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4 (36) December 2013

4 (36) December 2013
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Welcome to Chinese Railway Market

Welcome to Chinese Railway Market

There were never many independent players nor much private capital in the Chinese railway market. Governed by the Ministry of Railways, the sector was developing in accordance with state policy. Now it is going to be opened up to anyone who wants to enter it. What other changes will reforms give rise to? 

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Foundations Have Been Laid

Chinese railways are the most overloaded in the world. On average, there is 40.029 tons of cargo per a kilometer. For comparison, in Japan the figure is 13.835 tons. Obviously, if new tracks are not built, the situation on the network can become even tougher. The Ministry of Railways always relied on the support of authorities, but it was getting more and more difficult to find funds for large scale projects. Reform was needed.
The Ministry of Railways, which was often considered as “a state within a state”, tried hard to protect the sector from external competition, and entry for private players was closed by means of additional liсenсe procedures, and western machine building companies had to transfer the rights for their developments to Chinese companies to enter this market.
Now the situation must change. Reform in the country began four months after the former minister of railways Liu Zhijun was fired and sentenced to death for bribery and abuse of power. During his tenure, bribes in the ministry amounted to over $2 million, and he is also accused of an attempt at bribing the Central Committee of the Communist Party. After his dismissal, the Ministry of Railways of China was dismantled.
Now its administrative functions are fulfilled by the Ministry of Communications and the State Railway Administration (SRA), and the commercial activity is managed by the operator China Railway Corporation (CR). The latter is a public company, reporting to the central government. It will be funded by the Ministry of Finance and regulated by the Ministry of Communications and the SRA.  
CR will be responsible for passenger and cargo transportation, it will utilize and manage the national railway network, plan investments, and offer consultancy about the necessity to subsidise one or another project by the government.
Most departments that were previously subordinate to the ministry, for example the Research Institute of Railways, will also be a part of CR. The State Railway Administration will be in charge of technical standards, control safety, and check the quality of services and how fulfillment of projects meets required standards. Additionally, it will be responsible for organizing international cooperation. The SRA was supposed to begin operating in June, but it has not been completely formed yet. The SRA will be subordinate to the Ministry of Communications. It is not clear what the role of the latter is in this structure. The structure of relations between CR and SRA are not obvious either.
The new system has a lot of drawbacks, because there is no legislation for the functions and liabilities of parties. There are problems in the management mechanism too. CR is subordinate to the State Council, and the Director General of the national operator is de-facto the minister, i.e. his status is higher than the Director General of SRA. It raises doubts whether SRA’s control over CR will be effective.

Focus on Express Delivery

China has never had serious problems with passenger transportation – railways are always popular even in poor regions, and the HSR network leaves all other forms of transport behind according to the current rates of development. The dynamics in the sector of cargo transportation are unfavourable, mainly due to a lack of investment. For example, $2.4 trillion is to be allocated for the development of passenger transportation till 2015, whilst no significant investment in the cargo transportation sector is planned.
Sheng Guangzu, Director General of CR, believes that the annual decrease in volumes is connected to bureaucratic procedures that are too complicated for clients. In his words, it is necessary to create an online system or with special hotlines for cargo transportation. The focus should be on high-yielding packaged cargoes and there should be privileges for consignors of machinery and goods of prime necessity. “Door to door” transportation must also be a priority.
In comparison with other cargo transport modes, railways are cheaper in China, for example by 5-10 yuans per tons as compared to road haulage (approximately up to $2). Therefore, a logistics company that dispatches 200,000 tons of freight per annum, can save approximately one million yuans ($163,000). Additional fees for organizing transportation, however, did not allow the use of this advantage before. During the planned economy period, authorities took an additional fee from logistics companies for services –
10-30 yuans per every ton (up to $5), additionally the latter had to pay for warehousing services, if customers were not able to collect their goods quickly. Before the reform operators had to submit their transportation plans every week, every month, and every season. At least 30 days were needed to get approval for transportation –this time was spent on reservation of wagons, identification, and confirmation of loading. Currently, as soon as freight is delivered to a station and passes safety checks, it is loaded immediately. Therefore, only one day is needed now instead of a month.
According to the plan, cargo transportation revenues will be $36.2 billion this year, although there was no precise development strategy after the ministry was dismantled. It is known that CR is going to pay attention to the problems of all players, which did not happen earlier. For example, the focus is on companies engaged in express delivery. Currently, they prefer air transport, but CR is ready to offer transportation of small parcels by high-speed trains, therefore, freight can be delivered on the day of dispatch or overnight. This type of transportation will reduce logistics expenses and offer lower prices to customers. According to the authorities, railways must not be a competitor to road transport. On the contrary, multimodal logistics is now a priority.
In 2013, China hopes to overtake the USA in the sector of express transportation to become number one in the world by market volume– this year 8.5-10 billion parcels will be carried in the country, and 9 billion in the USA. 
The reforms began several months ago, but the first results are already visible. For example, the Western Railway Station at Kunming city, a transport hub, gained 790 million yuan in revenue in January-July, and by the end of 2013 its revenue will amount to 1.4 billion yuans, approximately 40% more than in the previous year. From June 15, the station loaded 18,000 tons daily, 1,200 tons more than in the same period of 2012. Such results became possible due to the revision of the request adjustment system.
Also, the number of private individual customers using railways for transportation of goods and personal appliances increased. Consignors and operators are sure that the main achievement of the system is that railways have become more customer-oriented.

Green Light for Financial Institutions

Since the beginning of the period of rapid national economic growth in 2003, insufficient investment in the development of the railway system became less noticeable. In 2004, the “Strategy of Mid- and Long-Term Development of the Railway Network” was adopted. According to this, about 100 billion yuans (approximately $16 billion) is needed to carry out all plans. The situation was always complicated by the railways’ dependence on the state – this sector still gets money injected due to state bonds, local public investment, and bank loans. Approximately 47% is public investment, 25% – bank loans, and 9% –
self-financing. The Government of China funds HSR projects especially actively. Though the revenue from such projects is not as high as in other countries – for example, losses from the Beijing - Tianjin line reach $102 billion annually, and the Government plans to invest up to $300 billion in this system by 2020.
State banks in China are ready to give multi-billion yuan loans at a low interest rate, thus the state can make large investments which are impossible in some other countries. Therefore, the cost of high-speed railways in Europe or Japan is three times higher than that of a usual railway. In China, the cost of HSR is higher by just 50%. Naturally, fast construction bears additional risks and expenses associated with them – for example, low-quality materials or mistakes in the design, which several times have caused railbed erosion by ground water and even derailments.
As for public investment, 40-50% of funds are given by authorities by means of loans from state banks and financial departments, another 40% are bonds from the Ministry of Railways, and the remaining 10-20% is provided by regional governments.
At the beginning of 2013, the Chinese Government announced ambitious plans to invest up to 630 billion yuans by the end of the year. About 10.7 billion yuans will be invested in HSR in the Yunnan province, of which 6.7 billion yuans will be invested by the Yungui railway administration, and 4 billion yuans –
by the administration of the Shanghai – Kunming line. It is more than 9.4 billion yuans planned for 2012. The cost increased because of the rise in land prices, and of the necessity to build expensive bridges and tunnels. For example, the Chengdu – Lanzhou line, which is currently being constructed, comprises 75% of its route in difficult artificial structures.
Market investors had an opportunity to enter the market (there is even a private railway line in the country), but there were no stimuli for that. For example, to create a JV with a Chinese company, foreign players were to meet the following requirements: successfully work in the market sector at least 10 years, and have a capital of at least $25 billion. Also, the JV must be established for not more than 20 years. If investment made by a foreign company exceeds $30 million, confirmation from Chinese authorities and additional licenses and certificates from different departments are needed. Now private investors, according to the Government, will get privileges and stimuli, including the rights to property for managing regional and intercity lines. Will they want to use this chance? Without a clear strategy and amid an unclear regulation mechanism, it is too risky to invest in large scale projects, thus, there will be few of such players in the next two years.
As for the machine building sector, there will be no changes in it. There are three ways that private foreign companies can enter the market in the Republic: sell licenses for developments, establish a JV, and launch a company with 100% foreign capital. For example, the Chinese party still has the right to change the development, get a patent for such modified technology, and sell it.
Despite the dismantling of the Ministry of Railways and the creation of new players, the situation in the sector will not dramatically change. Two trends – following the political course and national economic growth – will continue to define the development of railway transportation. Nevertheless, experts forecast that the volume of outsourcing will increase in the near future, because companies will be more customer-oriented and focus on improving their service, and give the management of logistics to third parties. Increasing taxes on road transport and construction of separated HSR will contribute to cargoes transfer from road transport to railways.
To survive in new conditions, it would be better for the fragmented market to unite. It will be strategically correct to unite with companies of another profile – for example with airlines.
By Christina Alexandrova

[~DETAIL_TEXT] =>

Foundations Have Been Laid

Chinese railways are the most overloaded in the world. On average, there is 40.029 tons of cargo per a kilometer. For comparison, in Japan the figure is 13.835 tons. Obviously, if new tracks are not built, the situation on the network can become even tougher. The Ministry of Railways always relied on the support of authorities, but it was getting more and more difficult to find funds for large scale projects. Reform was needed.
The Ministry of Railways, which was often considered as “a state within a state”, tried hard to protect the sector from external competition, and entry for private players was closed by means of additional liсenсe procedures, and western machine building companies had to transfer the rights for their developments to Chinese companies to enter this market.
Now the situation must change. Reform in the country began four months after the former minister of railways Liu Zhijun was fired and sentenced to death for bribery and abuse of power. During his tenure, bribes in the ministry amounted to over $2 million, and he is also accused of an attempt at bribing the Central Committee of the Communist Party. After his dismissal, the Ministry of Railways of China was dismantled.
Now its administrative functions are fulfilled by the Ministry of Communications and the State Railway Administration (SRA), and the commercial activity is managed by the operator China Railway Corporation (CR). The latter is a public company, reporting to the central government. It will be funded by the Ministry of Finance and regulated by the Ministry of Communications and the SRA.  
CR will be responsible for passenger and cargo transportation, it will utilize and manage the national railway network, plan investments, and offer consultancy about the necessity to subsidise one or another project by the government.
Most departments that were previously subordinate to the ministry, for example the Research Institute of Railways, will also be a part of CR. The State Railway Administration will be in charge of technical standards, control safety, and check the quality of services and how fulfillment of projects meets required standards. Additionally, it will be responsible for organizing international cooperation. The SRA was supposed to begin operating in June, but it has not been completely formed yet. The SRA will be subordinate to the Ministry of Communications. It is not clear what the role of the latter is in this structure. The structure of relations between CR and SRA are not obvious either.
The new system has a lot of drawbacks, because there is no legislation for the functions and liabilities of parties. There are problems in the management mechanism too. CR is subordinate to the State Council, and the Director General of the national operator is de-facto the minister, i.e. his status is higher than the Director General of SRA. It raises doubts whether SRA’s control over CR will be effective.

Focus on Express Delivery

China has never had serious problems with passenger transportation – railways are always popular even in poor regions, and the HSR network leaves all other forms of transport behind according to the current rates of development. The dynamics in the sector of cargo transportation are unfavourable, mainly due to a lack of investment. For example, $2.4 trillion is to be allocated for the development of passenger transportation till 2015, whilst no significant investment in the cargo transportation sector is planned.
Sheng Guangzu, Director General of CR, believes that the annual decrease in volumes is connected to bureaucratic procedures that are too complicated for clients. In his words, it is necessary to create an online system or with special hotlines for cargo transportation. The focus should be on high-yielding packaged cargoes and there should be privileges for consignors of machinery and goods of prime necessity. “Door to door” transportation must also be a priority.
In comparison with other cargo transport modes, railways are cheaper in China, for example by 5-10 yuans per tons as compared to road haulage (approximately up to $2). Therefore, a logistics company that dispatches 200,000 tons of freight per annum, can save approximately one million yuans ($163,000). Additional fees for organizing transportation, however, did not allow the use of this advantage before. During the planned economy period, authorities took an additional fee from logistics companies for services –
10-30 yuans per every ton (up to $5), additionally the latter had to pay for warehousing services, if customers were not able to collect their goods quickly. Before the reform operators had to submit their transportation plans every week, every month, and every season. At least 30 days were needed to get approval for transportation –this time was spent on reservation of wagons, identification, and confirmation of loading. Currently, as soon as freight is delivered to a station and passes safety checks, it is loaded immediately. Therefore, only one day is needed now instead of a month.
According to the plan, cargo transportation revenues will be $36.2 billion this year, although there was no precise development strategy after the ministry was dismantled. It is known that CR is going to pay attention to the problems of all players, which did not happen earlier. For example, the focus is on companies engaged in express delivery. Currently, they prefer air transport, but CR is ready to offer transportation of small parcels by high-speed trains, therefore, freight can be delivered on the day of dispatch or overnight. This type of transportation will reduce logistics expenses and offer lower prices to customers. According to the authorities, railways must not be a competitor to road transport. On the contrary, multimodal logistics is now a priority.
In 2013, China hopes to overtake the USA in the sector of express transportation to become number one in the world by market volume– this year 8.5-10 billion parcels will be carried in the country, and 9 billion in the USA. 
The reforms began several months ago, but the first results are already visible. For example, the Western Railway Station at Kunming city, a transport hub, gained 790 million yuan in revenue in January-July, and by the end of 2013 its revenue will amount to 1.4 billion yuans, approximately 40% more than in the previous year. From June 15, the station loaded 18,000 tons daily, 1,200 tons more than in the same period of 2012. Such results became possible due to the revision of the request adjustment system.
Also, the number of private individual customers using railways for transportation of goods and personal appliances increased. Consignors and operators are sure that the main achievement of the system is that railways have become more customer-oriented.

Green Light for Financial Institutions

Since the beginning of the period of rapid national economic growth in 2003, insufficient investment in the development of the railway system became less noticeable. In 2004, the “Strategy of Mid- and Long-Term Development of the Railway Network” was adopted. According to this, about 100 billion yuans (approximately $16 billion) is needed to carry out all plans. The situation was always complicated by the railways’ dependence on the state – this sector still gets money injected due to state bonds, local public investment, and bank loans. Approximately 47% is public investment, 25% – bank loans, and 9% –
self-financing. The Government of China funds HSR projects especially actively. Though the revenue from such projects is not as high as in other countries – for example, losses from the Beijing - Tianjin line reach $102 billion annually, and the Government plans to invest up to $300 billion in this system by 2020.
State banks in China are ready to give multi-billion yuan loans at a low interest rate, thus the state can make large investments which are impossible in some other countries. Therefore, the cost of high-speed railways in Europe or Japan is three times higher than that of a usual railway. In China, the cost of HSR is higher by just 50%. Naturally, fast construction bears additional risks and expenses associated with them – for example, low-quality materials or mistakes in the design, which several times have caused railbed erosion by ground water and even derailments.
As for public investment, 40-50% of funds are given by authorities by means of loans from state banks and financial departments, another 40% are bonds from the Ministry of Railways, and the remaining 10-20% is provided by regional governments.
At the beginning of 2013, the Chinese Government announced ambitious plans to invest up to 630 billion yuans by the end of the year. About 10.7 billion yuans will be invested in HSR in the Yunnan province, of which 6.7 billion yuans will be invested by the Yungui railway administration, and 4 billion yuans –
by the administration of the Shanghai – Kunming line. It is more than 9.4 billion yuans planned for 2012. The cost increased because of the rise in land prices, and of the necessity to build expensive bridges and tunnels. For example, the Chengdu – Lanzhou line, which is currently being constructed, comprises 75% of its route in difficult artificial structures.
Market investors had an opportunity to enter the market (there is even a private railway line in the country), but there were no stimuli for that. For example, to create a JV with a Chinese company, foreign players were to meet the following requirements: successfully work in the market sector at least 10 years, and have a capital of at least $25 billion. Also, the JV must be established for not more than 20 years. If investment made by a foreign company exceeds $30 million, confirmation from Chinese authorities and additional licenses and certificates from different departments are needed. Now private investors, according to the Government, will get privileges and stimuli, including the rights to property for managing regional and intercity lines. Will they want to use this chance? Without a clear strategy and amid an unclear regulation mechanism, it is too risky to invest in large scale projects, thus, there will be few of such players in the next two years.
As for the machine building sector, there will be no changes in it. There are three ways that private foreign companies can enter the market in the Republic: sell licenses for developments, establish a JV, and launch a company with 100% foreign capital. For example, the Chinese party still has the right to change the development, get a patent for such modified technology, and sell it.
Despite the dismantling of the Ministry of Railways and the creation of new players, the situation in the sector will not dramatically change. Two trends – following the political course and national economic growth – will continue to define the development of railway transportation. Nevertheless, experts forecast that the volume of outsourcing will increase in the near future, because companies will be more customer-oriented and focus on improving their service, and give the management of logistics to third parties. Increasing taxes on road transport and construction of separated HSR will contribute to cargoes transfer from road transport to railways.
To survive in new conditions, it would be better for the fragmented market to unite. It will be strategically correct to unite with companies of another profile – for example with airlines.
By Christina Alexandrova

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There were never many independent players nor much private capital in the Chinese railway market. Governed by the Ministry of Railways, the sector was developing in accordance with state policy. Now it is going to be opened up to anyone who wants to enter it. What other changes will reforms give rise to? 

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Foundations Have Been Laid

Chinese railways are the most overloaded in the world. On average, there is 40.029 tons of cargo per a kilometer. For comparison, in Japan the figure is 13.835 tons. Obviously, if new tracks are not built, the situation on the network can become even tougher. The Ministry of Railways always relied on the support of authorities, but it was getting more and more difficult to find funds for large scale projects. Reform was needed.
The Ministry of Railways, which was often considered as “a state within a state”, tried hard to protect the sector from external competition, and entry for private players was closed by means of additional liсenсe procedures, and western machine building companies had to transfer the rights for their developments to Chinese companies to enter this market.
Now the situation must change. Reform in the country began four months after the former minister of railways Liu Zhijun was fired and sentenced to death for bribery and abuse of power. During his tenure, bribes in the ministry amounted to over $2 million, and he is also accused of an attempt at bribing the Central Committee of the Communist Party. After his dismissal, the Ministry of Railways of China was dismantled.
Now its administrative functions are fulfilled by the Ministry of Communications and the State Railway Administration (SRA), and the commercial activity is managed by the operator China Railway Corporation (CR). The latter is a public company, reporting to the central government. It will be funded by the Ministry of Finance and regulated by the Ministry of Communications and the SRA.  
CR will be responsible for passenger and cargo transportation, it will utilize and manage the national railway network, plan investments, and offer consultancy about the necessity to subsidise one or another project by the government.
Most departments that were previously subordinate to the ministry, for example the Research Institute of Railways, will also be a part of CR. The State Railway Administration will be in charge of technical standards, control safety, and check the quality of services and how fulfillment of projects meets required standards. Additionally, it will be responsible for organizing international cooperation. The SRA was supposed to begin operating in June, but it has not been completely formed yet. The SRA will be subordinate to the Ministry of Communications. It is not clear what the role of the latter is in this structure. The structure of relations between CR and SRA are not obvious either.
The new system has a lot of drawbacks, because there is no legislation for the functions and liabilities of parties. There are problems in the management mechanism too. CR is subordinate to the State Council, and the Director General of the national operator is de-facto the minister, i.e. his status is higher than the Director General of SRA. It raises doubts whether SRA’s control over CR will be effective.

Focus on Express Delivery

China has never had serious problems with passenger transportation – railways are always popular even in poor regions, and the HSR network leaves all other forms of transport behind according to the current rates of development. The dynamics in the sector of cargo transportation are unfavourable, mainly due to a lack of investment. For example, $2.4 trillion is to be allocated for the development of passenger transportation till 2015, whilst no significant investment in the cargo transportation sector is planned.
Sheng Guangzu, Director General of CR, believes that the annual decrease in volumes is connected to bureaucratic procedures that are too complicated for clients. In his words, it is necessary to create an online system or with special hotlines for cargo transportation. The focus should be on high-yielding packaged cargoes and there should be privileges for consignors of machinery and goods of prime necessity. “Door to door” transportation must also be a priority.
In comparison with other cargo transport modes, railways are cheaper in China, for example by 5-10 yuans per tons as compared to road haulage (approximately up to $2). Therefore, a logistics company that dispatches 200,000 tons of freight per annum, can save approximately one million yuans ($163,000). Additional fees for organizing transportation, however, did not allow the use of this advantage before. During the planned economy period, authorities took an additional fee from logistics companies for services –
10-30 yuans per every ton (up to $5), additionally the latter had to pay for warehousing services, if customers were not able to collect their goods quickly. Before the reform operators had to submit their transportation plans every week, every month, and every season. At least 30 days were needed to get approval for transportation –this time was spent on reservation of wagons, identification, and confirmation of loading. Currently, as soon as freight is delivered to a station and passes safety checks, it is loaded immediately. Therefore, only one day is needed now instead of a month.
According to the plan, cargo transportation revenues will be $36.2 billion this year, although there was no precise development strategy after the ministry was dismantled. It is known that CR is going to pay attention to the problems of all players, which did not happen earlier. For example, the focus is on companies engaged in express delivery. Currently, they prefer air transport, but CR is ready to offer transportation of small parcels by high-speed trains, therefore, freight can be delivered on the day of dispatch or overnight. This type of transportation will reduce logistics expenses and offer lower prices to customers. According to the authorities, railways must not be a competitor to road transport. On the contrary, multimodal logistics is now a priority.
In 2013, China hopes to overtake the USA in the sector of express transportation to become number one in the world by market volume– this year 8.5-10 billion parcels will be carried in the country, and 9 billion in the USA. 
The reforms began several months ago, but the first results are already visible. For example, the Western Railway Station at Kunming city, a transport hub, gained 790 million yuan in revenue in January-July, and by the end of 2013 its revenue will amount to 1.4 billion yuans, approximately 40% more than in the previous year. From June 15, the station loaded 18,000 tons daily, 1,200 tons more than in the same period of 2012. Such results became possible due to the revision of the request adjustment system.
Also, the number of private individual customers using railways for transportation of goods and personal appliances increased. Consignors and operators are sure that the main achievement of the system is that railways have become more customer-oriented.

Green Light for Financial Institutions

Since the beginning of the period of rapid national economic growth in 2003, insufficient investment in the development of the railway system became less noticeable. In 2004, the “Strategy of Mid- and Long-Term Development of the Railway Network” was adopted. According to this, about 100 billion yuans (approximately $16 billion) is needed to carry out all plans. The situation was always complicated by the railways’ dependence on the state – this sector still gets money injected due to state bonds, local public investment, and bank loans. Approximately 47% is public investment, 25% – bank loans, and 9% –
self-financing. The Government of China funds HSR projects especially actively. Though the revenue from such projects is not as high as in other countries – for example, losses from the Beijing - Tianjin line reach $102 billion annually, and the Government plans to invest up to $300 billion in this system by 2020.
State banks in China are ready to give multi-billion yuan loans at a low interest rate, thus the state can make large investments which are impossible in some other countries. Therefore, the cost of high-speed railways in Europe or Japan is three times higher than that of a usual railway. In China, the cost of HSR is higher by just 50%. Naturally, fast construction bears additional risks and expenses associated with them – for example, low-quality materials or mistakes in the design, which several times have caused railbed erosion by ground water and even derailments.
As for public investment, 40-50% of funds are given by authorities by means of loans from state banks and financial departments, another 40% are bonds from the Ministry of Railways, and the remaining 10-20% is provided by regional governments.
At the beginning of 2013, the Chinese Government announced ambitious plans to invest up to 630 billion yuans by the end of the year. About 10.7 billion yuans will be invested in HSR in the Yunnan province, of which 6.7 billion yuans will be invested by the Yungui railway administration, and 4 billion yuans –
by the administration of the Shanghai – Kunming line. It is more than 9.4 billion yuans planned for 2012. The cost increased because of the rise in land prices, and of the necessity to build expensive bridges and tunnels. For example, the Chengdu – Lanzhou line, which is currently being constructed, comprises 75% of its route in difficult artificial structures.
Market investors had an opportunity to enter the market (there is even a private railway line in the country), but there were no stimuli for that. For example, to create a JV with a Chinese company, foreign players were to meet the following requirements: successfully work in the market sector at least 10 years, and have a capital of at least $25 billion. Also, the JV must be established for not more than 20 years. If investment made by a foreign company exceeds $30 million, confirmation from Chinese authorities and additional licenses and certificates from different departments are needed. Now private investors, according to the Government, will get privileges and stimuli, including the rights to property for managing regional and intercity lines. Will they want to use this chance? Without a clear strategy and amid an unclear regulation mechanism, it is too risky to invest in large scale projects, thus, there will be few of such players in the next two years.
As for the machine building sector, there will be no changes in it. There are three ways that private foreign companies can enter the market in the Republic: sell licenses for developments, establish a JV, and launch a company with 100% foreign capital. For example, the Chinese party still has the right to change the development, get a patent for such modified technology, and sell it.
Despite the dismantling of the Ministry of Railways and the creation of new players, the situation in the sector will not dramatically change. Two trends – following the political course and national economic growth – will continue to define the development of railway transportation. Nevertheless, experts forecast that the volume of outsourcing will increase in the near future, because companies will be more customer-oriented and focus on improving their service, and give the management of logistics to third parties. Increasing taxes on road transport and construction of separated HSR will contribute to cargoes transfer from road transport to railways.
To survive in new conditions, it would be better for the fragmented market to unite. It will be strategically correct to unite with companies of another profile – for example with airlines.
By Christina Alexandrova

[~DETAIL_TEXT] =>

Foundations Have Been Laid

Chinese railways are the most overloaded in the world. On average, there is 40.029 tons of cargo per a kilometer. For comparison, in Japan the figure is 13.835 tons. Obviously, if new tracks are not built, the situation on the network can become even tougher. The Ministry of Railways always relied on the support of authorities, but it was getting more and more difficult to find funds for large scale projects. Reform was needed.
The Ministry of Railways, which was often considered as “a state within a state”, tried hard to protect the sector from external competition, and entry for private players was closed by means of additional liсenсe procedures, and western machine building companies had to transfer the rights for their developments to Chinese companies to enter this market.
Now the situation must change. Reform in the country began four months after the former minister of railways Liu Zhijun was fired and sentenced to death for bribery and abuse of power. During his tenure, bribes in the ministry amounted to over $2 million, and he is also accused of an attempt at bribing the Central Committee of the Communist Party. After his dismissal, the Ministry of Railways of China was dismantled.
Now its administrative functions are fulfilled by the Ministry of Communications and the State Railway Administration (SRA), and the commercial activity is managed by the operator China Railway Corporation (CR). The latter is a public company, reporting to the central government. It will be funded by the Ministry of Finance and regulated by the Ministry of Communications and the SRA.  
CR will be responsible for passenger and cargo transportation, it will utilize and manage the national railway network, plan investments, and offer consultancy about the necessity to subsidise one or another project by the government.
Most departments that were previously subordinate to the ministry, for example the Research Institute of Railways, will also be a part of CR. The State Railway Administration will be in charge of technical standards, control safety, and check the quality of services and how fulfillment of projects meets required standards. Additionally, it will be responsible for organizing international cooperation. The SRA was supposed to begin operating in June, but it has not been completely formed yet. The SRA will be subordinate to the Ministry of Communications. It is not clear what the role of the latter is in this structure. The structure of relations between CR and SRA are not obvious either.
The new system has a lot of drawbacks, because there is no legislation for the functions and liabilities of parties. There are problems in the management mechanism too. CR is subordinate to the State Council, and the Director General of the national operator is de-facto the minister, i.e. his status is higher than the Director General of SRA. It raises doubts whether SRA’s control over CR will be effective.

