is needed to prepare the transport infrastructure (except high-speed railways construction) for the 2018 FIFA World Cup. This is written in the “Outlook for the Long-Term Social and Economic Development of the Russian Federation till 2030,” prepared by the RF Ministry of Economic Development.
In accordance with the strategy of railway transport development in Russia till 2030, there can be two variants – minimum and maximum. Investments are to be RUB 5.1 trillion till 2015, and in 2016-2030 RUB 6.3 trillion according to the minimum variant and RUB 8.6 trillion according to the maximum one in prices of 2007.
Because of the crisis in 2009, this level of finance can hardly be reached. If conditions are favourable, the amount of finance from all sources can be RUB 750 billion till 2015. If the economy develops according to the conservative scenario, investments in the railway sector will be approximately RUB 430 billion.
In favourable conditions, the volume of new railways construction will increase significantly: 20,000 km of new rail lines will be constructed in 2013 – 2030, fast and high-speed passenger traffic will be launched on the most important routes of RZD’s network (about 3,600 km of high-speed lines are supposed to be built by 2030). According to the strategy, the share of public rail lines with limited carrying capacity is to fall from 8.9% in 2011 to 0% in 2030.
RZD’s Total Investment in Severomuisky Tunnel on the BAM Will Exceed RUB 776 Million till 2017
Russian Railways’ total investment in the development of the Severomuisky Tunnel on the Baikal-Amur Railway will be RUB 776.4 million (approximately $25.88 million) till 2017.
In 2012-2017, it is planned to reconstruct the drainage arrangement, modernise the track structure, ventilation and air heating systems, and to upgrade the fire detection system. Also, a system for automated monitoring of truck and tunnel geodynamic safety will be installed. Severomuisky Tunnel is the longest railway tunnel in Russia (15,343 metres). It is situated on the Baikal-Amur Railway. It was opened on December 5, 2003.
[~DETAIL_TEXT] => RZD’s Losses from Commuter Transportation Will Reach RUB 18.5 Billion in 2013
Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
In the words of Mr Yakunin, the draft budgets of Russian regions envisage RUB 7.4 billion of subsidies to compensate for the lost revenue because of state regulation of tariffs. It is just half of the sum needed.
“The lack of 100% compensation for the reduced revenue destabilises the work of commuter passenger companies and can make their activity irregular in some regions and even in the whole country,” said Vladimir Yakunin.
Belarus to Invest $1 Billion into Logistics by 2015
Over $1 billion in investments will be raised by 2015 to improve the logistics sector in Belarus.
In line with the logistics development program set to run until 2015, Belarus is implementing 48 investment projects for which over $380 million in investment was raised. The total amount of investments to be raised into the sector is expected to exceed $1 billion by 2015. The total area of A class storage facilities that are to be constructed by 2015 is more than 700,000 square meters.
Belarus is now working to enhance the competitiveness of its infrastructure and to create additional conditions for the efficient operation of logistics centers compared to logistics centers of the neighboring countries that have many years of relevant experience.
Pilot Sale of 5% Stake in RZD to State Funds Can Take Place in 2013-2014
The pilot sale of a 5% shareholding in RZD to state funds can take place in 2013-2014, according to the company’s presentation for investors, prepared for bond placement.
It is planned that RZD will place new shares, therefore, the money it will get will be invested in infrastructure projects.
Recently officials said that a 5% stake in RZD would be sold in 2013. Then, that it should happen not earlier than in 2015-2016. “Another 20% must be sold during an IPO,” runs the presentation. This plan has been adjusted with the Vice Prime Minister and the Ministry of Economic Development, according to RZD’s presentation.
Preparation of Railway Infrastructure for the 2018 FIFA World Cup Is Estimated at RUB 400 Billion
According to the preliminary information of the RF Transport Ministry, approximately RUB 400 billion ($13.25 billion) is needed to prepare the transport infrastructure (except high-speed railways construction) for the 2018 FIFA World Cup. This is written in the “Outlook for the Long-Term Social and Economic Development of the Russian Federation till 2030,” prepared by the RF Ministry of Economic Development.
In accordance with the strategy of railway transport development in Russia till 2030, there can be two variants – minimum and maximum. Investments are to be RUB 5.1 trillion till 2015, and in 2016-2030 RUB 6.3 trillion according to the minimum variant and RUB 8.6 trillion according to the maximum one in prices of 2007.
Because of the crisis in 2009, this level of finance can hardly be reached. If conditions are favourable, the amount of finance from all sources can be RUB 750 billion till 2015. If the economy develops according to the conservative scenario, investments in the railway sector will be approximately RUB 430 billion.
In favourable conditions, the volume of new railways construction will increase significantly: 20,000 km of new rail lines will be constructed in 2013 – 2030, fast and high-speed passenger traffic will be launched on the most important routes of RZD’s network (about 3,600 km of high-speed lines are supposed to be built by 2030). According to the strategy, the share of public rail lines with limited carrying capacity is to fall from 8.9% in 2011 to 0% in 2030.
RZD’s Total Investment in Severomuisky Tunnel on the BAM Will Exceed RUB 776 Million till 2017
Russian Railways’ total investment in the development of the Severomuisky Tunnel on the Baikal-Amur Railway will be RUB 776.4 million (approximately $25.88 million) till 2017.
In 2012-2017, it is planned to reconstruct the drainage arrangement, modernise the track structure, ventilation and air heating systems, and to upgrade the fire detection system. Also, a system for automated monitoring of truck and tunnel geodynamic safety will be installed. Severomuisky Tunnel is the longest railway tunnel in Russia (15,343 metres). It is situated on the Baikal-Amur Railway. It was opened on December 5, 2003.
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[PREVIEW_TEXT] => Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
[~PREVIEW_TEXT] => Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
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[SECTION_META_DESCRIPTION] => <p>Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.<br />
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.</p>
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[ELEMENT_META_DESCRIPTION] => <p>Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.<br />
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.</p>
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[DETAIL_TEXT] => RZD’s Losses from Commuter Transportation Will Reach RUB 18.5 Billion in 2013
Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
In the words of Mr Yakunin, the draft budgets of Russian regions envisage RUB 7.4 billion of subsidies to compensate for the lost revenue because of state regulation of tariffs. It is just half of the sum needed.
“The lack of 100% compensation for the reduced revenue destabilises the work of commuter passenger companies and can make their activity irregular in some regions and even in the whole country,” said Vladimir Yakunin.
Belarus to Invest $1 Billion into Logistics by 2015
Over $1 billion in investments will be raised by 2015 to improve the logistics sector in Belarus.
In line with the logistics development program set to run until 2015, Belarus is implementing 48 investment projects for which over $380 million in investment was raised. The total amount of investments to be raised into the sector is expected to exceed $1 billion by 2015. The total area of A class storage facilities that are to be constructed by 2015 is more than 700,000 square meters.
Belarus is now working to enhance the competitiveness of its infrastructure and to create additional conditions for the efficient operation of logistics centers compared to logistics centers of the neighboring countries that have many years of relevant experience.
Pilot Sale of 5% Stake in RZD to State Funds Can Take Place in 2013-2014
The pilot sale of a 5% shareholding in RZD to state funds can take place in 2013-2014, according to the company’s presentation for investors, prepared for bond placement.
It is planned that RZD will place new shares, therefore, the money it will get will be invested in infrastructure projects.
Recently officials said that a 5% stake in RZD would be sold in 2013. Then, that it should happen not earlier than in 2015-2016. “Another 20% must be sold during an IPO,” runs the presentation. This plan has been adjusted with the Vice Prime Minister and the Ministry of Economic Development, according to RZD’s presentation.
Preparation of Railway Infrastructure for the 2018 FIFA World Cup Is Estimated at RUB 400 Billion
According to the preliminary information of the RF Transport Ministry, approximately RUB 400 billion ($13.25 billion) is needed to prepare the transport infrastructure (except high-speed railways construction) for the 2018 FIFA World Cup. This is written in the “Outlook for the Long-Term Social and Economic Development of the Russian Federation till 2030,” prepared by the RF Ministry of Economic Development.
In accordance with the strategy of railway transport development in Russia till 2030, there can be two variants – minimum and maximum. Investments are to be RUB 5.1 trillion till 2015, and in 2016-2030 RUB 6.3 trillion according to the minimum variant and RUB 8.6 trillion according to the maximum one in prices of 2007.
Because of the crisis in 2009, this level of finance can hardly be reached. If conditions are favourable, the amount of finance from all sources can be RUB 750 billion till 2015. If the economy develops according to the conservative scenario, investments in the railway sector will be approximately RUB 430 billion.
In favourable conditions, the volume of new railways construction will increase significantly: 20,000 km of new rail lines will be constructed in 2013 – 2030, fast and high-speed passenger traffic will be launched on the most important routes of RZD’s network (about 3,600 km of high-speed lines are supposed to be built by 2030). According to the strategy, the share of public rail lines with limited carrying capacity is to fall from 8.9% in 2011 to 0% in 2030.
RZD’s Total Investment in Severomuisky Tunnel on the BAM Will Exceed RUB 776 Million till 2017
Russian Railways’ total investment in the development of the Severomuisky Tunnel on the Baikal-Amur Railway will be RUB 776.4 million (approximately $25.88 million) till 2017.
In 2012-2017, it is planned to reconstruct the drainage arrangement, modernise the track structure, ventilation and air heating systems, and to upgrade the fire detection system. Also, a system for automated monitoring of truck and tunnel geodynamic safety will be installed. Severomuisky Tunnel is the longest railway tunnel in Russia (15,343 metres). It is situated on the Baikal-Amur Railway. It was opened on December 5, 2003.
[~DETAIL_TEXT] => RZD’s Losses from Commuter Transportation Will Reach RUB 18.5 Billion in 2013
Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
In the words of Mr Yakunin, the draft budgets of Russian regions envisage RUB 7.4 billion of subsidies to compensate for the lost revenue because of state regulation of tariffs. It is just half of the sum needed.
“The lack of 100% compensation for the reduced revenue destabilises the work of commuter passenger companies and can make their activity irregular in some regions and even in the whole country,” said Vladimir Yakunin.
Belarus to Invest $1 Billion into Logistics by 2015
Over $1 billion in investments will be raised by 2015 to improve the logistics sector in Belarus.
In line with the logistics development program set to run until 2015, Belarus is implementing 48 investment projects for which over $380 million in investment was raised. The total amount of investments to be raised into the sector is expected to exceed $1 billion by 2015. The total area of A class storage facilities that are to be constructed by 2015 is more than 700,000 square meters.
Belarus is now working to enhance the competitiveness of its infrastructure and to create additional conditions for the efficient operation of logistics centers compared to logistics centers of the neighboring countries that have many years of relevant experience.
Pilot Sale of 5% Stake in RZD to State Funds Can Take Place in 2013-2014
The pilot sale of a 5% shareholding in RZD to state funds can take place in 2013-2014, according to the company’s presentation for investors, prepared for bond placement.
It is planned that RZD will place new shares, therefore, the money it will get will be invested in infrastructure projects.
Recently officials said that a 5% stake in RZD would be sold in 2013. Then, that it should happen not earlier than in 2015-2016. “Another 20% must be sold during an IPO,” runs the presentation. This plan has been adjusted with the Vice Prime Minister and the Ministry of Economic Development, according to RZD’s presentation.
Preparation of Railway Infrastructure for the 2018 FIFA World Cup Is Estimated at RUB 400 Billion
According to the preliminary information of the RF Transport Ministry, approximately RUB 400 billion ($13.25 billion) is needed to prepare the transport infrastructure (except high-speed railways construction) for the 2018 FIFA World Cup. This is written in the “Outlook for the Long-Term Social and Economic Development of the Russian Federation till 2030,” prepared by the RF Ministry of Economic Development.
In accordance with the strategy of railway transport development in Russia till 2030, there can be two variants – minimum and maximum. Investments are to be RUB 5.1 trillion till 2015, and in 2016-2030 RUB 6.3 trillion according to the minimum variant and RUB 8.6 trillion according to the maximum one in prices of 2007.
Because of the crisis in 2009, this level of finance can hardly be reached. If conditions are favourable, the amount of finance from all sources can be RUB 750 billion till 2015. If the economy develops according to the conservative scenario, investments in the railway sector will be approximately RUB 430 billion.
In favourable conditions, the volume of new railways construction will increase significantly: 20,000 km of new rail lines will be constructed in 2013 – 2030, fast and high-speed passenger traffic will be launched on the most important routes of RZD’s network (about 3,600 km of high-speed lines are supposed to be built by 2030). According to the strategy, the share of public rail lines with limited carrying capacity is to fall from 8.9% in 2011 to 0% in 2030.
RZD’s Total Investment in Severomuisky Tunnel on the BAM Will Exceed RUB 776 Million till 2017
Russian Railways’ total investment in the development of the Severomuisky Tunnel on the Baikal-Amur Railway will be RUB 776.4 million (approximately $25.88 million) till 2017.
In 2012-2017, it is planned to reconstruct the drainage arrangement, modernise the track structure, ventilation and air heating systems, and to upgrade the fire detection system. Also, a system for automated monitoring of truck and tunnel geodynamic safety will be installed. Severomuisky Tunnel is the longest railway tunnel in Russia (15,343 metres). It is situated on the Baikal-Amur Railway. It was opened on December 5, 2003.
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Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.
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[SECTION_META_DESCRIPTION] => <p>Russian regional budgets lack RUB 11.1 billion needed for the compensation for the revenue lost due to state regulation of tariffs in 2013, Vladimir Yakunin, President of RZD said.<br />
Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.</p>
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Forecasted total losses from commuter passenger transportation in 2013 will be approximately RUB 18.5 billion.</p>
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The year of 2012 was a breakthrough from the viewpoint of how efficiently RZD participated in international projects. RZD’s integration in the global transport system continues in 2013. It proves that this activity has become a long-term trend for Russian Railways.
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One of the main stimuli to the participation of RZD specialists in the work of international organisations was the decision taken at the 81st session of the general assembly of the International Union of Railways (UIC) in December 2012 to appoint President of Russian Railways Vladimir Yakunin as the Chairman of the UIC for 2013-2014. Today, this organisation unites almost two hundred companies. Its aim is to develop a balanced policy in the railway sector, where there are plenty of transporters competing with each other. It is the first time in the 90-year history of the UIC, when a representative of Russia heads it. In fact, it is the recognition of the holding company’s merits at the international level and an opportunity, in the opinion of Mr Yakunin, to strengthen the position of RZD on the global market of transport services.
Within the framework of the UIC, RZD is going to focus on consolidating the efforts of railways from different countries to carry out projects together, to exchange knowledge and experience, and to form the basis of the common global railway policy.
“Our common objectives, taking the UIC and all of us forward, are a further strengthening of the Union’s gravitas, to enhance its recognition in the global transport and economic community, and the provision of its maximum efficiency for members of the UIC. I’d like to offer you three principles as the most important factors for the development of the organisation, able to help achieve these objectives: Involvement, Integration, and Innovation,” Mr Yakunin said.
Speaking about the global status of the UIC, one should emphasise the importance of strengthening its cooperation with other international organisations, including the UN, for the issues of railway transport regulation, border crossing procedures, and the development of international transport corridors connecting centres of economic activity and contributing to the development of global trade. In the opinion of Mr Yakunin, the UIC can be the coordinator for the development of such corridors.
Transit Potential Grows
The importance of the railway transit potential development and Russia’s obtaining the status of a trade bridge between Europe and Asia was recognised by Vladimir Putin, the RF President at the APEC business summit in early September 2012.
According to experts, just 1% of freight carried between Europe and Asia is transported via Russia, whilst the annual trade turnover between the countries of the two regions amounts to approximately $1 trillion. This figure could grow fivefold by 2020 in favourable conditions, and this can happen due to an increase in the transit transportation via Russia, which could contribute to attracting additional $5 billion to the Russian economy annually.
That’s where RZD’s high-priority objectives originate from. Firstly, it is the enhancement of the commercial attractiveness of transit transportation via Russian railway network. Secondly, it is the convergence and harmonisation of technical standards and regulations of Europe, Asia, and “1520 space” countries to provide through cargo traffic. Thirdly, railway routes should be built-in into present-day logistics schemes and multimodal transport chains more actively. Fourthly, the scientific-technical and innovative cooperation with railway companies from the EU, the CIS, and the APEC is needed. All these contribute to the integration of Russian railways in the global transport system.
As for the priority directions of transit transportation for Russia, these are international transport corridors East – West and North – South. Within the framework of the Strategy of the Railway Transport Development in the Russian Federation till 2030, RZD is carrying out a complex of projects targeted at increasing the attractiveness of transit transportation via the Russian railway network. In particular, the carrying capacity of routes, which are parts of the North – South transport corridor and the East – West direction, are being upgraded and expanded.
A successful completion of the first joint railway project between Russia and Iran influenced the further development of the North – South international transport corridor. On October 13, 2012, traffic on the Tabriz – Azarshahr route started running, the line was electrified by Russian and Iranian specialists. Its length is about 46 km. There are five railway stations on the section. This project may become the starting point for further interaction between Russian and Iranian railways.
In addition to the Tabriz – Azarshahr line, Iran pays special attention to the development of cargo transportation via the North – South international transport corridor. Its competitiveness can increase due to the creation of a direct railway link with Iran via Azerbaijan and the project of construction of the Resht (Iran) – Astara (Iran) – Astara (Azerbaijan) rail line. If the project is carried out, conditions for the attraction of additional amount of imports, exports, and transit freight will be created. Also, it will contribute to a more efficient usage of the geopolitical position of the two countries for trade and economic relations between Europe and Asia. The basis of the East – West transport corridor is the Trans-Siberian Railway, which is regarded as the most important part of the bridge between Europe and Asia, which is an alternative to traditional trans-ocean routes.
The Transsib has become one of the busiest railways in the world. The total amount of international transportation of large containers via the Transsib grew to 563,000 TEU in 2010-2011 (+27% as compared with 2009). In 2012, RZD also provided an increase in the cargo transportation volume. In future, on average more than 100 freight and passenger train pairs will travel on sections of the railway daily. The current speed of trains travelling on the Transsib is approximately 1,200 km per day. In other words, it takes a train eight days to run from one end of the Transsib to the other. By 2015, it will take seven days to transport a container via the Transsib from the eastern to the western border of Russia. And that is not the limit: in November 2011, a container train travelled from the Nakhodka-Vostochnaya station (Russian Far East) to the Shushary station (St Petersburg transport node) 6 days and 16 hours.
Focus on Logistics
A landmark was the completion of the reconstruction of the Hasan – Radjin railway section by RZD in 2012: the new line that connected the Russian Far East with the North Korean port is the first phase of a programme of full modernisation for the Trans-Korean Mainline. The railway route via Russia is three times shorter. Construction of new lines to the ports of North Korea and South Korea creates new opportunities for international trade on the routes between Europe and Asia. Millions tons of freight will be transported in both directions via the Transsib, and it will contribute to the development of the Russian economy.
Multi-modal railway and ferry transportation is developing. The Ust-Luga – Baltiysk – Sassnitz railway-ferry line attracts new types of cargo. In the words of Engels Gagarsky, Deputy Head of the Progressive Transport and Technological Systems and Logistics Department at Soyuzmorniiproekt, transportation volume on the Ust-Luga – Baltiysk line has been increasing by 3-5% per month since the beginning of 2012.
On June 8, 2012, a formal ceremony of opening a regular railway-ferry communication between Ust-Luga and Sassnitz took place. Angela Merkel, the Chancellor of Germany, and Vladimir Yakunin, President of Russian Railways participated in it. Since the opening of the Ust-Luga – Sassnitz line, the “Petersburg” ferry has made 28 international trips.
Before the beginning of work on the line, RZD and BFI (Black Sea Ferry and Invest Ltd.) signed an agreement about use of the ferry on the slot-charter terms. This allowed the setting of through rates on multi-modal (railway-sea) transportation on the route. Igor Lobko, Head of the The Oktaybrskiy Territorial Centre of Corporate Transport Services says that RZD currently provides a full range of services for the organisation of cargo transportation to the final consignee in Europe in the framework of development of transport and logistics services using the Ust-Luga – Sassnitz railway-ferry line. It is an organisation engaged in door-to-door transportation, information support of cargo at all stages of transportation, organisation of cargo handling in the Sassnitz port on the “one window” principle (with one executive agent – RZD). A common element between all participants, contractors, and sub-contractors in the transportation is an affiliate of RZD – the Center of Corporate Transport Services, a subdivision of which is the Oktaybrskiy Territorial Centre of Corporate Transport Services.
The project for railway-ferry traffic on the Ust-Luga – Sassnitz line is synchronised with such new factors as purchasing GEFCO by RZD and the emergence of the United Transport and Logistics Company (OTLK) in the market.
GEFCO is a leading supplier of integrated 4PL/3PL services and it is one of the top ten logistics operators in Europe. This purchase will help RZD maximise the attractiveness of transit cargo flows on the trans-continental route Europe – Asia. The next step will be the development of the sales network of transit trans-continental transport services via the international logistics company.
For RZD, the synergy will be huge, believes Philippe Varin, Chairman of the Managing Board of Peugeot S.A., the idea is to create a transport corridor from Rotterdam to Vladivostok. The deal will help to reduce the cost of transportation via this corridor due to logistics technologies at a global level.
The OTLC extends the ability to offer of sophisticated transport and logistics services with a railway component in the market of the Common Economic Space, created by Russia, Belarus, and Kazakhstan. In the opinion of Semyon Rezer, President of the non-commercial partnership Guild of Freight Forwarders, this contributes to the development of prospective integration projects of RZD there.
Instruments for Foreign Trade Activation
RZD continues to cooperate closely with the governments of Slovakia, Austria, and Ukraine to promote the project of a new Eurasian transport corridor and to expand it to Bratislava and Vienna. According to the general agreement signed in March 2012 by RZD and Railways of Serbia, railway projects are considered as an instrument to promote foreign economic cooperation between Russia and Serbia.
The transfer of shares in Ulan-Bator Railway to RZD contributed to reaching a breakeven point by Mongolian railways. Funds for the additional issue of shares in the company were allocated to develop infrastructure and renew rolling stock.
The development of an adjusted strategy with Kazakh railways contributed to the creation of an alternative variant of a New Silk Road in the global market – via Kazakhstan and Russia, says Serik Akhmetov, Prime Minister of Kazakhstan.
Therefore, globalisation of railway transport and unification of its standards is a long-term trend. Russian Railways are ready to play the a leading role in railway integrating process and formation of a common transport space. ®
By Alexander Solntsev
[~DETAIL_TEXT] => Involvement, Integration, and Innovation
One of the main stimuli to the participation of RZD specialists in the work of international organisations was the decision taken at the 81st session of the general assembly of the International Union of Railways (UIC) in December 2012 to appoint President of Russian Railways Vladimir Yakunin as the Chairman of the UIC for 2013-2014. Today, this organisation unites almost two hundred companies. Its aim is to develop a balanced policy in the railway sector, where there are plenty of transporters competing with each other. It is the first time in the 90-year history of the UIC, when a representative of Russia heads it. In fact, it is the recognition of the holding company’s merits at the international level and an opportunity, in the opinion of Mr Yakunin, to strengthen the position of RZD on the global market of transport services.
Within the framework of the UIC, RZD is going to focus on consolidating the efforts of railways from different countries to carry out projects together, to exchange knowledge and experience, and to form the basis of the common global railway policy.
“Our common objectives, taking the UIC and all of us forward, are a further strengthening of the Union’s gravitas, to enhance its recognition in the global transport and economic community, and the provision of its maximum efficiency for members of the UIC. I’d like to offer you three principles as the most important factors for the development of the organisation, able to help achieve these objectives: Involvement, Integration, and Innovation,” Mr Yakunin said.
Speaking about the global status of the UIC, one should emphasise the importance of strengthening its cooperation with other international organisations, including the UN, for the issues of railway transport regulation, border crossing procedures, and the development of international transport corridors connecting centres of economic activity and contributing to the development of global trade. In the opinion of Mr Yakunin, the UIC can be the coordinator for the development of such corridors.
Transit Potential Grows
The importance of the railway transit potential development and Russia’s obtaining the status of a trade bridge between Europe and Asia was recognised by Vladimir Putin, the RF President at the APEC business summit in early September 2012.
According to experts, just 1% of freight carried between Europe and Asia is transported via Russia, whilst the annual trade turnover between the countries of the two regions amounts to approximately $1 trillion. This figure could grow fivefold by 2020 in favourable conditions, and this can happen due to an increase in the transit transportation via Russia, which could contribute to attracting additional $5 billion to the Russian economy annually.
That’s where RZD’s high-priority objectives originate from. Firstly, it is the enhancement of the commercial attractiveness of transit transportation via Russian railway network. Secondly, it is the convergence and harmonisation of technical standards and regulations of Europe, Asia, and “1520 space” countries to provide through cargo traffic. Thirdly, railway routes should be built-in into present-day logistics schemes and multimodal transport chains more actively. Fourthly, the scientific-technical and innovative cooperation with railway companies from the EU, the CIS, and the APEC is needed. All these contribute to the integration of Russian railways in the global transport system.
As for the priority directions of transit transportation for Russia, these are international transport corridors East – West and North – South. Within the framework of the Strategy of the Railway Transport Development in the Russian Federation till 2030, RZD is carrying out a complex of projects targeted at increasing the attractiveness of transit transportation via the Russian railway network. In particular, the carrying capacity of routes, which are parts of the North – South transport corridor and the East – West direction, are being upgraded and expanded.
A successful completion of the first joint railway project between Russia and Iran influenced the further development of the North – South international transport corridor. On October 13, 2012, traffic on the Tabriz – Azarshahr route started running, the line was electrified by Russian and Iranian specialists. Its length is about 46 km. There are five railway stations on the section. This project may become the starting point for further interaction between Russian and Iranian railways.
In addition to the Tabriz – Azarshahr line, Iran pays special attention to the development of cargo transportation via the North – South international transport corridor. Its competitiveness can increase due to the creation of a direct railway link with Iran via Azerbaijan and the project of construction of the Resht (Iran) – Astara (Iran) – Astara (Azerbaijan) rail line. If the project is carried out, conditions for the attraction of additional amount of imports, exports, and transit freight will be created. Also, it will contribute to a more efficient usage of the geopolitical position of the two countries for trade and economic relations between Europe and Asia. The basis of the East – West transport corridor is the Trans-Siberian Railway, which is regarded as the most important part of the bridge between Europe and Asia, which is an alternative to traditional trans-ocean routes.
The Transsib has become one of the busiest railways in the world. The total amount of international transportation of large containers via the Transsib grew to 563,000 TEU in 2010-2011 (+27% as compared with 2009). In 2012, RZD also provided an increase in the cargo transportation volume. In future, on average more than 100 freight and passenger train pairs will travel on sections of the railway daily. The current speed of trains travelling on the Transsib is approximately 1,200 km per day. In other words, it takes a train eight days to run from one end of the Transsib to the other. By 2015, it will take seven days to transport a container via the Transsib from the eastern to the western border of Russia. And that is not the limit: in November 2011, a container train travelled from the Nakhodka-Vostochnaya station (Russian Far East) to the Shushary station (St Petersburg transport node) 6 days and 16 hours.
Focus on Logistics
A landmark was the completion of the reconstruction of the Hasan – Radjin railway section by RZD in 2012: the new line that connected the Russian Far East with the North Korean port is the first phase of a programme of full modernisation for the Trans-Korean Mainline. The railway route via Russia is three times shorter. Construction of new lines to the ports of North Korea and South Korea creates new opportunities for international trade on the routes between Europe and Asia. Millions tons of freight will be transported in both directions via the Transsib, and it will contribute to the development of the Russian economy.
Multi-modal railway and ferry transportation is developing. The Ust-Luga – Baltiysk – Sassnitz railway-ferry line attracts new types of cargo. In the words of Engels Gagarsky, Deputy Head of the Progressive Transport and Technological Systems and Logistics Department at Soyuzmorniiproekt, transportation volume on the Ust-Luga – Baltiysk line has been increasing by 3-5% per month since the beginning of 2012.
On June 8, 2012, a formal ceremony of opening a regular railway-ferry communication between Ust-Luga and Sassnitz took place. Angela Merkel, the Chancellor of Germany, and Vladimir Yakunin, President of Russian Railways participated in it. Since the opening of the Ust-Luga – Sassnitz line, the “Petersburg” ferry has made 28 international trips.
Before the beginning of work on the line, RZD and BFI (Black Sea Ferry and Invest Ltd.) signed an agreement about use of the ferry on the slot-charter terms. This allowed the setting of through rates on multi-modal (railway-sea) transportation on the route. Igor Lobko, Head of the The Oktaybrskiy Territorial Centre of Corporate Transport Services says that RZD currently provides a full range of services for the organisation of cargo transportation to the final consignee in Europe in the framework of development of transport and logistics services using the Ust-Luga – Sassnitz railway-ferry line. It is an organisation engaged in door-to-door transportation, information support of cargo at all stages of transportation, organisation of cargo handling in the Sassnitz port on the “one window” principle (with one executive agent – RZD). A common element between all participants, contractors, and sub-contractors in the transportation is an affiliate of RZD – the Center of Corporate Transport Services, a subdivision of which is the Oktaybrskiy Territorial Centre of Corporate Transport Services.
The project for railway-ferry traffic on the Ust-Luga – Sassnitz line is synchronised with such new factors as purchasing GEFCO by RZD and the emergence of the United Transport and Logistics Company (OTLK) in the market.
GEFCO is a leading supplier of integrated 4PL/3PL services and it is one of the top ten logistics operators in Europe. This purchase will help RZD maximise the attractiveness of transit cargo flows on the trans-continental route Europe – Asia. The next step will be the development of the sales network of transit trans-continental transport services via the international logistics company.
For RZD, the synergy will be huge, believes Philippe Varin, Chairman of the Managing Board of Peugeot S.A., the idea is to create a transport corridor from Rotterdam to Vladivostok. The deal will help to reduce the cost of transportation via this corridor due to logistics technologies at a global level.
The OTLC extends the ability to offer of sophisticated transport and logistics services with a railway component in the market of the Common Economic Space, created by Russia, Belarus, and Kazakhstan. In the opinion of Semyon Rezer, President of the non-commercial partnership Guild of Freight Forwarders, this contributes to the development of prospective integration projects of RZD there.
Instruments for Foreign Trade Activation
RZD continues to cooperate closely with the governments of Slovakia, Austria, and Ukraine to promote the project of a new Eurasian transport corridor and to expand it to Bratislava and Vienna. According to the general agreement signed in March 2012 by RZD and Railways of Serbia, railway projects are considered as an instrument to promote foreign economic cooperation between Russia and Serbia.
The transfer of shares in Ulan-Bator Railway to RZD contributed to reaching a breakeven point by Mongolian railways. Funds for the additional issue of shares in the company were allocated to develop infrastructure and renew rolling stock.
The development of an adjusted strategy with Kazakh railways contributed to the creation of an alternative variant of a New Silk Road in the global market – via Kazakhstan and Russia, says Serik Akhmetov, Prime Minister of Kazakhstan.
Therefore, globalisation of railway transport and unification of its standards is a long-term trend. Russian Railways are ready to play the a leading role in railway integrating process and formation of a common transport space. ®
By Alexander Solntsev
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[DETAIL_TEXT] => Involvement, Integration, and Innovation
One of the main stimuli to the participation of RZD specialists in the work of international organisations was the decision taken at the 81st session of the general assembly of the International Union of Railways (UIC) in December 2012 to appoint President of Russian Railways Vladimir Yakunin as the Chairman of the UIC for 2013-2014. Today, this organisation unites almost two hundred companies. Its aim is to develop a balanced policy in the railway sector, where there are plenty of transporters competing with each other. It is the first time in the 90-year history of the UIC, when a representative of Russia heads it. In fact, it is the recognition of the holding company’s merits at the international level and an opportunity, in the opinion of Mr Yakunin, to strengthen the position of RZD on the global market of transport services.
Within the framework of the UIC, RZD is going to focus on consolidating the efforts of railways from different countries to carry out projects together, to exchange knowledge and experience, and to form the basis of the common global railway policy.
“Our common objectives, taking the UIC and all of us forward, are a further strengthening of the Union’s gravitas, to enhance its recognition in the global transport and economic community, and the provision of its maximum efficiency for members of the UIC. I’d like to offer you three principles as the most important factors for the development of the organisation, able to help achieve these objectives: Involvement, Integration, and Innovation,” Mr Yakunin said.
Speaking about the global status of the UIC, one should emphasise the importance of strengthening its cooperation with other international organisations, including the UN, for the issues of railway transport regulation, border crossing procedures, and the development of international transport corridors connecting centres of economic activity and contributing to the development of global trade. In the opinion of Mr Yakunin, the UIC can be the coordinator for the development of such corridors.
Transit Potential Grows
The importance of the railway transit potential development and Russia’s obtaining the status of a trade bridge between Europe and Asia was recognised by Vladimir Putin, the RF President at the APEC business summit in early September 2012.
According to experts, just 1% of freight carried between Europe and Asia is transported via Russia, whilst the annual trade turnover between the countries of the two regions amounts to approximately $1 trillion. This figure could grow fivefold by 2020 in favourable conditions, and this can happen due to an increase in the transit transportation via Russia, which could contribute to attracting additional $5 billion to the Russian economy annually.
That’s where RZD’s high-priority objectives originate from. Firstly, it is the enhancement of the commercial attractiveness of transit transportation via Russian railway network. Secondly, it is the convergence and harmonisation of technical standards and regulations of Europe, Asia, and “1520 space” countries to provide through cargo traffic. Thirdly, railway routes should be built-in into present-day logistics schemes and multimodal transport chains more actively. Fourthly, the scientific-technical and innovative cooperation with railway companies from the EU, the CIS, and the APEC is needed. All these contribute to the integration of Russian railways in the global transport system.
As for the priority directions of transit transportation for Russia, these are international transport corridors East – West and North – South. Within the framework of the Strategy of the Railway Transport Development in the Russian Federation till 2030, RZD is carrying out a complex of projects targeted at increasing the attractiveness of transit transportation via the Russian railway network. In particular, the carrying capacity of routes, which are parts of the North – South transport corridor and the East – West direction, are being upgraded and expanded.
A successful completion of the first joint railway project between Russia and Iran influenced the further development of the North – South international transport corridor. On October 13, 2012, traffic on the Tabriz – Azarshahr route started running, the line was electrified by Russian and Iranian specialists. Its length is about 46 km. There are five railway stations on the section. This project may become the starting point for further interaction between Russian and Iranian railways.
In addition to the Tabriz – Azarshahr line, Iran pays special attention to the development of cargo transportation via the North – South international transport corridor. Its competitiveness can increase due to the creation of a direct railway link with Iran via Azerbaijan and the project of construction of the Resht (Iran) – Astara (Iran) – Astara (Azerbaijan) rail line. If the project is carried out, conditions for the attraction of additional amount of imports, exports, and transit freight will be created. Also, it will contribute to a more efficient usage of the geopolitical position of the two countries for trade and economic relations between Europe and Asia. The basis of the East – West transport corridor is the Trans-Siberian Railway, which is regarded as the most important part of the bridge between Europe and Asia, which is an alternative to traditional trans-ocean routes.
The Transsib has become one of the busiest railways in the world. The total amount of international transportation of large containers via the Transsib grew to 563,000 TEU in 2010-2011 (+27% as compared with 2009). In 2012, RZD also provided an increase in the cargo transportation volume. In future, on average more than 100 freight and passenger train pairs will travel on sections of the railway daily. The current speed of trains travelling on the Transsib is approximately 1,200 km per day. In other words, it takes a train eight days to run from one end of the Transsib to the other. By 2015, it will take seven days to transport a container via the Transsib from the eastern to the western border of Russia. And that is not the limit: in November 2011, a container train travelled from the Nakhodka-Vostochnaya station (Russian Far East) to the Shushary station (St Petersburg transport node) 6 days and 16 hours.
Focus on Logistics
A landmark was the completion of the reconstruction of the Hasan – Radjin railway section by RZD in 2012: the new line that connected the Russian Far East with the North Korean port is the first phase of a programme of full modernisation for the Trans-Korean Mainline. The railway route via Russia is three times shorter. Construction of new lines to the ports of North Korea and South Korea creates new opportunities for international trade on the routes between Europe and Asia. Millions tons of freight will be transported in both directions via the Transsib, and it will contribute to the development of the Russian economy.
Multi-modal railway and ferry transportation is developing. The Ust-Luga – Baltiysk – Sassnitz railway-ferry line attracts new types of cargo. In the words of Engels Gagarsky, Deputy Head of the Progressive Transport and Technological Systems and Logistics Department at Soyuzmorniiproekt, transportation volume on the Ust-Luga – Baltiysk line has been increasing by 3-5% per month since the beginning of 2012.
On June 8, 2012, a formal ceremony of opening a regular railway-ferry communication between Ust-Luga and Sassnitz took place. Angela Merkel, the Chancellor of Germany, and Vladimir Yakunin, President of Russian Railways participated in it. Since the opening of the Ust-Luga – Sassnitz line, the “Petersburg” ferry has made 28 international trips.
Before the beginning of work on the line, RZD and BFI (Black Sea Ferry and Invest Ltd.) signed an agreement about use of the ferry on the slot-charter terms. This allowed the setting of through rates on multi-modal (railway-sea) transportation on the route. Igor Lobko, Head of the The Oktaybrskiy Territorial Centre of Corporate Transport Services says that RZD currently provides a full range of services for the organisation of cargo transportation to the final consignee in Europe in the framework of development of transport and logistics services using the Ust-Luga – Sassnitz railway-ferry line. It is an organisation engaged in door-to-door transportation, information support of cargo at all stages of transportation, organisation of cargo handling in the Sassnitz port on the “one window” principle (with one executive agent – RZD). A common element between all participants, contractors, and sub-contractors in the transportation is an affiliate of RZD – the Center of Corporate Transport Services, a subdivision of which is the Oktaybrskiy Territorial Centre of Corporate Transport Services.
The project for railway-ferry traffic on the Ust-Luga – Sassnitz line is synchronised with such new factors as purchasing GEFCO by RZD and the emergence of the United Transport and Logistics Company (OTLK) in the market.
GEFCO is a leading supplier of integrated 4PL/3PL services and it is one of the top ten logistics operators in Europe. This purchase will help RZD maximise the attractiveness of transit cargo flows on the trans-continental route Europe – Asia. The next step will be the development of the sales network of transit trans-continental transport services via the international logistics company.
For RZD, the synergy will be huge, believes Philippe Varin, Chairman of the Managing Board of Peugeot S.A., the idea is to create a transport corridor from Rotterdam to Vladivostok. The deal will help to reduce the cost of transportation via this corridor due to logistics technologies at a global level.
The OTLC extends the ability to offer of sophisticated transport and logistics services with a railway component in the market of the Common Economic Space, created by Russia, Belarus, and Kazakhstan. In the opinion of Semyon Rezer, President of the non-commercial partnership Guild of Freight Forwarders, this contributes to the development of prospective integration projects of RZD there.