Focus on Express Delivery

China has never had serious problems with passenger transportation – railways are always popular even in poor regions, and the HSR network leaves all other forms of transport behind according to the current rates of development. The dynamics in the sector of cargo transportation are unfavourable, mainly due to a lack of investment. For example, $2.4 trillion is to be allocated for the development of passenger transportation till 2015, whilst no significant investment in the cargo transportation sector is planned.
Sheng Guangzu, Director General of CR, believes that the annual decrease in volumes is connected to bureaucratic procedures that are too complicated for clients. In his words, it is necessary to create an online system or with special hotlines for cargo transportation. The focus should be on high-yielding packaged cargoes and there should be privileges for consignors of machinery and goods of prime necessity. “Door to door” transportation must also be a priority.
In comparison with other cargo transport modes, railways are cheaper in China, for example by 5-10 yuans per tons as compared to road haulage (approximately up to $2). Therefore, a logistics company that dispatches 200,000 tons of freight per annum, can save approximately one million yuans ($163,000). Additional fees for organizing transportation, however, did not allow the use of this advantage before. During the planned economy period, authorities took an additional fee from logistics companies for services –
10-30 yuans per every ton (up to $5), additionally the latter had to pay for warehousing services, if customers were not able to collect their goods quickly. Before the reform operators had to submit their transportation plans every week, every month, and every season. At least 30 days were needed to get approval for transportation –this time was spent on reservation of wagons, identification, and confirmation of loading. Currently, as soon as freight is delivered to a station and passes safety checks, it is loaded immediately. Therefore, only one day is needed now instead of a month.
According to the plan, cargo transportation revenues will be $36.2 billion this year, although there was no precise development strategy after the ministry was dismantled. It is known that CR is going to pay attention to the problems of all players, which did not happen earlier. For example, the focus is on companies engaged in express delivery. Currently, they prefer air transport, but CR is ready to offer transportation of small parcels by high-speed trains, therefore, freight can be delivered on the day of dispatch or overnight. This type of transportation will reduce logistics expenses and offer lower prices to customers. According to the authorities, railways must not be a competitor to road transport. On the contrary, multimodal logistics is now a priority.
In 2013, China hopes to overtake the USA in the sector of express transportation to become number one in the world by market volume– this year 8.5-10 billion parcels will be carried in the country, and 9 billion in the USA. 
The reforms began several months ago, but the first results are already visible. For example, the Western Railway Station at Kunming city, a transport hub, gained 790 million yuan in revenue in January-July, and by the end of 2013 its revenue will amount to 1.4 billion yuans, approximately 40% more than in the previous year. From June 15, the station loaded 18,000 tons daily, 1,200 tons more than in the same period of 2012. Such results became possible due to the revision of the request adjustment system.
Also, the number of private individual customers using railways for transportation of goods and personal appliances increased. Consignors and operators are sure that the main achievement of the system is that railways have become more customer-oriented.

Green Light for Financial Institutions

Since the beginning of the period of rapid national economic growth in 2003, insufficient investment in the development of the railway system became less noticeable. In 2004, the “Strategy of Mid- and Long-Term Development of the Railway Network” was adopted. According to this, about 100 billion yuans (approximately $16 billion) is needed to carry out all plans. The situation was always complicated by the railways’ dependence on the state – this sector still gets money injected due to state bonds, local public investment, and bank loans. Approximately 47% is public investment, 25% – bank loans, and 9% –
self-financing. The Government of China funds HSR projects especially actively. Though the revenue from such projects is not as high as in other countries – for example, losses from the Beijing - Tianjin line reach $102 billion annually, and the Government plans to invest up to $300 billion in this system by 2020.
State banks in China are ready to give multi-billion yuan loans at a low interest rate, thus the state can make large investments which are impossible in some other countries. Therefore, the cost of high-speed railways in Europe or Japan is three times higher than that of a usual railway. In China, the cost of HSR is higher by just 50%. Naturally, fast construction bears additional risks and expenses associated with them – for example, low-quality materials or mistakes in the design, which several times have caused railbed erosion by ground water and even derailments.
As for public investment, 40-50% of funds are given by authorities by means of loans from state banks and financial departments, another 40% are bonds from the Ministry of Railways, and the remaining 10-20% is provided by regional governments.
At the beginning of 2013, the Chinese Government announced ambitious plans to invest up to 630 billion yuans by the end of the year. About 10.7 billion yuans will be invested in HSR in the Yunnan province, of which 6.7 billion yuans will be invested by the Yungui railway administration, and 4 billion yuans –
by the administration of the Shanghai – Kunming line. It is more than 9.4 billion yuans planned for 2012. The cost increased because of the rise in land prices, and of the necessity to build expensive bridges and tunnels. For example, the Chengdu – Lanzhou line, which is currently being constructed, comprises 75% of its route in difficult artificial structures.
Market investors had an opportunity to enter the market (there is even a private railway line in the country), but there were no stimuli for that. For example, to create a JV with a Chinese company, foreign players were to meet the following requirements: successfully work in the market sector at least 10 years, and have a capital of at least $25 billion. Also, the JV must be established for not more than 20 years. If investment made by a foreign company exceeds $30 million, confirmation from Chinese authorities and additional licenses and certificates from different departments are needed. Now private investors, according to the Government, will get privileges and stimuli, including the rights to property for managing regional and intercity lines. Will they want to use this chance? Without a clear strategy and amid an unclear regulation mechanism, it is too risky to invest in large scale projects, thus, there will be few of such players in the next two years.
As for the machine building sector, there will be no changes in it. There are three ways that private foreign companies can enter the market in the Republic: sell licenses for developments, establish a JV, and launch a company with 100% foreign capital. For example, the Chinese party still has the right to change the development, get a patent for such modified technology, and sell it.
Despite the dismantling of the Ministry of Railways and the creation of new players, the situation in the sector will not dramatically change. Two trends – following the political course and national economic growth – will continue to define the development of railway transportation. Nevertheless, experts forecast that the volume of outsourcing will increase in the near future, because companies will be more customer-oriented and focus on improving their service, and give the management of logistics to third parties. Increasing taxes on road transport and construction of separated HSR will contribute to cargoes transfer from road transport to railways.
To survive in new conditions, it would be better for the fragmented market to unite. It will be strategically correct to unite with companies of another profile – for example with airlines.
By Christina Alexandrova

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There were never many independent players nor much private capital in the Chinese railway market. Governed by the Ministry of Railways, the sector was developing in accordance with state policy. Now it is going to be opened up to anyone who wants to enter it. What other changes will reforms give rise to? 

[~PREVIEW_TEXT] =>

There were never many independent players nor much private capital in the Chinese railway market. Governed by the Ministry of Railways, the sector was developing in accordance with state policy. Now it is going to be opened up to anyone who wants to enter it. What other changes will reforms give rise to? 

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РЖД-Партнер

In Partnership with Global Leaders

In Partnership  with Global Leaders

A programme for the development of the Machine Building Sector
in 2010-2014 is being carried out in the Republic of Kazakhstan.
New plants, opened in the framework of the programme,
must provide the country with Kazakhstan-made railway machinery.

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Renewal of the Locomotive Fleet

According to analysts from the Eurasian Development Bank, the prospects for machine building sector development in Kazakhstan are looking up due to more profitable conditions for the creation of new production capacities and the opening up of a large sales market. The Union of Machine Builders of Kazakhstan note that the production volumes of the enlarged sector (machine building and metalworking) in the Republic grew 14-fold in 12 years – to $4.3 billion. This sum is forecast to reach $5.4 billion in the current year, and will exceed $6.5 billion in 2014.
An increase in the demand for products from the railway machine building sector is caused by the growth of cargo turnover and the degradation of the current generation of rolling stock. Askar Mamin, President of National Company Kazakhstan Temir Zholy JSC (KTZ) notes that thanks to state support a new sector of railway machine building, characterised by large amounts of high value-added products, was created in Kazakhstan in a short term. Nine big plants that are engaged in the manufacture of high-tech products with a serious export potential were built in the framework of the state programme and in the partnership with global leaders in the railway machine building sector, such as General Electric, Alstom, Talgo, and Siemens.
In 2009, Locomotive Kurastyru Zauyty JSC (LKZ) was opened. It is scheduled to produce 92 TE33A diesel locomotives there in 2013. Of that, 72 locomotives will be made for Locomotive JSC, and 20 will be exported (10 units will be supplied to Estonia, 8 to Tajikistan, and 2 to Kyrgyzstan). Work is under way to expand the share of Kazakhstan-made components used in the production of TE33A. The first diesel locomotive made at LKZ was a CKD product assembled from components and nodes delivered from different General Electric plants all over the world. Nowadays, LKZ produces over 11,000 different parts for new locomotives – about 70% of the machine’s total weight or about 30% of its cost (by 2015 this figure will grow to 50%). Another priority of LKZ is the promotion of TE33A to export markets.
TE33A locomotives are equipped with GEVO 12-cylinder 4,400 horsepower diesel prime movers, consuming 17% less fuel and oil in comparison with their predecessors. Last July, KTZ, Transmashdiesel, and General Electric launched a joint project for GEVO diesel engines production. The engines will be used at LKZ and exported to the CIS states. The capacity of the plant is 300 units per annum. The first diesel engine will be made in December 2014.
In 2014, LKZ will begin to produce a new passenger diesel locomotive of the TEP33A model. It will be optimised for the existing freight locomotive. Most changes are targeted to meet certification requirements. Thus, the system of motor suspension will be changed, which will allow an increase in the design speed of the locomotive to 160 kph, while that of TE33A is 120 kph.
The ageing fleet of diesel locomotives in Kazakhstan will be renewed by new TEM-KZ made at the Shu Locomotive Repair Plant, an affiliate of Kamkor Locomotive LLP. The project of shunting diesel locomotive assembly in Shu was launched in spring 2012 with the assistance of the China South Locomotive & Rolling Stock Corporation Limited (CSR). “10 diesel locomotives will be made by the year-end. In the future, the capacity of the plant will grow to 50 units per annum,” said Asan Nusipkulov, Engineer-in-Chief at Kamkor Locomotive. All in all, Shu Locomotive Repair Plant is to supply over 260 locomotives to the market of Kazakhstan. According to the technical department of Shu Locomotive Repair Plant, sandboxes, a water bladder tank, a tank – diesel fuel heater, a pilot, waist rails, and ladders were made for the first assembly unit, the share of Kazakhstan-made components in which was 5%. By 2020 this figure is to reach 51%.
The production of freight electric locomotives in the Republic of Kazakhstan became possible due to Electrovoz Kurastyru Zauyty LLP (EKZ), which opened in Astana in December 2012. It is a joint venture between KTZ, Alstom (France), and Transmashholding (Russia). The first locomotive was produced last February. The annual capacity of the plant is 100 electric locomotive units. Though most of them are built to fulfill the increasing needs of Kazakh railways, but 40% of them are planned for export to the CIS countries.
Currently, two KZ8A two-unit electric locomotives are being tested. The first pilot machine is being tested on the Astana – Eremeintau section in Kazakhstan, and the second – at the testing ground of VNIIZhT in Scherbinka (Russia). Excellent traction characteristics together with a high capacity allow using one KZ8A two-unit locomotive instead of VL80 three-unit locomotives for pulling a 9,000 ton train. To increase the profitability of the electric locomotive, EKZ plans to produce components for it. By 2020 the share of Kazakhstan-made components will amount to 50%. Moreover, a passenger electric locomotive is to be produced by the end of 2013, designed by Alstom.

Map of Industrialisation 

To carry out the project of launching the production of freight wagons in the Republic of Kazakhstan, the Kazakhstan Wagon Building Company LLP (KWC) was created at the production complex of Taman LLP in Ekibastuz in 2008. In 2012 it produced 1,700 gondola cars purchased by Kaztemirtrans JSC. Because of the Kazakh economy’s focus on raw materials, the most popular types of rolling stock in the country are universal gondola cars. According to experts, Kazakhstan will need up to 53,000 cargo railcars by 2020. “According to the Memorandum signed in 2010 by KWC and Kaztemirtrans, the wagon building plant will fulfill the country’s domestic need for railcars for the next 7 years. Therefore, it is too early to talk about exports of the plant’s products,” says Kabylbek Tolepbergenov, Deputy CEO for Production at KWC.  
The development of the transport machine building sector in Kazakhstan contributed to the localisation of production of large nodes and components at a higher stage of processing. In 2012, the production of medium wagon casting was put into operation in Pavlodar by the Format Mach Company LLP. Its capacity is 5,000 wagon sets per annum. In 2015 it will begin to produce large wagon castings with the same annual capacity – 5,000 wagon sets. Also, the company began to make automatic coupling devices, cushioning devices, and coupler yokes.
700 wagon sets will be produced at Vostockmashzavod JSC in Ust-Kamenogorsk in 2013, and in the near future the production volume will increase to 4,000 per annum. The company began production of the 73ZW draft gear housing, production and mechanical tooling of draft gear housings, and is now getting ready to manufacture labyrinth box bearings.
Test samples of large wagon casting were produced at Parkhomenko KMZ LLP in Karaganda. The design capacity of the company is 2,500 wagon sets per annum. A request for pre-certification tests has been submitted already. Work is under way to certify products and receive the conditional number of the marking stamp.  In addition, the production of large wagon castings will be launched by Simplex Mash LLP in Temirtau in 2013 (its design capacity will be up to 5,000 wagon sets per annum). Therefore, due to all these measures, 16,500 wagon sets with 100% Kazakhstan-made components will be produced annually by 2015.
It is worth mentioning the first stage of the production of track switching equipment and solid wheels put into operation at Prommashkomplekt in Ekibastuz. The project of rail and structural steel production on the Siemens-Voest-Alpine technology was implemented in 2012. The capacity of the new facility will be 430,000 tons of rolled products per annum, including 200,000 tons of 120 metre long rails. The plant will be operational in 2014.
Another important project for the Republic is the production of passenger wagons in cooperation with the Spanish company Talgo. The Plan of Joint Actions, signed by Kazakh and Belarusian railways in 2011, covered the initiative of launching a passenger train linking the capitals of the three countries – Astana, Moscow, and Minsk.
Vasily Gapeev, Head of the Representative office of Belarusian Railways in Kazakhstan, says, “I think the Tulpar-Talgo plant will strengthen its position even more by 2015, and then it will be possible to form this international train of railcars made in Kazakhstan. If a good schedule is made for it, the train could cover 3,500 km distance in two days. It is a very forward-looking project, which will allow us to take one more step towards the Common Economic Space.”  
On the whole, the Republic’s Map of Industrialisation in 2010-2014 covers more than 780 innovation projects. Of that, 56 are in the machine building sector, and one third of them refers to the railway sector. A distinguishing feature of the machine building sector in Kazakhstan is the domination of assembly plants. One of the most obvious problems is the lack of capacities to produce the components needed for the modern machinery assembled in the country. More than 2,000 types of spares are needed for KTZ alone. Of that, local companies can produce less than 500. Several new plants producing different nodes and parts will be put into operation in 2013-2016. There are problems, which may become worse after Kazakhstan joins the WTO. Specialists think that one of the most important and real opportunities for the development of machine building is the cooperation between countries – members of the Customs Union and the CIS. It will contribute to an increase in production volumes and exports, extension of sources for investment attraction and introduction of new technologies.
By Elena Ushkova

[~DETAIL_TEXT] =>

Renewal of the Locomotive Fleet

According to analysts from the Eurasian Development Bank, the prospects for machine building sector development in Kazakhstan are looking up due to more profitable conditions for the creation of new production capacities and the opening up of a large sales market. The Union of Machine Builders of Kazakhstan note that the production volumes of the enlarged sector (machine building and metalworking) in the Republic grew 14-fold in 12 years – to $4.3 billion. This sum is forecast to reach $5.4 billion in the current year, and will exceed $6.5 billion in 2014.
An increase in the demand for products from the railway machine building sector is caused by the growth of cargo turnover and the degradation of the current generation of rolling stock. Askar Mamin, President of National Company Kazakhstan Temir Zholy JSC (KTZ) notes that thanks to state support a new sector of railway machine building, characterised by large amounts of high value-added products, was created in Kazakhstan in a short term. Nine big plants that are engaged in the manufacture of high-tech products with a serious export potential were built in the framework of the state programme and in the partnership with global leaders in the railway machine building sector, such as General Electric, Alstom, Talgo, and Siemens.
In 2009, Locomotive Kurastyru Zauyty JSC (LKZ) was opened. It is scheduled to produce 92 TE33A diesel locomotives there in 2013. Of that, 72 locomotives will be made for Locomotive JSC, and 20 will be exported (10 units will be supplied to Estonia, 8 to Tajikistan, and 2 to Kyrgyzstan). Work is under way to expand the share of Kazakhstan-made components used in the production of TE33A. The first diesel locomotive made at LKZ was a CKD product assembled from components and nodes delivered from different General Electric plants all over the world. Nowadays, LKZ produces over 11,000 different parts for new locomotives – about 70% of the machine’s total weight or about 30% of its cost (by 2015 this figure will grow to 50%). Another priority of LKZ is the promotion of TE33A to export markets.
TE33A locomotives are equipped with GEVO 12-cylinder 4,400 horsepower diesel prime movers, consuming 17% less fuel and oil in comparison with their predecessors. Last July, KTZ, Transmashdiesel, and General Electric launched a joint project for GEVO diesel engines production. The engines will be used at LKZ and exported to the CIS states. The capacity of the plant is 300 units per annum. The first diesel engine will be made in December 2014.
In 2014, LKZ will begin to produce a new passenger diesel locomotive of the TEP33A model. It will be optimised for the existing freight locomotive. Most changes are targeted to meet certification requirements. Thus, the system of motor suspension will be changed, which will allow an increase in the design speed of the locomotive to 160 kph, while that of TE33A is 120 kph.
The ageing fleet of diesel locomotives in Kazakhstan will be renewed by new TEM-KZ made at the Shu Locomotive Repair Plant, an affiliate of Kamkor Locomotive LLP. The project of shunting diesel locomotive assembly in Shu was launched in spring 2012 with the assistance of the China South Locomotive & Rolling Stock Corporation Limited (CSR). “10 diesel locomotives will be made by the year-end. In the future, the capacity of the plant will grow to 50 units per annum,” said Asan Nusipkulov, Engineer-in-Chief at Kamkor Locomotive. All in all, Shu Locomotive Repair Plant is to supply over 260 locomotives to the market of Kazakhstan. According to the technical department of Shu Locomotive Repair Plant, sandboxes, a water bladder tank, a tank – diesel fuel heater, a pilot, waist rails, and ladders were made for the first assembly unit, the share of Kazakhstan-made components in which was 5%. By 2020 this figure is to reach 51%.
The production of freight electric locomotives in the Republic of Kazakhstan became possible due to Electrovoz Kurastyru Zauyty LLP (EKZ), which opened in Astana in December 2012. It is a joint venture between KTZ, Alstom (France), and Transmashholding (Russia). The first locomotive was produced last February. The annual capacity of the plant is 100 electric locomotive units. Though most of them are built to fulfill the increasing needs of Kazakh railways, but 40% of them are planned for export to the CIS countries.
Currently, two KZ8A two-unit electric locomotives are being tested. The first pilot machine is being tested on the Astana – Eremeintau section in Kazakhstan, and the second – at the testing ground of VNIIZhT in Scherbinka (Russia). Excellent traction characteristics together with a high capacity allow using one KZ8A two-unit locomotive instead of VL80 three-unit locomotives for pulling a 9,000 ton train. To increase the profitability of the electric locomotive, EKZ plans to produce components for it. By 2020 the share of Kazakhstan-made components will amount to 50%. Moreover, a passenger electric locomotive is to be produced by the end of 2013, designed by Alstom.

Map of Industrialisation 

To carry out the project of launching the production of freight wagons in the Republic of Kazakhstan, the Kazakhstan Wagon Building Company LLP (KWC) was created at the production complex of Taman LLP in Ekibastuz in 2008. In 2012 it produced 1,700 gondola cars purchased by Kaztemirtrans JSC. Because of the Kazakh economy’s focus on raw materials, the most popular types of rolling stock in the country are universal gondola cars. According to experts, Kazakhstan will need up to 53,000 cargo railcars by 2020. “According to the Memorandum signed in 2010 by KWC and Kaztemirtrans, the wagon building plant will fulfill the country’s domestic need for railcars for the next 7 years. Therefore, it is too early to talk about exports of the plant’s products,” says Kabylbek Tolepbergenov, Deputy CEO for Production at KWC.  
The development of the transport machine building sector in Kazakhstan contributed to the localisation of production of large nodes and components at a higher stage of processing. In 2012, the production of medium wagon casting was put into operation in Pavlodar by the Format Mach Company LLP. Its capacity is 5,000 wagon sets per annum. In 2015 it will begin to produce large wagon castings with the same annual capacity – 5,000 wagon sets. Also, the company began to make automatic coupling devices, cushioning devices, and coupler yokes.
700 wagon sets will be produced at Vostockmashzavod JSC in Ust-Kamenogorsk in 2013, and in the near future the production volume will increase to 4,000 per annum. The company began production of the 73ZW draft gear housing, production and mechanical tooling of draft gear housings, and is now getting ready to manufacture labyrinth box bearings.
Test samples of large wagon casting were produced at Parkhomenko KMZ LLP in Karaganda. The design capacity of the company is 2,500 wagon sets per annum. A request for pre-certification tests has been submitted already. Work is under way to certify products and receive the conditional number of the marking stamp.  In addition, the production of large wagon castings will be launched by Simplex Mash LLP in Temirtau in 2013 (its design capacity will be up to 5,000 wagon sets per annum). Therefore, due to all these measures, 16,500 wagon sets with 100% Kazakhstan-made components will be produced annually by 2015.
It is worth mentioning the first stage of the production of track switching equipment and solid wheels put into operation at Prommashkomplekt in Ekibastuz. The project of rail and structural steel production on the Siemens-Voest-Alpine technology was implemented in 2012. The capacity of the new facility will be 430,000 tons of rolled products per annum, including 200,000 tons of 120 metre long rails. The plant will be operational in 2014.
Another important project for the Republic is the production of passenger wagons in cooperation with the Spanish company Talgo. The Plan of Joint Actions, signed by Kazakh and Belarusian railways in 2011, covered the initiative of launching a passenger train linking the capitals of the three countries – Astana, Moscow, and Minsk.
Vasily Gapeev, Head of the Representative office of Belarusian Railways in Kazakhstan, says, “I think the Tulpar-Talgo plant will strengthen its position even more by 2015, and then it will be possible to form this international train of railcars made in Kazakhstan. If a good schedule is made for it, the train could cover 3,500 km distance in two days. It is a very forward-looking project, which will allow us to take one more step towards the Common Economic Space.”  
On the whole, the Republic’s Map of Industrialisation in 2010-2014 covers more than 780 innovation projects. Of that, 56 are in the machine building sector, and one third of them refers to the railway sector. A distinguishing feature of the machine building sector in Kazakhstan is the domination of assembly plants. One of the most obvious problems is the lack of capacities to produce the components needed for the modern machinery assembled in the country. More than 2,000 types of spares are needed for KTZ alone. Of that, local companies can produce less than 500. Several new plants producing different nodes and parts will be put into operation in 2013-2016. There are problems, which may become worse after Kazakhstan joins the WTO. Specialists think that one of the most important and real opportunities for the development of machine building is the cooperation between countries – members of the Customs Union and the CIS. It will contribute to an increase in production volumes and exports, extension of sources for investment attraction and introduction of new technologies.
By Elena Ushkova

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A programme for the development of the Machine Building Sector
in 2010-2014 is being carried out in the Republic of Kazakhstan.
New plants, opened in the framework of the programme,
must provide the country with Kazakhstan-made railway machinery.

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A programme for the development of the Machine Building Sector
in 2010-2014 is being carried out in the Republic of Kazakhstan.
New plants, opened in the framework of the programme,
must provide the country with Kazakhstan-made railway machinery.

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Renewal of the Locomotive Fleet

According to analysts from the Eurasian Development Bank, the prospects for machine building sector development in Kazakhstan are looking up due to more profitable conditions for the creation of new production capacities and the opening up of a large sales market. The Union of Machine Builders of Kazakhstan note that the production volumes of the enlarged sector (machine building and metalworking) in the Republic grew 14-fold in 12 years – to $4.3 billion. This sum is forecast to reach $5.4 billion in the current year, and will exceed $6.5 billion in 2014.
An increase in the demand for products from the railway machine building sector is caused by the growth of cargo turnover and the degradation of the current generation of rolling stock. Askar Mamin, President of National Company Kazakhstan Temir Zholy JSC (KTZ) notes that thanks to state support a new sector of railway machine building, characterised by large amounts of high value-added products, was created in Kazakhstan in a short term. Nine big plants that are engaged in the manufacture of high-tech products with a serious export potential were built in the framework of the state programme and in the partnership with global leaders in the railway machine building sector, such as General Electric, Alstom, Talgo, and Siemens.
In 2009, Locomotive Kurastyru Zauyty JSC (LKZ) was opened. It is scheduled to produce 92 TE33A diesel locomotives there in 2013. Of that, 72 locomotives will be made for Locomotive JSC, and 20 will be exported (10 units will be supplied to Estonia, 8 to Tajikistan, and 2 to Kyrgyzstan). Work is under way to expand the share of Kazakhstan-made components used in the production of TE33A. The first diesel locomotive made at LKZ was a CKD product assembled from components and nodes delivered from different General Electric plants all over the world. Nowadays, LKZ produces over 11,000 different parts for new locomotives – about 70% of the machine’s total weight or about 30% of its cost (by 2015 this figure will grow to 50%). Another priority of LKZ is the promotion of TE33A to export markets.
TE33A locomotives are equipped with GEVO 12-cylinder 4,400 horsepower diesel prime movers, consuming 17% less fuel and oil in comparison with their predecessors. Last July, KTZ, Transmashdiesel, and General Electric launched a joint project for GEVO diesel engines production. The engines will be used at LKZ and exported to the CIS states. The capacity of the plant is 300 units per annum. The first diesel engine will be made in December 2014.
In 2014, LKZ will begin to produce a new passenger diesel locomotive of the TEP33A model. It will be optimised for the existing freight locomotive. Most changes are targeted to meet certification requirements. Thus, the system of motor suspension will be changed, which will allow an increase in the design speed of the locomotive to 160 kph, while that of TE33A is 120 kph.
The ageing fleet of diesel locomotives in Kazakhstan will be renewed by new TEM-KZ made at the Shu Locomotive Repair Plant, an affiliate of Kamkor Locomotive LLP. The project of shunting diesel locomotive assembly in Shu was launched in spring 2012 with the assistance of the China South Locomotive & Rolling Stock Corporation Limited (CSR). “10 diesel locomotives will be made by the year-end. In the future, the capacity of the plant will grow to 50 units per annum,” said Asan Nusipkulov, Engineer-in-Chief at Kamkor Locomotive. All in all, Shu Locomotive Repair Plant is to supply over 260 locomotives to the market of Kazakhstan. According to the technical department of Shu Locomotive Repair Plant, sandboxes, a water bladder tank, a tank – diesel fuel heater, a pilot, waist rails, and ladders were made for the first assembly unit, the share of Kazakhstan-made components in which was 5%. By 2020 this figure is to reach 51%.
The production of freight electric locomotives in the Republic of Kazakhstan became possible due to Electrovoz Kurastyru Zauyty LLP (EKZ), which opened in Astana in December 2012. It is a joint venture between KTZ, Alstom (France), and Transmashholding (Russia). The first locomotive was produced last February. The annual capacity of the plant is 100 electric locomotive units. Though most of them are built to fulfill the increasing needs of Kazakh railways, but 40% of them are planned for export to the CIS countries.
Currently, two KZ8A two-unit electric locomotives are being tested. The first pilot machine is being tested on the Astana – Eremeintau section in Kazakhstan, and the second – at the testing ground of VNIIZhT in Scherbinka (Russia). Excellent traction characteristics together with a high capacity allow using one KZ8A two-unit locomotive instead of VL80 three-unit locomotives for pulling a 9,000 ton train. To increase the profitability of the electric locomotive, EKZ plans to produce components for it. By 2020 the share of Kazakhstan-made components will amount to 50%. Moreover, a passenger electric locomotive is to be produced by the end of 2013, designed by Alstom.