Instruments for Foreign Trade Activation
RZD continues to cooperate closely with the governments of Slovakia, Austria, and Ukraine to promote the project of a new Eurasian transport corridor and to expand it to Bratislava and Vienna. According to the general agreement signed in March 2012 by RZD and Railways of Serbia, railway projects are considered as an instrument to promote foreign economic cooperation between Russia and Serbia.
The transfer of shares in Ulan-Bator Railway to RZD contributed to reaching a breakeven point by Mongolian railways. Funds for the additional issue of shares in the company were allocated to develop infrastructure and renew rolling stock.
The development of an adjusted strategy with Kazakh railways contributed to the creation of an alternative variant of a New Silk Road in the global market – via Kazakhstan and Russia, says Serik Akhmetov, Prime Minister of Kazakhstan.
Therefore, globalisation of railway transport and unification of its standards is a long-term trend. Russian Railways are ready to play the a leading role in railway integrating process and formation of a common transport space. ®
By Alexander Solntsev
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One of the main stimuli to the participation of RZD specialists in the work of international organisations was the decision taken at the 81st session of the general assembly of the International Union of Railways (UIC) in December 2012 to appoint President of Russian Railways Vladimir Yakunin as the Chairman of the UIC for 2013-2014. Today, this organisation unites almost two hundred companies. Its aim is to develop a balanced policy in the railway sector, where there are plenty of transporters competing with each other. It is the first time in the 90-year history of the UIC, when a representative of Russia heads it. In fact, it is the recognition of the holding company’s merits at the international level and an opportunity, in the opinion of Mr Yakunin, to strengthen the position of RZD on the global market of transport services.
Within the framework of the UIC, RZD is going to focus on consolidating the efforts of railways from different countries to carry out projects together, to exchange knowledge and experience, and to form the basis of the common global railway policy.
“Our common objectives, taking the UIC and all of us forward, are a further strengthening of the Union’s gravitas, to enhance its recognition in the global transport and economic community, and the provision of its maximum efficiency for members of the UIC. I’d like to offer you three principles as the most important factors for the development of the organisation, able to help achieve these objectives: Involvement, Integration, and Innovation,” Mr Yakunin said.
Speaking about the global status of the UIC, one should emphasise the importance of strengthening its cooperation with other international organisations, including the UN, for the issues of railway transport regulation, border crossing procedures, and the development of international transport corridors connecting centres of economic activity and contributing to the development of global trade. In the opinion of Mr Yakunin, the UIC can be the coordinator for the development of such corridors.
Transit Potential Grows
The importance of the railway transit potential development and Russia’s obtaining the status of a trade bridge between Europe and Asia was recognised by Vladimir Putin, the RF President at the APEC business summit in early September 2012.
According to experts, just 1% of freight carried between Europe and Asia is transported via Russia, whilst the annual trade turnover between the countries of the two regions amounts to approximately $1 trillion. This figure could grow fivefold by 2020 in favourable conditions, and this can happen due to an increase in the transit transportation via Russia, which could contribute to attracting additional $5 billion to the Russian economy annually.
That’s where RZD’s high-priority objectives originate from. Firstly, it is the enhancement of the commercial attractiveness of transit transportation via Russian railway network. Secondly, it is the convergence and harmonisation of technical standards and regulations of Europe, Asia, and “1520 space” countries to provide through cargo traffic. Thirdly, railway routes should be built-in into present-day logistics schemes and multimodal transport chains more actively. Fourthly, the scientific-technical and innovative cooperation with railway companies from the EU, the CIS, and the APEC is needed. All these contribute to the integration of Russian railways in the global transport system.
As for the priority directions of transit transportation for Russia, these are international transport corridors East – West and North – South. Within the framework of the Strategy of the Railway Transport Development in the Russian Federation till 2030, RZD is carrying out a complex of projects targeted at increasing the attractiveness of transit transportation via the Russian railway network. In particular, the carrying capacity of routes, which are parts of the North – South transport corridor and the East – West direction, are being upgraded and expanded.
A successful completion of the first joint railway project between Russia and Iran influenced the further development of the North – South international transport corridor. On October 13, 2012, traffic on the Tabriz – Azarshahr route started running, the line was electrified by Russian and Iranian specialists. Its length is about 46 km. There are five railway stations on the section. This project may become the starting point for further interaction between Russian and Iranian railways.
In addition to the Tabriz – Azarshahr line, Iran pays special attention to the development of cargo transportation via the North – South international transport corridor. Its competitiveness can increase due to the creation of a direct railway link with Iran via Azerbaijan and the project of construction of the Resht (Iran) – Astara (Iran) – Astara (Azerbaijan) rail line. If the project is carried out, conditions for the attraction of additional amount of imports, exports, and transit freight will be created. Also, it will contribute to a more efficient usage of the geopolitical position of the two countries for trade and economic relations between Europe and Asia. The basis of the East – West transport corridor is the Trans-Siberian Railway, which is regarded as the most important part of the bridge between Europe and Asia, which is an alternative to traditional trans-ocean routes.
The Transsib has become one of the busiest railways in the world. The total amount of international transportation of large containers via the Transsib grew to 563,000 TEU in 2010-2011 (+27% as compared with 2009). In 2012, RZD also provided an increase in the cargo transportation volume. In future, on average more than 100 freight and passenger train pairs will travel on sections of the railway daily. The current speed of trains travelling on the Transsib is approximately 1,200 km per day. In other words, it takes a train eight days to run from one end of the Transsib to the other. By 2015, it will take seven days to transport a container via the Transsib from the eastern to the western border of Russia. And that is not the limit: in November 2011, a container train travelled from the Nakhodka-Vostochnaya station (Russian Far East) to the Shushary station (St Petersburg transport node) 6 days and 16 hours.
Focus on Logistics
A landmark was the completion of the reconstruction of the Hasan – Radjin railway section by RZD in 2012: the new line that connected the Russian Far East with the North Korean port is the first phase of a programme of full modernisation for the Trans-Korean Mainline. The railway route via Russia is three times shorter. Construction of new lines to the ports of North Korea and South Korea creates new opportunities for international trade on the routes between Europe and Asia. Millions tons of freight will be transported in both directions via the Transsib, and it will contribute to the development of the Russian economy.
Multi-modal railway and ferry transportation is developing. The Ust-Luga – Baltiysk – Sassnitz railway-ferry line attracts new types of cargo. In the words of Engels Gagarsky, Deputy Head of the Progressive Transport and Technological Systems and Logistics Department at Soyuzmorniiproekt, transportation volume on the Ust-Luga – Baltiysk line has been increasing by 3-5% per month since the beginning of 2012.
On June 8, 2012, a formal ceremony of opening a regular railway-ferry communication between Ust-Luga and Sassnitz took place. Angela Merkel, the Chancellor of Germany, and Vladimir Yakunin, President of Russian Railways participated in it. Since the opening of the Ust-Luga – Sassnitz line, the “Petersburg” ferry has made 28 international trips.
Before the beginning of work on the line, RZD and BFI (Black Sea Ferry and Invest Ltd.) signed an agreement about use of the ferry on the slot-charter terms. This allowed the setting of through rates on multi-modal (railway-sea) transportation on the route. Igor Lobko, Head of the The Oktaybrskiy Territorial Centre of Corporate Transport Services says that RZD currently provides a full range of services for the organisation of cargo transportation to the final consignee in Europe in the framework of development of transport and logistics services using the Ust-Luga – Sassnitz railway-ferry line. It is an organisation engaged in door-to-door transportation, information support of cargo at all stages of transportation, organisation of cargo handling in the Sassnitz port on the “one window” principle (with one executive agent – RZD). A common element between all participants, contractors, and sub-contractors in the transportation is an affiliate of RZD – the Center of Corporate Transport Services, a subdivision of which is the Oktaybrskiy Territorial Centre of Corporate Transport Services.
The project for railway-ferry traffic on the Ust-Luga – Sassnitz line is synchronised with such new factors as purchasing GEFCO by RZD and the emergence of the United Transport and Logistics Company (OTLK) in the market.
GEFCO is a leading supplier of integrated 4PL/3PL services and it is one of the top ten logistics operators in Europe. This purchase will help RZD maximise the attractiveness of transit cargo flows on the trans-continental route Europe – Asia. The next step will be the development of the sales network of transit trans-continental transport services via the international logistics company.
For RZD, the synergy will be huge, believes Philippe Varin, Chairman of the Managing Board of Peugeot S.A., the idea is to create a transport corridor from Rotterdam to Vladivostok. The deal will help to reduce the cost of transportation via this corridor due to logistics technologies at a global level.
The OTLC extends the ability to offer of sophisticated transport and logistics services with a railway component in the market of the Common Economic Space, created by Russia, Belarus, and Kazakhstan. In the opinion of Semyon Rezer, President of the non-commercial partnership Guild of Freight Forwarders, this contributes to the development of prospective integration projects of RZD there.
Instruments for Foreign Trade Activation
RZD continues to cooperate closely with the governments of Slovakia, Austria, and Ukraine to promote the project of a new Eurasian transport corridor and to expand it to Bratislava and Vienna. According to the general agreement signed in March 2012 by RZD and Railways of Serbia, railway projects are considered as an instrument to promote foreign economic cooperation between Russia and Serbia.
The transfer of shares in Ulan-Bator Railway to RZD contributed to reaching a breakeven point by Mongolian railways. Funds for the additional issue of shares in the company were allocated to develop infrastructure and renew rolling stock.
The development of an adjusted strategy with Kazakh railways contributed to the creation of an alternative variant of a New Silk Road in the global market – via Kazakhstan and Russia, says Serik Akhmetov, Prime Minister of Kazakhstan.
Therefore, globalisation of railway transport and unification of its standards is a long-term trend. Russian Railways are ready to play the a leading role in railway integrating process and formation of a common transport space. ®
By Alexander Solntsev
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The project of federal law “About the Transit Transportation of Cargo on the Territory of Russian Federation” was submitted to the Russian State Duma. Its purpose is to reduce to a common denominator all the special features of legislation, among them numerous agreements, contracts and conventions, which touches on Russian and international legal fields.
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[DETAIL_TEXT] => Revision of Lessons Learnt
In 2011 an attempt to pass a law on transit failed. The governmental structures didn’t manage to take the development of this strategically important document to its logical conclusion. The process stalled because of bureaucratic red-tape.
Last October it was once again told about that Russia doesn’t use its transit potential. The issue was raised during the meeting of experts and leading players of transport market with the Russia’s President Vladimir Putin.
The result of the meeting of the Head of state and transport branch workers was the order to the Head of the Ministry of Transport Maxim Sokolov to issue the document, which lays the foundations of a common policy aimed at increasing transit cargo.
It is a major task – to reduce to a common denominator all the special features of legislation, among them numerous agreements, contracts and conventions concerning both Russian and international legal fields.
However the Ministry of Transport moved quickly, and in December 2012 issued draft bill “About the Transit Transportation of Cargo on the Territory of Russian Federation”. In return the Ministry of Economic Development announced the start of public consultations with the goal of estimating the effect of normative legislative act.
The Department of Regulatory Impact Assessment of the Ministry of Economic Development told “The RZD-Partner International” that a number of public organizations assisted in teamwork.
The experts of the Chamber of Commerce and Industry (RF CCI), All Russia public organisations – Russian Union of Industrialists and Entrepreneurs (RSPP), Business Russia, Non-Commercial Partnership of Railway Rolling Stock Operators and other specialised organizations and departments voiced their opinions.
But as it turned out, the quality of the bill was inversely proportional to the time it took to develop it. There were a lot of comments about the document. Trying to regulate transit standards and to mark the parameters of governmental regulation, the authors focused on the regulation too much.
Too Many Remarks
Initially the bill’s creators marked the requirement to define the coordinating body, which will be responsible for the transit transportations’ development. The experts doubted this point. They think the appearance of such resource can adversely affect the market situation. Transport market players have already quite often voiced their dissatisfaction with the lack of congruence between state governmental bodies as with numerous contradictions in legislation as well. The whole issue has created and is still creating unfavourable conditions for the future. According to the experts, the appearance of one more market regulator threatens an increase of administrative pressure. In particular the representatives of RSPP and RF CCI expressed fear that the bill will have the effect of toughening up requirements to the participants of foreign economic activities and forwarders. For its part the experts of the Non-Commercial Partnership of Railway Rolling Stock Operators mentioned that the document makes complex provisions for the official registration of transit corridors. Here is one of the innovations from the Ministry of Transport: it expects that a special list of transport transit corridors will be created.
According to the chairwoman of the Non-Commercial Partnership of Railway Rolling Stock Operators Olga Lukyanova, the project let the bodies of state control and inspectorate to screen the vehicles and (or) containers. And this will delay delivery time.
Russian Railways gave a negative feedback on the last bill version. According to RZD: along with numerous complaints about legal and technical nature, the role of the bill is still unclear in the regulation of railway cargo transportation. According to many market participants, on the one hand is that Russia bears a strong resemblance to “miracle field”, where the transit cargo can get stuck at any time. On the other hand there are serious concerns about running the transit transportation by means of orders and decrees.
Intrigue Remains
Not to run to extremes – the most complicated goal, especially when the solution is at the junction of a multitude of interests. The draft bill, which was sent for consideration to the Russian Federation Government, was not an issue: apparently only a few are acquainted with it.
According to Valery Kulikov, Head of the North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector, a step of no small importance is to exactly define the transit transport corridors as the base directions for transit transportation, making of legal and technological routines for such kind of transportations.
“One cannot deny the high importance of developing a customs-tariff policy aimed at boosting the growth of transit potential in our country. That is actually one of the most important goals of the bill,” advises the specialist.
According to him, due to passage of this bill there will appear the relevant governmental control in the transit cargo transport branch, also the possibility to regulate the cooperation between transport organisations, forwarders and their customers.
If the final decision about the necessity of governmental regulation of transit forwarding is approved, the bill will have to be adjusted with the members of the Customs Union.
By Tatyana Denisenko
viewpoint
Semyon Rezer,
President of the Guild of Freight Forwarders:
– Every bill is only the beginning of the work. The main thing is that there is a real attempt to resolve issues, which appear on the transit cargoes’ way. And most problems arise at customs, so the law could help to speed up the passing of cargo at customs by using the different mechanisms: technical, technological and of course legislative.
You need to keep in mind the difference between the Russian and international legislation, but this stage is a matter for the future.
This law question is also solved in the State Duma. There is a working group, which is busy with realization of President’s message concerning the transit. It is managed by the Vice Speaker Alexander Zhukov. The Guild of Freight Forwarders collaborates actively in development of draft bill, interacts with the parliament, and a relevant plan is already created. I dare say the more different points of view in this case are, the better the result will be.
Valery Kulikov,
Head of North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector
– For the time being the legal system in the field of transit transportation is based on the legislative regulation of different sectors – as transport as customs, forwarding, environmental control as well. This causes the regulation of certain aspects of the delivery process.
At the same time the existing legislative framework does not meet the modern requirements for transport business functioning. For example the receipt of transit cargo and its release cannot be carried out according to the rules, which were established by the Russian Federation legislation.
Olga Melnikova,
General Director of RusSotra LLC:
– The customer agrees to transport his goods via our territory, and at the first optional halt the cargo gets stuck. There are a lot of reasons for it – I won’t voice them, it would be a long list.
Every federal department thinks that it can actively meddle in the delivery process due to the existing bills.
Needless to say that many regulations are in conflict with the acts in other departments. Moreover there is no understanding, what the transit is, and that the country does need it.
[~DETAIL_TEXT] => Revision of Lessons Learnt
In 2011 an attempt to pass a law on transit failed. The governmental structures didn’t manage to take the development of this strategically important document to its logical conclusion. The process stalled because of bureaucratic red-tape.
Last October it was once again told about that Russia doesn’t use its transit potential. The issue was raised during the meeting of experts and leading players of transport market with the Russia’s President Vladimir Putin.
The result of the meeting of the Head of state and transport branch workers was the order to the Head of the Ministry of Transport Maxim Sokolov to issue the document, which lays the foundations of a common policy aimed at increasing transit cargo.
It is a major task – to reduce to a common denominator all the special features of legislation, among them numerous agreements, contracts and conventions concerning both Russian and international legal fields.
However the Ministry of Transport moved quickly, and in December 2012 issued draft bill “About the Transit Transportation of Cargo on the Territory of Russian Federation”. In return the Ministry of Economic Development announced the start of public consultations with the goal of estimating the effect of normative legislative act.
The Department of Regulatory Impact Assessment of the Ministry of Economic Development told “The RZD-Partner International” that a number of public organizations assisted in teamwork.
The experts of the Chamber of Commerce and Industry (RF CCI), All Russia public organisations – Russian Union of Industrialists and Entrepreneurs (RSPP), Business Russia, Non-Commercial Partnership of Railway Rolling Stock Operators and other specialised organizations and departments voiced their opinions.
But as it turned out, the quality of the bill was inversely proportional to the time it took to develop it. There were a lot of comments about the document. Trying to regulate transit standards and to mark the parameters of governmental regulation, the authors focused on the regulation too much.
Too Many Remarks
Initially the bill’s creators marked the requirement to define the coordinating body, which will be responsible for the transit transportations’ development. The experts doubted this point. They think the appearance of such resource can adversely affect the market situation. Transport market players have already quite often voiced their dissatisfaction with the lack of congruence between state governmental bodies as with numerous contradictions in legislation as well. The whole issue has created and is still creating unfavourable conditions for the future. According to the experts, the appearance of one more market regulator threatens an increase of administrative pressure. In particular the representatives of RSPP and RF CCI expressed fear that the bill will have the effect of toughening up requirements to the participants of foreign economic activities and forwarders. For its part the experts of the Non-Commercial Partnership of Railway Rolling Stock Operators mentioned that the document makes complex provisions for the official registration of transit corridors. Here is one of the innovations from the Ministry of Transport: it expects that a special list of transport transit corridors will be created.
According to the chairwoman of the Non-Commercial Partnership of Railway Rolling Stock Operators Olga Lukyanova, the project let the bodies of state control and inspectorate to screen the vehicles and (or) containers. And this will delay delivery time.
Russian Railways gave a negative feedback on the last bill version. According to RZD: along with numerous complaints about legal and technical nature, the role of the bill is still unclear in the regulation of railway cargo transportation. According to many market participants, on the one hand is that Russia bears a strong resemblance to “miracle field”, where the transit cargo can get stuck at any time. On the other hand there are serious concerns about running the transit transportation by means of orders and decrees.
Intrigue Remains
Not to run to extremes – the most complicated goal, especially when the solution is at the junction of a multitude of interests. The draft bill, which was sent for consideration to the Russian Federation Government, was not an issue: apparently only a few are acquainted with it.
According to Valery Kulikov, Head of the North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector, a step of no small importance is to exactly define the transit transport corridors as the base directions for transit transportation, making of legal and technological routines for such kind of transportations.
“One cannot deny the high importance of developing a customs-tariff policy aimed at boosting the growth of transit potential in our country. That is actually one of the most important goals of the bill,” advises the specialist.
According to him, due to passage of this bill there will appear the relevant governmental control in the transit cargo transport branch, also the possibility to regulate the cooperation between transport organisations, forwarders and their customers.
If the final decision about the necessity of governmental regulation of transit forwarding is approved, the bill will have to be adjusted with the members of the Customs Union.
By Tatyana Denisenko
viewpoint
Semyon Rezer,
President of the Guild of Freight Forwarders:
– Every bill is only the beginning of the work. The main thing is that there is a real attempt to resolve issues, which appear on the transit cargoes’ way. And most problems arise at customs, so the law could help to speed up the passing of cargo at customs by using the different mechanisms: technical, technological and of course legislative.
You need to keep in mind the difference between the Russian and international legislation, but this stage is a matter for the future.
This law question is also solved in the State Duma. There is a working group, which is busy with realization of President’s message concerning the transit. It is managed by the Vice Speaker Alexander Zhukov. The Guild of Freight Forwarders collaborates actively in development of draft bill, interacts with the parliament, and a relevant plan is already created. I dare say the more different points of view in this case are, the better the result will be.
Valery Kulikov,
Head of North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector
– For the time being the legal system in the field of transit transportation is based on the legislative regulation of different sectors – as transport as customs, forwarding, environmental control as well. This causes the regulation of certain aspects of the delivery process.
At the same time the existing legislative framework does not meet the modern requirements for transport business functioning. For example the receipt of transit cargo and its release cannot be carried out according to the rules, which were established by the Russian Federation legislation.
Olga Melnikova,
General Director of RusSotra LLC:
– The customer agrees to transport his goods via our territory, and at the first optional halt the cargo gets stuck. There are a lot of reasons for it – I won’t voice them, it would be a long list.
Every federal department thinks that it can actively meddle in the delivery process due to the existing bills.
Needless to say that many regulations are in conflict with the acts in other departments. Moreover there is no understanding, what the transit is, and that the country does need it.
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[DETAIL_TEXT] => Revision of Lessons Learnt
In 2011 an attempt to pass a law on transit failed. The governmental structures didn’t manage to take the development of this strategically important document to its logical conclusion. The process stalled because of bureaucratic red-tape.
Last October it was once again told about that Russia doesn’t use its transit potential. The issue was raised during the meeting of experts and leading players of transport market with the Russia’s President Vladimir Putin.
The result of the meeting of the Head of state and transport branch workers was the order to the Head of the Ministry of Transport Maxim Sokolov to issue the document, which lays the foundations of a common policy aimed at increasing transit cargo.
It is a major task – to reduce to a common denominator all the special features of legislation, among them numerous agreements, contracts and conventions concerning both Russian and international legal fields.
However the Ministry of Transport moved quickly, and in December 2012 issued draft bill “About the Transit Transportation of Cargo on the Territory of Russian Federation”. In return the Ministry of Economic Development announced the start of public consultations with the goal of estimating the effect of normative legislative act.
The Department of Regulatory Impact Assessment of the Ministry of Economic Development told “The RZD-Partner International” that a number of public organizations assisted in teamwork.
The experts of the Chamber of Commerce and Industry (RF CCI), All Russia public organisations – Russian Union of Industrialists and Entrepreneurs (RSPP), Business Russia, Non-Commercial Partnership of Railway Rolling Stock Operators and other specialised organizations and departments voiced their opinions.
But as it turned out, the quality of the bill was inversely proportional to the time it took to develop it. There were a lot of comments about the document. Trying to regulate transit standards and to mark the parameters of governmental regulation, the authors focused on the regulation too much.
Too Many Remarks
Initially the bill’s creators marked the requirement to define the coordinating body, which will be responsible for the transit transportations’ development. The experts doubted this point. They think the appearance of such resource can adversely affect the market situation. Transport market players have already quite often voiced their dissatisfaction with the lack of congruence between state governmental bodies as with numerous contradictions in legislation as well. The whole issue has created and is still creating unfavourable conditions for the future. According to the experts, the appearance of one more market regulator threatens an increase of administrative pressure. In particular the representatives of RSPP and RF CCI expressed fear that the bill will have the effect of toughening up requirements to the participants of foreign economic activities and forwarders. For its part the experts of the Non-Commercial Partnership of Railway Rolling Stock Operators mentioned that the document makes complex provisions for the official registration of transit corridors. Here is one of the innovations from the Ministry of Transport: it expects that a special list of transport transit corridors will be created.
According to the chairwoman of the Non-Commercial Partnership of Railway Rolling Stock Operators Olga Lukyanova, the project let the bodies of state control and inspectorate to screen the vehicles and (or) containers. And this will delay delivery time.
Russian Railways gave a negative feedback on the last bill version. According to RZD: along with numerous complaints about legal and technical nature, the role of the bill is still unclear in the regulation of railway cargo transportation. According to many market participants, on the one hand is that Russia bears a strong resemblance to “miracle field”, where the transit cargo can get stuck at any time. On the other hand there are serious concerns about running the transit transportation by means of orders and decrees.
Intrigue Remains
Not to run to extremes – the most complicated goal, especially when the solution is at the junction of a multitude of interests. The draft bill, which was sent for consideration to the Russian Federation Government, was not an issue: apparently only a few are acquainted with it.
According to Valery Kulikov, Head of the North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector, a step of no small importance is to exactly define the transit transport corridors as the base directions for transit transportation, making of legal and technological routines for such kind of transportations.
“One cannot deny the high importance of developing a customs-tariff policy aimed at boosting the growth of transit potential in our country. That is actually one of the most important goals of the bill,” advises the specialist.
According to him, due to passage of this bill there will appear the relevant governmental control in the transit cargo transport branch, also the possibility to regulate the cooperation between transport organisations, forwarders and their customers.
If the final decision about the necessity of governmental regulation of transit forwarding is approved, the bill will have to be adjusted with the members of the Customs Union.
By Tatyana Denisenko
viewpoint
Semyon Rezer,
President of the Guild of Freight Forwarders:
– Every bill is only the beginning of the work. The main thing is that there is a real attempt to resolve issues, which appear on the transit cargoes’ way. And most problems arise at customs, so the law could help to speed up the passing of cargo at customs by using the different mechanisms: technical, technological and of course legislative.
You need to keep in mind the difference between the Russian and international legislation, but this stage is a matter for the future.
This law question is also solved in the State Duma. There is a working group, which is busy with realization of President’s message concerning the transit. It is managed by the Vice Speaker Alexander Zhukov. The Guild of Freight Forwarders collaborates actively in development of draft bill, interacts with the parliament, and a relevant plan is already created. I dare say the more different points of view in this case are, the better the result will be.
Valery Kulikov,
Head of North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector
– For the time being the legal system in the field of transit transportation is based on the legislative regulation of different sectors – as transport as customs, forwarding, environmental control as well. This causes the regulation of certain aspects of the delivery process.
At the same time the existing legislative framework does not meet the modern requirements for transport business functioning. For example the receipt of transit cargo and its release cannot be carried out according to the rules, which were established by the Russian Federation legislation.
Olga Melnikova,
General Director of RusSotra LLC:
– The customer agrees to transport his goods via our territory, and at the first optional halt the cargo gets stuck. There are a lot of reasons for it – I won’t voice them, it would be a long list.
Every federal department thinks that it can actively meddle in the delivery process due to the existing bills.
Needless to say that many regulations are in conflict with the acts in other departments. Moreover there is no understanding, what the transit is, and that the country does need it.
[~DETAIL_TEXT] => Revision of Lessons Learnt
In 2011 an attempt to pass a law on transit failed. The governmental structures didn’t manage to take the development of this strategically important document to its logical conclusion. The process stalled because of bureaucratic red-tape.
Last October it was once again told about that Russia doesn’t use its transit potential. The issue was raised during the meeting of experts and leading players of transport market with the Russia’s President Vladimir Putin.
The result of the meeting of the Head of state and transport branch workers was the order to the Head of the Ministry of Transport Maxim Sokolov to issue the document, which lays the foundations of a common policy aimed at increasing transit cargo.
It is a major task – to reduce to a common denominator all the special features of legislation, among them numerous agreements, contracts and conventions concerning both Russian and international legal fields.
However the Ministry of Transport moved quickly, and in December 2012 issued draft bill “About the Transit Transportation of Cargo on the Territory of Russian Federation”. In return the Ministry of Economic Development announced the start of public consultations with the goal of estimating the effect of normative legislative act.
The Department of Regulatory Impact Assessment of the Ministry of Economic Development told “The RZD-Partner International” that a number of public organizations assisted in teamwork.
The experts of the Chamber of Commerce and Industry (RF CCI), All Russia public organisations – Russian Union of Industrialists and Entrepreneurs (RSPP), Business Russia, Non-Commercial Partnership of Railway Rolling Stock Operators and other specialised organizations and departments voiced their opinions.
But as it turned out, the quality of the bill was inversely proportional to the time it took to develop it. There were a lot of comments about the document. Trying to regulate transit standards and to mark the parameters of governmental regulation, the authors focused on the regulation too much.
Too Many Remarks
Initially the bill’s creators marked the requirement to define the coordinating body, which will be responsible for the transit transportations’ development. The experts doubted this point. They think the appearance of such resource can adversely affect the market situation. Transport market players have already quite often voiced their dissatisfaction with the lack of congruence between state governmental bodies as with numerous contradictions in legislation as well. The whole issue has created and is still creating unfavourable conditions for the future. According to the experts, the appearance of one more market regulator threatens an increase of administrative pressure. In particular the representatives of RSPP and RF CCI expressed fear that the bill will have the effect of toughening up requirements to the participants of foreign economic activities and forwarders. For its part the experts of the Non-Commercial Partnership of Railway Rolling Stock Operators mentioned that the document makes complex provisions for the official registration of transit corridors. Here is one of the innovations from the Ministry of Transport: it expects that a special list of transport transit corridors will be created.
According to the chairwoman of the Non-Commercial Partnership of Railway Rolling Stock Operators Olga Lukyanova, the project let the bodies of state control and inspectorate to screen the vehicles and (or) containers. And this will delay delivery time.
Russian Railways gave a negative feedback on the last bill version. According to RZD: along with numerous complaints about legal and technical nature, the role of the bill is still unclear in the regulation of railway cargo transportation. According to many market participants, on the one hand is that Russia bears a strong resemblance to “miracle field”, where the transit cargo can get stuck at any time. On the other hand there are serious concerns about running the transit transportation by means of orders and decrees.
Intrigue Remains
Not to run to extremes – the most complicated goal, especially when the solution is at the junction of a multitude of interests. The draft bill, which was sent for consideration to the Russian Federation Government, was not an issue: apparently only a few are acquainted with it.
According to Valery Kulikov, Head of the North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector, a step of no small importance is to exactly define the transit transport corridors as the base directions for transit transportation, making of legal and technological routines for such kind of transportations.
“One cannot deny the high importance of developing a customs-tariff policy aimed at boosting the growth of transit potential in our country. That is actually one of the most important goals of the bill,” advises the specialist.
According to him, due to passage of this bill there will appear the relevant governmental control in the transit cargo transport branch, also the possibility to regulate the cooperation between transport organisations, forwarders and their customers.
If the final decision about the necessity of governmental regulation of transit forwarding is approved, the bill will have to be adjusted with the members of the Customs Union.
By Tatyana Denisenko
viewpoint
Semyon Rezer,
President of the Guild of Freight Forwarders:
– Every bill is only the beginning of the work. The main thing is that there is a real attempt to resolve issues, which appear on the transit cargoes’ way. And most problems arise at customs, so the law could help to speed up the passing of cargo at customs by using the different mechanisms: technical, technological and of course legislative.
You need to keep in mind the difference between the Russian and international legislation, but this stage is a matter for the future.
This law question is also solved in the State Duma. There is a working group, which is busy with realization of President’s message concerning the transit. It is managed by the Vice Speaker Alexander Zhukov. The Guild of Freight Forwarders collaborates actively in development of draft bill, interacts with the parliament, and a relevant plan is already created. I dare say the more different points of view in this case are, the better the result will be.
Valery Kulikov,
Head of North-Western Department of Directorate of the State Road Supervision, the Federal Service for Supervision in the Transport Sector
– For the time being the legal system in the field of transit transportation is based on the legislative regulation of different sectors – as transport as customs, forwarding, environmental control as well. This causes the regulation of certain aspects of the delivery process.
At the same time the existing legislative framework does not meet the modern requirements for transport business functioning. For example the receipt of transit cargo and its release cannot be carried out according to the rules, which were established by the Russian Federation legislation.
Olga Melnikova,
General Director of RusSotra LLC:
– The customer agrees to transport his goods via our territory, and at the first optional halt the cargo gets stuck. There are a lot of reasons for it – I won’t voice them, it would be a long list.
Every federal department thinks that it can actively meddle in the delivery process due to the existing bills.
Needless to say that many regulations are in conflict with the acts in other departments. Moreover there is no understanding, what the transit is, and that the country does need it.
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After the purchase of an international operator GEFCO, RZD’s expansion into the European market obtains a new quality: the basis for promoting value-added rail services is created.
The new services are targeted at the development of a new logistics system.
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[DETAIL_TEXT] => Trans-Eurasian Transport Corridor
Several global circumstances contributed to RZD’s expansion into the European market. The first was the ambition of international operators to diversify their risks at Eurasian transportation. In the words of Hisako Tsudji, an expert from the Economic Research Institute for Northeast Asia (ERINA), risks are connected with the fact that high oil prices provoke an increase in sea charter rates on lines via the Suez Canal. Thus, it is important to international forwarders to have an alternative to these routes. Thus, the land Eurasian link via the Transsib is one of the most convenient routes.
In addition, the interest of European countries in railway projects is growing, because the EU decided to redirect 30% of goods, which are transported at a distance of over 300 km from road to rail and inland waterway transport by 2030, and 50% by 2050.
Therefore, there is sense in talking about Russia’s more active participation in the development of the so-called Trans-Eurasian zone (corridor), which brings together transport systems in Europe, Russia and Asia (Kazakhstan, China, Japan, Korea). There must develop a comprehensive multi-modal infrastructure in this zone. This means that it must help solve a number of problems - not only transport, but also power, informational, and environmental ones. According to Guy Eames, CEO of Green Building Council, a Russian non-commercial partnership, this approach is derived from the ambition to efficiently use resources, especially the area to be used for infrastructure facilities, energy sources, and tools to protect and restore the environment.
Also, the EU set ambitious objectives in development of European rail corridors. Within the framework of these projects, Russian Railways are going to expand their presence in the transport and logistics market in Europe. One of remarkable events from this viewpoint is RZD’s recent purchase of a 75% stake in the international logistics company GEFCO from Peugeot Citroen group of companies.
Integration of this logistics operator, which has worked for 60 years in the market, in Russian Railways can stimulate the development of integrated transport and logistics services and enhance customer-friendliness, thinks Vladimir Yakunin, President of RZD. This can also give a boost to use the transit potential of Russia more efficiently and contribute to increasing the level of logistics, according to which the Russian Federation is the 95-th in the world ranking.
Specialists at Russian Railways forecast 3PL/4PL logistics service market growth in Russia will be sevenfold in nine years – in other words, from €2 billion in 2012 to €15 billion in 2022. Therefore, it is very important for RZD to take its place in this sector of the market.
Cooperating with RZD, GEFCO plans to strengthen its position in China and India. Thus, GEFCO becomes a link between Europe and Asia. This means that the Russian railway component will be a part of logistics services. The first step in this direction has already been made: GEFCO has already had experience of working with some major railway operators, as well as with RZD-Logistics (a subsidiary of Russian Railways).
European Quality of Service
Earlier RZD was satisfied with the role of a transporter, but now it strives to attract additional cargo flows by providing “door-to-door” services. “Currently, it is impossible to do that without a developed logistics system,” says V. Yakunin.
That’s why RZD thought over different ways of integration with European companies, which are considered as leaders in the logistics sector. The acquisition of such a company as GEFCO is commercially profitable. Experts think that RZD’s additional revenue from this deal will amount to RUB 40 billion by 2017.
For that, RZD will have to diversify a part of GEFCO’s business, which was traditionally organised to service supply chains for Peugeot Citroen. It is not easy to make such changes. And RZD will have to make additional investments in Europe.
According to Sergey Smirnov, Director of the Institute for Social Policy and Social and Economic Programmes, the Higher School of Economics, the results are quite predictable: the acquisition is needed not only for RZD, but for the Russian economy. In this case, the expansion of RZD to the European transport market is justified: in the end it will become a tool for the promotion of Russian goods to Europe. Such a tool can hardly be created without state support. Simultaneously, advanced European logistics technologies will be transferred to Russia. From this viewpoint, GEFCO can be considered as a way of enhancing the land transport corridor between Asia and Europe. Logistics can help improve its performance.
Does Russia Need 4PL-Providers
Meanwhile, RZD has other means for the expansion into Europe. Vadim Morozov, the First Vice President of RZD said that the holding company planned to create a logistics business unit. Its priority objective for 2013 is to find and develop synergies with subsidiaries and affiliates of Russian Railways (first of all, TransContainer, RZD-Logistics, and RailTransAuto). The company will continue to interact with GEFCO to develop the medium-term program for the development of RZD’s logistics business abroad.
Moreover, they are going to analyse the feasibility of providing 4PL logistics services with the help of GEFCO. In other words, joining transport logistics and distribution logistics, as, for example, Deutsche Bahn Holding in Germany does. In the words of Rüdiger Grube, Chairman of the Board of Deutsche Bahn AG, a new quality appears at the junction of two types of logistics - a sort of transport services outsourcing: transportation and related activities turn into a part of marketing strategies of large producers.
RZD can test such technologies through organisation of supplies for the company’s own needs in several directions. Then, it will demonstrate to customers that such services can be efficient to reduce expenditure during distribution.
RZD together with Kazakhstan and Belarusian Railways developed a project to create the United Transport and Logistics Company (OTLK) to provide complex transport and logistics services in the Common Economic Space (area of the integrated union of Russia, Belarus and Kazakhstan).
When OTLK is launched, a powerful new player will appear in the market, if necessary assets and competences are given to it. Therefore, Russian Railways plan to speed up the process of creating multi-modal terminal and logistics centers on the Russian rail network. First of all, it will be done at large transport hubs. The planned scheme is as follows: RZD’s Directorate for Terminal and Warehousing Facilities will provide terminal services in freight yards of railway hubs. Moreover, it is planned to use storage facilities belonging to RZD as well as those of private companies - owners of the terminals, which turn into off-dock rail transport and logistics centers. RZD-Logistics should be a 3PL-service provider. It will transport goods by rail and road, and will be engaged in storing, controlling orders, and accumulating wagonload lots.
The pattern here is the German model: Deutsche Bahn Holding provides similar services through its subsidiary Deutsche Bahn Mobility Logistics. Naturally, situations in the transport market of Russia and Germany differ, but it will change in the future, experts say. Some customers of RZD want to have a comprehensive service already now, for example, in the segment of container transportation with the rail component. Hence the idea to create RZD-Logistics appeared. Its target is to help to provide such services as “just in time” and “door-to-door”.
New Routes to Key Markets
Another instrument for RZD’s expansion to Europe is the development of multi-modal rail-ferry transportation. Ust-Luga – Baltiisk – Sassnitz ferry link is being developed. According to Mr Yakunin, this project is not just a new route, it is a new corridor for multimodal transportation between the Asian and the Pacific Region and Europe through the territory of Russia and the CIS countries.
In addition, in 2012, RZD continued to interact with the governments of Slovakia, Austria and Ukraine to develop the project of creating a new branch of the Eurasian transport corridor to Bratislava and Vienna.
In the near future, a tender for an expanded feasibility study will take place. Its results will allow the participating countries to begin a new phase of the project–design and construction. This can happen in 2014.
Vladimir Yakunin emphasised that the construction of a broad gauge to Vienna is not the ultimate goal for RZD, but a practical step to extend the 10,000-kilometre long railway route to key European markets, because the most important international transport corridors pass via the Bratislava – Vienna region. This project also matches the acquisition of GEFCO and the launch of OTLK.
In March 2012, RZD and Serbian Railways signed General Agreement on the implementation of projects in the railway sector. These projects are developing within the framework of the activation of foreign economic cooperation between Russia and Serbia.