Map of Industrialisation 

To carry out the project of launching the production of freight wagons in the Republic of Kazakhstan, the Kazakhstan Wagon Building Company LLP (KWC) was created at the production complex of Taman LLP in Ekibastuz in 2008. In 2012 it produced 1,700 gondola cars purchased by Kaztemirtrans JSC. Because of the Kazakh economy’s focus on raw materials, the most popular types of rolling stock in the country are universal gondola cars. According to experts, Kazakhstan will need up to 53,000 cargo railcars by 2020. “According to the Memorandum signed in 2010 by KWC and Kaztemirtrans, the wagon building plant will fulfill the country’s domestic need for railcars for the next 7 years. Therefore, it is too early to talk about exports of the plant’s products,” says Kabylbek Tolepbergenov, Deputy CEO for Production at KWC.  
The development of the transport machine building sector in Kazakhstan contributed to the localisation of production of large nodes and components at a higher stage of processing. In 2012, the production of medium wagon casting was put into operation in Pavlodar by the Format Mach Company LLP. Its capacity is 5,000 wagon sets per annum. In 2015 it will begin to produce large wagon castings with the same annual capacity – 5,000 wagon sets. Also, the company began to make automatic coupling devices, cushioning devices, and coupler yokes.
700 wagon sets will be produced at Vostockmashzavod JSC in Ust-Kamenogorsk in 2013, and in the near future the production volume will increase to 4,000 per annum. The company began production of the 73ZW draft gear housing, production and mechanical tooling of draft gear housings, and is now getting ready to manufacture labyrinth box bearings.
Test samples of large wagon casting were produced at Parkhomenko KMZ LLP in Karaganda. The design capacity of the company is 2,500 wagon sets per annum. A request for pre-certification tests has been submitted already. Work is under way to certify products and receive the conditional number of the marking stamp.  In addition, the production of large wagon castings will be launched by Simplex Mash LLP in Temirtau in 2013 (its design capacity will be up to 5,000 wagon sets per annum). Therefore, due to all these measures, 16,500 wagon sets with 100% Kazakhstan-made components will be produced annually by 2015.
It is worth mentioning the first stage of the production of track switching equipment and solid wheels put into operation at Prommashkomplekt in Ekibastuz. The project of rail and structural steel production on the Siemens-Voest-Alpine technology was implemented in 2012. The capacity of the new facility will be 430,000 tons of rolled products per annum, including 200,000 tons of 120 metre long rails. The plant will be operational in 2014.
Another important project for the Republic is the production of passenger wagons in cooperation with the Spanish company Talgo. The Plan of Joint Actions, signed by Kazakh and Belarusian railways in 2011, covered the initiative of launching a passenger train linking the capitals of the three countries – Astana, Moscow, and Minsk.
Vasily Gapeev, Head of the Representative office of Belarusian Railways in Kazakhstan, says, “I think the Tulpar-Talgo plant will strengthen its position even more by 2015, and then it will be possible to form this international train of railcars made in Kazakhstan. If a good schedule is made for it, the train could cover 3,500 km distance in two days. It is a very forward-looking project, which will allow us to take one more step towards the Common Economic Space.”  
On the whole, the Republic’s Map of Industrialisation in 2010-2014 covers more than 780 innovation projects. Of that, 56 are in the machine building sector, and one third of them refers to the railway sector. A distinguishing feature of the machine building sector in Kazakhstan is the domination of assembly plants. One of the most obvious problems is the lack of capacities to produce the components needed for the modern machinery assembled in the country. More than 2,000 types of spares are needed for KTZ alone. Of that, local companies can produce less than 500. Several new plants producing different nodes and parts will be put into operation in 2013-2016. There are problems, which may become worse after Kazakhstan joins the WTO. Specialists think that one of the most important and real opportunities for the development of machine building is the cooperation between countries – members of the Customs Union and the CIS. It will contribute to an increase in production volumes and exports, extension of sources for investment attraction and introduction of new technologies.
By Elena Ushkova

[~DETAIL_TEXT] =>

Renewal of the Locomotive Fleet

According to analysts from the Eurasian Development Bank, the prospects for machine building sector development in Kazakhstan are looking up due to more profitable conditions for the creation of new production capacities and the opening up of a large sales market. The Union of Machine Builders of Kazakhstan note that the production volumes of the enlarged sector (machine building and metalworking) in the Republic grew 14-fold in 12 years – to $4.3 billion. This sum is forecast to reach $5.4 billion in the current year, and will exceed $6.5 billion in 2014.
An increase in the demand for products from the railway machine building sector is caused by the growth of cargo turnover and the degradation of the current generation of rolling stock. Askar Mamin, President of National Company Kazakhstan Temir Zholy JSC (KTZ) notes that thanks to state support a new sector of railway machine building, characterised by large amounts of high value-added products, was created in Kazakhstan in a short term. Nine big plants that are engaged in the manufacture of high-tech products with a serious export potential were built in the framework of the state programme and in the partnership with global leaders in the railway machine building sector, such as General Electric, Alstom, Talgo, and Siemens.
In 2009, Locomotive Kurastyru Zauyty JSC (LKZ) was opened. It is scheduled to produce 92 TE33A diesel locomotives there in 2013. Of that, 72 locomotives will be made for Locomotive JSC, and 20 will be exported (10 units will be supplied to Estonia, 8 to Tajikistan, and 2 to Kyrgyzstan). Work is under way to expand the share of Kazakhstan-made components used in the production of TE33A. The first diesel locomotive made at LKZ was a CKD product assembled from components and nodes delivered from different General Electric plants all over the world. Nowadays, LKZ produces over 11,000 different parts for new locomotives – about 70% of the machine’s total weight or about 30% of its cost (by 2015 this figure will grow to 50%). Another priority of LKZ is the promotion of TE33A to export markets.
TE33A locomotives are equipped with GEVO 12-cylinder 4,400 horsepower diesel prime movers, consuming 17% less fuel and oil in comparison with their predecessors. Last July, KTZ, Transmashdiesel, and General Electric launched a joint project for GEVO diesel engines production. The engines will be used at LKZ and exported to the CIS states. The capacity of the plant is 300 units per annum. The first diesel engine will be made in December 2014.
In 2014, LKZ will begin to produce a new passenger diesel locomotive of the TEP33A model. It will be optimised for the existing freight locomotive. Most changes are targeted to meet certification requirements. Thus, the system of motor suspension will be changed, which will allow an increase in the design speed of the locomotive to 160 kph, while that of TE33A is 120 kph.
The ageing fleet of diesel locomotives in Kazakhstan will be renewed by new TEM-KZ made at the Shu Locomotive Repair Plant, an affiliate of Kamkor Locomotive LLP. The project of shunting diesel locomotive assembly in Shu was launched in spring 2012 with the assistance of the China South Locomotive & Rolling Stock Corporation Limited (CSR). “10 diesel locomotives will be made by the year-end. In the future, the capacity of the plant will grow to 50 units per annum,” said Asan Nusipkulov, Engineer-in-Chief at Kamkor Locomotive. All in all, Shu Locomotive Repair Plant is to supply over 260 locomotives to the market of Kazakhstan. According to the technical department of Shu Locomotive Repair Plant, sandboxes, a water bladder tank, a tank – diesel fuel heater, a pilot, waist rails, and ladders were made for the first assembly unit, the share of Kazakhstan-made components in which was 5%. By 2020 this figure is to reach 51%.
The production of freight electric locomotives in the Republic of Kazakhstan became possible due to Electrovoz Kurastyru Zauyty LLP (EKZ), which opened in Astana in December 2012. It is a joint venture between KTZ, Alstom (France), and Transmashholding (Russia). The first locomotive was produced last February. The annual capacity of the plant is 100 electric locomotive units. Though most of them are built to fulfill the increasing needs of Kazakh railways, but 40% of them are planned for export to the CIS countries.
Currently, two KZ8A two-unit electric locomotives are being tested. The first pilot machine is being tested on the Astana – Eremeintau section in Kazakhstan, and the second – at the testing ground of VNIIZhT in Scherbinka (Russia). Excellent traction characteristics together with a high capacity allow using one KZ8A two-unit locomotive instead of VL80 three-unit locomotives for pulling a 9,000 ton train. To increase the profitability of the electric locomotive, EKZ plans to produce components for it. By 2020 the share of Kazakhstan-made components will amount to 50%. Moreover, a passenger electric locomotive is to be produced by the end of 2013, designed by Alstom.

Map of Industrialisation 

To carry out the project of launching the production of freight wagons in the Republic of Kazakhstan, the Kazakhstan Wagon Building Company LLP (KWC) was created at the production complex of Taman LLP in Ekibastuz in 2008. In 2012 it produced 1,700 gondola cars purchased by Kaztemirtrans JSC. Because of the Kazakh economy’s focus on raw materials, the most popular types of rolling stock in the country are universal gondola cars. According to experts, Kazakhstan will need up to 53,000 cargo railcars by 2020. “According to the Memorandum signed in 2010 by KWC and Kaztemirtrans, the wagon building plant will fulfill the country’s domestic need for railcars for the next 7 years. Therefore, it is too early to talk about exports of the plant’s products,” says Kabylbek Tolepbergenov, Deputy CEO for Production at KWC.  
The development of the transport machine building sector in Kazakhstan contributed to the localisation of production of large nodes and components at a higher stage of processing. In 2012, the production of medium wagon casting was put into operation in Pavlodar by the Format Mach Company LLP. Its capacity is 5,000 wagon sets per annum. In 2015 it will begin to produce large wagon castings with the same annual capacity – 5,000 wagon sets. Also, the company began to make automatic coupling devices, cushioning devices, and coupler yokes.
700 wagon sets will be produced at Vostockmashzavod JSC in Ust-Kamenogorsk in 2013, and in the near future the production volume will increase to 4,000 per annum. The company began production of the 73ZW draft gear housing, production and mechanical tooling of draft gear housings, and is now getting ready to manufacture labyrinth box bearings.
Test samples of large wagon casting were produced at Parkhomenko KMZ LLP in Karaganda. The design capacity of the company is 2,500 wagon sets per annum. A request for pre-certification tests has been submitted already. Work is under way to certify products and receive the conditional number of the marking stamp.  In addition, the production of large wagon castings will be launched by Simplex Mash LLP in Temirtau in 2013 (its design capacity will be up to 5,000 wagon sets per annum). Therefore, due to all these measures, 16,500 wagon sets with 100% Kazakhstan-made components will be produced annually by 2015.
It is worth mentioning the first stage of the production of track switching equipment and solid wheels put into operation at Prommashkomplekt in Ekibastuz. The project of rail and structural steel production on the Siemens-Voest-Alpine technology was implemented in 2012. The capacity of the new facility will be 430,000 tons of rolled products per annum, including 200,000 tons of 120 metre long rails. The plant will be operational in 2014.
Another important project for the Republic is the production of passenger wagons in cooperation with the Spanish company Talgo. The Plan of Joint Actions, signed by Kazakh and Belarusian railways in 2011, covered the initiative of launching a passenger train linking the capitals of the three countries – Astana, Moscow, and Minsk.
Vasily Gapeev, Head of the Representative office of Belarusian Railways in Kazakhstan, says, “I think the Tulpar-Talgo plant will strengthen its position even more by 2015, and then it will be possible to form this international train of railcars made in Kazakhstan. If a good schedule is made for it, the train could cover 3,500 km distance in two days. It is a very forward-looking project, which will allow us to take one more step towards the Common Economic Space.”  
On the whole, the Republic’s Map of Industrialisation in 2010-2014 covers more than 780 innovation projects. Of that, 56 are in the machine building sector, and one third of them refers to the railway sector. A distinguishing feature of the machine building sector in Kazakhstan is the domination of assembly plants. One of the most obvious problems is the lack of capacities to produce the components needed for the modern machinery assembled in the country. More than 2,000 types of spares are needed for KTZ alone. Of that, local companies can produce less than 500. Several new plants producing different nodes and parts will be put into operation in 2013-2016. There are problems, which may become worse after Kazakhstan joins the WTO. Specialists think that one of the most important and real opportunities for the development of machine building is the cooperation between countries – members of the Customs Union and the CIS. It will contribute to an increase in production volumes and exports, extension of sources for investment attraction and introduction of new technologies.
By Elena Ushkova

[DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>

A programme for the development of the Machine Building Sector
in 2010-2014 is being carried out in the Republic of Kazakhstan.
New plants, opened in the framework of the programme,
must provide the country with Kazakhstan-made railway machinery.

[~PREVIEW_TEXT] =>

A programme for the development of the Machine Building Sector
in 2010-2014 is being carried out in the Republic of Kazakhstan.
New plants, opened in the framework of the programme,
must provide the country with Kazakhstan-made railway machinery.

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РЖД-Партнер

Eurasian Integration

Eurasian Integration

The priorities of the Republic of Kazakhstan are the development of reliable transport and logistics links between Europe and Asia, and the creation of an efficient national infrastructure to contribute to the country’s integration into the global economy. Kanat Alpysbaev, Vice President for Logistics at National Company Kazakhstan Temir Zholy OJSC (KTZ), talks about projects contributing to expanding the transit potential of Kazakhstan.

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Multimodal Service

– Mr Alpysbaev, what are the largest trans-continental transport and logistics projects carried out with the participation of KTZ? 

– Work is currently underway to develop the country’s transit potential. A number of infrastructural projects have been carried out already. The construction of the Korgas – Zhetygen railway line (293 km) was finished in 2011, and the Uzen – the state border with Turkmenistan route (146 km) was completed in 2012. In May 11, 2013, the Bolashak station was opened at the Kazakh – Turkmen border, which became the beginning of a new route from Kazakhstan to/from the Persian Gulf countries. Also, projects for an international centre of cross-border cooperation “Khorgos” and a special economic zone “Khorgos – Eastern Gates” were carried out as well as the extension of the Aktau sea port northwards and the development of airport infrastructure.
I’d like to note that last year the construction of a new railway line linking Zhezkazgan and Beineu (988 km) began. It will straighten the existing route to the Aktau port in the direction of Turkey, Southeastern Europe, and the Persian Gulf countries. Due to the new line, the transportation distance from Dostyk to Aktau will reduce by 748 km. Another important advantage of this link is the decrease in delivery time via Kazakhstan, for example, the delivery time for freight carried from the Lianyungang port (China) to Istanbul (Turkey) reduced from 17 to 14 days, and consequently the cost of transportation also fell.
The new Zhezkazgan – Beineu line will contribute to route integration with the 98 km long Akhalkalaki (Georgia) – Kars (Turkey) railway line, the construction of which will be completed in 2014. This combination of infrastructural projects in the region will increase the transit opportunities of Kazakhstan and other countries – members of TRACECA, and will provide a freight base (for dry cargoes) to the Aktau port.
The anticipated volume of transit freight flow between China and the EU carried via the Zhezkazgan – Beineu line and the Aktau port will amount to 150,000 TEU by 2020. Special attention is paid to container trains on the routes Chongqing (China) – Duisburg (Germany) and Chengdu (China) – Lodz (Poland), which were put into operation in 2011 and 2012 respectively. In both cases the time en route is about 15 days.
Forming the external terminal network, we have defined the basic points for freight flow consolidation in China and their absorption into the Baltic States and the Black Sea region. We plan to open an agent sales office in Urumqi and build a terminal in the Lianyungang port in China.

– What measures has the Republic of Kazakhstan taken to strengthen the interaction between different transport modes?

– By the order of the head of the country, a national multimodal operator KTZ Express was launched by KTZ. It is the only centre providing transport and logistics services, with representative offices abroad, and a developed agent network. Nowadays, we are expanding our competence in the sectors of air-, road-, and water transport. It is necessary for combining transport services for supply chains, and offering an integrated service to the final customer. Taking into account the geographical specifics of Kazakhstan and its involvement in international trade, such services becomes an instrument for improving transport and transit potential and the logistics climate in the country. The national multimodal operator will integrate itself into transportation by railway, road, sea, and air, port and airport infrastructure, and a network of transport and logistics centres, providing door-to-door cargo transportation, organising full supply chains and offering through tariff rates.
In cooperation with transport and logistics operators, we develop new logistics solutions for the consolidation of transit flows in the Republic of Kazakhstan and their distribution to regions (Central Asia, Russia, Europe) using multimodal transportation. We have begun offering a service organising through and combined transportation from Central China. Also, we are preparing pilot cargo transportation in the framework of a Rail-Air project from Chongqing to Amsterdam using three transport modes – railway, road vehicles, and airplanes. This chain includes customs, terminal and warehousing services and air charter. A similar scheme is applied for sea transportation via the Dubai air hub. A luxury advantage of our product is that the transportation time is 50% shorter, though the cost of the service is practically the same.

– Can you comment on the cooperation of KTZ, Kazlogistics, the National Centre for the Development of Transport Logistics, and the Association of National Forwarders of the Republic of Kazakhstan targeted at building consignor – trader – transporter – customs relations unto a single logistics scheme (in the framework of a memorandum signed on September 20, 2012)?

– Among the results of joint work, I would like to mention the introduction of container trains according to the preliminary e-declaration system, and the development of the scheme for interaction between participants in the transport process. In particular, container trains on the Ukhan – Pardubitse and Chengdu – Lodz routes were launched, and due to the prior submission of customs information, formalities at the Dostyk border crossing took only 1.5 and 1.1 hours respectively.

Moving to External Markets

– What are the plans about the creation of a network of transport and logistics centres in the Republic of Kazakhstan and abroad?

– A feasibility study for the construction of TLCs in Kazakhstan is being developed. It must define the number of such centres and their location. To form an external network of TLCs abroad, we analysed existing and future export and transit flows, and built a backbone map of the basic points of freight base origin and absorption. On the basis of the analysis, a concept of developing an external agent and terminal network was formed. It takes into account different models of participation of capital.
The key projects are the construction of our own terminal infrastructure in the Lianyungang port to consolidate cargo flows to/from Southeastern Asia –one of prospective directions for the development of the Kazakh trade. In addition to China, we are going to develop our terminal capacities in the Baltic and Black Sea ports, Europe, and Persian Gulf – as major directions for Kazakh exports and transit.
A sophisticated study will be carried out to correctly estimate the feasibility of investing in an external terminal network. Perhaps, somewhere we will have to build terminals, and in other places it will be more reasonable to conclude a partnership agreement or open an agent office to promote transport and logistics services, accumulate freight base, and provide a backload.
A network of transport and logistics centres, united by a centralised management system and a single technological process, will contribute to the coherence of the areas of Kazakhstan and countries – members of international transport corridors, and an entry to key sea commercial routes to Southeastern Asia and Europe. After all, it will give rise to an increase in the volume of the international cargo for export, import, and transit via Kazakhstan by 120% by 2020.

– What should be done before the end of 2013 and in the more distant future for Kazakhstan TemirZholy to become a national transport and logistics operator?

– KTZ received the SEZ “Khorgos – Eastern Gates”, international centre for cross-border cooperation “Khorgos”, and a number of regional airports for confidential management. The Aktau sea port will be handed over for confidential management by the end of 2013 too. Also, business processes and the methods of interaction between all infrastructure facilities will be done in accordance with global practices to increase the efficiency of the business and the quality of services.
The “Kazakhstan – New Silk Road” project is being carried out. It envisages the maximum usage of the transport potential of Kazakhstan and is a priority and an important stage in the country’s transformation into the transport and logistics hub of the region. Constant work is underway to ensure the safety of cargo, the development of competitive tariff rates, to increase the speed of transportation and reduce delivery time and to remove physical and other barriers at interstate junctions. All of which will contribute to an increase in the transit potential of countries – participants of international transport corridors. At the same time, the regulative and legislative base is being improved, particularly in the field of regulation of transit and combined transportation, which will contribute to the simplification of procedures for transit transportation via Kazakhstan and organisation of combined transportation.
Interviewed by Elena Ushkova 

[~DETAIL_TEXT] =>

Multimodal Service

– Mr Alpysbaev, what are the largest trans-continental transport and logistics projects carried out with the participation of KTZ? 

– Work is currently underway to develop the country’s transit potential. A number of infrastructural projects have been carried out already. The construction of the Korgas – Zhetygen railway line (293 km) was finished in 2011, and the Uzen – the state border with Turkmenistan route (146 km) was completed in 2012. In May 11, 2013, the Bolashak station was opened at the Kazakh – Turkmen border, which became the beginning of a new route from Kazakhstan to/from the Persian Gulf countries. Also, projects for an international centre of cross-border cooperation “Khorgos” and a special economic zone “Khorgos – Eastern Gates” were carried out as well as the extension of the Aktau sea port northwards and the development of airport infrastructure.
I’d like to note that last year the construction of a new railway line linking Zhezkazgan and Beineu (988 km) began. It will straighten the existing route to the Aktau port in the direction of Turkey, Southeastern Europe, and the Persian Gulf countries. Due to the new line, the transportation distance from Dostyk to Aktau will reduce by 748 km. Another important advantage of this link is the decrease in delivery time via Kazakhstan, for example, the delivery time for freight carried from the Lianyungang port (China) to Istanbul (Turkey) reduced from 17 to 14 days, and consequently the cost of transportation also fell.
The new Zhezkazgan – Beineu line will contribute to route integration with the 98 km long Akhalkalaki (Georgia) – Kars (Turkey) railway line, the construction of which will be completed in 2014. This combination of infrastructural projects in the region will increase the transit opportunities of Kazakhstan and other countries – members of TRACECA, and will provide a freight base (for dry cargoes) to the Aktau port.
The anticipated volume of transit freight flow between China and the EU carried via the Zhezkazgan – Beineu line and the Aktau port will amount to 150,000 TEU by 2020. Special attention is paid to container trains on the routes Chongqing (China) – Duisburg (Germany) and Chengdu (China) – Lodz (Poland), which were put into operation in 2011 and 2012 respectively. In both cases the time en route is about 15 days.
Forming the external terminal network, we have defined the basic points for freight flow consolidation in China and their absorption into the Baltic States and the Black Sea region. We plan to open an agent sales office in Urumqi and build a terminal in the Lianyungang port in China.

– What measures has the Republic of Kazakhstan taken to strengthen the interaction between different transport modes?

– By the order of the head of the country, a national multimodal operator KTZ Express was launched by KTZ. It is the only centre providing transport and logistics services, with representative offices abroad, and a developed agent network. Nowadays, we are expanding our competence in the sectors of air-, road-, and water transport. It is necessary for combining transport services for supply chains, and offering an integrated service to the final customer. Taking into account the geographical specifics of Kazakhstan and its involvement in international trade, such services becomes an instrument for improving transport and transit potential and the logistics climate in the country. The national multimodal operator will integrate itself into transportation by railway, road, sea, and air, port and airport infrastructure, and a network of transport and logistics centres, providing door-to-door cargo transportation, organising full supply chains and offering through tariff rates.
In cooperation with transport and logistics operators, we develop new logistics solutions for the consolidation of transit flows in the Republic of Kazakhstan and their distribution to regions (Central Asia, Russia, Europe) using multimodal transportation. We have begun offering a service organising through and combined transportation from Central China. Also, we are preparing pilot cargo transportation in the framework of a Rail-Air project from Chongqing to Amsterdam using three transport modes – railway, road vehicles, and airplanes. This chain includes customs, terminal and warehousing services and air charter. A similar scheme is applied for sea transportation via the Dubai air hub. A luxury advantage of our product is that the transportation time is 50% shorter, though the cost of the service is practically the same.

– Can you comment on the cooperation of KTZ, Kazlogistics, the National Centre for the Development of Transport Logistics, and the Association of National Forwarders of the Republic of Kazakhstan targeted at building consignor – trader – transporter – customs relations unto a single logistics scheme (in the framework of a memorandum signed on September 20, 2012)?

– Among the results of joint work, I would like to mention the introduction of container trains according to the preliminary e-declaration system, and the development of the scheme for interaction between participants in the transport process. In particular, container trains on the Ukhan – Pardubitse and Chengdu – Lodz routes were launched, and due to the prior submission of customs information, formalities at the Dostyk border crossing took only 1.5 and 1.1 hours respectively.

Moving to External Markets

– What are the plans about the creation of a network of transport and logistics centres in the Republic of Kazakhstan and abroad?

– A feasibility study for the construction of TLCs in Kazakhstan is being developed. It must define the number of such centres and their location. To form an external network of TLCs abroad, we analysed existing and future export and transit flows, and built a backbone map of the basic points of freight base origin and absorption. On the basis of the analysis, a concept of developing an external agent and terminal network was formed. It takes into account different models of participation of capital.
The key projects are the construction of our own terminal infrastructure in the Lianyungang port to consolidate cargo flows to/from Southeastern Asia –one of prospective directions for the development of the Kazakh trade. In addition to China, we are going to develop our terminal capacities in the Baltic and Black Sea ports, Europe, and Persian Gulf – as major directions for Kazakh exports and transit.
A sophisticated study will be carried out to correctly estimate the feasibility of investing in an external terminal network. Perhaps, somewhere we will have to build terminals, and in other places it will be more reasonable to conclude a partnership agreement or open an agent office to promote transport and logistics services, accumulate freight base, and provide a backload.
A network of transport and logistics centres, united by a centralised management system and a single technological process, will contribute to the coherence of the areas of Kazakhstan and countries – members of international transport corridors, and an entry to key sea commercial routes to Southeastern Asia and Europe. After all, it will give rise to an increase in the volume of the international cargo for export, import, and transit via Kazakhstan by 120% by 2020.

– What should be done before the end of 2013 and in the more distant future for Kazakhstan TemirZholy to become a national transport and logistics operator?

– KTZ received the SEZ “Khorgos – Eastern Gates”, international centre for cross-border cooperation “Khorgos”, and a number of regional airports for confidential management. The Aktau sea port will be handed over for confidential management by the end of 2013 too. Also, business processes and the methods of interaction between all infrastructure facilities will be done in accordance with global practices to increase the efficiency of the business and the quality of services.
The “Kazakhstan – New Silk Road” project is being carried out. It envisages the maximum usage of the transport potential of Kazakhstan and is a priority and an important stage in the country’s transformation into the transport and logistics hub of the region. Constant work is underway to ensure the safety of cargo, the development of competitive tariff rates, to increase the speed of transportation and reduce delivery time and to remove physical and other barriers at interstate junctions. All of which will contribute to an increase in the transit potential of countries – participants of international transport corridors. At the same time, the regulative and legislative base is being improved, particularly in the field of regulation of transit and combined transportation, which will contribute to the simplification of procedures for transit transportation via Kazakhstan and organisation of combined transportation.
Interviewed by Elena Ushkova 

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The priorities of the Republic of Kazakhstan are the development of reliable transport and logistics links between Europe and Asia, and the creation of an efficient national infrastructure to contribute to the country’s integration into the global economy. Kanat Alpysbaev, Vice President for Logistics at National Company Kazakhstan Temir Zholy OJSC (KTZ), talks about projects contributing to expanding the transit potential of Kazakhstan.

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The priorities of the Republic of Kazakhstan are the development of reliable transport and logistics links between Europe and Asia, and the creation of an efficient national infrastructure to contribute to the country’s integration into the global economy. Kanat Alpysbaev, Vice President for Logistics at National Company Kazakhstan Temir Zholy OJSC (KTZ), talks about projects contributing to expanding the transit potential of Kazakhstan.

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Kanat Alpysbaev, Vice President for Logistics at National Company Kazakhstan Temir Zholy OJSC (KTZ), talks about projects contributing to expanding the transit potential of Kazakhstan.</p> [ELEMENT_META_TITLE] => Eurasian Integration [ELEMENT_META_KEYWORDS] => eurasian integration [ELEMENT_META_DESCRIPTION] => <p>The priorities of the Republic of Kazakhstan are the development of reliable transport and logistics links between Europe and Asia, and the creation of an efficient national infrastructure to contribute to the country’s integration into the global economy. 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Multimodal Service

– Mr Alpysbaev, what are the largest trans-continental transport and logistics projects carried out with the participation of KTZ? 

– Work is currently underway to develop the country’s transit potential. A number of infrastructural projects have been carried out already. The construction of the Korgas – Zhetygen railway line (293 km) was finished in 2011, and the Uzen – the state border with Turkmenistan route (146 km) was completed in 2012. In May 11, 2013, the Bolashak station was opened at the Kazakh – Turkmen border, which became the beginning of a new route from Kazakhstan to/from the Persian Gulf countries. Also, projects for an international centre of cross-border cooperation “Khorgos” and a special economic zone “Khorgos – Eastern Gates” were carried out as well as the extension of the Aktau sea port northwards and the development of airport infrastructure.
I’d like to note that last year the construction of a new railway line linking Zhezkazgan and Beineu (988 km) began. It will straighten the existing route to the Aktau port in the direction of Turkey, Southeastern Europe, and the Persian Gulf countries. Due to the new line, the transportation distance from Dostyk to Aktau will reduce by 748 km. Another important advantage of this link is the decrease in delivery time via Kazakhstan, for example, the delivery time for freight carried from the Lianyungang port (China) to Istanbul (Turkey) reduced from 17 to 14 days, and consequently the cost of transportation also fell.
The new Zhezkazgan – Beineu line will contribute to route integration with the 98 km long Akhalkalaki (Georgia) – Kars (Turkey) railway line, the construction of which will be completed in 2014. This combination of infrastructural projects in the region will increase the transit opportunities of Kazakhstan and other countries – members of TRACECA, and will provide a freight base (for dry cargoes) to the Aktau port.
The anticipated volume of transit freight flow between China and the EU carried via the Zhezkazgan – Beineu line and the Aktau port will amount to 150,000 TEU by 2020. Special attention is paid to container trains on the routes Chongqing (China) – Duisburg (Germany) and Chengdu (China) – Lodz (Poland), which were put into operation in 2011 and 2012 respectively. In both cases the time en route is about 15 days.
Forming the external terminal network, we have defined the basic points for freight flow consolidation in China and their absorption into the Baltic States and the Black Sea region. We plan to open an agent sales office in Urumqi and build a terminal in the Lianyungang port in China.