Finally, talking about the expansion of Russian Railways into Europe, we cannot but mention the launch of a container train between China and Europe with a unified consignment note at the end of autumn in 2012. The first such train made a trip from China via Russia to Duisburg (Germany). RZD carried out the project under the auspices of the Organisation for Cooperation between Railways (OSJD) with the participation of the Belarusian Railways (Belarus), Kazakhstan Temir Zholy (Kazakhstan), PKP Cargo (Poland), the Ministry of Railways of China and DB Schenker Rail (Germany). The train carrying 42 FEU travelled on the route, using the CIM / SMGS consignment note. It delivered products made by Acer and ASUS, as well as consumer goods from Chongqing (China). Goods produced by Hewlett Packard were transported in a similar way later. The transportation was arranged by RZD-Logistics and YuXinOu (Chongqing) Logistics Co. Ltd. The CIM/SMGS consignment allows to transport cargo without re-formalising it in the areas where transport legislation changes, which simplifies border crossing procedures and increases the speed of delivery. Prior to the use of the unified consignment note, more than 20 trains travelled on the route using separate invoices.
YuXinOu (Chongqing) Logistics Co. Ltd. is a joint venture of RZD-Logistics in China. Its another joint venture is registered in Latvia (AO EuroRailTrans). In 2012, the network of sales offices of Far East Land Bridge, Ltd. (FELB), engaged in rail transit container transportation between Europe and China, was added to the network of RZD- Logistics.
Therefore, RZD had had experience of promoting their services to Europe before it purchased GEFCO. However, the integration with this largest international operator expands the horizon for the development of such services. ®
By Alexander Solntsev
[~DETAIL_TEXT] => Trans-Eurasian Transport Corridor
Several global circumstances contributed to RZD’s expansion into the European market. The first was the ambition of international operators to diversify their risks at Eurasian transportation. In the words of Hisako Tsudji, an expert from the Economic Research Institute for Northeast Asia (ERINA), risks are connected with the fact that high oil prices provoke an increase in sea charter rates on lines via the Suez Canal. Thus, it is important to international forwarders to have an alternative to these routes. Thus, the land Eurasian link via the Transsib is one of the most convenient routes.
In addition, the interest of European countries in railway projects is growing, because the EU decided to redirect 30% of goods, which are transported at a distance of over 300 km from road to rail and inland waterway transport by 2030, and 50% by 2050.
Therefore, there is sense in talking about Russia’s more active participation in the development of the so-called Trans-Eurasian zone (corridor), which brings together transport systems in Europe, Russia and Asia (Kazakhstan, China, Japan, Korea). There must develop a comprehensive multi-modal infrastructure in this zone. This means that it must help solve a number of problems - not only transport, but also power, informational, and environmental ones. According to Guy Eames, CEO of Green Building Council, a Russian non-commercial partnership, this approach is derived from the ambition to efficiently use resources, especially the area to be used for infrastructure facilities, energy sources, and tools to protect and restore the environment.
Also, the EU set ambitious objectives in development of European rail corridors. Within the framework of these projects, Russian Railways are going to expand their presence in the transport and logistics market in Europe. One of remarkable events from this viewpoint is RZD’s recent purchase of a 75% stake in the international logistics company GEFCO from Peugeot Citroen group of companies.
Integration of this logistics operator, which has worked for 60 years in the market, in Russian Railways can stimulate the development of integrated transport and logistics services and enhance customer-friendliness, thinks Vladimir Yakunin, President of RZD. This can also give a boost to use the transit potential of Russia more efficiently and contribute to increasing the level of logistics, according to which the Russian Federation is the 95-th in the world ranking.
Specialists at Russian Railways forecast 3PL/4PL logistics service market growth in Russia will be sevenfold in nine years – in other words, from €2 billion in 2012 to €15 billion in 2022. Therefore, it is very important for RZD to take its place in this sector of the market.
Cooperating with RZD, GEFCO plans to strengthen its position in China and India. Thus, GEFCO becomes a link between Europe and Asia. This means that the Russian railway component will be a part of logistics services. The first step in this direction has already been made: GEFCO has already had experience of working with some major railway operators, as well as with RZD-Logistics (a subsidiary of Russian Railways).
European Quality of Service
Earlier RZD was satisfied with the role of a transporter, but now it strives to attract additional cargo flows by providing “door-to-door” services. “Currently, it is impossible to do that without a developed logistics system,” says V. Yakunin.
That’s why RZD thought over different ways of integration with European companies, which are considered as leaders in the logistics sector. The acquisition of such a company as GEFCO is commercially profitable. Experts think that RZD’s additional revenue from this deal will amount to RUB 40 billion by 2017.
For that, RZD will have to diversify a part of GEFCO’s business, which was traditionally organised to service supply chains for Peugeot Citroen. It is not easy to make such changes. And RZD will have to make additional investments in Europe.
According to Sergey Smirnov, Director of the Institute for Social Policy and Social and Economic Programmes, the Higher School of Economics, the results are quite predictable: the acquisition is needed not only for RZD, but for the Russian economy. In this case, the expansion of RZD to the European transport market is justified: in the end it will become a tool for the promotion of Russian goods to Europe. Such a tool can hardly be created without state support. Simultaneously, advanced European logistics technologies will be transferred to Russia. From this viewpoint, GEFCO can be considered as a way of enhancing the land transport corridor between Asia and Europe. Logistics can help improve its performance.
Does Russia Need 4PL-Providers
Meanwhile, RZD has other means for the expansion into Europe. Vadim Morozov, the First Vice President of RZD said that the holding company planned to create a logistics business unit. Its priority objective for 2013 is to find and develop synergies with subsidiaries and affiliates of Russian Railways (first of all, TransContainer, RZD-Logistics, and RailTransAuto). The company will continue to interact with GEFCO to develop the medium-term program for the development of RZD’s logistics business abroad.
Moreover, they are going to analyse the feasibility of providing 4PL logistics services with the help of GEFCO. In other words, joining transport logistics and distribution logistics, as, for example, Deutsche Bahn Holding in Germany does. In the words of Rüdiger Grube, Chairman of the Board of Deutsche Bahn AG, a new quality appears at the junction of two types of logistics - a sort of transport services outsourcing: transportation and related activities turn into a part of marketing strategies of large producers.
RZD can test such technologies through organisation of supplies for the company’s own needs in several directions. Then, it will demonstrate to customers that such services can be efficient to reduce expenditure during distribution.
RZD together with Kazakhstan and Belarusian Railways developed a project to create the United Transport and Logistics Company (OTLK) to provide complex transport and logistics services in the Common Economic Space (area of the integrated union of Russia, Belarus and Kazakhstan).
When OTLK is launched, a powerful new player will appear in the market, if necessary assets and competences are given to it. Therefore, Russian Railways plan to speed up the process of creating multi-modal terminal and logistics centers on the Russian rail network. First of all, it will be done at large transport hubs. The planned scheme is as follows: RZD’s Directorate for Terminal and Warehousing Facilities will provide terminal services in freight yards of railway hubs. Moreover, it is planned to use storage facilities belonging to RZD as well as those of private companies - owners of the terminals, which turn into off-dock rail transport and logistics centers. RZD-Logistics should be a 3PL-service provider. It will transport goods by rail and road, and will be engaged in storing, controlling orders, and accumulating wagonload lots.
The pattern here is the German model: Deutsche Bahn Holding provides similar services through its subsidiary Deutsche Bahn Mobility Logistics. Naturally, situations in the transport market of Russia and Germany differ, but it will change in the future, experts say. Some customers of RZD want to have a comprehensive service already now, for example, in the segment of container transportation with the rail component. Hence the idea to create RZD-Logistics appeared. Its target is to help to provide such services as “just in time” and “door-to-door”.
New Routes to Key Markets
Another instrument for RZD’s expansion to Europe is the development of multi-modal rail-ferry transportation. Ust-Luga – Baltiisk – Sassnitz ferry link is being developed. According to Mr Yakunin, this project is not just a new route, it is a new corridor for multimodal transportation between the Asian and the Pacific Region and Europe through the territory of Russia and the CIS countries.
In addition, in 2012, RZD continued to interact with the governments of Slovakia, Austria and Ukraine to develop the project of creating a new branch of the Eurasian transport corridor to Bratislava and Vienna.
In the near future, a tender for an expanded feasibility study will take place. Its results will allow the participating countries to begin a new phase of the project–design and construction. This can happen in 2014.
Vladimir Yakunin emphasised that the construction of a broad gauge to Vienna is not the ultimate goal for RZD, but a practical step to extend the 10,000-kilometre long railway route to key European markets, because the most important international transport corridors pass via the Bratislava – Vienna region. This project also matches the acquisition of GEFCO and the launch of OTLK.
In March 2012, RZD and Serbian Railways signed General Agreement on the implementation of projects in the railway sector. These projects are developing within the framework of the activation of foreign economic cooperation between Russia and Serbia.
Finally, talking about the expansion of Russian Railways into Europe, we cannot but mention the launch of a container train between China and Europe with a unified consignment note at the end of autumn in 2012. The first such train made a trip from China via Russia to Duisburg (Germany). RZD carried out the project under the auspices of the Organisation for Cooperation between Railways (OSJD) with the participation of the Belarusian Railways (Belarus), Kazakhstan Temir Zholy (Kazakhstan), PKP Cargo (Poland), the Ministry of Railways of China and DB Schenker Rail (Germany). The train carrying 42 FEU travelled on the route, using the CIM / SMGS consignment note. It delivered products made by Acer and ASUS, as well as consumer goods from Chongqing (China). Goods produced by Hewlett Packard were transported in a similar way later. The transportation was arranged by RZD-Logistics and YuXinOu (Chongqing) Logistics Co. Ltd. The CIM/SMGS consignment allows to transport cargo without re-formalising it in the areas where transport legislation changes, which simplifies border crossing procedures and increases the speed of delivery. Prior to the use of the unified consignment note, more than 20 trains travelled on the route using separate invoices.
YuXinOu (Chongqing) Logistics Co. Ltd. is a joint venture of RZD-Logistics in China. Its another joint venture is registered in Latvia (AO EuroRailTrans). In 2012, the network of sales offices of Far East Land Bridge, Ltd. (FELB), engaged in rail transit container transportation between Europe and China, was added to the network of RZD- Logistics.
Therefore, RZD had had experience of promoting their services to Europe before it purchased GEFCO. However, the integration with this largest international operator expands the horizon for the development of such services. ®
By Alexander Solntsev
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The new services are targeted at the development of a new logistics system.</p>
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[DETAIL_TEXT] => Trans-Eurasian Transport Corridor
Several global circumstances contributed to RZD’s expansion into the European market. The first was the ambition of international operators to diversify their risks at Eurasian transportation. In the words of Hisako Tsudji, an expert from the Economic Research Institute for Northeast Asia (ERINA), risks are connected with the fact that high oil prices provoke an increase in sea charter rates on lines via the Suez Canal. Thus, it is important to international forwarders to have an alternative to these routes. Thus, the land Eurasian link via the Transsib is one of the most convenient routes.
In addition, the interest of European countries in railway projects is growing, because the EU decided to redirect 30% of goods, which are transported at a distance of over 300 km from road to rail and inland waterway transport by 2030, and 50% by 2050.
Therefore, there is sense in talking about Russia’s more active participation in the development of the so-called Trans-Eurasian zone (corridor), which brings together transport systems in Europe, Russia and Asia (Kazakhstan, China, Japan, Korea). There must develop a comprehensive multi-modal infrastructure in this zone. This means that it must help solve a number of problems - not only transport, but also power, informational, and environmental ones. According to Guy Eames, CEO of Green Building Council, a Russian non-commercial partnership, this approach is derived from the ambition to efficiently use resources, especially the area to be used for infrastructure facilities, energy sources, and tools to protect and restore the environment.
Also, the EU set ambitious objectives in development of European rail corridors. Within the framework of these projects, Russian Railways are going to expand their presence in the transport and logistics market in Europe. One of remarkable events from this viewpoint is RZD’s recent purchase of a 75% stake in the international logistics company GEFCO from Peugeot Citroen group of companies.
Integration of this logistics operator, which has worked for 60 years in the market, in Russian Railways can stimulate the development of integrated transport and logistics services and enhance customer-friendliness, thinks Vladimir Yakunin, President of RZD. This can also give a boost to use the transit potential of Russia more efficiently and contribute to increasing the level of logistics, according to which the Russian Federation is the 95-th in the world ranking.
Specialists at Russian Railways forecast 3PL/4PL logistics service market growth in Russia will be sevenfold in nine years – in other words, from €2 billion in 2012 to €15 billion in 2022. Therefore, it is very important for RZD to take its place in this sector of the market.
Cooperating with RZD, GEFCO plans to strengthen its position in China and India. Thus, GEFCO becomes a link between Europe and Asia. This means that the Russian railway component will be a part of logistics services. The first step in this direction has already been made: GEFCO has already had experience of working with some major railway operators, as well as with RZD-Logistics (a subsidiary of Russian Railways).
European Quality of Service
Earlier RZD was satisfied with the role of a transporter, but now it strives to attract additional cargo flows by providing “door-to-door” services. “Currently, it is impossible to do that without a developed logistics system,” says V. Yakunin.
That’s why RZD thought over different ways of integration with European companies, which are considered as leaders in the logistics sector. The acquisition of such a company as GEFCO is commercially profitable. Experts think that RZD’s additional revenue from this deal will amount to RUB 40 billion by 2017.
For that, RZD will have to diversify a part of GEFCO’s business, which was traditionally organised to service supply chains for Peugeot Citroen. It is not easy to make such changes. And RZD will have to make additional investments in Europe.
According to Sergey Smirnov, Director of the Institute for Social Policy and Social and Economic Programmes, the Higher School of Economics, the results are quite predictable: the acquisition is needed not only for RZD, but for the Russian economy. In this case, the expansion of RZD to the European transport market is justified: in the end it will become a tool for the promotion of Russian goods to Europe. Such a tool can hardly be created without state support. Simultaneously, advanced European logistics technologies will be transferred to Russia. From this viewpoint, GEFCO can be considered as a way of enhancing the land transport corridor between Asia and Europe. Logistics can help improve its performance.
Does Russia Need 4PL-Providers
Meanwhile, RZD has other means for the expansion into Europe. Vadim Morozov, the First Vice President of RZD said that the holding company planned to create a logistics business unit. Its priority objective for 2013 is to find and develop synergies with subsidiaries and affiliates of Russian Railways (first of all, TransContainer, RZD-Logistics, and RailTransAuto). The company will continue to interact with GEFCO to develop the medium-term program for the development of RZD’s logistics business abroad.
Moreover, they are going to analyse the feasibility of providing 4PL logistics services with the help of GEFCO. In other words, joining transport logistics and distribution logistics, as, for example, Deutsche Bahn Holding in Germany does. In the words of Rüdiger Grube, Chairman of the Board of Deutsche Bahn AG, a new quality appears at the junction of two types of logistics - a sort of transport services outsourcing: transportation and related activities turn into a part of marketing strategies of large producers.
RZD can test such technologies through organisation of supplies for the company’s own needs in several directions. Then, it will demonstrate to customers that such services can be efficient to reduce expenditure during distribution.
RZD together with Kazakhstan and Belarusian Railways developed a project to create the United Transport and Logistics Company (OTLK) to provide complex transport and logistics services in the Common Economic Space (area of the integrated union of Russia, Belarus and Kazakhstan).
When OTLK is launched, a powerful new player will appear in the market, if necessary assets and competences are given to it. Therefore, Russian Railways plan to speed up the process of creating multi-modal terminal and logistics centers on the Russian rail network. First of all, it will be done at large transport hubs. The planned scheme is as follows: RZD’s Directorate for Terminal and Warehousing Facilities will provide terminal services in freight yards of railway hubs. Moreover, it is planned to use storage facilities belonging to RZD as well as those of private companies - owners of the terminals, which turn into off-dock rail transport and logistics centers. RZD-Logistics should be a 3PL-service provider. It will transport goods by rail and road, and will be engaged in storing, controlling orders, and accumulating wagonload lots.
The pattern here is the German model: Deutsche Bahn Holding provides similar services through its subsidiary Deutsche Bahn Mobility Logistics. Naturally, situations in the transport market of Russia and Germany differ, but it will change in the future, experts say. Some customers of RZD want to have a comprehensive service already now, for example, in the segment of container transportation with the rail component. Hence the idea to create RZD-Logistics appeared. Its target is to help to provide such services as “just in time” and “door-to-door”.
New Routes to Key Markets
Another instrument for RZD’s expansion to Europe is the development of multi-modal rail-ferry transportation. Ust-Luga – Baltiisk – Sassnitz ferry link is being developed. According to Mr Yakunin, this project is not just a new route, it is a new corridor for multimodal transportation between the Asian and the Pacific Region and Europe through the territory of Russia and the CIS countries.
In addition, in 2012, RZD continued to interact with the governments of Slovakia, Austria and Ukraine to develop the project of creating a new branch of the Eurasian transport corridor to Bratislava and Vienna.
In the near future, a tender for an expanded feasibility study will take place. Its results will allow the participating countries to begin a new phase of the project–design and construction. This can happen in 2014.
Vladimir Yakunin emphasised that the construction of a broad gauge to Vienna is not the ultimate goal for RZD, but a practical step to extend the 10,000-kilometre long railway route to key European markets, because the most important international transport corridors pass via the Bratislava – Vienna region. This project also matches the acquisition of GEFCO and the launch of OTLK.
In March 2012, RZD and Serbian Railways signed General Agreement on the implementation of projects in the railway sector. These projects are developing within the framework of the activation of foreign economic cooperation between Russia and Serbia.
Finally, talking about the expansion of Russian Railways into Europe, we cannot but mention the launch of a container train between China and Europe with a unified consignment note at the end of autumn in 2012. The first such train made a trip from China via Russia to Duisburg (Germany). RZD carried out the project under the auspices of the Organisation for Cooperation between Railways (OSJD) with the participation of the Belarusian Railways (Belarus), Kazakhstan Temir Zholy (Kazakhstan), PKP Cargo (Poland), the Ministry of Railways of China and DB Schenker Rail (Germany). The train carrying 42 FEU travelled on the route, using the CIM / SMGS consignment note. It delivered products made by Acer and ASUS, as well as consumer goods from Chongqing (China). Goods produced by Hewlett Packard were transported in a similar way later. The transportation was arranged by RZD-Logistics and YuXinOu (Chongqing) Logistics Co. Ltd. The CIM/SMGS consignment allows to transport cargo without re-formalising it in the areas where transport legislation changes, which simplifies border crossing procedures and increases the speed of delivery. Prior to the use of the unified consignment note, more than 20 trains travelled on the route using separate invoices.
YuXinOu (Chongqing) Logistics Co. Ltd. is a joint venture of RZD-Logistics in China. Its another joint venture is registered in Latvia (AO EuroRailTrans). In 2012, the network of sales offices of Far East Land Bridge, Ltd. (FELB), engaged in rail transit container transportation between Europe and China, was added to the network of RZD- Logistics.
Therefore, RZD had had experience of promoting their services to Europe before it purchased GEFCO. However, the integration with this largest international operator expands the horizon for the development of such services. ®
By Alexander Solntsev
[~DETAIL_TEXT] => Trans-Eurasian Transport Corridor
Several global circumstances contributed to RZD’s expansion into the European market. The first was the ambition of international operators to diversify their risks at Eurasian transportation. In the words of Hisako Tsudji, an expert from the Economic Research Institute for Northeast Asia (ERINA), risks are connected with the fact that high oil prices provoke an increase in sea charter rates on lines via the Suez Canal. Thus, it is important to international forwarders to have an alternative to these routes. Thus, the land Eurasian link via the Transsib is one of the most convenient routes.
In addition, the interest of European countries in railway projects is growing, because the EU decided to redirect 30% of goods, which are transported at a distance of over 300 km from road to rail and inland waterway transport by 2030, and 50% by 2050.
Therefore, there is sense in talking about Russia’s more active participation in the development of the so-called Trans-Eurasian zone (corridor), which brings together transport systems in Europe, Russia and Asia (Kazakhstan, China, Japan, Korea). There must develop a comprehensive multi-modal infrastructure in this zone. This means that it must help solve a number of problems - not only transport, but also power, informational, and environmental ones. According to Guy Eames, CEO of Green Building Council, a Russian non-commercial partnership, this approach is derived from the ambition to efficiently use resources, especially the area to be used for infrastructure facilities, energy sources, and tools to protect and restore the environment.
Also, the EU set ambitious objectives in development of European rail corridors. Within the framework of these projects, Russian Railways are going to expand their presence in the transport and logistics market in Europe. One of remarkable events from this viewpoint is RZD’s recent purchase of a 75% stake in the international logistics company GEFCO from Peugeot Citroen group of companies.
Integration of this logistics operator, which has worked for 60 years in the market, in Russian Railways can stimulate the development of integrated transport and logistics services and enhance customer-friendliness, thinks Vladimir Yakunin, President of RZD. This can also give a boost to use the transit potential of Russia more efficiently and contribute to increasing the level of logistics, according to which the Russian Federation is the 95-th in the world ranking.
Specialists at Russian Railways forecast 3PL/4PL logistics service market growth in Russia will be sevenfold in nine years – in other words, from €2 billion in 2012 to €15 billion in 2022. Therefore, it is very important for RZD to take its place in this sector of the market.
Cooperating with RZD, GEFCO plans to strengthen its position in China and India. Thus, GEFCO becomes a link between Europe and Asia. This means that the Russian railway component will be a part of logistics services. The first step in this direction has already been made: GEFCO has already had experience of working with some major railway operators, as well as with RZD-Logistics (a subsidiary of Russian Railways).
European Quality of Service
Earlier RZD was satisfied with the role of a transporter, but now it strives to attract additional cargo flows by providing “door-to-door” services. “Currently, it is impossible to do that without a developed logistics system,” says V. Yakunin.
That’s why RZD thought over different ways of integration with European companies, which are considered as leaders in the logistics sector. The acquisition of such a company as GEFCO is commercially profitable. Experts think that RZD’s additional revenue from this deal will amount to RUB 40 billion by 2017.
For that, RZD will have to diversify a part of GEFCO’s business, which was traditionally organised to service supply chains for Peugeot Citroen. It is not easy to make such changes. And RZD will have to make additional investments in Europe.
According to Sergey Smirnov, Director of the Institute for Social Policy and Social and Economic Programmes, the Higher School of Economics, the results are quite predictable: the acquisition is needed not only for RZD, but for the Russian economy. In this case, the expansion of RZD to the European transport market is justified: in the end it will become a tool for the promotion of Russian goods to Europe. Such a tool can hardly be created without state support. Simultaneously, advanced European logistics technologies will be transferred to Russia. From this viewpoint, GEFCO can be considered as a way of enhancing the land transport corridor between Asia and Europe. Logistics can help improve its performance.
Does Russia Need 4PL-Providers
Meanwhile, RZD has other means for the expansion into Europe. Vadim Morozov, the First Vice President of RZD said that the holding company planned to create a logistics business unit. Its priority objective for 2013 is to find and develop synergies with subsidiaries and affiliates of Russian Railways (first of all, TransContainer, RZD-Logistics, and RailTransAuto). The company will continue to interact with GEFCO to develop the medium-term program for the development of RZD’s logistics business abroad.
Moreover, they are going to analyse the feasibility of providing 4PL logistics services with the help of GEFCO. In other words, joining transport logistics and distribution logistics, as, for example, Deutsche Bahn Holding in Germany does. In the words of Rüdiger Grube, Chairman of the Board of Deutsche Bahn AG, a new quality appears at the junction of two types of logistics - a sort of transport services outsourcing: transportation and related activities turn into a part of marketing strategies of large producers.
RZD can test such technologies through organisation of supplies for the company’s own needs in several directions. Then, it will demonstrate to customers that such services can be efficient to reduce expenditure during distribution.
RZD together with Kazakhstan and Belarusian Railways developed a project to create the United Transport and Logistics Company (OTLK) to provide complex transport and logistics services in the Common Economic Space (area of the integrated union of Russia, Belarus and Kazakhstan).
When OTLK is launched, a powerful new player will appear in the market, if necessary assets and competences are given to it. Therefore, Russian Railways plan to speed up the process of creating multi-modal terminal and logistics centers on the Russian rail network. First of all, it will be done at large transport hubs. The planned scheme is as follows: RZD’s Directorate for Terminal and Warehousing Facilities will provide terminal services in freight yards of railway hubs. Moreover, it is planned to use storage facilities belonging to RZD as well as those of private companies - owners of the terminals, which turn into off-dock rail transport and logistics centers. RZD-Logistics should be a 3PL-service provider. It will transport goods by rail and road, and will be engaged in storing, controlling orders, and accumulating wagonload lots.
The pattern here is the German model: Deutsche Bahn Holding provides similar services through its subsidiary Deutsche Bahn Mobility Logistics. Naturally, situations in the transport market of Russia and Germany differ, but it will change in the future, experts say. Some customers of RZD want to have a comprehensive service already now, for example, in the segment of container transportation with the rail component. Hence the idea to create RZD-Logistics appeared. Its target is to help to provide such services as “just in time” and “door-to-door”.
New Routes to Key Markets
Another instrument for RZD’s expansion to Europe is the development of multi-modal rail-ferry transportation. Ust-Luga – Baltiisk – Sassnitz ferry link is being developed. According to Mr Yakunin, this project is not just a new route, it is a new corridor for multimodal transportation between the Asian and the Pacific Region and Europe through the territory of Russia and the CIS countries.
In addition, in 2012, RZD continued to interact with the governments of Slovakia, Austria and Ukraine to develop the project of creating a new branch of the Eurasian transport corridor to Bratislava and Vienna.
In the near future, a tender for an expanded feasibility study will take place. Its results will allow the participating countries to begin a new phase of the project–design and construction. This can happen in 2014.
Vladimir Yakunin emphasised that the construction of a broad gauge to Vienna is not the ultimate goal for RZD, but a practical step to extend the 10,000-kilometre long railway route to key European markets, because the most important international transport corridors pass via the Bratislava – Vienna region. This project also matches the acquisition of GEFCO and the launch of OTLK.
In March 2012, RZD and Serbian Railways signed General Agreement on the implementation of projects in the railway sector. These projects are developing within the framework of the activation of foreign economic cooperation between Russia and Serbia.
Finally, talking about the expansion of Russian Railways into Europe, we cannot but mention the launch of a container train between China and Europe with a unified consignment note at the end of autumn in 2012. The first such train made a trip from China via Russia to Duisburg (Germany). RZD carried out the project under the auspices of the Organisation for Cooperation between Railways (OSJD) with the participation of the Belarusian Railways (Belarus), Kazakhstan Temir Zholy (Kazakhstan), PKP Cargo (Poland), the Ministry of Railways of China and DB Schenker Rail (Germany). The train carrying 42 FEU travelled on the route, using the CIM / SMGS consignment note. It delivered products made by Acer and ASUS, as well as consumer goods from Chongqing (China). Goods produced by Hewlett Packard were transported in a similar way later. The transportation was arranged by RZD-Logistics and YuXinOu (Chongqing) Logistics Co. Ltd. The CIM/SMGS consignment allows to transport cargo without re-formalising it in the areas where transport legislation changes, which simplifies border crossing procedures and increases the speed of delivery. Prior to the use of the unified consignment note, more than 20 trains travelled on the route using separate invoices.
YuXinOu (Chongqing) Logistics Co. Ltd. is a joint venture of RZD-Logistics in China. Its another joint venture is registered in Latvia (AO EuroRailTrans). In 2012, the network of sales offices of Far East Land Bridge, Ltd. (FELB), engaged in rail transit container transportation between Europe and China, was added to the network of RZD- Logistics.
Therefore, RZD had had experience of promoting their services to Europe before it purchased GEFCO. However, the integration with this largest international operator expands the horizon for the development of such services. ®
By Alexander Solntsev
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The new services are targeted at the development of a new logistics system.</p>
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Last year the share of railways in the total turnover of the Russian
transport system (except pipelines) grew to 85.5%. It is one of the highest figures in the world. RZD took steps towards becoming a holding company with a focus on logistics services.
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[DETAIL_TEXT] => New Approaches
Firstly, speaking about the reform one should mention the launch and stable functioning of 85 subsidiaries of RZD. The total net assets of the subsidiaries, in which RZD has shareholdings, amounts to RUB 0.5 trillion. In the last three years, the company received RUB 237 billion from the sale of shareholdings in its subsidiaries. Of that, it got RUB 76 billion in 2012. The sale of the shares in Freight One was the largest privatisation deal in the recent history of Russia (RUB 175.5 billion). The sale of shareholdings in subsidiaries contributes to the creation of greater competition in different sectors of the railway transport market and attraction of private capital into the sector.
In the context of the company’s assets privatisation, it is obvious that RZD continues to keep to ethos of rational, evolutional development in the reform and modernisation of railways. Simultaneously, last year RZD participated in the discussion with the Federal Antimonopoly Service and a number of representatives of transport community about the development of so called commercial infrastructure of the freight railway transportation market.
Recently, there have been moves to organise a self-regulatory non-commercial partnership of the market players and the creation of a transportation services exchange. There has been no such experience in the world railway practice (and the International Union of Railways recognizes it). Moreover, many experts think that these ideas will not help to solve the current problems and will cause an imbalance in the functioning of the railway transport market.
Gaps in the regulation and a surplus of the rolling stock fleet give rise to concerns. The legal vacuum in defining the status of a rolling stock operator, and his obligations at cargo transportation, non-efficient transfer of empty railcars, and occupation of infrastructure will reduce the efficiency of work and may cause a speculative increase in prices for rolling stock rental. Therefore, the company strives for a balanced enhancement of the legislative sector. RZD submits its groundworks and offers to relevant federal authorities.
A lot of attention was paid last year to the issue of tariff regulation of railway transport. Unified tariffs on empty mileage of universal gondola cars and flat wagons and special flat wagons for timber came into force on November 1. Meanwhile, there are still a lot of issues to be solved. Together with ministries and departments in charge, RZD will continue the work aimed at formation of a long-term tariff policy and implementation of the investment component in the tariff on freight railway transportation.
Despite the persistent tension in the Russian economy, RZD’s transportation volume increased last year. There was a 2.4% rise in the cargo loading volume. However, the absolute result is hardly satisfying because it is only equal to the result of 2005. Exports via Russian ports contributed to the increase in the loading volume, whilst domestic transportation volume remains below the pre-crisis level. As a result, on some export routes, particularly in the Far Eastern region, the network is operating at maximum capacity, exceeding the highest results in the history of Russian railways by 30%.
In 2012, RZD’s contribution to the GDP was 1.74%, a little smaller than in 2011, when the figure was 1.81%. This shows a decline in the transport burden on the economy, and creation of conditions for the development of other sectors by restraining an increase in railway tariffs. This also means that investment in the railway infrastructure is not sufficient. Proof of this comes from 2003, when RZD was launched, prices in industry increased by 240% on average (for example, in the fuel industry they grew by 450%, in the ferrous metallurgy they rose by 260%), and tariffs on railway transportation grew by 180% only.
As a result, the transport component reduced for almost all types of cargo: by almost 32% for iron ore, by 34% for crude oil, by 56% for fuel oil, by 24% for coke, and by 17% for grain. There was a 0.6% increase for thermal coal only. Meanwhile, RZD remains one of the largest tax payers in Russia. Last year, over RUB 263 billion was transferred to budgets of all levels, and the entire holding company paid RUB 306 billion of taxes.
Amid the insufficient regulation of railway operators’ activity, the persistent expansion of the freight wagon fleet had a negative impact on the situation. Nowadays, more than 1,700 owners have a fleet of 1.15 million cargo wagons. Cargo turnover increased by 6% in comparison with the pre-crisis level of 2007, whilst the wagon fleet grew by 20% during the same period. As a consequence of rolling stock surplus, the efficiency of a cargo wagon fell by 11% as compared to 2007, and the time of its turnover grew by 21% or 2.7 days. The average section speed reduced by 12% and there was an increase in the need for locomotive teams.
All these factors create an additional burden on infrastructure and reduce the efficiency of the entire railway sector. In turn, this contributes to an increase in the price of transportation, and consumers feel it. Therefore, the competitiveness of railways decreases, and, because of a decline in the quality of services, consignors start to search for an alternative transport mode to have their freight carried.
To improve the situation, when amid a common surplus of wagons small and medium business faced an acute shortage of rolling stock, the RF Government made a decree, according to which RZD rented 106,000 gondola cars from Federal Cargo Company OJSC, thus forming the Rented Private Railcar fleet (RPR). The decree was initiated by RZD and supported by the Transport Ministry. Rented wagons worked in accordance with the principles of public rolling stock fleet.
The situation improved. At the same time, it is clear that usage of rented wagons by the transporter cannot help to solve the problem completely. A more sophisticated approach to transport process enhancement is needed. The project of the Common Network Technological Process was developed for that.
The first results of suggested improvements have appeared already. In particular, the accuracy of cargo trains dispatch on schedule has improved, the number of freight trains traveling on fixed train paths is growing. These are the main areas for enhancing the technology of transportation. As for the RPR fleet, the RF Government decided to keep this model till the end of 2013, when the Common Network Technological Process is completely put in operation.
Instruments for Efficiency
RZD has increased the presence in the transport and logistics market. In particular, RZD purchased a 75% shareholding in international logistics company GEFCO from Peugeot Citroеn. This will help to compensate for lost revenue due to the privatisation of efficient subsidiaries. At the same time, GEFCO’s integration into RZD will contribute to the enhancement of the holding company’s client-friendliness, give a boost to efficient usage of Russia’ transit potential, help to improve the level of logistics (in the international ranking, the company is just at the 95th position now). This is one of the most important integration projects.
To create sophisticated high-tech logistics services, RZD is transferring to a modern format of cargo servicing – multimodal terminal and logistics centres on the whole railway network of Russia, and first of all in large transport nodes. In April 2012, the company’s Board approved a relevant concept, completing project work at the first terminal and logistics centre “Bely Rast” in the Moscow region.
Container transportation volume increased rapidly. In 2012 it amounted to three million TEU, 11% more than in 2011. The number of container block trains grew by 20% to 7,500.
Last year RZD completed the creation of a management hierarchy for all basic business activities. The Central Directorate of Infrastructure was the last to be created. Therefore, it is the first time in the 175 year history of Russian Railways that it transferred from a mainly territorial management system to a matrix structure, where the key role belongs to network-wide special directorates. Their activity is coordinated at the central and at the regional levels.
On October 1, 2012, railways started functioning as regional centres of corporate management (RCCM). Chiefs of railways are responsible for reaching corporate targets and coordinate the holding company’s activity in the relevant area. The basic objectives for the next period are to build and strengthen horizontal ties between territorial directorates, affiliates, and the subsidiaries of RZD, and to optimise non-core assets.
It is also important to enhance internal efficiency, because currently the opportunities for possible state financial support are limited, and the loan potential will be practically exhausted in the next two years. Therefore, there is a need to develop and take measures to optimise expenditure and increase revenue, to master new instruments and methods.
Also, it’s necessary to continue work within the framework of interregional coordinating councils, enhance interaction with all players in the transport market to provide reliability and efficiency in the transportation process.
First of all, the company focuses on using advanced technologies to reach economic efficiency and create a modernised technological base for the company’s day to day work. RZD carries out the programme of innovative development approved by the Governmental Committee for High Technologies and Innovations and adopted by RZD’s Board of Directors. Last year, over RUB 7 billion was allocated for research and experimental and design works. It is 0.54% of the company’s revenue, which matches the level of other comparable companies around the world.
A priority of the company’s innovative development is extension of the level of power and environmental efficiency. According to the data from recent reports by the International Energy Agency and the International Union of Railways, Russian Railways is recognised as a leader among the leading railways of the world in the sector of energy efficiency.
A lot of innovative solutions in the sphere of development of intelligent systems for transport process control, services quality control, and monitoring of the condition of fixed assets and production processes have been developed recently. Implementation of innovative technologies for strengthening the permanent way structure and extend its life time is going on. RZD is carrying out a five-year programme to renew maintenance vehicles, which will allow increased efficiency in their work.
This year RZD plans to implement innovative developments in the work of basic production directorates, and transfer from pilot projects to their use on the whole network. RZD’s Plan of Research and Technical Development in 2013 was adopted. It covers the whole production sector of the company. It envisages not only use of modern technologies, but development of research and technical approaches covering almost all activities on Russian Railways. To carry out new principles, RZD created a new corporate system to control innovative activity. It provides a full cycle of implementing innovative projects – from defining strategic directions and target parameters of development to making new products and assessing their efficiency.
Investment Priorities
RZD used all opportunities and resources to extend the investment programme in 2012. As a result, investment exceeded RUB 481 billion, 20% more than in 2011, however, in comparable prices it is below the 2008 investment programme, when the maximum investment level was reached. Additional funds were received due to measures taken to increase internal efficiency and successful loan policy.
In 2012, 532 locomotives and 475 electric multiple units were bought. 96 km of station tracks, 118 km of secondary tracks were put in operation, and 132 km of tracks were electrified. RZD continued to carry out projects targeted at increasing the carrying capacity of railway sections and reducing bottle-necks.
With the support of the RF Government, RZD activated projects for the development of infrastructure at the Moscow railway node. Construction of the new Kuznetsovsky Tunnel was completed. It was funded from the RF Investment Fund. At the same time, there is a colossal shortage of funding, a result of which is a catastrophic level of fixed assets deterioration and a smaller pace of infrastructure extension than needed.
Regarding the funding sources, the 2013 investment programme of RZD will be RUB 411.4 billion. The three-year investment programme envisages significant funds for tractive rolling stock fleet renewal. Particularly, it is intended to buy about 770 locomotives in 2013. It is practically the whole production programme of the Russian transport machine building sector.
In the next three years, RZD is going to cut expenditure by RUB 24-25 billion per annum. A priority of every directorate, every subsidiary and affiliate of RZD is to increase their efficiency through labour productivity growth and optimal use of all resources.
Obviously, one of the most negative aspects of the world economy crisis is the lack of global initiative, which could open new horizons and help to transfer from a recession and budget deficit to joint planning of development. Leading international experts confirm the importance of investment in infrastructure, including railways.
Carrying out infrastructure projects contributes to the creation of jobs, provides a support to the real sector of economy, and makes for an increase in the pace of economic growth. It was declared in the declaration of the leaders of G20 member-states after the summit in Mexico last summer that investment in infrastructure is a very important prerequisite for stable economic growth. And the role of state funding of such projects was highly appreciated.
In January 2012, RZD, Vnesheconombank, and 20 key Russian industrial enterprises signed an Agreement on Railway Infrastructure Development as a result of a meeting chaired by the RF Prime Minister. It regulates relations between the transporter and cargo owners on the “take or pay” principle, which will allow RZD to provide a guaranteed payback of its investment upon condition that the project is initially planned to be recouped. Another important decision was made in 2012 – to attract funding from the Pension Fund by means of long-term loans (up to 30 years) in the form of infrastructure bonds to fund infrastructure projects.
In November 2011, the Organisation for Economic Cooperation and Development presented the results of the research “Needs for the Development of Strategically Important Infrastructure till 2030.” According to it, the world transport infrastructure needs $11.3 trillion of investments. Of that, railways need 44% (approximately $5 trillion). Therefore, railways are recognised as a priority in transport infrastructure development around the whole world.