– What measures has the Republic of Kazakhstan taken to strengthen the interaction between different transport modes?

– By the order of the head of the country, a national multimodal operator KTZ Express was launched by KTZ. It is the only centre providing transport and logistics services, with representative offices abroad, and a developed agent network. Nowadays, we are expanding our competence in the sectors of air-, road-, and water transport. It is necessary for combining transport services for supply chains, and offering an integrated service to the final customer. Taking into account the geographical specifics of Kazakhstan and its involvement in international trade, such services becomes an instrument for improving transport and transit potential and the logistics climate in the country. The national multimodal operator will integrate itself into transportation by railway, road, sea, and air, port and airport infrastructure, and a network of transport and logistics centres, providing door-to-door cargo transportation, organising full supply chains and offering through tariff rates.
In cooperation with transport and logistics operators, we develop new logistics solutions for the consolidation of transit flows in the Republic of Kazakhstan and their distribution to regions (Central Asia, Russia, Europe) using multimodal transportation. We have begun offering a service organising through and combined transportation from Central China. Also, we are preparing pilot cargo transportation in the framework of a Rail-Air project from Chongqing to Amsterdam using three transport modes – railway, road vehicles, and airplanes. This chain includes customs, terminal and warehousing services and air charter. A similar scheme is applied for sea transportation via the Dubai air hub. A luxury advantage of our product is that the transportation time is 50% shorter, though the cost of the service is practically the same.

– Can you comment on the cooperation of KTZ, Kazlogistics, the National Centre for the Development of Transport Logistics, and the Association of National Forwarders of the Republic of Kazakhstan targeted at building consignor – trader – transporter – customs relations unto a single logistics scheme (in the framework of a memorandum signed on September 20, 2012)?

– Among the results of joint work, I would like to mention the introduction of container trains according to the preliminary e-declaration system, and the development of the scheme for interaction between participants in the transport process. In particular, container trains on the Ukhan – Pardubitse and Chengdu – Lodz routes were launched, and due to the prior submission of customs information, formalities at the Dostyk border crossing took only 1.5 and 1.1 hours respectively.

Moving to External Markets

– What are the plans about the creation of a network of transport and logistics centres in the Republic of Kazakhstan and abroad?

– A feasibility study for the construction of TLCs in Kazakhstan is being developed. It must define the number of such centres and their location. To form an external network of TLCs abroad, we analysed existing and future export and transit flows, and built a backbone map of the basic points of freight base origin and absorption. On the basis of the analysis, a concept of developing an external agent and terminal network was formed. It takes into account different models of participation of capital.
The key projects are the construction of our own terminal infrastructure in the Lianyungang port to consolidate cargo flows to/from Southeastern Asia –one of prospective directions for the development of the Kazakh trade. In addition to China, we are going to develop our terminal capacities in the Baltic and Black Sea ports, Europe, and Persian Gulf – as major directions for Kazakh exports and transit.
A sophisticated study will be carried out to correctly estimate the feasibility of investing in an external terminal network. Perhaps, somewhere we will have to build terminals, and in other places it will be more reasonable to conclude a partnership agreement or open an agent office to promote transport and logistics services, accumulate freight base, and provide a backload.
A network of transport and logistics centres, united by a centralised management system and a single technological process, will contribute to the coherence of the areas of Kazakhstan and countries – members of international transport corridors, and an entry to key sea commercial routes to Southeastern Asia and Europe. After all, it will give rise to an increase in the volume of the international cargo for export, import, and transit via Kazakhstan by 120% by 2020.

– What should be done before the end of 2013 and in the more distant future for Kazakhstan TemirZholy to become a national transport and logistics operator?

– KTZ received the SEZ “Khorgos – Eastern Gates”, international centre for cross-border cooperation “Khorgos”, and a number of regional airports for confidential management. The Aktau sea port will be handed over for confidential management by the end of 2013 too. Also, business processes and the methods of interaction between all infrastructure facilities will be done in accordance with global practices to increase the efficiency of the business and the quality of services.
The “Kazakhstan – New Silk Road” project is being carried out. It envisages the maximum usage of the transport potential of Kazakhstan and is a priority and an important stage in the country’s transformation into the transport and logistics hub of the region. Constant work is underway to ensure the safety of cargo, the development of competitive tariff rates, to increase the speed of transportation and reduce delivery time and to remove physical and other barriers at interstate junctions. All of which will contribute to an increase in the transit potential of countries – participants of international transport corridors. At the same time, the regulative and legislative base is being improved, particularly in the field of regulation of transit and combined transportation, which will contribute to the simplification of procedures for transit transportation via Kazakhstan and organisation of combined transportation.
Interviewed by Elena Ushkova 

[~DETAIL_TEXT] =>

Multimodal Service

– Mr Alpysbaev, what are the largest trans-continental transport and logistics projects carried out with the participation of KTZ? 

– Work is currently underway to develop the country’s transit potential. A number of infrastructural projects have been carried out already. The construction of the Korgas – Zhetygen railway line (293 km) was finished in 2011, and the Uzen – the state border with Turkmenistan route (146 km) was completed in 2012. In May 11, 2013, the Bolashak station was opened at the Kazakh – Turkmen border, which became the beginning of a new route from Kazakhstan to/from the Persian Gulf countries. Also, projects for an international centre of cross-border cooperation “Khorgos” and a special economic zone “Khorgos – Eastern Gates” were carried out as well as the extension of the Aktau sea port northwards and the development of airport infrastructure.
I’d like to note that last year the construction of a new railway line linking Zhezkazgan and Beineu (988 km) began. It will straighten the existing route to the Aktau port in the direction of Turkey, Southeastern Europe, and the Persian Gulf countries. Due to the new line, the transportation distance from Dostyk to Aktau will reduce by 748 km. Another important advantage of this link is the decrease in delivery time via Kazakhstan, for example, the delivery time for freight carried from the Lianyungang port (China) to Istanbul (Turkey) reduced from 17 to 14 days, and consequently the cost of transportation also fell.
The new Zhezkazgan – Beineu line will contribute to route integration with the 98 km long Akhalkalaki (Georgia) – Kars (Turkey) railway line, the construction of which will be completed in 2014. This combination of infrastructural projects in the region will increase the transit opportunities of Kazakhstan and other countries – members of TRACECA, and will provide a freight base (for dry cargoes) to the Aktau port.
The anticipated volume of transit freight flow between China and the EU carried via the Zhezkazgan – Beineu line and the Aktau port will amount to 150,000 TEU by 2020. Special attention is paid to container trains on the routes Chongqing (China) – Duisburg (Germany) and Chengdu (China) – Lodz (Poland), which were put into operation in 2011 and 2012 respectively. In both cases the time en route is about 15 days.
Forming the external terminal network, we have defined the basic points for freight flow consolidation in China and their absorption into the Baltic States and the Black Sea region. We plan to open an agent sales office in Urumqi and build a terminal in the Lianyungang port in China.

– What measures has the Republic of Kazakhstan taken to strengthen the interaction between different transport modes?

– By the order of the head of the country, a national multimodal operator KTZ Express was launched by KTZ. It is the only centre providing transport and logistics services, with representative offices abroad, and a developed agent network. Nowadays, we are expanding our competence in the sectors of air-, road-, and water transport. It is necessary for combining transport services for supply chains, and offering an integrated service to the final customer. Taking into account the geographical specifics of Kazakhstan and its involvement in international trade, such services becomes an instrument for improving transport and transit potential and the logistics climate in the country. The national multimodal operator will integrate itself into transportation by railway, road, sea, and air, port and airport infrastructure, and a network of transport and logistics centres, providing door-to-door cargo transportation, organising full supply chains and offering through tariff rates.
In cooperation with transport and logistics operators, we develop new logistics solutions for the consolidation of transit flows in the Republic of Kazakhstan and their distribution to regions (Central Asia, Russia, Europe) using multimodal transportation. We have begun offering a service organising through and combined transportation from Central China. Also, we are preparing pilot cargo transportation in the framework of a Rail-Air project from Chongqing to Amsterdam using three transport modes – railway, road vehicles, and airplanes. This chain includes customs, terminal and warehousing services and air charter. A similar scheme is applied for sea transportation via the Dubai air hub. A luxury advantage of our product is that the transportation time is 50% shorter, though the cost of the service is practically the same.

– Can you comment on the cooperation of KTZ, Kazlogistics, the National Centre for the Development of Transport Logistics, and the Association of National Forwarders of the Republic of Kazakhstan targeted at building consignor – trader – transporter – customs relations unto a single logistics scheme (in the framework of a memorandum signed on September 20, 2012)?

– Among the results of joint work, I would like to mention the introduction of container trains according to the preliminary e-declaration system, and the development of the scheme for interaction between participants in the transport process. In particular, container trains on the Ukhan – Pardubitse and Chengdu – Lodz routes were launched, and due to the prior submission of customs information, formalities at the Dostyk border crossing took only 1.5 and 1.1 hours respectively.

Moving to External Markets

– What are the plans about the creation of a network of transport and logistics centres in the Republic of Kazakhstan and abroad?

– A feasibility study for the construction of TLCs in Kazakhstan is being developed. It must define the number of such centres and their location. To form an external network of TLCs abroad, we analysed existing and future export and transit flows, and built a backbone map of the basic points of freight base origin and absorption. On the basis of the analysis, a concept of developing an external agent and terminal network was formed. It takes into account different models of participation of capital.
The key projects are the construction of our own terminal infrastructure in the Lianyungang port to consolidate cargo flows to/from Southeastern Asia –one of prospective directions for the development of the Kazakh trade. In addition to China, we are going to develop our terminal capacities in the Baltic and Black Sea ports, Europe, and Persian Gulf – as major directions for Kazakh exports and transit.
A sophisticated study will be carried out to correctly estimate the feasibility of investing in an external terminal network. Perhaps, somewhere we will have to build terminals, and in other places it will be more reasonable to conclude a partnership agreement or open an agent office to promote transport and logistics services, accumulate freight base, and provide a backload.
A network of transport and logistics centres, united by a centralised management system and a single technological process, will contribute to the coherence of the areas of Kazakhstan and countries – members of international transport corridors, and an entry to key sea commercial routes to Southeastern Asia and Europe. After all, it will give rise to an increase in the volume of the international cargo for export, import, and transit via Kazakhstan by 120% by 2020.

– What should be done before the end of 2013 and in the more distant future for Kazakhstan TemirZholy to become a national transport and logistics operator?

– KTZ received the SEZ “Khorgos – Eastern Gates”, international centre for cross-border cooperation “Khorgos”, and a number of regional airports for confidential management. The Aktau sea port will be handed over for confidential management by the end of 2013 too. Also, business processes and the methods of interaction between all infrastructure facilities will be done in accordance with global practices to increase the efficiency of the business and the quality of services.
The “Kazakhstan – New Silk Road” project is being carried out. It envisages the maximum usage of the transport potential of Kazakhstan and is a priority and an important stage in the country’s transformation into the transport and logistics hub of the region. Constant work is underway to ensure the safety of cargo, the development of competitive tariff rates, to increase the speed of transportation and reduce delivery time and to remove physical and other barriers at interstate junctions. All of which will contribute to an increase in the transit potential of countries – participants of international transport corridors. At the same time, the regulative and legislative base is being improved, particularly in the field of regulation of transit and combined transportation, which will contribute to the simplification of procedures for transit transportation via Kazakhstan and organisation of combined transportation.
Interviewed by Elena Ushkova 

[DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>

The priorities of the Republic of Kazakhstan are the development of reliable transport and logistics links between Europe and Asia, and the creation of an efficient national infrastructure to contribute to the country’s integration into the global economy. Kanat Alpysbaev, Vice President for Logistics at National Company Kazakhstan Temir Zholy OJSC (KTZ), talks about projects contributing to expanding the transit potential of Kazakhstan.

[~PREVIEW_TEXT] =>

The priorities of the Republic of Kazakhstan are the development of reliable transport and logistics links between Europe and Asia, and the creation of an efficient national infrastructure to contribute to the country’s integration into the global economy. Kanat Alpysbaev, Vice President for Logistics at National Company Kazakhstan Temir Zholy OJSC (KTZ), talks about projects contributing to expanding the transit potential of Kazakhstan.

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РЖД-Партнер

Satellite Controlled Railway

Satellite Controlled Railway

In 2013 the scope of applications for satellite technologies increased significantly. Key accomplishments were achieved in the course of the implementation of infrastructure projects. This allowed the setting of more ambitious challenges which Russian Railways are successfully overcoming.

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Monitoring Infrastructure

Igor Rozenberg, Deputy General Director, at the Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport JSC (NIIAS), says that satellite technologies enable the monitoring of the condition of the railway infrastructure facilities, so one is able to deal faster with emergency and pre-emergency situations. It can be done e.g. with the help of modern methods of space radio interferometry, that register even tiny changes at a facility. This is how one learns about terrain movements and deformations of artificial structures. In the same manner one can carry out mapping and make high precision digital terrain models under any weather and lighting conditions.
The results of the satellite soundings are also used in design and survey works for the positioning of the center line of a track. Notably, during preparation works for the construction of the second Baikal tunnel (Baikal-Amur Mainline) they helped to determine the most accurate way through granitic rocks.
Satellite technologies enable the creation of 3D digital models of railway stations, power supply line supports and other elements involved in the operation of a railway, as well as determining the run of a bounding box. In other words, it helps to outline the entire planned infrastructure on a general map of the area.
The integration of satellite technologies with the latest geographic information systems (GIS) enables the creation of risk maps. In addition, the scanning data helps to estimate possible environmental risks when working on investment projects.
For instance, a recent project, carried out on the Tuapse – Adler section (by North-Caucasian railways, an affiliate of RZD), involved the development of potentially dangerous terrain interpretation technique as well as creating tools measuring terrain displacement risk. It is important to use them in the regions where experience has proven that there is a high probability of landslides or collapses of the railroad bed.
Mikhail Bryn, the head of the Engineering Geodesy Department at the St Petersburg State Transport University, believes that it is time now to switch from individual pilot projects to a practice of automatic geodesic monitoring of transportation facilities deformation. It presupposes real time processing of data received from sensors (inclinometers, accelerometers, tachometers, weather stations) at transportation facilities. The monitoring will enable automatic forecasting of the technical conditions of equipment. Client/server technologies for data processing will allow merging different computer systems that will, among other things, interact with satellites. This will help minimise the risks of railway industrial accidents as well as significantly reducing the costs of running complex engineering structures.

Radar Adjusts the Way

Several Russian Railways’ projects in the field of satellite radio-location monitoring are related to track maintenance. Introducing technologies of this kind to the Russian railways has been hindered in the past by the specifics of the railway organisation. Infrastructure facilities have been designed and constructed being tied up to certain landmarks (reference pegs). They further served as the base for the development of the railway infrastructure. Reference peg layouts differ significantly from the geographical maps contours. This discrepancy has inhibited the implementation of satellite positioning for a long time. Russian Railways had to stick to the reference peg system due to state reasons. It took some time to solve this problem and adapt satellite technologies to the Russian railways.
Initially the satellite scanning data had to be aligned with the reference peg layouts, as the maintenance and re-engineering of the railroad infrastructure had to be carried out in accordance with them. The tasks that followed were more complicated.
For instance, a ground penetrating radar able to detect railtrack ballast defects was tested when carrying out a project in a segment of the Moscow railway system in 2013. The problem here is that cracks, displacements and water accumulation zones in the roadbed might not be seen at surface level, so it is difficult to detect them using standard techniques. For this reason the efficiency of the routine maintenance was decreased.
The staff at the Logis-Geotech research center designed a multi-channel ground penetrating radar that detects roadbed deficiencies at least 3 meters deep into the ground. Sergey Dubrovsky, Logis-Geotech Director General, says that the device is fully compatible with track-measuring car equipment. It can however operate independently and be installed on any rolling stock. The device is fast in operation: the detection can be done at the train or multiple unit’s speed of up to 120 kph.
A ground penetrating radar is usually installed on a track-measuring car, though it can be installed on any other rolling stock as well. The measurement data is displayed as a digital map with highlighted areas where the deformations of the railtrack are considered dangerous for the railway traffic.
There are projects that aim to automate the complete overhauling of the rail superstructure using satellite systems. It was first tested by the Oktyabrskaya Railway (an affiliate of RZD). One of the railway sections was surveyed with a ground penetrating radar, which enabled the creation of 3D models of the railtrack. This in turn enabled automatic operation of the ballast cleaning machine RM-80. The resulting accuracy of the activity performance has increased at least twofold, and the shooting speed of the overhauled railtrack increased by 8-9 times.
According to experts, the cost advantage of switching to technologies that place railtrack into the design position using the coordinates amounts to at least RUB 5 million a year per track maintenance train equipped with satellite systems.
In the summer of 2013 satellites helped to not only to clean ballast but also to overhaul the railtrack and replace track panels on yet another segment of the speed railway Moscow – St Petersburg – Buslovskaya (the Oktyabrskaya Railway).
With the help of satellite technologies, a high precision railtrack coordinate system has been completed for the speed railway Moscow – St Petersburg – Buslovskaya operating domain. Now it has become the backbone of the main system for railroad infrastructure spatial data – says Sergey Konyshev, Head of the Mechanisation Department, Central Directorate of Infrastructure at Russian Railways.
Introduction of such a system of spatial data is a further step towards mastering modern technologies. The satellite is now able to coordinate a whole set of operations during a railtrack overhaul.
These technologies are starting to spread now to other railways. For instance, a set of machines has been used to lay a 3D geogrid in a conveyer column, including RM-80 to level the ballast layer, SCH-601 to reel out and lay the 3D and a carriage with instrumentation systems and a navigator, linked to GLONASS/GPS that helped to operate the roadway machines with maximum efficiency.
As for other railways, the introduction of GLONASS/GPS-based coordinate technologies has been limited so far to trying to speed up the geodesic tie of the railtrack in order to place it in the design position. It alone however increases fourfold the speed of location survey and pre-construction survey, according to Alexander Pikalov, Deputy Head of the Engineering Department, West Siberian Directorate of Railtrack Maintenance.

Increasing Infrastructure Efficiency

At the present moment Russian Railways’ equipment is only partially compatible with satellite systems.  The number of compatible devices has however significantly increased recently. All new machinery, including multiple units for the examination of the railway infrastructure, are equipped with satellite sensors and terminals.
Russian Railways’ satellite systems are also used by the Federal State Enterprise Departmental Security Service of Railway Transport of the Russian Federation. In 2013 it has introduced tracking and cargo protection “Sledopyt-T” devices, connected to electronic seals. The device can determine the location of a carriage and is connected to GLONASS/GPS, improving the cargo’s protection.
The CLUB-U system (integrated locomotive standardised train traffic safety device) uses a satellite positioning receiver SR8/GLONASS to automatically locate the locomotive, which improves the provision of locomotive haulage on the Russian railway network.
The process of digitising all the services, related to high speed train motion control systems will soon be completed. Given the scope of the operating domain all the train control must be carried out with the help of GLONASS/GPS technologies.
All these provisions are intended to increase railroad infrastructure operating efficiency. ®
By Alexander Solntsev

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Monitoring Infrastructure

Igor Rozenberg, Deputy General Director, at the Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport JSC (NIIAS), says that satellite technologies enable the monitoring of the condition of the railway infrastructure facilities, so one is able to deal faster with emergency and pre-emergency situations. It can be done e.g. with the help of modern methods of space radio interferometry, that register even tiny changes at a facility. This is how one learns about terrain movements and deformations of artificial structures. In the same manner one can carry out mapping and make high precision digital terrain models under any weather and lighting conditions.
The results of the satellite soundings are also used in design and survey works for the positioning of the center line of a track. Notably, during preparation works for the construction of the second Baikal tunnel (Baikal-Amur Mainline) they helped to determine the most accurate way through granitic rocks.
Satellite technologies enable the creation of 3D digital models of railway stations, power supply line supports and other elements involved in the operation of a railway, as well as determining the run of a bounding box. In other words, it helps to outline the entire planned infrastructure on a general map of the area.
The integration of satellite technologies with the latest geographic information systems (GIS) enables the creation of risk maps. In addition, the scanning data helps to estimate possible environmental risks when working on investment projects.
For instance, a recent project, carried out on the Tuapse – Adler section (by North-Caucasian railways, an affiliate of RZD), involved the development of potentially dangerous terrain interpretation technique as well as creating tools measuring terrain displacement risk. It is important to use them in the regions where experience has proven that there is a high probability of landslides or collapses of the railroad bed.
Mikhail Bryn, the head of the Engineering Geodesy Department at the St Petersburg State Transport University, believes that it is time now to switch from individual pilot projects to a practice of automatic geodesic monitoring of transportation facilities deformation. It presupposes real time processing of data received from sensors (inclinometers, accelerometers, tachometers, weather stations) at transportation facilities. The monitoring will enable automatic forecasting of the technical conditions of equipment. Client/server technologies for data processing will allow merging different computer systems that will, among other things, interact with satellites. This will help minimise the risks of railway industrial accidents as well as significantly reducing the costs of running complex engineering structures.

Radar Adjusts the Way

Several Russian Railways’ projects in the field of satellite radio-location monitoring are related to track maintenance. Introducing technologies of this kind to the Russian railways has been hindered in the past by the specifics of the railway organisation. Infrastructure facilities have been designed and constructed being tied up to certain landmarks (reference pegs). They further served as the base for the development of the railway infrastructure. Reference peg layouts differ significantly from the geographical maps contours. This discrepancy has inhibited the implementation of satellite positioning for a long time. Russian Railways had to stick to the reference peg system due to state reasons. It took some time to solve this problem and adapt satellite technologies to the Russian railways.
Initially the satellite scanning data had to be aligned with the reference peg layouts, as the maintenance and re-engineering of the railroad infrastructure had to be carried out in accordance with them. The tasks that followed were more complicated.
For instance, a ground penetrating radar able to detect railtrack ballast defects was tested when carrying out a project in a segment of the Moscow railway system in 2013. The problem here is that cracks, displacements and water accumulation zones in the roadbed might not be seen at surface level, so it is difficult to detect them using standard techniques. For this reason the efficiency of the routine maintenance was decreased.
The staff at the Logis-Geotech research center designed a multi-channel ground penetrating radar that detects roadbed deficiencies at least 3 meters deep into the ground. Sergey Dubrovsky, Logis-Geotech Director General, says that the device is fully compatible with track-measuring car equipment. It can however operate independently and be installed on any rolling stock. The device is fast in operation: the detection can be done at the train or multiple unit’s speed of up to 120 kph.
A ground penetrating radar is usually installed on a track-measuring car, though it can be installed on any other rolling stock as well. The measurement data is displayed as a digital map with highlighted areas where the deformations of the railtrack are considered dangerous for the railway traffic.
There are projects that aim to automate the complete overhauling of the rail superstructure using satellite systems. It was first tested by the Oktyabrskaya Railway (an affiliate of RZD). One of the railway sections was surveyed with a ground penetrating radar, which enabled the creation of 3D models of the railtrack. This in turn enabled automatic operation of the ballast cleaning machine RM-80. The resulting accuracy of the activity performance has increased at least twofold, and the shooting speed of the overhauled railtrack increased by 8-9 times.
According to experts, the cost advantage of switching to technologies that place railtrack into the design position using the coordinates amounts to at least RUB 5 million a year per track maintenance train equipped with satellite systems.
In the summer of 2013 satellites helped to not only to clean ballast but also to overhaul the railtrack and replace track panels on yet another segment of the speed railway Moscow – St Petersburg – Buslovskaya (the Oktyabrskaya Railway).
With the help of satellite technologies, a high precision railtrack coordinate system has been completed for the speed railway Moscow – St Petersburg – Buslovskaya operating domain. Now it has become the backbone of the main system for railroad infrastructure spatial data – says Sergey Konyshev, Head of the Mechanisation Department, Central Directorate of Infrastructure at Russian Railways.
Introduction of such a system of spatial data is a further step towards mastering modern technologies. The satellite is now able to coordinate a whole set of operations during a railtrack overhaul.
These technologies are starting to spread now to other railways. For instance, a set of machines has been used to lay a 3D geogrid in a conveyer column, including RM-80 to level the ballast layer, SCH-601 to reel out and lay the 3D and a carriage with instrumentation systems and a navigator, linked to GLONASS/GPS that helped to operate the roadway machines with maximum efficiency.
As for other railways, the introduction of GLONASS/GPS-based coordinate technologies has been limited so far to trying to speed up the geodesic tie of the railtrack in order to place it in the design position. It alone however increases fourfold the speed of location survey and pre-construction survey, according to Alexander Pikalov, Deputy Head of the Engineering Department, West Siberian Directorate of Railtrack Maintenance.

Increasing Infrastructure Efficiency

At the present moment Russian Railways’ equipment is only partially compatible with satellite systems.  The number of compatible devices has however significantly increased recently. All new machinery, including multiple units for the examination of the railway infrastructure, are equipped with satellite sensors and terminals.
Russian Railways’ satellite systems are also used by the Federal State Enterprise Departmental Security Service of Railway Transport of the Russian Federation. In 2013 it has introduced tracking and cargo protection “Sledopyt-T” devices, connected to electronic seals. The device can determine the location of a carriage and is connected to GLONASS/GPS, improving the cargo’s protection.
The CLUB-U system (integrated locomotive standardised train traffic safety device) uses a satellite positioning receiver SR8/GLONASS to automatically locate the locomotive, which improves the provision of locomotive haulage on the Russian railway network.
The process of digitising all the services, related to high speed train motion control systems will soon be completed. Given the scope of the operating domain all the train control must be carried out with the help of GLONASS/GPS technologies.
All these provisions are intended to increase railroad infrastructure operating efficiency. ®
By Alexander Solntsev

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In 2013 the scope of applications for satellite technologies increased significantly. Key accomplishments were achieved in the course of the implementation of infrastructure projects. This allowed the setting of more ambitious challenges which Russian Railways are successfully overcoming.

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    [DETAIL_TEXT] => 

Monitoring Infrastructure

Igor Rozenberg, Deputy General Director, at the Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport JSC (NIIAS), says that satellite technologies enable the monitoring of the condition of the railway infrastructure facilities, so one is able to deal faster with emergency and pre-emergency situations. It can be done e.g. with the help of modern methods of space radio interferometry, that register even tiny changes at a facility. This is how one learns about terrain movements and deformations of artificial structures. In the same manner one can carry out mapping and make high precision digital terrain models under any weather and lighting conditions.
The results of the satellite soundings are also used in design and survey works for the positioning of the center line of a track. Notably, during preparation works for the construction of the second Baikal tunnel (Baikal-Amur Mainline) they helped to determine the most accurate way through granitic rocks.
Satellite technologies enable the creation of 3D digital models of railway stations, power supply line supports and other elements involved in the operation of a railway, as well as determining the run of a bounding box. In other words, it helps to outline the entire planned infrastructure on a general map of the area.
The integration of satellite technologies with the latest geographic information systems (GIS) enables the creation of risk maps. In addition, the scanning data helps to estimate possible environmental risks when working on investment projects.
For instance, a recent project, carried out on the Tuapse – Adler section (by North-Caucasian railways, an affiliate of RZD), involved the development of potentially dangerous terrain interpretation technique as well as creating tools measuring terrain displacement risk. It is important to use them in the regions where experience has proven that there is a high probability of landslides or collapses of the railroad bed.
Mikhail Bryn, the head of the Engineering Geodesy Department at the St Petersburg State Transport University, believes that it is time now to switch from individual pilot projects to a practice of automatic geodesic monitoring of transportation facilities deformation. It presupposes real time processing of data received from sensors (inclinometers, accelerometers, tachometers, weather stations) at transportation facilities. The monitoring will enable automatic forecasting of the technical conditions of equipment. Client/server technologies for data processing will allow merging different computer systems that will, among other things, interact with satellites. This will help minimise the risks of railway industrial accidents as well as significantly reducing the costs of running complex engineering structures.