Modernisation and development of infrastructure remains RZD’s key objective in 2013 and beyond. The company will continue to use all financial mechanisms to attract investment. However, the holding company’s own opportunities are not enough to solve all problems, which appeared decades ago. Moreover, the company does not have enough money to carry out infrastructure projects on the BAM scale or to develop infrastructure on the threshold of the FIFA World Cup in 2018.
Commissioned by RZD, a group of scientific organisations worked actively to estimate the consequences of insufficient funding of railway infrastructure. The research was based on advanced model complex with the use of intersectoral balance. According to the research, total losses to GDP because of limitation of railway transportation can be between RUB 5.5 trillion and RUB 6.4 trillion, and losses to the budget system – between RUB 1.3 trillion and RUB 1.5 trillion. In the opinion of scientists, the state investment in transport infrastructure is a serious instrument for the development of the economy, and an important part of state anti-crisis policy. This instrument is actively used in such countries as France, Germany, Austria, England, and China.
Taking into account the dynamics of global macroeconomic figures and those in Russia, one has to admit that the year of 2013 will be a difficult one. There is a risk of slowing down the pace of economic growth. This year it is likely to be developed in accordance with the conservative (or even negative) scenario than the basic, or using the terms of the Ministry of Economic Development, moderately optimistic scenario. Therefore, the senior management of the company must organise work more thoroughly, using anti-crisis measures in all types of activities. ®
By Elena Ushkova
[~DETAIL_TEXT] => New Approaches
Firstly, speaking about the reform one should mention the launch and stable functioning of 85 subsidiaries of RZD. The total net assets of the subsidiaries, in which RZD has shareholdings, amounts to RUB 0.5 trillion. In the last three years, the company received RUB 237 billion from the sale of shareholdings in its subsidiaries. Of that, it got RUB 76 billion in 2012. The sale of the shares in Freight One was the largest privatisation deal in the recent history of Russia (RUB 175.5 billion). The sale of shareholdings in subsidiaries contributes to the creation of greater competition in different sectors of the railway transport market and attraction of private capital into the sector.
In the context of the company’s assets privatisation, it is obvious that RZD continues to keep to ethos of rational, evolutional development in the reform and modernisation of railways. Simultaneously, last year RZD participated in the discussion with the Federal Antimonopoly Service and a number of representatives of transport community about the development of so called commercial infrastructure of the freight railway transportation market.
Recently, there have been moves to organise a self-regulatory non-commercial partnership of the market players and the creation of a transportation services exchange. There has been no such experience in the world railway practice (and the International Union of Railways recognizes it). Moreover, many experts think that these ideas will not help to solve the current problems and will cause an imbalance in the functioning of the railway transport market.
Gaps in the regulation and a surplus of the rolling stock fleet give rise to concerns. The legal vacuum in defining the status of a rolling stock operator, and his obligations at cargo transportation, non-efficient transfer of empty railcars, and occupation of infrastructure will reduce the efficiency of work and may cause a speculative increase in prices for rolling stock rental. Therefore, the company strives for a balanced enhancement of the legislative sector. RZD submits its groundworks and offers to relevant federal authorities.
A lot of attention was paid last year to the issue of tariff regulation of railway transport. Unified tariffs on empty mileage of universal gondola cars and flat wagons and special flat wagons for timber came into force on November 1. Meanwhile, there are still a lot of issues to be solved. Together with ministries and departments in charge, RZD will continue the work aimed at formation of a long-term tariff policy and implementation of the investment component in the tariff on freight railway transportation.
Despite the persistent tension in the Russian economy, RZD’s transportation volume increased last year. There was a 2.4% rise in the cargo loading volume. However, the absolute result is hardly satisfying because it is only equal to the result of 2005. Exports via Russian ports contributed to the increase in the loading volume, whilst domestic transportation volume remains below the pre-crisis level. As a result, on some export routes, particularly in the Far Eastern region, the network is operating at maximum capacity, exceeding the highest results in the history of Russian railways by 30%.
In 2012, RZD’s contribution to the GDP was 1.74%, a little smaller than in 2011, when the figure was 1.81%. This shows a decline in the transport burden on the economy, and creation of conditions for the development of other sectors by restraining an increase in railway tariffs. This also means that investment in the railway infrastructure is not sufficient. Proof of this comes from 2003, when RZD was launched, prices in industry increased by 240% on average (for example, in the fuel industry they grew by 450%, in the ferrous metallurgy they rose by 260%), and tariffs on railway transportation grew by 180% only.
As a result, the transport component reduced for almost all types of cargo: by almost 32% for iron ore, by 34% for crude oil, by 56% for fuel oil, by 24% for coke, and by 17% for grain. There was a 0.6% increase for thermal coal only. Meanwhile, RZD remains one of the largest tax payers in Russia. Last year, over RUB 263 billion was transferred to budgets of all levels, and the entire holding company paid RUB 306 billion of taxes.
Amid the insufficient regulation of railway operators’ activity, the persistent expansion of the freight wagon fleet had a negative impact on the situation. Nowadays, more than 1,700 owners have a fleet of 1.15 million cargo wagons. Cargo turnover increased by 6% in comparison with the pre-crisis level of 2007, whilst the wagon fleet grew by 20% during the same period. As a consequence of rolling stock surplus, the efficiency of a cargo wagon fell by 11% as compared to 2007, and the time of its turnover grew by 21% or 2.7 days. The average section speed reduced by 12% and there was an increase in the need for locomotive teams.
All these factors create an additional burden on infrastructure and reduce the efficiency of the entire railway sector. In turn, this contributes to an increase in the price of transportation, and consumers feel it. Therefore, the competitiveness of railways decreases, and, because of a decline in the quality of services, consignors start to search for an alternative transport mode to have their freight carried.
To improve the situation, when amid a common surplus of wagons small and medium business faced an acute shortage of rolling stock, the RF Government made a decree, according to which RZD rented 106,000 gondola cars from Federal Cargo Company OJSC, thus forming the Rented Private Railcar fleet (RPR). The decree was initiated by RZD and supported by the Transport Ministry. Rented wagons worked in accordance with the principles of public rolling stock fleet.
The situation improved. At the same time, it is clear that usage of rented wagons by the transporter cannot help to solve the problem completely. A more sophisticated approach to transport process enhancement is needed. The project of the Common Network Technological Process was developed for that.
The first results of suggested improvements have appeared already. In particular, the accuracy of cargo trains dispatch on schedule has improved, the number of freight trains traveling on fixed train paths is growing. These are the main areas for enhancing the technology of transportation. As for the RPR fleet, the RF Government decided to keep this model till the end of 2013, when the Common Network Technological Process is completely put in operation.
Instruments for Efficiency
RZD has increased the presence in the transport and logistics market. In particular, RZD purchased a 75% shareholding in international logistics company GEFCO from Peugeot Citroеn. This will help to compensate for lost revenue due to the privatisation of efficient subsidiaries. At the same time, GEFCO’s integration into RZD will contribute to the enhancement of the holding company’s client-friendliness, give a boost to efficient usage of Russia’ transit potential, help to improve the level of logistics (in the international ranking, the company is just at the 95th position now). This is one of the most important integration projects.
To create sophisticated high-tech logistics services, RZD is transferring to a modern format of cargo servicing – multimodal terminal and logistics centres on the whole railway network of Russia, and first of all in large transport nodes. In April 2012, the company’s Board approved a relevant concept, completing project work at the first terminal and logistics centre “Bely Rast” in the Moscow region.
Container transportation volume increased rapidly. In 2012 it amounted to three million TEU, 11% more than in 2011. The number of container block trains grew by 20% to 7,500.
Last year RZD completed the creation of a management hierarchy for all basic business activities. The Central Directorate of Infrastructure was the last to be created. Therefore, it is the first time in the 175 year history of Russian Railways that it transferred from a mainly territorial management system to a matrix structure, where the key role belongs to network-wide special directorates. Their activity is coordinated at the central and at the regional levels.
On October 1, 2012, railways started functioning as regional centres of corporate management (RCCM). Chiefs of railways are responsible for reaching corporate targets and coordinate the holding company’s activity in the relevant area. The basic objectives for the next period are to build and strengthen horizontal ties between territorial directorates, affiliates, and the subsidiaries of RZD, and to optimise non-core assets.
It is also important to enhance internal efficiency, because currently the opportunities for possible state financial support are limited, and the loan potential will be practically exhausted in the next two years. Therefore, there is a need to develop and take measures to optimise expenditure and increase revenue, to master new instruments and methods.
Also, it’s necessary to continue work within the framework of interregional coordinating councils, enhance interaction with all players in the transport market to provide reliability and efficiency in the transportation process.
First of all, the company focuses on using advanced technologies to reach economic efficiency and create a modernised technological base for the company’s day to day work. RZD carries out the programme of innovative development approved by the Governmental Committee for High Technologies and Innovations and adopted by RZD’s Board of Directors. Last year, over RUB 7 billion was allocated for research and experimental and design works. It is 0.54% of the company’s revenue, which matches the level of other comparable companies around the world.
A priority of the company’s innovative development is extension of the level of power and environmental efficiency. According to the data from recent reports by the International Energy Agency and the International Union of Railways, Russian Railways is recognised as a leader among the leading railways of the world in the sector of energy efficiency.
A lot of innovative solutions in the sphere of development of intelligent systems for transport process control, services quality control, and monitoring of the condition of fixed assets and production processes have been developed recently. Implementation of innovative technologies for strengthening the permanent way structure and extend its life time is going on. RZD is carrying out a five-year programme to renew maintenance vehicles, which will allow increased efficiency in their work.
This year RZD plans to implement innovative developments in the work of basic production directorates, and transfer from pilot projects to their use on the whole network. RZD’s Plan of Research and Technical Development in 2013 was adopted. It covers the whole production sector of the company. It envisages not only use of modern technologies, but development of research and technical approaches covering almost all activities on Russian Railways. To carry out new principles, RZD created a new corporate system to control innovative activity. It provides a full cycle of implementing innovative projects – from defining strategic directions and target parameters of development to making new products and assessing their efficiency.
Investment Priorities
RZD used all opportunities and resources to extend the investment programme in 2012. As a result, investment exceeded RUB 481 billion, 20% more than in 2011, however, in comparable prices it is below the 2008 investment programme, when the maximum investment level was reached. Additional funds were received due to measures taken to increase internal efficiency and successful loan policy.
In 2012, 532 locomotives and 475 electric multiple units were bought. 96 km of station tracks, 118 km of secondary tracks were put in operation, and 132 km of tracks were electrified. RZD continued to carry out projects targeted at increasing the carrying capacity of railway sections and reducing bottle-necks.
With the support of the RF Government, RZD activated projects for the development of infrastructure at the Moscow railway node. Construction of the new Kuznetsovsky Tunnel was completed. It was funded from the RF Investment Fund. At the same time, there is a colossal shortage of funding, a result of which is a catastrophic level of fixed assets deterioration and a smaller pace of infrastructure extension than needed.
Regarding the funding sources, the 2013 investment programme of RZD will be RUB 411.4 billion. The three-year investment programme envisages significant funds for tractive rolling stock fleet renewal. Particularly, it is intended to buy about 770 locomotives in 2013. It is practically the whole production programme of the Russian transport machine building sector.
In the next three years, RZD is going to cut expenditure by RUB 24-25 billion per annum. A priority of every directorate, every subsidiary and affiliate of RZD is to increase their efficiency through labour productivity growth and optimal use of all resources.
Obviously, one of the most negative aspects of the world economy crisis is the lack of global initiative, which could open new horizons and help to transfer from a recession and budget deficit to joint planning of development. Leading international experts confirm the importance of investment in infrastructure, including railways.
Carrying out infrastructure projects contributes to the creation of jobs, provides a support to the real sector of economy, and makes for an increase in the pace of economic growth. It was declared in the declaration of the leaders of G20 member-states after the summit in Mexico last summer that investment in infrastructure is a very important prerequisite for stable economic growth. And the role of state funding of such projects was highly appreciated.
In January 2012, RZD, Vnesheconombank, and 20 key Russian industrial enterprises signed an Agreement on Railway Infrastructure Development as a result of a meeting chaired by the RF Prime Minister. It regulates relations between the transporter and cargo owners on the “take or pay” principle, which will allow RZD to provide a guaranteed payback of its investment upon condition that the project is initially planned to be recouped. Another important decision was made in 2012 – to attract funding from the Pension Fund by means of long-term loans (up to 30 years) in the form of infrastructure bonds to fund infrastructure projects.
In November 2011, the Organisation for Economic Cooperation and Development presented the results of the research “Needs for the Development of Strategically Important Infrastructure till 2030.” According to it, the world transport infrastructure needs $11.3 trillion of investments. Of that, railways need 44% (approximately $5 trillion). Therefore, railways are recognised as a priority in transport infrastructure development around the whole world.
Modernisation and development of infrastructure remains RZD’s key objective in 2013 and beyond. The company will continue to use all financial mechanisms to attract investment. However, the holding company’s own opportunities are not enough to solve all problems, which appeared decades ago. Moreover, the company does not have enough money to carry out infrastructure projects on the BAM scale or to develop infrastructure on the threshold of the FIFA World Cup in 2018.
Commissioned by RZD, a group of scientific organisations worked actively to estimate the consequences of insufficient funding of railway infrastructure. The research was based on advanced model complex with the use of intersectoral balance. According to the research, total losses to GDP because of limitation of railway transportation can be between RUB 5.5 trillion and RUB 6.4 trillion, and losses to the budget system – between RUB 1.3 trillion and RUB 1.5 trillion. In the opinion of scientists, the state investment in transport infrastructure is a serious instrument for the development of the economy, and an important part of state anti-crisis policy. This instrument is actively used in such countries as France, Germany, Austria, England, and China.
Taking into account the dynamics of global macroeconomic figures and those in Russia, one has to admit that the year of 2013 will be a difficult one. There is a risk of slowing down the pace of economic growth. This year it is likely to be developed in accordance with the conservative (or even negative) scenario than the basic, or using the terms of the Ministry of Economic Development, moderately optimistic scenario. Therefore, the senior management of the company must organise work more thoroughly, using anti-crisis measures in all types of activities. ®
By Elena Ushkova
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Firstly, speaking about the reform one should mention the launch and stable functioning of 85 subsidiaries of RZD. The total net assets of the subsidiaries, in which RZD has shareholdings, amounts to RUB 0.5 trillion. In the last three years, the company received RUB 237 billion from the sale of shareholdings in its subsidiaries. Of that, it got RUB 76 billion in 2012. The sale of the shares in Freight One was the largest privatisation deal in the recent history of Russia (RUB 175.5 billion). The sale of shareholdings in subsidiaries contributes to the creation of greater competition in different sectors of the railway transport market and attraction of private capital into the sector.
In the context of the company’s assets privatisation, it is obvious that RZD continues to keep to ethos of rational, evolutional development in the reform and modernisation of railways. Simultaneously, last year RZD participated in the discussion with the Federal Antimonopoly Service and a number of representatives of transport community about the development of so called commercial infrastructure of the freight railway transportation market.
Recently, there have been moves to organise a self-regulatory non-commercial partnership of the market players and the creation of a transportation services exchange. There has been no such experience in the world railway practice (and the International Union of Railways recognizes it). Moreover, many experts think that these ideas will not help to solve the current problems and will cause an imbalance in the functioning of the railway transport market.
Gaps in the regulation and a surplus of the rolling stock fleet give rise to concerns. The legal vacuum in defining the status of a rolling stock operator, and his obligations at cargo transportation, non-efficient transfer of empty railcars, and occupation of infrastructure will reduce the efficiency of work and may cause a speculative increase in prices for rolling stock rental. Therefore, the company strives for a balanced enhancement of the legislative sector. RZD submits its groundworks and offers to relevant federal authorities.
A lot of attention was paid last year to the issue of tariff regulation of railway transport. Unified tariffs on empty mileage of universal gondola cars and flat wagons and special flat wagons for timber came into force on November 1. Meanwhile, there are still a lot of issues to be solved. Together with ministries and departments in charge, RZD will continue the work aimed at formation of a long-term tariff policy and implementation of the investment component in the tariff on freight railway transportation.
Despite the persistent tension in the Russian economy, RZD’s transportation volume increased last year. There was a 2.4% rise in the cargo loading volume. However, the absolute result is hardly satisfying because it is only equal to the result of 2005. Exports via Russian ports contributed to the increase in the loading volume, whilst domestic transportation volume remains below the pre-crisis level. As a result, on some export routes, particularly in the Far Eastern region, the network is operating at maximum capacity, exceeding the highest results in the history of Russian railways by 30%.
In 2012, RZD’s contribution to the GDP was 1.74%, a little smaller than in 2011, when the figure was 1.81%. This shows a decline in the transport burden on the economy, and creation of conditions for the development of other sectors by restraining an increase in railway tariffs. This also means that investment in the railway infrastructure is not sufficient. Proof of this comes from 2003, when RZD was launched, prices in industry increased by 240% on average (for example, in the fuel industry they grew by 450%, in the ferrous metallurgy they rose by 260%), and tariffs on railway transportation grew by 180% only.
As a result, the transport component reduced for almost all types of cargo: by almost 32% for iron ore, by 34% for crude oil, by 56% for fuel oil, by 24% for coke, and by 17% for grain. There was a 0.6% increase for thermal coal only. Meanwhile, RZD remains one of the largest tax payers in Russia. Last year, over RUB 263 billion was transferred to budgets of all levels, and the entire holding company paid RUB 306 billion of taxes.
Amid the insufficient regulation of railway operators’ activity, the persistent expansion of the freight wagon fleet had a negative impact on the situation. Nowadays, more than 1,700 owners have a fleet of 1.15 million cargo wagons. Cargo turnover increased by 6% in comparison with the pre-crisis level of 2007, whilst the wagon fleet grew by 20% during the same period. As a consequence of rolling stock surplus, the efficiency of a cargo wagon fell by 11% as compared to 2007, and the time of its turnover grew by 21% or 2.7 days. The average section speed reduced by 12% and there was an increase in the need for locomotive teams.
All these factors create an additional burden on infrastructure and reduce the efficiency of the entire railway sector. In turn, this contributes to an increase in the price of transportation, and consumers feel it. Therefore, the competitiveness of railways decreases, and, because of a decline in the quality of services, consignors start to search for an alternative transport mode to have their freight carried.
To improve the situation, when amid a common surplus of wagons small and medium business faced an acute shortage of rolling stock, the RF Government made a decree, according to which RZD rented 106,000 gondola cars from Federal Cargo Company OJSC, thus forming the Rented Private Railcar fleet (RPR). The decree was initiated by RZD and supported by the Transport Ministry. Rented wagons worked in accordance with the principles of public rolling stock fleet.
The situation improved. At the same time, it is clear that usage of rented wagons by the transporter cannot help to solve the problem completely. A more sophisticated approach to transport process enhancement is needed. The project of the Common Network Technological Process was developed for that.
The first results of suggested improvements have appeared already. In particular, the accuracy of cargo trains dispatch on schedule has improved, the number of freight trains traveling on fixed train paths is growing. These are the main areas for enhancing the technology of transportation. As for the RPR fleet, the RF Government decided to keep this model till the end of 2013, when the Common Network Technological Process is completely put in operation.
Instruments for Efficiency
RZD has increased the presence in the transport and logistics market. In particular, RZD purchased a 75% shareholding in international logistics company GEFCO from Peugeot Citroеn. This will help to compensate for lost revenue due to the privatisation of efficient subsidiaries. At the same time, GEFCO’s integration into RZD will contribute to the enhancement of the holding company’s client-friendliness, give a boost to efficient usage of Russia’ transit potential, help to improve the level of logistics (in the international ranking, the company is just at the 95th position now). This is one of the most important integration projects.