Radar Adjusts the Way

Several Russian Railways’ projects in the field of satellite radio-location monitoring are related to track maintenance. Introducing technologies of this kind to the Russian railways has been hindered in the past by the specifics of the railway organisation. Infrastructure facilities have been designed and constructed being tied up to certain landmarks (reference pegs). They further served as the base for the development of the railway infrastructure. Reference peg layouts differ significantly from the geographical maps contours. This discrepancy has inhibited the implementation of satellite positioning for a long time. Russian Railways had to stick to the reference peg system due to state reasons. It took some time to solve this problem and adapt satellite technologies to the Russian railways.
Initially the satellite scanning data had to be aligned with the reference peg layouts, as the maintenance and re-engineering of the railroad infrastructure had to be carried out in accordance with them. The tasks that followed were more complicated.
For instance, a ground penetrating radar able to detect railtrack ballast defects was tested when carrying out a project in a segment of the Moscow railway system in 2013. The problem here is that cracks, displacements and water accumulation zones in the roadbed might not be seen at surface level, so it is difficult to detect them using standard techniques. For this reason the efficiency of the routine maintenance was decreased.
The staff at the Logis-Geotech research center designed a multi-channel ground penetrating radar that detects roadbed deficiencies at least 3 meters deep into the ground. Sergey Dubrovsky, Logis-Geotech Director General, says that the device is fully compatible with track-measuring car equipment. It can however operate independently and be installed on any rolling stock. The device is fast in operation: the detection can be done at the train or multiple unit’s speed of up to 120 kph.
A ground penetrating radar is usually installed on a track-measuring car, though it can be installed on any other rolling stock as well. The measurement data is displayed as a digital map with highlighted areas where the deformations of the railtrack are considered dangerous for the railway traffic.
There are projects that aim to automate the complete overhauling of the rail superstructure using satellite systems. It was first tested by the Oktyabrskaya Railway (an affiliate of RZD). One of the railway sections was surveyed with a ground penetrating radar, which enabled the creation of 3D models of the railtrack. This in turn enabled automatic operation of the ballast cleaning machine RM-80. The resulting accuracy of the activity performance has increased at least twofold, and the shooting speed of the overhauled railtrack increased by 8-9 times.
According to experts, the cost advantage of switching to technologies that place railtrack into the design position using the coordinates amounts to at least RUB 5 million a year per track maintenance train equipped with satellite systems.
In the summer of 2013 satellites helped to not only to clean ballast but also to overhaul the railtrack and replace track panels on yet another segment of the speed railway Moscow – St Petersburg – Buslovskaya (the Oktyabrskaya Railway).
With the help of satellite technologies, a high precision railtrack coordinate system has been completed for the speed railway Moscow – St Petersburg – Buslovskaya operating domain. Now it has become the backbone of the main system for railroad infrastructure spatial data – says Sergey Konyshev, Head of the Mechanisation Department, Central Directorate of Infrastructure at Russian Railways.
Introduction of such a system of spatial data is a further step towards mastering modern technologies. The satellite is now able to coordinate a whole set of operations during a railtrack overhaul.
These technologies are starting to spread now to other railways. For instance, a set of machines has been used to lay a 3D geogrid in a conveyer column, including RM-80 to level the ballast layer, SCH-601 to reel out and lay the 3D and a carriage with instrumentation systems and a navigator, linked to GLONASS/GPS that helped to operate the roadway machines with maximum efficiency.
As for other railways, the introduction of GLONASS/GPS-based coordinate technologies has been limited so far to trying to speed up the geodesic tie of the railtrack in order to place it in the design position. It alone however increases fourfold the speed of location survey and pre-construction survey, according to Alexander Pikalov, Deputy Head of the Engineering Department, West Siberian Directorate of Railtrack Maintenance.

Increasing Infrastructure Efficiency

At the present moment Russian Railways’ equipment is only partially compatible with satellite systems.  The number of compatible devices has however significantly increased recently. All new machinery, including multiple units for the examination of the railway infrastructure, are equipped with satellite sensors and terminals.
Russian Railways’ satellite systems are also used by the Federal State Enterprise Departmental Security Service of Railway Transport of the Russian Federation. In 2013 it has introduced tracking and cargo protection “Sledopyt-T” devices, connected to electronic seals. The device can determine the location of a carriage and is connected to GLONASS/GPS, improving the cargo’s protection.
The CLUB-U system (integrated locomotive standardised train traffic safety device) uses a satellite positioning receiver SR8/GLONASS to automatically locate the locomotive, which improves the provision of locomotive haulage on the Russian railway network.
The process of digitising all the services, related to high speed train motion control systems will soon be completed. Given the scope of the operating domain all the train control must be carried out with the help of GLONASS/GPS technologies.
All these provisions are intended to increase railroad infrastructure operating efficiency. ®
By Alexander Solntsev

[~DETAIL_TEXT] =>

Monitoring Infrastructure

Igor Rozenberg, Deputy General Director, at the Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport JSC (NIIAS), says that satellite technologies enable the monitoring of the condition of the railway infrastructure facilities, so one is able to deal faster with emergency and pre-emergency situations. It can be done e.g. with the help of modern methods of space radio interferometry, that register even tiny changes at a facility. This is how one learns about terrain movements and deformations of artificial structures. In the same manner one can carry out mapping and make high precision digital terrain models under any weather and lighting conditions.
The results of the satellite soundings are also used in design and survey works for the positioning of the center line of a track. Notably, during preparation works for the construction of the second Baikal tunnel (Baikal-Amur Mainline) they helped to determine the most accurate way through granitic rocks.
Satellite technologies enable the creation of 3D digital models of railway stations, power supply line supports and other elements involved in the operation of a railway, as well as determining the run of a bounding box. In other words, it helps to outline the entire planned infrastructure on a general map of the area.
The integration of satellite technologies with the latest geographic information systems (GIS) enables the creation of risk maps. In addition, the scanning data helps to estimate possible environmental risks when working on investment projects.
For instance, a recent project, carried out on the Tuapse – Adler section (by North-Caucasian railways, an affiliate of RZD), involved the development of potentially dangerous terrain interpretation technique as well as creating tools measuring terrain displacement risk. It is important to use them in the regions where experience has proven that there is a high probability of landslides or collapses of the railroad bed.
Mikhail Bryn, the head of the Engineering Geodesy Department at the St Petersburg State Transport University, believes that it is time now to switch from individual pilot projects to a practice of automatic geodesic monitoring of transportation facilities deformation. It presupposes real time processing of data received from sensors (inclinometers, accelerometers, tachometers, weather stations) at transportation facilities. The monitoring will enable automatic forecasting of the technical conditions of equipment. Client/server technologies for data processing will allow merging different computer systems that will, among other things, interact with satellites. This will help minimise the risks of railway industrial accidents as well as significantly reducing the costs of running complex engineering structures.

Radar Adjusts the Way

Several Russian Railways’ projects in the field of satellite radio-location monitoring are related to track maintenance. Introducing technologies of this kind to the Russian railways has been hindered in the past by the specifics of the railway organisation. Infrastructure facilities have been designed and constructed being tied up to certain landmarks (reference pegs). They further served as the base for the development of the railway infrastructure. Reference peg layouts differ significantly from the geographical maps contours. This discrepancy has inhibited the implementation of satellite positioning for a long time. Russian Railways had to stick to the reference peg system due to state reasons. It took some time to solve this problem and adapt satellite technologies to the Russian railways.
Initially the satellite scanning data had to be aligned with the reference peg layouts, as the maintenance and re-engineering of the railroad infrastructure had to be carried out in accordance with them. The tasks that followed were more complicated.
For instance, a ground penetrating radar able to detect railtrack ballast defects was tested when carrying out a project in a segment of the Moscow railway system in 2013. The problem here is that cracks, displacements and water accumulation zones in the roadbed might not be seen at surface level, so it is difficult to detect them using standard techniques. For this reason the efficiency of the routine maintenance was decreased.
The staff at the Logis-Geotech research center designed a multi-channel ground penetrating radar that detects roadbed deficiencies at least 3 meters deep into the ground. Sergey Dubrovsky, Logis-Geotech Director General, says that the device is fully compatible with track-measuring car equipment. It can however operate independently and be installed on any rolling stock. The device is fast in operation: the detection can be done at the train or multiple unit’s speed of up to 120 kph.
A ground penetrating radar is usually installed on a track-measuring car, though it can be installed on any other rolling stock as well. The measurement data is displayed as a digital map with highlighted areas where the deformations of the railtrack are considered dangerous for the railway traffic.
There are projects that aim to automate the complete overhauling of the rail superstructure using satellite systems. It was first tested by the Oktyabrskaya Railway (an affiliate of RZD). One of the railway sections was surveyed with a ground penetrating radar, which enabled the creation of 3D models of the railtrack. This in turn enabled automatic operation of the ballast cleaning machine RM-80. The resulting accuracy of the activity performance has increased at least twofold, and the shooting speed of the overhauled railtrack increased by 8-9 times.
According to experts, the cost advantage of switching to technologies that place railtrack into the design position using the coordinates amounts to at least RUB 5 million a year per track maintenance train equipped with satellite systems.
In the summer of 2013 satellites helped to not only to clean ballast but also to overhaul the railtrack and replace track panels on yet another segment of the speed railway Moscow – St Petersburg – Buslovskaya (the Oktyabrskaya Railway).
With the help of satellite technologies, a high precision railtrack coordinate system has been completed for the speed railway Moscow – St Petersburg – Buslovskaya operating domain. Now it has become the backbone of the main system for railroad infrastructure spatial data – says Sergey Konyshev, Head of the Mechanisation Department, Central Directorate of Infrastructure at Russian Railways.
Introduction of such a system of spatial data is a further step towards mastering modern technologies. The satellite is now able to coordinate a whole set of operations during a railtrack overhaul.
These technologies are starting to spread now to other railways. For instance, a set of machines has been used to lay a 3D geogrid in a conveyer column, including RM-80 to level the ballast layer, SCH-601 to reel out and lay the 3D and a carriage with instrumentation systems and a navigator, linked to GLONASS/GPS that helped to operate the roadway machines with maximum efficiency.
As for other railways, the introduction of GLONASS/GPS-based coordinate technologies has been limited so far to trying to speed up the geodesic tie of the railtrack in order to place it in the design position. It alone however increases fourfold the speed of location survey and pre-construction survey, according to Alexander Pikalov, Deputy Head of the Engineering Department, West Siberian Directorate of Railtrack Maintenance.

Increasing Infrastructure Efficiency

At the present moment Russian Railways’ equipment is only partially compatible with satellite systems.  The number of compatible devices has however significantly increased recently. All new machinery, including multiple units for the examination of the railway infrastructure, are equipped with satellite sensors and terminals.
Russian Railways’ satellite systems are also used by the Federal State Enterprise Departmental Security Service of Railway Transport of the Russian Federation. In 2013 it has introduced tracking and cargo protection “Sledopyt-T” devices, connected to electronic seals. The device can determine the location of a carriage and is connected to GLONASS/GPS, improving the cargo’s protection.
The CLUB-U system (integrated locomotive standardised train traffic safety device) uses a satellite positioning receiver SR8/GLONASS to automatically locate the locomotive, which improves the provision of locomotive haulage on the Russian railway network.
The process of digitising all the services, related to high speed train motion control systems will soon be completed. Given the scope of the operating domain all the train control must be carried out with the help of GLONASS/GPS technologies.
All these provisions are intended to increase railroad infrastructure operating efficiency. ®
By Alexander Solntsev

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In 2013 the scope of applications for satellite technologies increased significantly. Key accomplishments were achieved in the course of the implementation of infrastructure projects. This allowed the setting of more ambitious challenges which Russian Railways are successfully overcoming.

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РЖД-Партнер

Russell Pittman: Competition works

Russell Pittman:  Competition works

Choosing a model for the reform of the railway sector is always an individual decision. All countries have their own way, but the result was supposed to be competition with fair conditions for all shippers. However, in practice this has not happened. The Director of Economic Research and Director of International Technical Assistance in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice Russell Pittman discusses the mistakes made.

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Third-party access


– Mr Pittman, you are one of the world’s most respected experts on railway reform. Tell our readers, please, which reforms in which countries did you take part in as an expert?

– My most extensive international railways work has been in Russia and China, in both cases as part of teams assembled by the OECD and the International Transport Forum to work with government bodies examining reform proposals.  I am currently an “outside expert” on a railway restructuring project in Mongolia organised by the Asian Development Bank.  I have also worked with antimonopoly agencies and regulators on railways restructuring issues in Australia, Brazil, Mexico, Poland, and Romania.

– It seems that your attitude towards RZD has changed during the years of your study of this market. Is it true? If so, why?

– Like many economists, I was initially attracted to the idea of creating competition by “vertical separation” in railways – that is, one company would control the infrastructure, multiple companies would run trains, and the infrastructure company would be prevented from operating trains in order to remove incentives for it to discriminate against its non-integrated rivals. This general idea was the theory behind the restructuring of the U.S. telecommunications industry that resulted from the U.S. v. AT&T antitrust litigation, and it became a sort of “default model” for reformers in a variety of infrastructure sectors around the world, including telecommunications, railways, and electricity.
However, I fairly quickly became skeptical of the real-world application of this idea to the railway sector. Again like many economists, I was partly reacting to the experience with vertical separation as a restructuring model for the UK railways around the turn of the 21st century – the expense, the difficulties of coordination between track and train operators, the investment and safety questions, and so on. I believe that by the time I began studying RZD I was persuaded that the vertical separation model – though it was still the favored model of the World Bank and many good reformers – would be a very risky one to apply to Russia.  Instead I have come to favor the “horizontal separation” model that is more common in the Americas – vertically integrated railway companies competing with each other over parallel routes and at common points – as much more appropriate to a large and freight-intensive railway system like Russia’s – or China’s, for that matter.

– How do you evaluate the results of the ongoing reforms in the Russian railway industry?

– A great deal has been accomplished – that’s for sure. The separation of operations from direct government control, the spin-off of non-core activities, the encouragement of private rolling stock ownership and competition among repair facilities, the creation of “daughter” operating companies – all of these have been important steps in the direction of greater transparency and efficiency.
In addition, some of what remains to be accomplished has been called for, unsuccessfully, by RZD itself. In particular, I believe that RZD is absolutely correct in calling for an end to the requirements for cross-subsidies within the system – both subsidies to passenger operations from freight operations and (if I understand correctly) requirements to keep rates low on coal shipments in order to prevent electricity price increases. If governments believe that certain passenger or freight operations should be priced below their costs, governments should provide the subsidies themselves. This is especially the case if governments are also trying to create competition:  cross-subsidy requirements inevitably distort competition.

– What do you see as the right structure for the industry? Should it be one infrastructure with a single owner, a unified infrastructure with different owners of cars or more individual private vertically-integrated companies?

– My own view is that competition among individual private vertically integrated railway companies is the best long-term arrangement for Russia. Let me explain why.
I believe that competition is an important force for efficiency and technological progress, and I believe that global experience clearly shows that the railway sector can support competition – that the railways sector is not, or at least is not always, a “natural monopoly”. I believe that the experience in Europe, both western and eastern, suggests that allowing new “carriers” onto the system provides clear benefits to shippers. Thus I believe that allowing the current “operators” on the Russian railways to become “carriers”, competing with RZD trains, would likely be an effective policy.
Having said this, I do believe that there are potential problems with coordination as well as with investment incentives when multiple train companies are operating on a single track. I also note that we have not seen this third party access model carried out in a large country. So my own view is that for a large, heavily utilised, freight-dominated railway like Russia’s, the horizontal separation model – the model that works so well in the US and Canada – is more promising. It preserves the economies of vertical integration – “where steel meets steel”, as they say on the railways – as well as economies of density and system size, so long as the system is not divided into too many components.

– If some vertically-integrated companies are created, will antitrust risks rise and sharp tariff increases become likely? How these risks can be reduced?

– There are certainly such risks in the move from regulation to competition, regardless of the “model” of competition chosen.
If competition is created, I would expect tariffs to be deregulated. In addition – and especially to the degree that current regulations are holding tariffs for some shippers below cost – I would expect some rate “rebalancing” – some rates will go up, some down.  The idea behind the design of a system of vertically integrated companies – whether the Institute for Natural Monopolies design, my design, or someone else’s design – would be to create competitive conditions for as many shippers as possible, so that the majority of freight would be shipped under conditions with at least two competing railway companies.  Nevertheless it is true that a system like this would leave some shippers facing a monopoly railway, and if those shippers do not have other transport options – either for the entire origin-destination routing or simply to the railhead of a competing railway company – the new railway might seek to charge monopoly tariffs.  So yes, I do not wish to evade this point:  with deregulation and the creation of competition, some shippers would pay higher tariffs.
It seems likely that in Russia, as in the US, policy makers would want to maintain some protection for these “captive shippers” from monopoly rates.  For example, tariff increases during a transition period could be limited.  There could be limits set on the degree to which tariffs set for captive shippers exceeded the railway company’s costs.  There could be a regime, as in Canada, for some shippers to have the right to demand a “short haul” from the monopoly railway serving them to the nearest competing railway.  These would all be political and policy decisions, part of a broader package that would seek to prevent some individuals and enterprises from being big losers from a policy that benefits the overall economy. 

Competition needs vigilance

– Now a new stage of railway reform has began in the European Union. What do you think of the way governments want to open up the markets of member countries?

– As I guess is clear by now, I am a great believer in competition, including railway competition.  And I believe that the third party access model has worked pretty well in creating competition within individual EU countries. So it seems to me that the entry by railways from one country onto the network of another country is likely to be beneficial to shippers.  I have heard concerns that one company may come to dominate this business, so again, with the creation of competition comes the need for vigilance by the competition and regulatory authorities against anticompetitive behavior.

– Countries with problems in their railway sector are going to play by the rules suggested by the EU to have chance of entering the European Union in the future. Is this the right decision? Will it help their railway market to overcome the crisis?

– As I’ve mentioned already, I believe the European experience with the third party access model is positive, so that, for example, shippers in Poland and Romania are receiving a better rail service than before because they have the option to use independent train operating companies or to carry their own cargos on the monopoly infrastructure.  Like many others, I am skeptical that complete vertical separation is worth the costs and risks, or is necessary for the creation of competition.  I believe we’re all waiting to see exactly how the “rules suggested by the EU” develop.

– This summer, railway reform was announced in China. What is your opinion of their way to of restructuring the market?

– China has been debating railway restructuring and reform for years. I understand there were decisions reached this past summer, the principal steps being taken now are the separation of commercial operations from the government:  the rail network will be operated by the new, government-owned China Railways Corporation, while the Ministry of Communications will be responsible for long term planning and policy-making, and the State Railways Administration for day-to-day regulation.  This is a good first step for systemic reform, similar to the abolishing of the Ministry of Railways and the creation of RZD as part of the first stage of the Russian railways reorganisation.  It should improve transparency and encourage efficient commercial operations.
What happens after that, though, seems to be unclear.  I have seen statements that the reformers hope to encourage the participation of private investors in the system, but I have not seen any specific discussion of reforms that would create or encourage the development of competition.  In the past there were certainly discussions about vertical separation or third party access as reform strategies for the Chinese railways, but as far as I know nothing like this has been attempted.  I have argued for the creation of competing, vertically integrated railways, and at least one Chinese expert – Professor Zhao Jian, of Beijing Jiaotong University – has made a similar proposal.  However, the only significant policy development I have seen that is at all related to this is the discussion of the construction of a new line, at least partially funded by private investors (as well as regional governments), connecting the coal production region of western Inner Mongolia to thermal electricity generators in central China.  Otherwise, I know of no current moves in China toward the creation of direct competition in the railways sector.
So overall it seems to me that the reforms announced in the summer may be a good first step, but more serious restructuring is likely to be required for the full efficiency of this huge network to be realised.

– Going back to Russia. What are the main lessons the Russian railway industry can learn from the privatisation and reforms in other countries?

– Competition works.  Expert competition agencies and sectoral regulators can do their jobs.  Russian policy makers were right to be skeptical of the Western reformers of the 1990’s and early 2000’s – some of them good friends and colleagues of mine –
who recommended vertical separation of the Russian railways.  But both horizontal separation and third party access regimes have a record of success in protecting freight shippers from monopoly railways in a variety of international settings, and if Russia decides that it prefers not to have a monopoly railways carrier – a decision only Russia can make – either of these options are worth serious consideration.
Interviewed
by Christina Alexandrova

[~DETAIL_TEXT] =>

Third-party access


– Mr Pittman, you are one of the world’s most respected experts on railway reform. Tell our readers, please, which reforms in which countries did you take part in as an expert?

– My most extensive international railways work has been in Russia and China, in both cases as part of teams assembled by the OECD and the International Transport Forum to work with government bodies examining reform proposals.  I am currently an “outside expert” on a railway restructuring project in Mongolia organised by the Asian Development Bank.  I have also worked with antimonopoly agencies and regulators on railways restructuring issues in Australia, Brazil, Mexico, Poland, and Romania.

– It seems that your attitude towards RZD has changed during the years of your study of this market. Is it true? If so, why?

– Like many economists, I was initially attracted to the idea of creating competition by “vertical separation” in railways – that is, one company would control the infrastructure, multiple companies would run trains, and the infrastructure company would be prevented from operating trains in order to remove incentives for it to discriminate against its non-integrated rivals. This general idea was the theory behind the restructuring of the U.S. telecommunications industry that resulted from the U.S. v. AT&T antitrust litigation, and it became a sort of “default model” for reformers in a variety of infrastructure sectors around the world, including telecommunications, railways, and electricity.
However, I fairly quickly became skeptical of the real-world application of this idea to the railway sector. Again like many economists, I was partly reacting to the experience with vertical separation as a restructuring model for the UK railways around the turn of the 21st century – the expense, the difficulties of coordination between track and train operators, the investment and safety questions, and so on. I believe that by the time I began studying RZD I was persuaded that the vertical separation model – though it was still the favored model of the World Bank and many good reformers – would be a very risky one to apply to Russia.  Instead I have come to favor the “horizontal separation” model that is more common in the Americas – vertically integrated railway companies competing with each other over parallel routes and at common points – as much more appropriate to a large and freight-intensive railway system like Russia’s – or China’s, for that matter.

– How do you evaluate the results of the ongoing reforms in the Russian railway industry?

– A great deal has been accomplished – that’s for sure. The separation of operations from direct government control, the spin-off of non-core activities, the encouragement of private rolling stock ownership and competition among repair facilities, the creation of “daughter” operating companies – all of these have been important steps in the direction of greater transparency and efficiency.
In addition, some of what remains to be accomplished has been called for, unsuccessfully, by RZD itself. In particular, I believe that RZD is absolutely correct in calling for an end to the requirements for cross-subsidies within the system – both subsidies to passenger operations from freight operations and (if I understand correctly) requirements to keep rates low on coal shipments in order to prevent electricity price increases. If governments believe that certain passenger or freight operations should be priced below their costs, governments should provide the subsidies themselves. This is especially the case if governments are also trying to create competition:  cross-subsidy requirements inevitably distort competition.

– What do you see as the right structure for the industry? Should it be one infrastructure with a single owner, a unified infrastructure with different owners of cars or more individual private vertically-integrated companies?

– My own view is that competition among individual private vertically integrated railway companies is the best long-term arrangement for Russia. Let me explain why.
I believe that competition is an important force for efficiency and technological progress, and I believe that global experience clearly shows that the railway sector can support competition – that the railways sector is not, or at least is not always, a “natural monopoly”. I believe that the experience in Europe, both western and eastern, suggests that allowing new “carriers” onto the system provides clear benefits to shippers. Thus I believe that allowing the current “operators” on the Russian railways to become “carriers”, competing with RZD trains, would likely be an effective policy.
Having said this, I do believe that there are potential problems with coordination as well as with investment incentives when multiple train companies are operating on a single track. I also note that we have not seen this third party access model carried out in a large country. So my own view is that for a large, heavily utilised, freight-dominated railway like Russia’s, the horizontal separation model – the model that works so well in the US and Canada – is more promising. It preserves the economies of vertical integration – “where steel meets steel”, as they say on the railways – as well as economies of density and system size, so long as the system is not divided into too many components.

– If some vertically-integrated companies are created, will antitrust risks rise and sharp tariff increases become likely? How these risks can be reduced?

– There are certainly such risks in the move from regulation to competition, regardless of the “model” of competition chosen.
If competition is created, I would expect tariffs to be deregulated. In addition – and especially to the degree that current regulations are holding tariffs for some shippers below cost – I would expect some rate “rebalancing” – some rates will go up, some down.  The idea behind the design of a system of vertically integrated companies – whether the Institute for Natural Monopolies design, my design, or someone else’s design – would be to create competitive conditions for as many shippers as possible, so that the majority of freight would be shipped under conditions with at least two competing railway companies.  Nevertheless it is true that a system like this would leave some shippers facing a monopoly railway, and if those shippers do not have other transport options – either for the entire origin-destination routing or simply to the railhead of a competing railway company – the new railway might seek to charge monopoly tariffs.  So yes, I do not wish to evade this point:  with deregulation and the creation of competition, some shippers would pay higher tariffs.
It seems likely that in Russia, as in the US, policy makers would want to maintain some protection for these “captive shippers” from monopoly rates.  For example, tariff increases during a transition period could be limited.  There could be limits set on the degree to which tariffs set for captive shippers exceeded the railway company’s costs.  There could be a regime, as in Canada, for some shippers to have the right to demand a “short haul” from the monopoly railway serving them to the nearest competing railway.  These would all be political and policy decisions, part of a broader package that would seek to prevent some individuals and enterprises from being big losers from a policy that benefits the overall economy. 

Competition needs vigilance

– Now a new stage of railway reform has began in the European Union. What do you think of the way governments want to open up the markets of member countries?

– As I guess is clear by now, I am a great believer in competition, including railway competition.  And I believe that the third party access model has worked pretty well in creating competition within individual EU countries. So it seems to me that the entry by railways from one country onto the network of another country is likely to be beneficial to shippers.  I have heard concerns that one company may come to dominate this business, so again, with the creation of competition comes the need for vigilance by the competition and regulatory authorities against anticompetitive behavior.

– Countries with problems in their railway sector are going to play by the rules suggested by the EU to have chance of entering the European Union in the future. Is this the right decision? Will it help their railway market to overcome the crisis?

– As I’ve mentioned already, I believe the European experience with the third party access model is positive, so that, for example, shippers in Poland and Romania are receiving a better rail service than before because they have the option to use independent train operating companies or to carry their own cargos on the monopoly infrastructure.  Like many others, I am skeptical that complete vertical separation is worth the costs and risks, or is necessary for the creation of competition.  I believe we’re all waiting to see exactly how the “rules suggested by the EU” develop.

– This summer, railway reform was announced in China. What is your opinion of their way to of restructuring the market?

– China has been debating railway restructuring and reform for years. I understand there were decisions reached this past summer, the principal steps being taken now are the separation of commercial operations from the government:  the rail network will be operated by the new, government-owned China Railways Corporation, while the Ministry of Communications will be responsible for long term planning and policy-making, and the State Railways Administration for day-to-day regulation.  This is a good first step for systemic reform, similar to the abolishing of the Ministry of Railways and the creation of RZD as part of the first stage of the Russian railways reorganisation.  It should improve transparency and encourage efficient commercial operations.
What happens after that, though, seems to be unclear.  I have seen statements that the reformers hope to encourage the participation of private investors in the system, but I have not seen any specific discussion of reforms that would create or encourage the development of competition.  In the past there were certainly discussions about vertical separation or third party access as reform strategies for the Chinese railways, but as far as I know nothing like this has been attempted.  I have argued for the creation of competing, vertically integrated railways, and at least one Chinese expert – Professor Zhao Jian, of Beijing Jiaotong University – has made a similar proposal.  However, the only significant policy development I have seen that is at all related to this is the discussion of the construction of a new line, at least partially funded by private investors (as well as regional governments), connecting the coal production region of western Inner Mongolia to thermal electricity generators in central China.  Otherwise, I know of no current moves in China toward the creation of direct competition in the railways sector.
So overall it seems to me that the reforms announced in the summer may be a good first step, but more serious restructuring is likely to be required for the full efficiency of this huge network to be realised.

– Going back to Russia. What are the main lessons the Russian railway industry can learn from the privatisation and reforms in other countries?

– Competition works.  Expert competition agencies and sectoral regulators can do their jobs.  Russian policy makers were right to be skeptical of the Western reformers of the 1990’s and early 2000’s – some of them good friends and colleagues of mine –
who recommended vertical separation of the Russian railways.  But both horizontal separation and third party access regimes have a record of success in protecting freight shippers from monopoly railways in a variety of international settings, and if Russia decides that it prefers not to have a monopoly railways carrier – a decision only Russia can make – either of these options are worth serious consideration.
Interviewed
by Christina Alexandrova

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Choosing a model for the reform of the railway sector is always an individual decision. All countries have their own way, but the result was supposed to be competition with fair conditions for all shippers. However, in practice this has not happened. The Director of Economic Research and Director of International Technical Assistance in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice Russell Pittman discusses the mistakes made.

[~PREVIEW_TEXT] =>

Choosing a model for the reform of the railway sector is always an individual decision. All countries have their own way, but the result was supposed to be competition with fair conditions for all shippers. However, in practice this has not happened. The Director of Economic Research and Director of International Technical Assistance in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice Russell Pittman discusses the mistakes made.

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Third-party access


– Mr Pittman, you are one of the world’s most respected experts on railway reform. Tell our readers, please, which reforms in which countries did you take part in as an expert?

– My most extensive international railways work has been in Russia and China, in both cases as part of teams assembled by the OECD and the International Transport Forum to work with government bodies examining reform proposals.  I am currently an “outside expert” on a railway restructuring project in Mongolia organised by the Asian Development Bank.  I have also worked with antimonopoly agencies and regulators on railways restructuring issues in Australia, Brazil, Mexico, Poland, and Romania.

– It seems that your attitude towards RZD has changed during the years of your study of this market. Is it true? If so, why?

– Like many economists, I was initially attracted to the idea of creating competition by “vertical separation” in railways – that is, one company would control the infrastructure, multiple companies would run trains, and the infrastructure company would be prevented from operating trains in order to remove incentives for it to discriminate against its non-integrated rivals. This general idea was the theory behind the restructuring of the U.S. telecommunications industry that resulted from the U.S. v. AT&T antitrust litigation, and it became a sort of “default model” for reformers in a variety of infrastructure sectors around the world, including telecommunications, railways, and electricity.
However, I fairly quickly became skeptical of the real-world application of this idea to the railway sector. Again like many economists, I was partly reacting to the experience with vertical separation as a restructuring model for the UK railways around the turn of the 21st century – the expense, the difficulties of coordination between track and train operators, the investment and safety questions, and so on. I believe that by the time I began studying RZD I was persuaded that the vertical separation model – though it was still the favored model of the World Bank and many good reformers – would be a very risky one to apply to Russia.  Instead I have come to favor the “horizontal separation” model that is more common in the Americas – vertically integrated railway companies competing with each other over parallel routes and at common points – as much more appropriate to a large and freight-intensive railway system like Russia’s – or China’s, for that matter.

– How do you evaluate the results of the ongoing reforms in the Russian railway industry?

– A great deal has been accomplished – that’s for sure. The separation of operations from direct government control, the spin-off of non-core activities, the encouragement of private rolling stock ownership and competition among repair facilities, the creation of “daughter” operating companies – all of these have been important steps in the direction of greater transparency and efficiency.
In addition, some of what remains to be accomplished has been called for, unsuccessfully, by RZD itself. In particular, I believe that RZD is absolutely correct in calling for an end to the requirements for cross-subsidies within the system – both subsidies to passenger operations from freight operations and (if I understand correctly) requirements to keep rates low on coal shipments in order to prevent electricity price increases. If governments believe that certain passenger or freight operations should be priced below their costs, governments should provide the subsidies themselves. This is especially the case if governments are also trying to create competition:  cross-subsidy requirements inevitably distort competition.

– What do you see as the right structure for the industry? Should it be one infrastructure with a single owner, a unified infrastructure with different owners of cars or more individual private vertically-integrated companies?

– My own view is that competition among individual private vertically integrated railway companies is the best long-term arrangement for Russia. Let me explain why.
I believe that competition is an important force for efficiency and technological progress, and I believe that global experience clearly shows that the railway sector can support competition – that the railways sector is not, or at least is not always, a “natural monopoly”. I believe that the experience in Europe, both western and eastern, suggests that allowing new “carriers” onto the system provides clear benefits to shippers. Thus I believe that allowing the current “operators” on the Russian railways to become “carriers”, competing with RZD trains, would likely be an effective policy.
Having said this, I do believe that there are potential problems with coordination as well as with investment incentives when multiple train companies are operating on a single track. I also note that we have not seen this third party access model carried out in a large country. So my own view is that for a large, heavily utilised, freight-dominated railway like Russia’s, the horizontal separation model – the model that works so well in the US and Canada – is more promising. It preserves the economies of vertical integration – “where steel meets steel”, as they say on the railways – as well as economies of density and system size, so long as the system is not divided into too many components.

– If some vertically-integrated companies are created, will antitrust risks rise and sharp tariff increases become likely? How these risks can be reduced?

– There are certainly such risks in the move from regulation to competition, regardless of the “model” of competition chosen.
If competition is created, I would expect tariffs to be deregulated. In addition – and especially to the degree that current regulations are holding tariffs for some shippers below cost – I would expect some rate “rebalancing” – some rates will go up, some down.  The idea behind the design of a system of vertically integrated companies – whether the Institute for Natural Monopolies design, my design, or someone else’s design – would be to create competitive conditions for as many shippers as possible, so that the majority of freight would be shipped under conditions with at least two competing railway companies.  Nevertheless it is true that a system like this would leave some shippers facing a monopoly railway, and if those shippers do not have other transport options – either for the entire origin-destination routing or simply to the railhead of a competing railway company – the new railway might seek to charge monopoly tariffs.  So yes, I do not wish to evade this point:  with deregulation and the creation of competition, some shippers would pay higher tariffs.
It seems likely that in Russia, as in the US, policy makers would want to maintain some protection for these “captive shippers” from monopoly rates.  For example, tariff increases during a transition period could be limited.  There could be limits set on the degree to which tariffs set for captive shippers exceeded the railway company’s costs.  There could be a regime, as in Canada, for some shippers to have the right to demand a “short haul” from the monopoly railway serving them to the nearest competing railway.  These would all be political and policy decisions, part of a broader package that would seek to prevent some individuals and enterprises from being big losers from a policy that benefits the overall economy. 

Competition needs vigilance

– Now a new stage of railway reform has began in the European Union. What do you think of the way governments want to open up the markets of member countries?

– As I guess is clear by now, I am a great believer in competition, including railway competition.  And I believe that the third party access model has worked pretty well in creating competition within individual EU countries. So it seems to me that the entry by railways from one country onto the network of another country is likely to be beneficial to shippers.  I have heard concerns that one company may come to dominate this business, so again, with the creation of competition comes the need for vigilance by the competition and regulatory authorities against anticompetitive behavior.

– Countries with problems in their railway sector are going to play by the rules suggested by the EU to have chance of entering the European Union in the future. Is this the right decision? Will it help their railway market to overcome the crisis?

– As I’ve mentioned already, I believe the European experience with the third party access model is positive, so that, for example, shippers in Poland and Romania are receiving a better rail service than before because they have the option to use independent train operating companies or to carry their own cargos on the monopoly infrastructure.  Like many others, I am skeptical that complete vertical separation is worth the costs and risks, or is necessary for the creation of competition.  I believe we’re all waiting to see exactly how the “rules suggested by the EU” develop.

– This summer, railway reform was announced in China. What is your opinion of their way to of restructuring the market?

– China has been debating railway restructuring and reform for years. I understand there were decisions reached this past summer, the principal steps being taken now are the separation of commercial operations from the government:  the rail network will be operated by the new, government-owned China Railways Corporation, while the Ministry of Communications will be responsible for long term planning and policy-making, and the State Railways Administration for day-to-day regulation.  This is a good first step for systemic reform, similar to the abolishing of the Ministry of Railways and the creation of RZD as part of the first stage of the Russian railways reorganisation.  It should improve transparency and encourage efficient commercial operations.
What happens after that, though, seems to be unclear.  I have seen statements that the reformers hope to encourage the participation of private investors in the system, but I have not seen any specific discussion of reforms that would create or encourage the development of competition.  In the past there were certainly discussions about vertical separation or third party access as reform strategies for the Chinese railways, but as far as I know nothing like this has been attempted.  I have argued for the creation of competing, vertically integrated railways, and at least one Chinese expert – Professor Zhao Jian, of Beijing Jiaotong University – has made a similar proposal.  However, the only significant policy development I have seen that is at all related to this is the discussion of the construction of a new line, at least partially funded by private investors (as well as regional governments), connecting the coal production region of western Inner Mongolia to thermal electricity generators in central China.  Otherwise, I know of no current moves in China toward the creation of direct competition in the railways sector.
So overall it seems to me that the reforms announced in the summer may be a good first step, but more serious restructuring is likely to be required for the full efficiency of this huge network to be realised.

– Going back to Russia. What are the main lessons the Russian railway industry can learn from the privatisation and reforms in other countries?

– Competition works.  Expert competition agencies and sectoral regulators can do their jobs.  Russian policy makers were right to be skeptical of the Western reformers of the 1990’s and early 2000’s – some of them good friends and colleagues of mine –
who recommended vertical separation of the Russian railways.  But both horizontal separation and third party access regimes have a record of success in protecting freight shippers from monopoly railways in a variety of international settings, and if Russia decides that it prefers not to have a monopoly railways carrier – a decision only Russia can make – either of these options are worth serious consideration.
Interviewed
by Christina Alexandrova

[~DETAIL_TEXT] =>

Third-party access


– Mr Pittman, you are one of the world’s most respected experts on railway reform. Tell our readers, please, which reforms in which countries did you take part in as an expert?

– My most extensive international railways work has been in Russia and China, in both cases as part of teams assembled by the OECD and the International Transport Forum to work with government bodies examining reform proposals.  I am currently an “outside expert” on a railway restructuring project in Mongolia organised by the Asian Development Bank.  I have also worked with antimonopoly agencies and regulators on railways restructuring issues in Australia, Brazil, Mexico, Poland, and Romania.

– It seems that your attitude towards RZD has changed during the years of your study of this market. Is it true? If so, why?

– Like many economists, I was initially attracted to the idea of creating competition by “vertical separation” in railways – that is, one company would control the infrastructure, multiple companies would run trains, and the infrastructure company would be prevented from operating trains in order to remove incentives for it to discriminate against its non-integrated rivals. This general idea was the theory behind the restructuring of the U.S. telecommunications industry that resulted from the U.S. v. AT&T antitrust litigation, and it became a sort of “default model” for reformers in a variety of infrastructure sectors around the world, including telecommunications, railways, and electricity.
However, I fairly quickly became skeptical of the real-world application of this idea to the railway sector. Again like many economists, I was partly reacting to the experience with vertical separation as a restructuring model for the UK railways around the turn of the 21st century – the expense, the difficulties of coordination between track and train operators, the investment and safety questions, and so on. I believe that by the time I began studying RZD I was persuaded that the vertical separation model – though it was still the favored model of the World Bank and many good reformers – would be a very risky one to apply to Russia.  Instead I have come to favor the “horizontal separation” model that is more common in the Americas – vertically integrated railway companies competing with each other over parallel routes and at common points – as much more appropriate to a large and freight-intensive railway system like Russia’s – or China’s, for that matter.

– How do you evaluate the results of the ongoing reforms in the Russian railway industry?

– A great deal has been accomplished – that’s for sure. The separation of operations from direct government control, the spin-off of non-core activities, the encouragement of private rolling stock ownership and competition among repair facilities, the creation of “daughter” operating companies – all of these have been important steps in the direction of greater transparency and efficiency.
In addition, some of what remains to be accomplished has been called for, unsuccessfully, by RZD itself. In particular, I believe that RZD is absolutely correct in calling for an end to the requirements for cross-subsidies within the system – both subsidies to passenger operations from freight operations and (if I understand correctly) requirements to keep rates low on coal shipments in order to prevent electricity price increases. If governments believe that certain passenger or freight operations should be priced below their costs, governments should provide the subsidies themselves. This is especially the case if governments are also trying to create competition:  cross-subsidy requirements inevitably distort competition.

– What do you see as the right structure for the industry? Should it be one infrastructure with a single owner, a unified infrastructure with different owners of cars or more individual private vertically-integrated companies?

– My own view is that competition among individual private vertically integrated railway companies is the best long-term arrangement for Russia. Let me explain why.
I believe that competition is an important force for efficiency and technological progress, and I believe that global experience clearly shows that the railway sector can support competition – that the railways sector is not, or at least is not always, a “natural monopoly”. I believe that the experience in Europe, both western and eastern, suggests that allowing new “carriers” onto the system provides clear benefits to shippers. Thus I believe that allowing the current “operators” on the Russian railways to become “carriers”, competing with RZD trains, would likely be an effective policy.
Having said this, I do believe that there are potential problems with coordination as well as with investment incentives when multiple train companies are operating on a single track. I also note that we have not seen this third party access model carried out in a large country. So my own view is that for a large, heavily utilised, freight-dominated railway like Russia’s, the horizontal separation model – the model that works so well in the US and Canada – is more promising. It preserves the economies of vertical integration – “where steel meets steel”, as they say on the railways – as well as economies of density and system size, so long as the system is not divided into too many components.

– If some vertically-integrated companies are created, will antitrust risks rise and sharp tariff increases become likely? How these risks can be reduced?

– There are certainly such risks in the move from regulation to competition, regardless of the “model” of competition chosen.
If competition is created, I would expect tariffs to be deregulated. In addition – and especially to the degree that current regulations are holding tariffs for some shippers below cost – I would expect some rate “rebalancing” – some rates will go up, some down.  The idea behind the design of a system of vertically integrated companies – whether the Institute for Natural Monopolies design, my design, or someone else’s design – would be to create competitive conditions for as many shippers as possible, so that the majority of freight would be shipped under conditions with at least two competing railway companies.  Nevertheless it is true that a system like this would leave some shippers facing a monopoly railway, and if those shippers do not have other transport options – either for the entire origin-destination routing or simply to the railhead of a competing railway company – the new railway might seek to charge monopoly tariffs.  So yes, I do not wish to evade this point:  with deregulation and the creation of competition, some shippers would pay higher tariffs.
It seems likely that in Russia, as in the US, policy makers would want to maintain some protection for these “captive shippers” from monopoly rates.  For example, tariff increases during a transition period could be limited.  There could be limits set on the degree to which tariffs set for captive shippers exceeded the railway company’s costs.  There could be a regime, as in Canada, for some shippers to have the right to demand a “short haul” from the monopoly railway serving them to the nearest competing railway.  These would all be political and policy decisions, part of a broader package that would seek to prevent some individuals and enterprises from being big losers from a policy that benefits the overall economy. 

Competition needs vigilance

– Now a new stage of railway reform has began in the European Union. What do you think of the way governments want to open up the markets of member countries?

– As I guess is clear by now, I am a great believer in competition, including railway competition.  And I believe that the third party access model has worked pretty well in creating competition within individual EU countries. So it seems to me that the entry by railways from one country onto the network of another country is likely to be beneficial to shippers.  I have heard concerns that one company may come to dominate this business, so again, with the creation of competition comes the need for vigilance by the competition and regulatory authorities against anticompetitive behavior.

– Countries with problems in their railway sector are going to play by the rules suggested by the EU to have chance of entering the European Union in the future. Is this the right decision? Will it help their railway market to overcome the crisis?

– As I’ve mentioned already, I believe the European experience with the third party access model is positive, so that, for example, shippers in Poland and Romania are receiving a better rail service than before because they have the option to use independent train operating companies or to carry their own cargos on the monopoly infrastructure.  Like many others, I am skeptical that complete vertical separation is worth the costs and risks, or is necessary for the creation of competition.  I believe we’re all waiting to see exactly how the “rules suggested by the EU” develop.

– This summer, railway reform was announced in China. What is your opinion of their way to of restructuring the market?

– China has been debating railway restructuring and reform for years. I understand there were decisions reached this past summer, the principal steps being taken now are the separation of commercial operations from the government:  the rail network will be operated by the new, government-owned China Railways Corporation, while the Ministry of Communications will be responsible for long term planning and policy-making, and the State Railways Administration for day-to-day regulation.  This is a good first step for systemic reform, similar to the abolishing of the Ministry of Railways and the creation of RZD as part of the first stage of the Russian railways reorganisation.  It should improve transparency and encourage efficient commercial operations.
What happens after that, though, seems to be unclear.  I have seen statements that the reformers hope to encourage the participation of private investors in the system, but I have not seen any specific discussion of reforms that would create or encourage the development of competition.  In the past there were certainly discussions about vertical separation or third party access as reform strategies for the Chinese railways, but as far as I know nothing like this has been attempted.  I have argued for the creation of competing, vertically integrated railways, and at least one Chinese expert – Professor Zhao Jian, of Beijing Jiaotong University – has made a similar proposal.  However, the only significant policy development I have seen that is at all related to this is the discussion of the construction of a new line, at least partially funded by private investors (as well as regional governments), connecting the coal production region of western Inner Mongolia to thermal electricity generators in central China.  Otherwise, I know of no current moves in China toward the creation of direct competition in the railways sector.
So overall it seems to me that the reforms announced in the summer may be a good first step, but more serious restructuring is likely to be required for the full efficiency of this huge network to be realised.

– Going back to Russia. What are the main lessons the Russian railway industry can learn from the privatisation and reforms in other countries?

– Competition works.  Expert competition agencies and sectoral regulators can do their jobs.  Russian policy makers were right to be skeptical of the Western reformers of the 1990’s and early 2000’s – some of them good friends and colleagues of mine –
who recommended vertical separation of the Russian railways.  But both horizontal separation and third party access regimes have a record of success in protecting freight shippers from monopoly railways in a variety of international settings, and if Russia decides that it prefers not to have a monopoly railways carrier – a decision only Russia can make – either of these options are worth serious consideration.
Interviewed
by Christina Alexandrova

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Choosing a model for the reform of the railway sector is always an individual decision. All countries have their own way, but the result was supposed to be competition with fair conditions for all shippers. However, in practice this has not happened. The Director of Economic Research and Director of International Technical Assistance in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice Russell Pittman discusses the mistakes made.

[~PREVIEW_TEXT] =>

Choosing a model for the reform of the railway sector is always an individual decision. All countries have their own way, but the result was supposed to be competition with fair conditions for all shippers. However, in practice this has not happened. The Director of Economic Research and Director of International Technical Assistance in the Economic Analysis Group, Antitrust Division, U.S. Department of Justice Russell Pittman discusses the mistakes made.

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РЖД-Партнер

PPP for a Better Future

PPP for a Better Future

The model of public–private partnership (PPP) has not proven popular
in Russia. The reason is the absence of relevant law, the draft of which is still in the process of approval. Meanwhile, the funding priorities for RZD are
for the purchase of locomotives, but not for construction, reconstruction
and modernisation of the railway network. What projects are needed today, and how will you attract investors?

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Investors Hesitant

This year Russian Government approved the investment program of development for the railways up to 2020 year. This year the investment amount will be RUB 411.4 billion. At the same time, it is clear that the development and upgrading of rail infrastructure in the country, where the operational length of the public network is more than 86,000 km, and its deterioration is more than 58%, requires trillions of rubles. Where to get this money?
Traditionally the investment activities of RZD are supported by public resources. About RUB 260 billion, including RUB 150 billion from the National Welfare Fund, is allocated for the development of the eastern area of the Trans-Siberian railway and the Baikal-Amur Mainline. In addition to this, NWF is going to invest RUB 150 billion to the development of the first HSR line between Moscow and Kazan, which should be built by 2018.
Of course, this project is very important for Russia, but according to experts, the timeframe is too tight. Therefore it’s hard to implement the PPP model here, because any activities for borrowing funds involves transparent tender, which can take more than a year. Also it is worth considering the preparations for the tender, the signing of the concession agreement. And financial closing of the project will require six months. Therefore, the building of HSR will not be via PPP, but another hybrid scheme.
Investors still have many reservations about Russian projects, because the issue is also complicated by the status of RZD as a natural monopoly. PPP can be applied only in those areas where legislation does not assign monopoly status to RZD. By investing in the project, the private investor plans to get a profit in the near future. The mechanism of investment in rail transport is too complicated, therefore only large companies can afford it today. These are some examples.
Rusal JSC built and now runs the railway line to the bauxite deposits in the Republic of Komi. Mechel JSC finished the construction of the railway line to Elga coking coal deposits. Company finished laying tracks at the end of the last year. Construction involved laying 321 km of tracks. According to the Chairman of the Board of Directors of Mechel Igor Zyuzin, the project’s scale is unique for the mining industry, as completion of railway construction together with the launch of mining was finished in such a short time, considering the 2008-2009 crisis. The railway track construction required investment of some RUB 40 billion.
RZD signed an agreement with private shipper Novatek, who will become co-investor in the project for increasing capacity of the line between Tobolsk and Surgut. By the way, Russian monopoly is going to attract RUB 156-405 billion from private sources by 2020.

Political mistakes

There are few examples of PPP projects in Russia in general, and most of the few implemented were not successful. For example, a line of the Kyzyl-Kuragino, Orlovsky tunnel in St Petersburg, the construction of a water supply-project “Neva”, a light rail tram (“Aboveground Express”). The reasons are mostly political. Investors need guarantees from the state or regional administrations, both budgetary and contractual, i.e. refund guarantee, minimum income guarantee in case of termination of the agreement and in case of construction risks. And sometimes the state comes to the conclusion that it is better to build a facility without private capital, as it is more profitable from an administrative point of view.
According to Olga Revzina, partner of Herberth Smith Freehills, PPP is not a panacea, and there is nothing wrong in the situation when the state chooses to implement the project on its own. “The only thing is that the decision should be taken before construction, it is important to have a clear methodology. In accordance with the specified criteria it is important to determine whether it should be PPP or not. Sometimes it happens that a PPP is declared, and then it is revealed that such model is unprofitable for the state. We hope that, in future, such mistakes will be avoided”, she said.
The M-11 Moscow-St Petersburg highway bypasses the Odintsovo, Pulkovo airport in St Petersburg and the Western high-speed ringroad in St Petersburg, which was finished last year and received all the awards as one of the most complicated project in Europe. Banks today are willing to invest, there is a pool of investors, and when PPP law is approved, the number of such projects should increase. There are some important railway projects which are being implemented on the basis of PPP and are supported by the Investment fund. Among them are “Ural industrial-Ural polar” (several railway lines for mining of ore minerals in the district of Yamal), line “Belkomur”, Naryn-Lugokan railway, etc.
According to Chairman of the Board of Directors of Transproject LLC Vitaly Maksimov, it is possible to attract even small investors to large projects. One example is the development of the Novorossiysk sea port. The problem of rail infrastructure having low capacity is the main limiting factor for further development. By 2015, it is planned to expand the transport infrastructure entering the port through the construction of several road and rail facilities. Private investments have already helped to increase terminal complexes and cargo flows almost to the maximum. Now the station allows for the dispatch and receipt of up to 40 trains per day. Implementation of the project will enable an increase in turnover of up to 60-70 trains a day. To achieve the main goal, a new logistics park, two connecting railroads near the station of Novorossiysk and the third main track from the external network should be built. It is important to finish the project as soon as possible, in just two years.
“An interesting way to stimulate private investors is projects for regional administrations. For example, the Government of Moscow is undertaking a joint investment project “Reconstruction and Development of the Inner Ring of the Moscow Railway”, said V. Maksimov. “The first stage of this project will be the life cycle contract for 30 years for maintenance and repair of 200 wagons in Kalininskaya line. Such tenders will be held also for the park of city trams and suburban trains.”

Refinancing Is the Way Forward


Today loans with the term above 10-13 years are almost inaccessible in Russia. The breakeven point of most infrastructure projects today is 20-30 years, which is dangerous for investors. It means that in the absence of refinancing, financial models must be built on the presumption of high income for the investor in the first years of the project. Otherwise, he will not be able to pay his debts.
But infrastructure payback is not less than 25-28 years. Therefore the investor is forced to ask the state to guarantee a minimum income to cover his loans and operational costs. Instead of trying to save the budget, the state in Russia becomes a major investor and lender for the project. This is clearly not the way to implement infrastructure projects with private investment in Russia, experts say.
One of the good solutions here is refinancing. According to this model, the investor can get a new loan to cover his previous loan. However, the refinancing can cause risks, because at the beginning of the infrastructure project, it is not clear how the situation in the market can change by the time of refinancing.
Therefore refinancing risks are usually divided between the state and the private investor. So, if the terms of the new loan will be worse than the former, the state and the investor may agree to share the loss in half. But a “substantial upside” from a refinancing may also be divided between the parties. It is a way to increase the predictability of project, which helps to bring foreign investors to domestic markets without having to pay a significant amount in the first years of the life of the project.
By Christina Alexandrova

viewpoint
Olga Revzina,
Partner of Herberth Smith Freehills:

– We hope that the PPP law will be accepted by end of 2013. We took part in creating it, and we think that market really needs this document. However, we have a lot of comments on the text. But they are not that important compared to our main wish - not make this document too strict. Now it is possible to use different forms of PPP, so today this is just a framework document. There is not much about types of guarantees in this paper, but we think, it is enough if the state gives compensation to investors in certain cases. According to the law, risk allocation must be fair to both parties, and the state also must assume a part of the risk.

Sergey Samolis,
Senior Manager of Project Activities of the Eurasian Development Bank (EDB):

– We can’t expect mass implementation of PPP in Russia. Even in European markets the share of PPP projects is not more than 5% of the volume of project financing transactions. At the same time, there are a lot of potential projects in Russia, that by their nature can be implemented like PPP. Currently the form of concession agreement is the most popular way to do it. According to this model, the private partner bears the risk of demand and collects payments from the user, but the possession of an object immediately after creation or after the end of the concession period goes to the public side.

Mikhail Kornev,  Lawyer Vegas Lex:
– Infrastructure bonds are a good long-term funding mechanism for PPP projects. There is interest in infrastructure bonds in Russia thanks to their good performance abroad. It is a great alternative to bank lending, because it is not always beneficial to the private partner to get a credit from a bank. But the issuer of bonds, usually a project company, does not have the ability to cover its losses by revenue from other activities. It creates risks for bondholders and raises the need for providing additional guarantees for repayment of debt obligations. For example, in the form of bank or state partner guarantee.

[~DETAIL_TEXT] =>

Investors Hesitant

This year Russian Government approved the investment program of development for the railways up to 2020 year. This year the investment amount will be RUB 411.4 billion. At the same time, it is clear that the development and upgrading of rail infrastructure in the country, where the operational length of the public network is more than 86,000 km, and its deterioration is more than 58%, requires trillions of rubles. Where to get this money?
Traditionally the investment activities of RZD are supported by public resources. About RUB 260 billion, including RUB 150 billion from the National Welfare Fund, is allocated for the development of the eastern area of the Trans-Siberian railway and the Baikal-Amur Mainline. In addition to this, NWF is going to invest RUB 150 billion to the development of the first HSR line between Moscow and Kazan, which should be built by 2018.
Of course, this project is very important for Russia, but according to experts, the timeframe is too tight. Therefore it’s hard to implement the PPP model here, because any activities for borrowing funds involves transparent tender, which can take more than a year. Also it is worth considering the preparations for the tender, the signing of the concession agreement. And financial closing of the project will require six months. Therefore, the building of HSR will not be via PPP, but another hybrid scheme.
Investors still have many reservations about Russian projects, because the issue is also complicated by the status of RZD as a natural monopoly. PPP can be applied only in those areas where legislation does not assign monopoly status to RZD. By investing in the project, the private investor plans to get a profit in the near future. The mechanism of investment in rail transport is too complicated, therefore only large companies can afford it today. These are some examples.
Rusal JSC built and now runs the railway line to the bauxite deposits in the Republic of Komi. Mechel JSC finished the construction of the railway line to Elga coking coal deposits. Company finished laying tracks at the end of the last year. Construction involved laying 321 km of tracks. According to the Chairman of the Board of Directors of Mechel Igor Zyuzin, the project’s scale is unique for the mining industry, as completion of railway construction together with the launch of mining was finished in such a short time, considering the 2008-2009 crisis. The railway track construction required investment of some RUB 40 billion.
RZD signed an agreement with private shipper Novatek, who will become co-investor in the project for increasing capacity of the line between Tobolsk and Surgut. By the way, Russian monopoly is going to attract RUB 156-405 billion from private sources by 2020.