To create sophisticated high-tech logistics services, RZD is transferring to a modern format of cargo servicing – multimodal terminal and logistics centres on the whole railway network of Russia, and first of all in large transport nodes. In April 2012, the company’s Board approved a relevant concept, completing project work at the first terminal and logistics centre “Bely Rast” in the Moscow region.
Container transportation volume increased rapidly. In 2012 it amounted to three million TEU, 11% more than in 2011. The number of container block trains grew by 20% to 7,500.
Last year RZD completed the creation of a management hierarchy for all basic business activities. The Central Directorate of Infrastructure was the last to be created. Therefore, it is the first time in the 175 year history of Russian Railways that it transferred from a mainly territorial management system to a matrix structure, where the key role belongs to network-wide special directorates. Their activity is coordinated at the central and at the regional levels.
On October 1, 2012, railways started functioning as regional centres of corporate management (RCCM). Chiefs of railways are responsible for reaching corporate targets and coordinate the holding company’s activity in the relevant area. The basic objectives for the next period are to build and strengthen horizontal ties between territorial directorates, affiliates, and the subsidiaries of RZD, and to optimise non-core assets.
It is also important to enhance internal efficiency, because currently the opportunities for possible state financial support are limited, and the loan potential will be practically exhausted in the next two years. Therefore, there is a need to develop and take measures to optimise expenditure and increase revenue, to master new instruments and methods.
Also, it’s necessary to continue work within the framework of interregional coordinating councils, enhance interaction with all players in the transport market to provide reliability and efficiency in the transportation process.
First of all, the company focuses on using advanced technologies to reach economic efficiency and create a modernised technological base for the company’s day to day work. RZD carries out the programme of innovative development approved by the Governmental Committee for High Technologies and Innovations and adopted by RZD’s Board of Directors. Last year, over RUB 7 billion was allocated for research and experimental and design works. It is 0.54% of the company’s revenue, which matches the level of other comparable companies around the world.
A priority of the company’s innovative development is extension of the level of power and environmental efficiency. According to the data from recent reports by the International Energy Agency and the International Union of Railways, Russian Railways is recognised as a leader among the leading railways of the world in the sector of energy efficiency.
A lot of innovative solutions in the sphere of development of intelligent systems for transport process control, services quality control, and monitoring of the condition of fixed assets and production processes have been developed recently. Implementation of innovative technologies for strengthening the permanent way structure and extend its life time is going on. RZD is carrying out a five-year programme to renew maintenance vehicles, which will allow increased efficiency in their work.
This year RZD plans to implement innovative developments in the work of basic production directorates, and transfer from pilot projects to their use on the whole network. RZD’s Plan of Research and Technical Development in 2013 was adopted. It covers the whole production sector of the company. It envisages not only use of modern technologies, but development of research and technical approaches covering almost all activities on Russian Railways. To carry out new principles, RZD created a new corporate system to control innovative activity. It provides a full cycle of implementing innovative projects – from defining strategic directions and target parameters of development to making new products and assessing their efficiency.
Investment Priorities
RZD used all opportunities and resources to extend the investment programme in 2012. As a result, investment exceeded RUB 481 billion, 20% more than in 2011, however, in comparable prices it is below the 2008 investment programme, when the maximum investment level was reached. Additional funds were received due to measures taken to increase internal efficiency and successful loan policy.
In 2012, 532 locomotives and 475 electric multiple units were bought. 96 km of station tracks, 118 km of secondary tracks were put in operation, and 132 km of tracks were electrified. RZD continued to carry out projects targeted at increasing the carrying capacity of railway sections and reducing bottle-necks.
With the support of the RF Government, RZD activated projects for the development of infrastructure at the Moscow railway node. Construction of the new Kuznetsovsky Tunnel was completed. It was funded from the RF Investment Fund. At the same time, there is a colossal shortage of funding, a result of which is a catastrophic level of fixed assets deterioration and a smaller pace of infrastructure extension than needed.
Regarding the funding sources, the 2013 investment programme of RZD will be RUB 411.4 billion. The three-year investment programme envisages significant funds for tractive rolling stock fleet renewal. Particularly, it is intended to buy about 770 locomotives in 2013. It is practically the whole production programme of the Russian transport machine building sector.
In the next three years, RZD is going to cut expenditure by RUB 24-25 billion per annum. A priority of every directorate, every subsidiary and affiliate of RZD is to increase their efficiency through labour productivity growth and optimal use of all resources.
Obviously, one of the most negative aspects of the world economy crisis is the lack of global initiative, which could open new horizons and help to transfer from a recession and budget deficit to joint planning of development. Leading international experts confirm the importance of investment in infrastructure, including railways.
Carrying out infrastructure projects contributes to the creation of jobs, provides a support to the real sector of economy, and makes for an increase in the pace of economic growth. It was declared in the declaration of the leaders of G20 member-states after the summit in Mexico last summer that investment in infrastructure is a very important prerequisite for stable economic growth. And the role of state funding of such projects was highly appreciated.
In January 2012, RZD, Vnesheconombank, and 20 key Russian industrial enterprises signed an Agreement on Railway Infrastructure Development as a result of a meeting chaired by the RF Prime Minister. It regulates relations between the transporter and cargo owners on the “take or pay” principle, which will allow RZD to provide a guaranteed payback of its investment upon condition that the project is initially planned to be recouped. Another important decision was made in 2012 – to attract funding from the Pension Fund by means of long-term loans (up to 30 years) in the form of infrastructure bonds to fund infrastructure projects.
In November 2011, the Organisation for Economic Cooperation and Development presented the results of the research “Needs for the Development of Strategically Important Infrastructure till 2030.” According to it, the world transport infrastructure needs $11.3 trillion of investments. Of that, railways need 44% (approximately $5 trillion). Therefore, railways are recognised as a priority in transport infrastructure development around the whole world.
Modernisation and development of infrastructure remains RZD’s key objective in 2013 and beyond. The company will continue to use all financial mechanisms to attract investment. However, the holding company’s own opportunities are not enough to solve all problems, which appeared decades ago. Moreover, the company does not have enough money to carry out infrastructure projects on the BAM scale or to develop infrastructure on the threshold of the FIFA World Cup in 2018.
Commissioned by RZD, a group of scientific organisations worked actively to estimate the consequences of insufficient funding of railway infrastructure. The research was based on advanced model complex with the use of intersectoral balance. According to the research, total losses to GDP because of limitation of railway transportation can be between RUB 5.5 trillion and RUB 6.4 trillion, and losses to the budget system – between RUB 1.3 trillion and RUB 1.5 trillion. In the opinion of scientists, the state investment in transport infrastructure is a serious instrument for the development of the economy, and an important part of state anti-crisis policy. This instrument is actively used in such countries as France, Germany, Austria, England, and China.
Taking into account the dynamics of global macroeconomic figures and those in Russia, one has to admit that the year of 2013 will be a difficult one. There is a risk of slowing down the pace of economic growth. This year it is likely to be developed in accordance with the conservative (or even negative) scenario than the basic, or using the terms of the Ministry of Economic Development, moderately optimistic scenario. Therefore, the senior management of the company must organise work more thoroughly, using anti-crisis measures in all types of activities. ®
By Elena Ushkova
[~DETAIL_TEXT] => New Approaches
Firstly, speaking about the reform one should mention the launch and stable functioning of 85 subsidiaries of RZD. The total net assets of the subsidiaries, in which RZD has shareholdings, amounts to RUB 0.5 trillion. In the last three years, the company received RUB 237 billion from the sale of shareholdings in its subsidiaries. Of that, it got RUB 76 billion in 2012. The sale of the shares in Freight One was the largest privatisation deal in the recent history of Russia (RUB 175.5 billion). The sale of shareholdings in subsidiaries contributes to the creation of greater competition in different sectors of the railway transport market and attraction of private capital into the sector.
In the context of the company’s assets privatisation, it is obvious that RZD continues to keep to ethos of rational, evolutional development in the reform and modernisation of railways. Simultaneously, last year RZD participated in the discussion with the Federal Antimonopoly Service and a number of representatives of transport community about the development of so called commercial infrastructure of the freight railway transportation market.
Recently, there have been moves to organise a self-regulatory non-commercial partnership of the market players and the creation of a transportation services exchange. There has been no such experience in the world railway practice (and the International Union of Railways recognizes it). Moreover, many experts think that these ideas will not help to solve the current problems and will cause an imbalance in the functioning of the railway transport market.
Gaps in the regulation and a surplus of the rolling stock fleet give rise to concerns. The legal vacuum in defining the status of a rolling stock operator, and his obligations at cargo transportation, non-efficient transfer of empty railcars, and occupation of infrastructure will reduce the efficiency of work and may cause a speculative increase in prices for rolling stock rental. Therefore, the company strives for a balanced enhancement of the legislative sector. RZD submits its groundworks and offers to relevant federal authorities.
A lot of attention was paid last year to the issue of tariff regulation of railway transport. Unified tariffs on empty mileage of universal gondola cars and flat wagons and special flat wagons for timber came into force on November 1. Meanwhile, there are still a lot of issues to be solved. Together with ministries and departments in charge, RZD will continue the work aimed at formation of a long-term tariff policy and implementation of the investment component in the tariff on freight railway transportation.
Despite the persistent tension in the Russian economy, RZD’s transportation volume increased last year. There was a 2.4% rise in the cargo loading volume. However, the absolute result is hardly satisfying because it is only equal to the result of 2005. Exports via Russian ports contributed to the increase in the loading volume, whilst domestic transportation volume remains below the pre-crisis level. As a result, on some export routes, particularly in the Far Eastern region, the network is operating at maximum capacity, exceeding the highest results in the history of Russian railways by 30%.
In 2012, RZD’s contribution to the GDP was 1.74%, a little smaller than in 2011, when the figure was 1.81%. This shows a decline in the transport burden on the economy, and creation of conditions for the development of other sectors by restraining an increase in railway tariffs. This also means that investment in the railway infrastructure is not sufficient. Proof of this comes from 2003, when RZD was launched, prices in industry increased by 240% on average (for example, in the fuel industry they grew by 450%, in the ferrous metallurgy they rose by 260%), and tariffs on railway transportation grew by 180% only.
As a result, the transport component reduced for almost all types of cargo: by almost 32% for iron ore, by 34% for crude oil, by 56% for fuel oil, by 24% for coke, and by 17% for grain. There was a 0.6% increase for thermal coal only. Meanwhile, RZD remains one of the largest tax payers in Russia. Last year, over RUB 263 billion was transferred to budgets of all levels, and the entire holding company paid RUB 306 billion of taxes.
Amid the insufficient regulation of railway operators’ activity, the persistent expansion of the freight wagon fleet had a negative impact on the situation. Nowadays, more than 1,700 owners have a fleet of 1.15 million cargo wagons. Cargo turnover increased by 6% in comparison with the pre-crisis level of 2007, whilst the wagon fleet grew by 20% during the same period. As a consequence of rolling stock surplus, the efficiency of a cargo wagon fell by 11% as compared to 2007, and the time of its turnover grew by 21% or 2.7 days. The average section speed reduced by 12% and there was an increase in the need for locomotive teams.
All these factors create an additional burden on infrastructure and reduce the efficiency of the entire railway sector. In turn, this contributes to an increase in the price of transportation, and consumers feel it. Therefore, the competitiveness of railways decreases, and, because of a decline in the quality of services, consignors start to search for an alternative transport mode to have their freight carried.
To improve the situation, when amid a common surplus of wagons small and medium business faced an acute shortage of rolling stock, the RF Government made a decree, according to which RZD rented 106,000 gondola cars from Federal Cargo Company OJSC, thus forming the Rented Private Railcar fleet (RPR). The decree was initiated by RZD and supported by the Transport Ministry. Rented wagons worked in accordance with the principles of public rolling stock fleet.
The situation improved. At the same time, it is clear that usage of rented wagons by the transporter cannot help to solve the problem completely. A more sophisticated approach to transport process enhancement is needed. The project of the Common Network Technological Process was developed for that.
The first results of suggested improvements have appeared already. In particular, the accuracy of cargo trains dispatch on schedule has improved, the number of freight trains traveling on fixed train paths is growing. These are the main areas for enhancing the technology of transportation. As for the RPR fleet, the RF Government decided to keep this model till the end of 2013, when the Common Network Technological Process is completely put in operation.
Instruments for Efficiency
RZD has increased the presence in the transport and logistics market. In particular, RZD purchased a 75% shareholding in international logistics company GEFCO from Peugeot Citroеn. This will help to compensate for lost revenue due to the privatisation of efficient subsidiaries. At the same time, GEFCO’s integration into RZD will contribute to the enhancement of the holding company’s client-friendliness, give a boost to efficient usage of Russia’ transit potential, help to improve the level of logistics (in the international ranking, the company is just at the 95th position now). This is one of the most important integration projects.
To create sophisticated high-tech logistics services, RZD is transferring to a modern format of cargo servicing – multimodal terminal and logistics centres on the whole railway network of Russia, and first of all in large transport nodes. In April 2012, the company’s Board approved a relevant concept, completing project work at the first terminal and logistics centre “Bely Rast” in the Moscow region.
Container transportation volume increased rapidly. In 2012 it amounted to three million TEU, 11% more than in 2011. The number of container block trains grew by 20% to 7,500.
Last year RZD completed the creation of a management hierarchy for all basic business activities. The Central Directorate of Infrastructure was the last to be created. Therefore, it is the first time in the 175 year history of Russian Railways that it transferred from a mainly territorial management system to a matrix structure, where the key role belongs to network-wide special directorates. Their activity is coordinated at the central and at the regional levels.
On October 1, 2012, railways started functioning as regional centres of corporate management (RCCM). Chiefs of railways are responsible for reaching corporate targets and coordinate the holding company’s activity in the relevant area. The basic objectives for the next period are to build and strengthen horizontal ties between territorial directorates, affiliates, and the subsidiaries of RZD, and to optimise non-core assets.
It is also important to enhance internal efficiency, because currently the opportunities for possible state financial support are limited, and the loan potential will be practically exhausted in the next two years. Therefore, there is a need to develop and take measures to optimise expenditure and increase revenue, to master new instruments and methods.
Also, it’s necessary to continue work within the framework of interregional coordinating councils, enhance interaction with all players in the transport market to provide reliability and efficiency in the transportation process.
First of all, the company focuses on using advanced technologies to reach economic efficiency and create a modernised technological base for the company’s day to day work. RZD carries out the programme of innovative development approved by the Governmental Committee for High Technologies and Innovations and adopted by RZD’s Board of Directors. Last year, over RUB 7 billion was allocated for research and experimental and design works. It is 0.54% of the company’s revenue, which matches the level of other comparable companies around the world.
A priority of the company’s innovative development is extension of the level of power and environmental efficiency. According to the data from recent reports by the International Energy Agency and the International Union of Railways, Russian Railways is recognised as a leader among the leading railways of the world in the sector of energy efficiency.
A lot of innovative solutions in the sphere of development of intelligent systems for transport process control, services quality control, and monitoring of the condition of fixed assets and production processes have been developed recently. Implementation of innovative technologies for strengthening the permanent way structure and extend its life time is going on. RZD is carrying out a five-year programme to renew maintenance vehicles, which will allow increased efficiency in their work.
This year RZD plans to implement innovative developments in the work of basic production directorates, and transfer from pilot projects to their use on the whole network. RZD’s Plan of Research and Technical Development in 2013 was adopted. It covers the whole production sector of the company. It envisages not only use of modern technologies, but development of research and technical approaches covering almost all activities on Russian Railways. To carry out new principles, RZD created a new corporate system to control innovative activity. It provides a full cycle of implementing innovative projects – from defining strategic directions and target parameters of development to making new products and assessing their efficiency.
Investment Priorities
RZD used all opportunities and resources to extend the investment programme in 2012. As a result, investment exceeded RUB 481 billion, 20% more than in 2011, however, in comparable prices it is below the 2008 investment programme, when the maximum investment level was reached. Additional funds were received due to measures taken to increase internal efficiency and successful loan policy.
In 2012, 532 locomotives and 475 electric multiple units were bought. 96 km of station tracks, 118 km of secondary tracks were put in operation, and 132 km of tracks were electrified. RZD continued to carry out projects targeted at increasing the carrying capacity of railway sections and reducing bottle-necks.
With the support of the RF Government, RZD activated projects for the development of infrastructure at the Moscow railway node. Construction of the new Kuznetsovsky Tunnel was completed. It was funded from the RF Investment Fund. At the same time, there is a colossal shortage of funding, a result of which is a catastrophic level of fixed assets deterioration and a smaller pace of infrastructure extension than needed.
Regarding the funding sources, the 2013 investment programme of RZD will be RUB 411.4 billion. The three-year investment programme envisages significant funds for tractive rolling stock fleet renewal. Particularly, it is intended to buy about 770 locomotives in 2013. It is practically the whole production programme of the Russian transport machine building sector.
In the next three years, RZD is going to cut expenditure by RUB 24-25 billion per annum. A priority of every directorate, every subsidiary and affiliate of RZD is to increase their efficiency through labour productivity growth and optimal use of all resources.
Obviously, one of the most negative aspects of the world economy crisis is the lack of global initiative, which could open new horizons and help to transfer from a recession and budget deficit to joint planning of development. Leading international experts confirm the importance of investment in infrastructure, including railways.
Carrying out infrastructure projects contributes to the creation of jobs, provides a support to the real sector of economy, and makes for an increase in the pace of economic growth. It was declared in the declaration of the leaders of G20 member-states after the summit in Mexico last summer that investment in infrastructure is a very important prerequisite for stable economic growth. And the role of state funding of such projects was highly appreciated.
In January 2012, RZD, Vnesheconombank, and 20 key Russian industrial enterprises signed an Agreement on Railway Infrastructure Development as a result of a meeting chaired by the RF Prime Minister. It regulates relations between the transporter and cargo owners on the “take or pay” principle, which will allow RZD to provide a guaranteed payback of its investment upon condition that the project is initially planned to be recouped. Another important decision was made in 2012 – to attract funding from the Pension Fund by means of long-term loans (up to 30 years) in the form of infrastructure bonds to fund infrastructure projects.
In November 2011, the Organisation for Economic Cooperation and Development presented the results of the research “Needs for the Development of Strategically Important Infrastructure till 2030.” According to it, the world transport infrastructure needs $11.3 trillion of investments. Of that, railways need 44% (approximately $5 trillion). Therefore, railways are recognised as a priority in transport infrastructure development around the whole world.
Modernisation and development of infrastructure remains RZD’s key objective in 2013 and beyond. The company will continue to use all financial mechanisms to attract investment. However, the holding company’s own opportunities are not enough to solve all problems, which appeared decades ago. Moreover, the company does not have enough money to carry out infrastructure projects on the BAM scale or to develop infrastructure on the threshold of the FIFA World Cup in 2018.
Commissioned by RZD, a group of scientific organisations worked actively to estimate the consequences of insufficient funding of railway infrastructure. The research was based on advanced model complex with the use of intersectoral balance. According to the research, total losses to GDP because of limitation of railway transportation can be between RUB 5.5 trillion and RUB 6.4 trillion, and losses to the budget system – between RUB 1.3 trillion and RUB 1.5 trillion. In the opinion of scientists, the state investment in transport infrastructure is a serious instrument for the development of the economy, and an important part of state anti-crisis policy. This instrument is actively used in such countries as France, Germany, Austria, England, and China.
Taking into account the dynamics of global macroeconomic figures and those in Russia, one has to admit that the year of 2013 will be a difficult one. There is a risk of slowing down the pace of economic growth. This year it is likely to be developed in accordance with the conservative (or even negative) scenario than the basic, or using the terms of the Ministry of Economic Development, moderately optimistic scenario. Therefore, the senior management of the company must organise work more thoroughly, using anti-crisis measures in all types of activities. ®
By Elena Ushkova
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