Political mistakes

There are few examples of PPP projects in Russia in general, and most of the few implemented were not successful. For example, a line of the Kyzyl-Kuragino, Orlovsky tunnel in St Petersburg, the construction of a water supply-project “Neva”, a light rail tram (“Aboveground Express”). The reasons are mostly political. Investors need guarantees from the state or regional administrations, both budgetary and contractual, i.e. refund guarantee, minimum income guarantee in case of termination of the agreement and in case of construction risks. And sometimes the state comes to the conclusion that it is better to build a facility without private capital, as it is more profitable from an administrative point of view.
According to Olga Revzina, partner of Herberth Smith Freehills, PPP is not a panacea, and there is nothing wrong in the situation when the state chooses to implement the project on its own. “The only thing is that the decision should be taken before construction, it is important to have a clear methodology. In accordance with the specified criteria it is important to determine whether it should be PPP or not. Sometimes it happens that a PPP is declared, and then it is revealed that such model is unprofitable for the state. We hope that, in future, such mistakes will be avoided”, she said.
The M-11 Moscow-St Petersburg highway bypasses the Odintsovo, Pulkovo airport in St Petersburg and the Western high-speed ringroad in St Petersburg, which was finished last year and received all the awards as one of the most complicated project in Europe. Banks today are willing to invest, there is a pool of investors, and when PPP law is approved, the number of such projects should increase. There are some important railway projects which are being implemented on the basis of PPP and are supported by the Investment fund. Among them are “Ural industrial-Ural polar” (several railway lines for mining of ore minerals in the district of Yamal), line “Belkomur”, Naryn-Lugokan railway, etc.
According to Chairman of the Board of Directors of Transproject LLC Vitaly Maksimov, it is possible to attract even small investors to large projects. One example is the development of the Novorossiysk sea port. The problem of rail infrastructure having low capacity is the main limiting factor for further development. By 2015, it is planned to expand the transport infrastructure entering the port through the construction of several road and rail facilities. Private investments have already helped to increase terminal complexes and cargo flows almost to the maximum. Now the station allows for the dispatch and receipt of up to 40 trains per day. Implementation of the project will enable an increase in turnover of up to 60-70 trains a day. To achieve the main goal, a new logistics park, two connecting railroads near the station of Novorossiysk and the third main track from the external network should be built. It is important to finish the project as soon as possible, in just two years.
“An interesting way to stimulate private investors is projects for regional administrations. For example, the Government of Moscow is undertaking a joint investment project “Reconstruction and Development of the Inner Ring of the Moscow Railway”, said V. Maksimov. “The first stage of this project will be the life cycle contract for 30 years for maintenance and repair of 200 wagons in Kalininskaya line. Such tenders will be held also for the park of city trams and suburban trains.”

Refinancing Is the Way Forward


Today loans with the term above 10-13 years are almost inaccessible in Russia. The breakeven point of most infrastructure projects today is 20-30 years, which is dangerous for investors. It means that in the absence of refinancing, financial models must be built on the presumption of high income for the investor in the first years of the project. Otherwise, he will not be able to pay his debts.
But infrastructure payback is not less than 25-28 years. Therefore the investor is forced to ask the state to guarantee a minimum income to cover his loans and operational costs. Instead of trying to save the budget, the state in Russia becomes a major investor and lender for the project. This is clearly not the way to implement infrastructure projects with private investment in Russia, experts say.
One of the good solutions here is refinancing. According to this model, the investor can get a new loan to cover his previous loan. However, the refinancing can cause risks, because at the beginning of the infrastructure project, it is not clear how the situation in the market can change by the time of refinancing.
Therefore refinancing risks are usually divided between the state and the private investor. So, if the terms of the new loan will be worse than the former, the state and the investor may agree to share the loss in half. But a “substantial upside” from a refinancing may also be divided between the parties. It is a way to increase the predictability of project, which helps to bring foreign investors to domestic markets without having to pay a significant amount in the first years of the life of the project.
By Christina Alexandrova

viewpoint
Olga Revzina,
Partner of Herberth Smith Freehills:

– We hope that the PPP law will be accepted by end of 2013. We took part in creating it, and we think that market really needs this document. However, we have a lot of comments on the text. But they are not that important compared to our main wish - not make this document too strict. Now it is possible to use different forms of PPP, so today this is just a framework document. There is not much about types of guarantees in this paper, but we think, it is enough if the state gives compensation to investors in certain cases. According to the law, risk allocation must be fair to both parties, and the state also must assume a part of the risk.

Sergey Samolis,
Senior Manager of Project Activities of the Eurasian Development Bank (EDB):

– We can’t expect mass implementation of PPP in Russia. Even in European markets the share of PPP projects is not more than 5% of the volume of project financing transactions. At the same time, there are a lot of potential projects in Russia, that by their nature can be implemented like PPP. Currently the form of concession agreement is the most popular way to do it. According to this model, the private partner bears the risk of demand and collects payments from the user, but the possession of an object immediately after creation or after the end of the concession period goes to the public side.

Mikhail Kornev,  Lawyer Vegas Lex:
– Infrastructure bonds are a good long-term funding mechanism for PPP projects. There is interest in infrastructure bonds in Russia thanks to their good performance abroad. It is a great alternative to bank lending, because it is not always beneficial to the private partner to get a credit from a bank. But the issuer of bonds, usually a project company, does not have the ability to cover its losses by revenue from other activities. It creates risks for bondholders and raises the need for providing additional guarantees for repayment of debt obligations. For example, in the form of bank or state partner guarantee.

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The model of public–private partnership (PPP) has not proven popular
in Russia. The reason is the absence of relevant law, the draft of which is still in the process of approval. Meanwhile, the funding priorities for RZD are
for the purchase of locomotives, but not for construction, reconstruction
and modernisation of the railway network. What projects are needed today, and how will you attract investors?

[~PREVIEW_TEXT] =>

The model of public–private partnership (PPP) has not proven popular
in Russia. The reason is the absence of relevant law, the draft of which is still in the process of approval. Meanwhile, the funding priorities for RZD are
for the purchase of locomotives, but not for construction, reconstruction
and modernisation of the railway network. What projects are needed today, and how will you attract investors?

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Investors Hesitant

This year Russian Government approved the investment program of development for the railways up to 2020 year. This year the investment amount will be RUB 411.4 billion. At the same time, it is clear that the development and upgrading of rail infrastructure in the country, where the operational length of the public network is more than 86,000 km, and its deterioration is more than 58%, requires trillions of rubles. Where to get this money?
Traditionally the investment activities of RZD are supported by public resources. About RUB 260 billion, including RUB 150 billion from the National Welfare Fund, is allocated for the development of the eastern area of the Trans-Siberian railway and the Baikal-Amur Mainline. In addition to this, NWF is going to invest RUB 150 billion to the development of the first HSR line between Moscow and Kazan, which should be built by 2018.
Of course, this project is very important for Russia, but according to experts, the timeframe is too tight. Therefore it’s hard to implement the PPP model here, because any activities for borrowing funds involves transparent tender, which can take more than a year. Also it is worth considering the preparations for the tender, the signing of the concession agreement. And financial closing of the project will require six months. Therefore, the building of HSR will not be via PPP, but another hybrid scheme.
Investors still have many reservations about Russian projects, because the issue is also complicated by the status of RZD as a natural monopoly. PPP can be applied only in those areas where legislation does not assign monopoly status to RZD. By investing in the project, the private investor plans to get a profit in the near future. The mechanism of investment in rail transport is too complicated, therefore only large companies can afford it today. These are some examples.
Rusal JSC built and now runs the railway line to the bauxite deposits in the Republic of Komi. Mechel JSC finished the construction of the railway line to Elga coking coal deposits. Company finished laying tracks at the end of the last year. Construction involved laying 321 km of tracks. According to the Chairman of the Board of Directors of Mechel Igor Zyuzin, the project’s scale is unique for the mining industry, as completion of railway construction together with the launch of mining was finished in such a short time, considering the 2008-2009 crisis. The railway track construction required investment of some RUB 40 billion.
RZD signed an agreement with private shipper Novatek, who will become co-investor in the project for increasing capacity of the line between Tobolsk and Surgut. By the way, Russian monopoly is going to attract RUB 156-405 billion from private sources by 2020.

Political mistakes

There are few examples of PPP projects in Russia in general, and most of the few implemented were not successful. For example, a line of the Kyzyl-Kuragino, Orlovsky tunnel in St Petersburg, the construction of a water supply-project “Neva”, a light rail tram (“Aboveground Express”). The reasons are mostly political. Investors need guarantees from the state or regional administrations, both budgetary and contractual, i.e. refund guarantee, minimum income guarantee in case of termination of the agreement and in case of construction risks. And sometimes the state comes to the conclusion that it is better to build a facility without private capital, as it is more profitable from an administrative point of view.
According to Olga Revzina, partner of Herberth Smith Freehills, PPP is not a panacea, and there is nothing wrong in the situation when the state chooses to implement the project on its own. “The only thing is that the decision should be taken before construction, it is important to have a clear methodology. In accordance with the specified criteria it is important to determine whether it should be PPP or not. Sometimes it happens that a PPP is declared, and then it is revealed that such model is unprofitable for the state. We hope that, in future, such mistakes will be avoided”, she said.
The M-11 Moscow-St Petersburg highway bypasses the Odintsovo, Pulkovo airport in St Petersburg and the Western high-speed ringroad in St Petersburg, which was finished last year and received all the awards as one of the most complicated project in Europe. Banks today are willing to invest, there is a pool of investors, and when PPP law is approved, the number of such projects should increase. There are some important railway projects which are being implemented on the basis of PPP and are supported by the Investment fund. Among them are “Ural industrial-Ural polar” (several railway lines for mining of ore minerals in the district of Yamal), line “Belkomur”, Naryn-Lugokan railway, etc.
According to Chairman of the Board of Directors of Transproject LLC Vitaly Maksimov, it is possible to attract even small investors to large projects. One example is the development of the Novorossiysk sea port. The problem of rail infrastructure having low capacity is the main limiting factor for further development. By 2015, it is planned to expand the transport infrastructure entering the port through the construction of several road and rail facilities. Private investments have already helped to increase terminal complexes and cargo flows almost to the maximum. Now the station allows for the dispatch and receipt of up to 40 trains per day. Implementation of the project will enable an increase in turnover of up to 60-70 trains a day. To achieve the main goal, a new logistics park, two connecting railroads near the station of Novorossiysk and the third main track from the external network should be built. It is important to finish the project as soon as possible, in just two years.
“An interesting way to stimulate private investors is projects for regional administrations. For example, the Government of Moscow is undertaking a joint investment project “Reconstruction and Development of the Inner Ring of the Moscow Railway”, said V. Maksimov. “The first stage of this project will be the life cycle contract for 30 years for maintenance and repair of 200 wagons in Kalininskaya line. Such tenders will be held also for the park of city trams and suburban trains.”

Refinancing Is the Way Forward


Today loans with the term above 10-13 years are almost inaccessible in Russia. The breakeven point of most infrastructure projects today is 20-30 years, which is dangerous for investors. It means that in the absence of refinancing, financial models must be built on the presumption of high income for the investor in the first years of the project. Otherwise, he will not be able to pay his debts.
But infrastructure payback is not less than 25-28 years. Therefore the investor is forced to ask the state to guarantee a minimum income to cover his loans and operational costs. Instead of trying to save the budget, the state in Russia becomes a major investor and lender for the project. This is clearly not the way to implement infrastructure projects with private investment in Russia, experts say.
One of the good solutions here is refinancing. According to this model, the investor can get a new loan to cover his previous loan. However, the refinancing can cause risks, because at the beginning of the infrastructure project, it is not clear how the situation in the market can change by the time of refinancing.
Therefore refinancing risks are usually divided between the state and the private investor. So, if the terms of the new loan will be worse than the former, the state and the investor may agree to share the loss in half. But a “substantial upside” from a refinancing may also be divided between the parties. It is a way to increase the predictability of project, which helps to bring foreign investors to domestic markets without having to pay a significant amount in the first years of the life of the project.
By Christina Alexandrova

viewpoint
Olga Revzina,
Partner of Herberth Smith Freehills:

– We hope that the PPP law will be accepted by end of 2013. We took part in creating it, and we think that market really needs this document. However, we have a lot of comments on the text. But they are not that important compared to our main wish - not make this document too strict. Now it is possible to use different forms of PPP, so today this is just a framework document. There is not much about types of guarantees in this paper, but we think, it is enough if the state gives compensation to investors in certain cases. According to the law, risk allocation must be fair to both parties, and the state also must assume a part of the risk.

Sergey Samolis,
Senior Manager of Project Activities of the Eurasian Development Bank (EDB):

– We can’t expect mass implementation of PPP in Russia. Even in European markets the share of PPP projects is not more than 5% of the volume of project financing transactions. At the same time, there are a lot of potential projects in Russia, that by their nature can be implemented like PPP. Currently the form of concession agreement is the most popular way to do it. According to this model, the private partner bears the risk of demand and collects payments from the user, but the possession of an object immediately after creation or after the end of the concession period goes to the public side.

Mikhail Kornev,  Lawyer Vegas Lex:
– Infrastructure bonds are a good long-term funding mechanism for PPP projects. There is interest in infrastructure bonds in Russia thanks to their good performance abroad. It is a great alternative to bank lending, because it is not always beneficial to the private partner to get a credit from a bank. But the issuer of bonds, usually a project company, does not have the ability to cover its losses by revenue from other activities. It creates risks for bondholders and raises the need for providing additional guarantees for repayment of debt obligations. For example, in the form of bank or state partner guarantee.

[~DETAIL_TEXT] =>

Investors Hesitant

This year Russian Government approved the investment program of development for the railways up to 2020 year. This year the investment amount will be RUB 411.4 billion. At the same time, it is clear that the development and upgrading of rail infrastructure in the country, where the operational length of the public network is more than 86,000 km, and its deterioration is more than 58%, requires trillions of rubles. Where to get this money?
Traditionally the investment activities of RZD are supported by public resources. About RUB 260 billion, including RUB 150 billion from the National Welfare Fund, is allocated for the development of the eastern area of the Trans-Siberian railway and the Baikal-Amur Mainline. In addition to this, NWF is going to invest RUB 150 billion to the development of the first HSR line between Moscow and Kazan, which should be built by 2018.
Of course, this project is very important for Russia, but according to experts, the timeframe is too tight. Therefore it’s hard to implement the PPP model here, because any activities for borrowing funds involves transparent tender, which can take more than a year. Also it is worth considering the preparations for the tender, the signing of the concession agreement. And financial closing of the project will require six months. Therefore, the building of HSR will not be via PPP, but another hybrid scheme.
Investors still have many reservations about Russian projects, because the issue is also complicated by the status of RZD as a natural monopoly. PPP can be applied only in those areas where legislation does not assign monopoly status to RZD. By investing in the project, the private investor plans to get a profit in the near future. The mechanism of investment in rail transport is too complicated, therefore only large companies can afford it today. These are some examples.
Rusal JSC built and now runs the railway line to the bauxite deposits in the Republic of Komi. Mechel JSC finished the construction of the railway line to Elga coking coal deposits. Company finished laying tracks at the end of the last year. Construction involved laying 321 km of tracks. According to the Chairman of the Board of Directors of Mechel Igor Zyuzin, the project’s scale is unique for the mining industry, as completion of railway construction together with the launch of mining was finished in such a short time, considering the 2008-2009 crisis. The railway track construction required investment of some RUB 40 billion.
RZD signed an agreement with private shipper Novatek, who will become co-investor in the project for increasing capacity of the line between Tobolsk and Surgut. By the way, Russian monopoly is going to attract RUB 156-405 billion from private sources by 2020.

Political mistakes

There are few examples of PPP projects in Russia in general, and most of the few implemented were not successful. For example, a line of the Kyzyl-Kuragino, Orlovsky tunnel in St Petersburg, the construction of a water supply-project “Neva”, a light rail tram (“Aboveground Express”). The reasons are mostly political. Investors need guarantees from the state or regional administrations, both budgetary and contractual, i.e. refund guarantee, minimum income guarantee in case of termination of the agreement and in case of construction risks. And sometimes the state comes to the conclusion that it is better to build a facility without private capital, as it is more profitable from an administrative point of view.
According to Olga Revzina, partner of Herberth Smith Freehills, PPP is not a panacea, and there is nothing wrong in the situation when the state chooses to implement the project on its own. “The only thing is that the decision should be taken before construction, it is important to have a clear methodology. In accordance with the specified criteria it is important to determine whether it should be PPP or not. Sometimes it happens that a PPP is declared, and then it is revealed that such model is unprofitable for the state. We hope that, in future, such mistakes will be avoided”, she said.
The M-11 Moscow-St Petersburg highway bypasses the Odintsovo, Pulkovo airport in St Petersburg and the Western high-speed ringroad in St Petersburg, which was finished last year and received all the awards as one of the most complicated project in Europe. Banks today are willing to invest, there is a pool of investors, and when PPP law is approved, the number of such projects should increase. There are some important railway projects which are being implemented on the basis of PPP and are supported by the Investment fund. Among them are “Ural industrial-Ural polar” (several railway lines for mining of ore minerals in the district of Yamal), line “Belkomur”, Naryn-Lugokan railway, etc.
According to Chairman of the Board of Directors of Transproject LLC Vitaly Maksimov, it is possible to attract even small investors to large projects. One example is the development of the Novorossiysk sea port. The problem of rail infrastructure having low capacity is the main limiting factor for further development. By 2015, it is planned to expand the transport infrastructure entering the port through the construction of several road and rail facilities. Private investments have already helped to increase terminal complexes and cargo flows almost to the maximum. Now the station allows for the dispatch and receipt of up to 40 trains per day. Implementation of the project will enable an increase in turnover of up to 60-70 trains a day. To achieve the main goal, a new logistics park, two connecting railroads near the station of Novorossiysk and the third main track from the external network should be built. It is important to finish the project as soon as possible, in just two years.
“An interesting way to stimulate private investors is projects for regional administrations. For example, the Government of Moscow is undertaking a joint investment project “Reconstruction and Development of the Inner Ring of the Moscow Railway”, said V. Maksimov. “The first stage of this project will be the life cycle contract for 30 years for maintenance and repair of 200 wagons in Kalininskaya line. Such tenders will be held also for the park of city trams and suburban trains.”

Refinancing Is the Way Forward


Today loans with the term above 10-13 years are almost inaccessible in Russia. The breakeven point of most infrastructure projects today is 20-30 years, which is dangerous for investors. It means that in the absence of refinancing, financial models must be built on the presumption of high income for the investor in the first years of the project. Otherwise, he will not be able to pay his debts.
But infrastructure payback is not less than 25-28 years. Therefore the investor is forced to ask the state to guarantee a minimum income to cover his loans and operational costs. Instead of trying to save the budget, the state in Russia becomes a major investor and lender for the project. This is clearly not the way to implement infrastructure projects with private investment in Russia, experts say.
One of the good solutions here is refinancing. According to this model, the investor can get a new loan to cover his previous loan. However, the refinancing can cause risks, because at the beginning of the infrastructure project, it is not clear how the situation in the market can change by the time of refinancing.
Therefore refinancing risks are usually divided between the state and the private investor. So, if the terms of the new loan will be worse than the former, the state and the investor may agree to share the loss in half. But a “substantial upside” from a refinancing may also be divided between the parties. It is a way to increase the predictability of project, which helps to bring foreign investors to domestic markets without having to pay a significant amount in the first years of the life of the project.
By Christina Alexandrova

viewpoint
Olga Revzina,
Partner of Herberth Smith Freehills:

– We hope that the PPP law will be accepted by end of 2013. We took part in creating it, and we think that market really needs this document. However, we have a lot of comments on the text. But they are not that important compared to our main wish - not make this document too strict. Now it is possible to use different forms of PPP, so today this is just a framework document. There is not much about types of guarantees in this paper, but we think, it is enough if the state gives compensation to investors in certain cases. According to the law, risk allocation must be fair to both parties, and the state also must assume a part of the risk.

Sergey Samolis,
Senior Manager of Project Activities of the Eurasian Development Bank (EDB):

– We can’t expect mass implementation of PPP in Russia. Even in European markets the share of PPP projects is not more than 5% of the volume of project financing transactions. At the same time, there are a lot of potential projects in Russia, that by their nature can be implemented like PPP. Currently the form of concession agreement is the most popular way to do it. According to this model, the private partner bears the risk of demand and collects payments from the user, but the possession of an object immediately after creation or after the end of the concession period goes to the public side.

Mikhail Kornev,  Lawyer Vegas Lex:
– Infrastructure bonds are a good long-term funding mechanism for PPP projects. There is interest in infrastructure bonds in Russia thanks to their good performance abroad. It is a great alternative to bank lending, because it is not always beneficial to the private partner to get a credit from a bank. But the issuer of bonds, usually a project company, does not have the ability to cover its losses by revenue from other activities. It creates risks for bondholders and raises the need for providing additional guarantees for repayment of debt obligations. For example, in the form of bank or state partner guarantee.

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The model of public–private partnership (PPP) has not proven popular
in Russia. The reason is the absence of relevant law, the draft of which is still in the process of approval. Meanwhile, the funding priorities for RZD are
for the purchase of locomotives, but not for construction, reconstruction
and modernisation of the railway network. What projects are needed today, and how will you attract investors?

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The model of public–private partnership (PPP) has not proven popular
in Russia. The reason is the absence of relevant law, the draft of which is still in the process of approval. Meanwhile, the funding priorities for RZD are
for the purchase of locomotives, but not for construction, reconstruction
and modernisation of the railway network. What projects are needed today, and how will you attract investors?

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РЖД-Партнер

Economics. Panorama

Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.

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Reliable Models of State Regulation Should be Developed – V. Yakunin
Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.
“The international economy is currently developing amid macroeconomic volatility, and one of its characteristics is the competition for transit freight flows,” he noted. Talking about international transit flows the President of RZD explained that most competition takes place in the sector of transportation by sea and railways.
V. Yakunin also emphasized that public investment is of vital importance for the development of railway infrastructure. “It must be developed at high rates, which is not happening in Russia now, but every rouble of investments in railway projects multiplies by 1.85 in the wider economy,” he resumed.

RZD and Hungarian State Railways Sign a Memorandum of Cooperation

Russian Railways and Hungarian State Railways signed a memorandum of cooperation in November.
The document was signed by Alexander Misharin, First Vice President of Russian Railways, and Ilona Dávid, Chairman of Hungarian State Railways.
The cooperation between the Russian and Hungarian railway administrations will be aimed at increasing the efficiency of the existing rail networks in the Russian Federation and Hungary, raising the competitiveness of rail transport compared to other modes of transport and working together on applying the requirements for the narrow 1435 mm and broad gauge 1520 mm railway systems in order to ensure their effective interaction.
Other priority areas singled out for cooperation include improving the operational safety of railway transport, minimising harmful effects on the environment and improving the tariff policy and information systems, as well as various other issues.

Government Approved 2014-2016 Investment Programme and Financial Plan of RZD

The RF Government approved the investment programme and the financial plan of Russian Railways for 2014 and for the planned period of 2015-2016. The volume of the investment programme is RUB 1.2 trillion.
“The ultimate goal of the investment programme is to remove infrastructure barriers, which slow down economic growth,” said Dmitry Medvedev, Prime Minister of Russia.
Vladimir Yakunin, President of RZD made several offers on behalf of the company. Firstly, getting RUB 26 billion subsidies with an adequate compensation for the investments in the BAM and the Transsib development from the National Welfare Fund or from the budget. Secondly, the President of Russian Railways offered that the Government should increase tariffs on oil bulk to limit its final cost, and contribute to getting a RUB 50 billion loan through an issue of infrastructure bonds in 2014.

RZD Opens New Railway Station in Adler
On October 28, 2013, Russian Railways JSC opened a new railway station in Adler. The RF President Vladimir Putin visited the opening ceremony.
“The Adler hub links all Olympic routes: to the ice stadiums in the Olympic park, to Krasnaya Polyana, to the international airport, and the central part of Sochi. Long-distance passenger trains arrive there too,” said Vladimir Yakunin, RZD President, at the opening ceremony.
The Adler station is a transport hub linking all types of passenger transport: railways, automobile transport, airlines, and sea transport (if berths are constructed there in the future). The terminal has an intermodal transport link with Sochi airport.
The total area of the new railway station is almost 30,000 sq m. Its capacity is 15,000 people per hour. The new terminal can service 56 pairs of long-distance and commuter trains per day, and 4 Aeroexpress trains per hour.
“I am sure that it will become one of Sochi’s most recognisable symbols, will convey the spirit and atmosphere of a modern, successful, rapidly developing and future-focused city, and will help Sochi to write its name in world sports history”, Vladimir Putin, President of Russia, said at the opening ceremony.

RZD Will Get Funds for the Modernisation of BAM and Transsib from National Welfare Fund

The Russian Government approved the allocation of RUB 150 billion from the National Welfare Fund each for two transport projects: the modernization of the Baikal-Amur and Trans-Siberian Mainlines and the construction of the Central Ring Motorway in the Moscow region.
The relevant decree dated November 5, 2013 was signed by Dmitry Medvedev, the Russian Prime Minister.
The Central Ring Motorway project will be carried out by state company Russian Highways (Avtodor), and RZD will carry out the programme of railways development in the eastern part of the country. Avtodor will get funds from the NWF by issuing bonds, and RZD - by means of an issue of privileged shares. Funds are given on condition of repayment. For the Central Ring Road, the minimum profitability of securities must be “inflation + 1%” from 2022, and for the BAM and the Transsib – 2-3% starting from the sixth year after the project implementation began (the figure will be specified when documents about the expansion of RZD’s authorized share capital are prepared).

UNIFE and UIRE Sign Memorandum of Understanding
At the occasion of the 4th International Rail Salon EXPO 1520 in Moscow, UNIFE, the European Rail Industry, and UIRE, the Russian Union of Industries of Railway Equipment signed a Memorandum of Understanding and cooperation to reinforce ties between the European and Russian railway sectors.
The Memorandum of Understanding was signed on September 11, 2013, by Henri Poupart-Lafarge (President of Alstom Transportation and Chairman of UNIFE) and Valentin Gapanovich (Senior Vice President of RZD and President of UIRE). The agreement aims to improve cooperation between the two organisations to foster the development of new technology in the European and Russian markets, promote the International Railway Industry Standard (IRIS), and harmonise technical legislation in the field of rail transport.
Henri Poupart-Lafarge remarked, “Russia is an important and growing market for the European rail industry. UNIFE welcomes this opportunity to renew the commitment with UIRE to strengthen the links between our two organisations. Collaboration between the Russian and European rail industries is crucial at a time when high-capacity, sustainable transportation is in such high demand.”

Railcar Fleet of OTLK to Grow to 70,000 Units by 2020
The fleet of container flat wagons of the Integrated Transport and Logistics Company (OTLK) launched by Belarus, Russia, and Kazakhstan, is to double by 2020 – to 70,000 units.
Companies, which will merge into OTLK, have more than 30,000 container flat wagons.
According to the business-plan of the project, the total cargo turnover of OTLK will exceed 4 million TEU by 2020, including the transit container flow between Europe and China.
Council for Rail Transport of CIS States and UIC Sign Memorandum of Cooperation
The Council for Rail Transport of CIS States (CRT CIS) and the International Union of Railways (UIC) signed a memorandum of cooperation on November 19, 2013, in Chisinau (Moldova).
The document was signed by Peter Kucherenko, Chairman of the Directorate of the CRT CIS, and Jean-Pierre Loubinoux, Director General of the UIC.
The memorandum proposed that from 2014 to 2017, the two organisations would cooperate in traffic safety, anti-terrorism security, the development of uniform operational rules for the railways and the interoperability of rail systems.
The parties will also exchange their experience in environmental protection, energy conservation and the development of backup systems for passenger traffic, as well as in cargo tracking technology.

FM Logistics Plans to Develop its Cooperation with Russian Railways
FM Logistics intends to develop cooperation with Russian Railways JSC, said Christophe Menivard, CEO of FM Logistics Russia.
He noted that the purchase of GEFCO contributed to an increase in RZD’s attractiveness in the logistics sector. It is too early to make global plans, however, because an integration of such a large structure is a long process, which has not been completed yet.
K. Menivard also explained that the transport activities of FM Logistics include railway transportation, so the company is already cooperating with RZD in this area.
“We hope that our joint work will continue”, he added.

Sberbank to Invest up to $3 Billion in New Transportation Hubs

Sberbank has signed an agreement with RZD-Passenger Station Development, a subsidiary of Russian Railways, for the joint development of transportation hubs in Moscow and the Moscow region.
Sberbank will invest up to 100 billion rubles ($3 billion) for building and maintaining transportation hubs to adapt to Moscow’s ever-increasing passenger traffic.
Passenger traffic in the capital’s transportation hubs should double by 2025, rising to 1.6 billion people a year. RZD-Passenger Station Development plans to build 64 new transportation hubs, including 57 in Moscow. Total investment in the project in the city alone could reach 1.1 trillion rubles by 2020. All projects are still at a conceptual stage and their date of completion remains unclear.

State Duma Delays Privatisation of RZD until the Company’s Market Capitalisation Grows
The State Duma Committee for Property has decided to delay consideration of the draft bill regarding the privatisation of a 5% stake in RZD until the Government takes measures to increase the company’s market capitalisation, in particular to define the means for public investment in railway infrastructure.
The draft bill, which was submitted to the State Duma on October 1st, implements amendments to Article 7 of the Federal Law “On Managing and Administrating Railway Transport Property”, stating that neither sale nor any other reduction of shareholding in the single business units are allowed if it results in the reduction of the shareholding held by the Russian Federation in the company to less than 95%.
The State Duma Committee for Property decided that in  preparation for the privatisation of RZD measures need to be taken to increase the company’s market capitalisation such as- long-term tariff formation based on a fixed return on investments, setting out the interaction between the state and RZD when carrying out investment projects with a long payback period (for example, the project of expanding the carrying capacity of the Baikal-Amur Mainline and the Trans-Siberian Mainline) and the development of a system of compensations to subsidise low tariffs for railway transportation.

[~DETAIL_TEXT] =>

Reliable Models of State Regulation Should be Developed – V. Yakunin
Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.
“The international economy is currently developing amid macroeconomic volatility, and one of its characteristics is the competition for transit freight flows,” he noted. Talking about international transit flows the President of RZD explained that most competition takes place in the sector of transportation by sea and railways.
V. Yakunin also emphasized that public investment is of vital importance for the development of railway infrastructure. “It must be developed at high rates, which is not happening in Russia now, but every rouble of investments in railway projects multiplies by 1.85 in the wider economy,” he resumed.

RZD and Hungarian State Railways Sign a Memorandum of Cooperation

Russian Railways and Hungarian State Railways signed a memorandum of cooperation in November.
The document was signed by Alexander Misharin, First Vice President of Russian Railways, and Ilona Dávid, Chairman of Hungarian State Railways.
The cooperation between the Russian and Hungarian railway administrations will be aimed at increasing the efficiency of the existing rail networks in the Russian Federation and Hungary, raising the competitiveness of rail transport compared to other modes of transport and working together on applying the requirements for the narrow 1435 mm and broad gauge 1520 mm railway systems in order to ensure their effective interaction.
Other priority areas singled out for cooperation include improving the operational safety of railway transport, minimising harmful effects on the environment and improving the tariff policy and information systems, as well as various other issues.

Government Approved 2014-2016 Investment Programme and Financial Plan of RZD

The RF Government approved the investment programme and the financial plan of Russian Railways for 2014 and for the planned period of 2015-2016. The volume of the investment programme is RUB 1.2 trillion.
“The ultimate goal of the investment programme is to remove infrastructure barriers, which slow down economic growth,” said Dmitry Medvedev, Prime Minister of Russia.
Vladimir Yakunin, President of RZD made several offers on behalf of the company. Firstly, getting RUB 26 billion subsidies with an adequate compensation for the investments in the BAM and the Transsib development from the National Welfare Fund or from the budget. Secondly, the President of Russian Railways offered that the Government should increase tariffs on oil bulk to limit its final cost, and contribute to getting a RUB 50 billion loan through an issue of infrastructure bonds in 2014.

RZD Opens New Railway Station in Adler
On October 28, 2013, Russian Railways JSC opened a new railway station in Adler. The RF President Vladimir Putin visited the opening ceremony.
“The Adler hub links all Olympic routes: to the ice stadiums in the Olympic park, to Krasnaya Polyana, to the international airport, and the central part of Sochi. Long-distance passenger trains arrive there too,” said Vladimir Yakunin, RZD President, at the opening ceremony.
The Adler station is a transport hub linking all types of passenger transport: railways, automobile transport, airlines, and sea transport (if berths are constructed there in the future). The terminal has an intermodal transport link with Sochi airport.
The total area of the new railway station is almost 30,000 sq m. Its capacity is 15,000 people per hour. The new terminal can service 56 pairs of long-distance and commuter trains per day, and 4 Aeroexpress trains per hour.
“I am sure that it will become one of Sochi’s most recognisable symbols, will convey the spirit and atmosphere of a modern, successful, rapidly developing and future-focused city, and will help Sochi to write its name in world sports history”, Vladimir Putin, President of Russia, said at the opening ceremony.

RZD Will Get Funds for the Modernisation of BAM and Transsib from National Welfare Fund

The Russian Government approved the allocation of RUB 150 billion from the National Welfare Fund each for two transport projects: the modernization of the Baikal-Amur and Trans-Siberian Mainlines and the construction of the Central Ring Motorway in the Moscow region.
The relevant decree dated November 5, 2013 was signed by Dmitry Medvedev, the Russian Prime Minister.
The Central Ring Motorway project will be carried out by state company Russian Highways (Avtodor), and RZD will carry out the programme of railways development in the eastern part of the country. Avtodor will get funds from the NWF by issuing bonds, and RZD - by means of an issue of privileged shares. Funds are given on condition of repayment. For the Central Ring Road, the minimum profitability of securities must be “inflation + 1%” from 2022, and for the BAM and the Transsib – 2-3% starting from the sixth year after the project implementation began (the figure will be specified when documents about the expansion of RZD’s authorized share capital are prepared).

UNIFE and UIRE Sign Memorandum of Understanding
At the occasion of the 4th International Rail Salon EXPO 1520 in Moscow, UNIFE, the European Rail Industry, and UIRE, the Russian Union of Industries of Railway Equipment signed a Memorandum of Understanding and cooperation to reinforce ties between the European and Russian railway sectors.
The Memorandum of Understanding was signed on September 11, 2013, by Henri Poupart-Lafarge (President of Alstom Transportation and Chairman of UNIFE) and Valentin Gapanovich (Senior Vice President of RZD and President of UIRE). The agreement aims to improve cooperation between the two organisations to foster the development of new technology in the European and Russian markets, promote the International Railway Industry Standard (IRIS), and harmonise technical legislation in the field of rail transport.
Henri Poupart-Lafarge remarked, “Russia is an important and growing market for the European rail industry. UNIFE welcomes this opportunity to renew the commitment with UIRE to strengthen the links between our two organisations. Collaboration between the Russian and European rail industries is crucial at a time when high-capacity, sustainable transportation is in such high demand.”

Railcar Fleet of OTLK to Grow to 70,000 Units by 2020
The fleet of container flat wagons of the Integrated Transport and Logistics Company (OTLK) launched by Belarus, Russia, and Kazakhstan, is to double by 2020 – to 70,000 units.
Companies, which will merge into OTLK, have more than 30,000 container flat wagons.
According to the business-plan of the project, the total cargo turnover of OTLK will exceed 4 million TEU by 2020, including the transit container flow between Europe and China.
Council for Rail Transport of CIS States and UIC Sign Memorandum of Cooperation
The Council for Rail Transport of CIS States (CRT CIS) and the International Union of Railways (UIC) signed a memorandum of cooperation on November 19, 2013, in Chisinau (Moldova).
The document was signed by Peter Kucherenko, Chairman of the Directorate of the CRT CIS, and Jean-Pierre Loubinoux, Director General of the UIC.
The memorandum proposed that from 2014 to 2017, the two organisations would cooperate in traffic safety, anti-terrorism security, the development of uniform operational rules for the railways and the interoperability of rail systems.
The parties will also exchange their experience in environmental protection, energy conservation and the development of backup systems for passenger traffic, as well as in cargo tracking technology.

FM Logistics Plans to Develop its Cooperation with Russian Railways
FM Logistics intends to develop cooperation with Russian Railways JSC, said Christophe Menivard, CEO of FM Logistics Russia.
He noted that the purchase of GEFCO contributed to an increase in RZD’s attractiveness in the logistics sector. It is too early to make global plans, however, because an integration of such a large structure is a long process, which has not been completed yet.
K. Menivard also explained that the transport activities of FM Logistics include railway transportation, so the company is already cooperating with RZD in this area.
“We hope that our joint work will continue”, he added.

Sberbank to Invest up to $3 Billion in New Transportation Hubs

Sberbank has signed an agreement with RZD-Passenger Station Development, a subsidiary of Russian Railways, for the joint development of transportation hubs in Moscow and the Moscow region.
Sberbank will invest up to 100 billion rubles ($3 billion) for building and maintaining transportation hubs to adapt to Moscow’s ever-increasing passenger traffic.
Passenger traffic in the capital’s transportation hubs should double by 2025, rising to 1.6 billion people a year. RZD-Passenger Station Development plans to build 64 new transportation hubs, including 57 in Moscow. Total investment in the project in the city alone could reach 1.1 trillion rubles by 2020. All projects are still at a conceptual stage and their date of completion remains unclear.

State Duma Delays Privatisation of RZD until the Company’s Market Capitalisation Grows
The State Duma Committee for Property has decided to delay consideration of the draft bill regarding the privatisation of a 5% stake in RZD until the Government takes measures to increase the company’s market capitalisation, in particular to define the means for public investment in railway infrastructure.
The draft bill, which was submitted to the State Duma on October 1st, implements amendments to Article 7 of the Federal Law “On Managing and Administrating Railway Transport Property”, stating that neither sale nor any other reduction of shareholding in the single business units are allowed if it results in the reduction of the shareholding held by the Russian Federation in the company to less than 95%.
The State Duma Committee for Property decided that in  preparation for the privatisation of RZD measures need to be taken to increase the company’s market capitalisation such as- long-term tariff formation based on a fixed return on investments, setting out the interaction between the state and RZD when carrying out investment projects with a long payback period (for example, the project of expanding the carrying capacity of the Baikal-Amur Mainline and the Trans-Siberian Mainline) and the development of a system of compensations to subsidise low tariffs for railway transportation.

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Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.

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Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.

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Reliable Models of State Regulation Should be Developed – V. Yakunin
Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.
“The international economy is currently developing amid macroeconomic volatility, and one of its characteristics is the competition for transit freight flows,” he noted. Talking about international transit flows the President of RZD explained that most competition takes place in the sector of transportation by sea and railways.
V. Yakunin also emphasized that public investment is of vital importance for the development of railway infrastructure. “It must be developed at high rates, which is not happening in Russia now, but every rouble of investments in railway projects multiplies by 1.85 in the wider economy,” he resumed.

RZD and Hungarian State Railways Sign a Memorandum of Cooperation

Russian Railways and Hungarian State Railways signed a memorandum of cooperation in November.
The document was signed by Alexander Misharin, First Vice President of Russian Railways, and Ilona Dávid, Chairman of Hungarian State Railways.
The cooperation between the Russian and Hungarian railway administrations will be aimed at increasing the efficiency of the existing rail networks in the Russian Federation and Hungary, raising the competitiveness of rail transport compared to other modes of transport and working together on applying the requirements for the narrow 1435 mm and broad gauge 1520 mm railway systems in order to ensure their effective interaction.
Other priority areas singled out for cooperation include improving the operational safety of railway transport, minimising harmful effects on the environment and improving the tariff policy and information systems, as well as various other issues.

Government Approved 2014-2016 Investment Programme and Financial Plan of RZD

The RF Government approved the investment programme and the financial plan of Russian Railways for 2014 and for the planned period of 2015-2016. The volume of the investment programme is RUB 1.2 trillion.
“The ultimate goal of the investment programme is to remove infrastructure barriers, which slow down economic growth,” said Dmitry Medvedev, Prime Minister of Russia.
Vladimir Yakunin, President of RZD made several offers on behalf of the company. Firstly, getting RUB 26 billion subsidies with an adequate compensation for the investments in the BAM and the Transsib development from the National Welfare Fund or from the budget. Secondly, the President of Russian Railways offered that the Government should increase tariffs on oil bulk to limit its final cost, and contribute to getting a RUB 50 billion loan through an issue of infrastructure bonds in 2014.

RZD Opens New Railway Station in Adler
On October 28, 2013, Russian Railways JSC opened a new railway station in Adler. The RF President Vladimir Putin visited the opening ceremony.
“The Adler hub links all Olympic routes: to the ice stadiums in the Olympic park, to Krasnaya Polyana, to the international airport, and the central part of Sochi. Long-distance passenger trains arrive there too,” said Vladimir Yakunin, RZD President, at the opening ceremony.
The Adler station is a transport hub linking all types of passenger transport: railways, automobile transport, airlines, and sea transport (if berths are constructed there in the future). The terminal has an intermodal transport link with Sochi airport.
The total area of the new railway station is almost 30,000 sq m. Its capacity is 15,000 people per hour. The new terminal can service 56 pairs of long-distance and commuter trains per day, and 4 Aeroexpress trains per hour.
“I am sure that it will become one of Sochi’s most recognisable symbols, will convey the spirit and atmosphere of a modern, successful, rapidly developing and future-focused city, and will help Sochi to write its name in world sports history”, Vladimir Putin, President of Russia, said at the opening ceremony.

RZD Will Get Funds for the Modernisation of BAM and Transsib from National Welfare Fund

The Russian Government approved the allocation of RUB 150 billion from the National Welfare Fund each for two transport projects: the modernization of the Baikal-Amur and Trans-Siberian Mainlines and the construction of the Central Ring Motorway in the Moscow region.
The relevant decree dated November 5, 2013 was signed by Dmitry Medvedev, the Russian Prime Minister.
The Central Ring Motorway project will be carried out by state company Russian Highways (Avtodor), and RZD will carry out the programme of railways development in the eastern part of the country. Avtodor will get funds from the NWF by issuing bonds, and RZD - by means of an issue of privileged shares. Funds are given on condition of repayment. For the Central Ring Road, the minimum profitability of securities must be “inflation + 1%” from 2022, and for the BAM and the Transsib – 2-3% starting from the sixth year after the project implementation began (the figure will be specified when documents about the expansion of RZD’s authorized share capital are prepared).

UNIFE and UIRE Sign Memorandum of Understanding
At the occasion of the 4th International Rail Salon EXPO 1520 in Moscow, UNIFE, the European Rail Industry, and UIRE, the Russian Union of Industries of Railway Equipment signed a Memorandum of Understanding and cooperation to reinforce ties between the European and Russian railway sectors.
The Memorandum of Understanding was signed on September 11, 2013, by Henri Poupart-Lafarge (President of Alstom Transportation and Chairman of UNIFE) and Valentin Gapanovich (Senior Vice President of RZD and President of UIRE). The agreement aims to improve cooperation between the two organisations to foster the development of new technology in the European and Russian markets, promote the International Railway Industry Standard (IRIS), and harmonise technical legislation in the field of rail transport.
Henri Poupart-Lafarge remarked, “Russia is an important and growing market for the European rail industry. UNIFE welcomes this opportunity to renew the commitment with UIRE to strengthen the links between our two organisations. Collaboration between the Russian and European rail industries is crucial at a time when high-capacity, sustainable transportation is in such high demand.”

Railcar Fleet of OTLK to Grow to 70,000 Units by 2020
The fleet of container flat wagons of the Integrated Transport and Logistics Company (OTLK) launched by Belarus, Russia, and Kazakhstan, is to double by 2020 – to 70,000 units.
Companies, which will merge into OTLK, have more than 30,000 container flat wagons.
According to the business-plan of the project, the total cargo turnover of OTLK will exceed 4 million TEU by 2020, including the transit container flow between Europe and China.
Council for Rail Transport of CIS States and UIC Sign Memorandum of Cooperation
The Council for Rail Transport of CIS States (CRT CIS) and the International Union of Railways (UIC) signed a memorandum of cooperation on November 19, 2013, in Chisinau (Moldova).
The document was signed by Peter Kucherenko, Chairman of the Directorate of the CRT CIS, and Jean-Pierre Loubinoux, Director General of the UIC.
The memorandum proposed that from 2014 to 2017, the two organisations would cooperate in traffic safety, anti-terrorism security, the development of uniform operational rules for the railways and the interoperability of rail systems.
The parties will also exchange their experience in environmental protection, energy conservation and the development of backup systems for passenger traffic, as well as in cargo tracking technology.

FM Logistics Plans to Develop its Cooperation with Russian Railways
FM Logistics intends to develop cooperation with Russian Railways JSC, said Christophe Menivard, CEO of FM Logistics Russia.
He noted that the purchase of GEFCO contributed to an increase in RZD’s attractiveness in the logistics sector. It is too early to make global plans, however, because an integration of such a large structure is a long process, which has not been completed yet.
K. Menivard also explained that the transport activities of FM Logistics include railway transportation, so the company is already cooperating with RZD in this area.
“We hope that our joint work will continue”, he added.

Sberbank to Invest up to $3 Billion in New Transportation Hubs

Sberbank has signed an agreement with RZD-Passenger Station Development, a subsidiary of Russian Railways, for the joint development of transportation hubs in Moscow and the Moscow region.
Sberbank will invest up to 100 billion rubles ($3 billion) for building and maintaining transportation hubs to adapt to Moscow’s ever-increasing passenger traffic.
Passenger traffic in the capital’s transportation hubs should double by 2025, rising to 1.6 billion people a year. RZD-Passenger Station Development plans to build 64 new transportation hubs, including 57 in Moscow. Total investment in the project in the city alone could reach 1.1 trillion rubles by 2020. All projects are still at a conceptual stage and their date of completion remains unclear.

State Duma Delays Privatisation of RZD until the Company’s Market Capitalisation Grows
The State Duma Committee for Property has decided to delay consideration of the draft bill regarding the privatisation of a 5% stake in RZD until the Government takes measures to increase the company’s market capitalisation, in particular to define the means for public investment in railway infrastructure.
The draft bill, which was submitted to the State Duma on October 1st, implements amendments to Article 7 of the Federal Law “On Managing and Administrating Railway Transport Property”, stating that neither sale nor any other reduction of shareholding in the single business units are allowed if it results in the reduction of the shareholding held by the Russian Federation in the company to less than 95%.
The State Duma Committee for Property decided that in  preparation for the privatisation of RZD measures need to be taken to increase the company’s market capitalisation such as- long-term tariff formation based on a fixed return on investments, setting out the interaction between the state and RZD when carrying out investment projects with a long payback period (for example, the project of expanding the carrying capacity of the Baikal-Amur Mainline and the Trans-Siberian Mainline) and the development of a system of compensations to subsidise low tariffs for railway transportation.

[~DETAIL_TEXT] =>

Reliable Models of State Regulation Should be Developed – V. Yakunin
Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.
“The international economy is currently developing amid macroeconomic volatility, and one of its characteristics is the competition for transit freight flows,” he noted. Talking about international transit flows the President of RZD explained that most competition takes place in the sector of transportation by sea and railways.
V. Yakunin also emphasized that public investment is of vital importance for the development of railway infrastructure. “It must be developed at high rates, which is not happening in Russia now, but every rouble of investments in railway projects multiplies by 1.85 in the wider economy,” he resumed.

RZD and Hungarian State Railways Sign a Memorandum of Cooperation

Russian Railways and Hungarian State Railways signed a memorandum of cooperation in November.
The document was signed by Alexander Misharin, First Vice President of Russian Railways, and Ilona Dávid, Chairman of Hungarian State Railways.
The cooperation between the Russian and Hungarian railway administrations will be aimed at increasing the efficiency of the existing rail networks in the Russian Federation and Hungary, raising the competitiveness of rail transport compared to other modes of transport and working together on applying the requirements for the narrow 1435 mm and broad gauge 1520 mm railway systems in order to ensure their effective interaction.
Other priority areas singled out for cooperation include improving the operational safety of railway transport, minimising harmful effects on the environment and improving the tariff policy and information systems, as well as various other issues.

Government Approved 2014-2016 Investment Programme and Financial Plan of RZD

The RF Government approved the investment programme and the financial plan of Russian Railways for 2014 and for the planned period of 2015-2016. The volume of the investment programme is RUB 1.2 trillion.
“The ultimate goal of the investment programme is to remove infrastructure barriers, which slow down economic growth,” said Dmitry Medvedev, Prime Minister of Russia.
Vladimir Yakunin, President of RZD made several offers on behalf of the company. Firstly, getting RUB 26 billion subsidies with an adequate compensation for the investments in the BAM and the Transsib development from the National Welfare Fund or from the budget. Secondly, the President of Russian Railways offered that the Government should increase tariffs on oil bulk to limit its final cost, and contribute to getting a RUB 50 billion loan through an issue of infrastructure bonds in 2014.

RZD Opens New Railway Station in Adler
On October 28, 2013, Russian Railways JSC opened a new railway station in Adler. The RF President Vladimir Putin visited the opening ceremony.
“The Adler hub links all Olympic routes: to the ice stadiums in the Olympic park, to Krasnaya Polyana, to the international airport, and the central part of Sochi. Long-distance passenger trains arrive there too,” said Vladimir Yakunin, RZD President, at the opening ceremony.
The Adler station is a transport hub linking all types of passenger transport: railways, automobile transport, airlines, and sea transport (if berths are constructed there in the future). The terminal has an intermodal transport link with Sochi airport.
The total area of the new railway station is almost 30,000 sq m. Its capacity is 15,000 people per hour. The new terminal can service 56 pairs of long-distance and commuter trains per day, and 4 Aeroexpress trains per hour.
“I am sure that it will become one of Sochi’s most recognisable symbols, will convey the spirit and atmosphere of a modern, successful, rapidly developing and future-focused city, and will help Sochi to write its name in world sports history”, Vladimir Putin, President of Russia, said at the opening ceremony.

RZD Will Get Funds for the Modernisation of BAM and Transsib from National Welfare Fund

The Russian Government approved the allocation of RUB 150 billion from the National Welfare Fund each for two transport projects: the modernization of the Baikal-Amur and Trans-Siberian Mainlines and the construction of the Central Ring Motorway in the Moscow region.
The relevant decree dated November 5, 2013 was signed by Dmitry Medvedev, the Russian Prime Minister.
The Central Ring Motorway project will be carried out by state company Russian Highways (Avtodor), and RZD will carry out the programme of railways development in the eastern part of the country. Avtodor will get funds from the NWF by issuing bonds, and RZD - by means of an issue of privileged shares. Funds are given on condition of repayment. For the Central Ring Road, the minimum profitability of securities must be “inflation + 1%” from 2022, and for the BAM and the Transsib – 2-3% starting from the sixth year after the project implementation began (the figure will be specified when documents about the expansion of RZD’s authorized share capital are prepared).

UNIFE and UIRE Sign Memorandum of Understanding
At the occasion of the 4th International Rail Salon EXPO 1520 in Moscow, UNIFE, the European Rail Industry, and UIRE, the Russian Union of Industries of Railway Equipment signed a Memorandum of Understanding and cooperation to reinforce ties between the European and Russian railway sectors.
The Memorandum of Understanding was signed on September 11, 2013, by Henri Poupart-Lafarge (President of Alstom Transportation and Chairman of UNIFE) and Valentin Gapanovich (Senior Vice President of RZD and President of UIRE). The agreement aims to improve cooperation between the two organisations to foster the development of new technology in the European and Russian markets, promote the International Railway Industry Standard (IRIS), and harmonise technical legislation in the field of rail transport.
Henri Poupart-Lafarge remarked, “Russia is an important and growing market for the European rail industry. UNIFE welcomes this opportunity to renew the commitment with UIRE to strengthen the links between our two organisations. Collaboration between the Russian and European rail industries is crucial at a time when high-capacity, sustainable transportation is in such high demand.”

Railcar Fleet of OTLK to Grow to 70,000 Units by 2020
The fleet of container flat wagons of the Integrated Transport and Logistics Company (OTLK) launched by Belarus, Russia, and Kazakhstan, is to double by 2020 – to 70,000 units.
Companies, which will merge into OTLK, have more than 30,000 container flat wagons.
According to the business-plan of the project, the total cargo turnover of OTLK will exceed 4 million TEU by 2020, including the transit container flow between Europe and China.
Council for Rail Transport of CIS States and UIC Sign Memorandum of Cooperation
The Council for Rail Transport of CIS States (CRT CIS) and the International Union of Railways (UIC) signed a memorandum of cooperation on November 19, 2013, in Chisinau (Moldova).
The document was signed by Peter Kucherenko, Chairman of the Directorate of the CRT CIS, and Jean-Pierre Loubinoux, Director General of the UIC.
The memorandum proposed that from 2014 to 2017, the two organisations would cooperate in traffic safety, anti-terrorism security, the development of uniform operational rules for the railways and the interoperability of rail systems.
The parties will also exchange their experience in environmental protection, energy conservation and the development of backup systems for passenger traffic, as well as in cargo tracking technology.

FM Logistics Plans to Develop its Cooperation with Russian Railways
FM Logistics intends to develop cooperation with Russian Railways JSC, said Christophe Menivard, CEO of FM Logistics Russia.
He noted that the purchase of GEFCO contributed to an increase in RZD’s attractiveness in the logistics sector. It is too early to make global plans, however, because an integration of such a large structure is a long process, which has not been completed yet.
K. Menivard also explained that the transport activities of FM Logistics include railway transportation, so the company is already cooperating with RZD in this area.
“We hope that our joint work will continue”, he added.

Sberbank to Invest up to $3 Billion in New Transportation Hubs

Sberbank has signed an agreement with RZD-Passenger Station Development, a subsidiary of Russian Railways, for the joint development of transportation hubs in Moscow and the Moscow region.
Sberbank will invest up to 100 billion rubles ($3 billion) for building and maintaining transportation hubs to adapt to Moscow’s ever-increasing passenger traffic.
Passenger traffic in the capital’s transportation hubs should double by 2025, rising to 1.6 billion people a year. RZD-Passenger Station Development plans to build 64 new transportation hubs, including 57 in Moscow. Total investment in the project in the city alone could reach 1.1 trillion rubles by 2020. All projects are still at a conceptual stage and their date of completion remains unclear.

State Duma Delays Privatisation of RZD until the Company’s Market Capitalisation Grows
The State Duma Committee for Property has decided to delay consideration of the draft bill regarding the privatisation of a 5% stake in RZD until the Government takes measures to increase the company’s market capitalisation, in particular to define the means for public investment in railway infrastructure.
The draft bill, which was submitted to the State Duma on October 1st, implements amendments to Article 7 of the Federal Law “On Managing and Administrating Railway Transport Property”, stating that neither sale nor any other reduction of shareholding in the single business units are allowed if it results in the reduction of the shareholding held by the Russian Federation in the company to less than 95%.
The State Duma Committee for Property decided that in  preparation for the privatisation of RZD measures need to be taken to increase the company’s market capitalisation such as- long-term tariff formation based on a fixed return on investments, setting out the interaction between the state and RZD when carrying out investment projects with a long payback period (for example, the project of expanding the carrying capacity of the Baikal-Amur Mainline and the Trans-Siberian Mainline) and the development of a system of compensations to subsidise low tariffs for railway transportation.

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Reliable models of state regulation, targeted at removing risks and stimulating infrastructure development, should be created, said Vladimir Yakunin, President of RZD, at the International Conference of Tariff Railway Regulators in Moscow.

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РЖД-Партнер

Mutually Beneficial Transit

Mutually Beneficial Transit

The development of the Trans-Siberian Mainline is a priority set by the Russian Government for RZD for the mid- and a long-term. What objectives should be accomplished to increase the attractiveness of the Transsib for customers?

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Infrastructural Breakthrough

On November 14-15, 2013, the XXII Plenary session of the international association “The Coordinating Council on Trans-Siberian Transportation” (CCTT) was held in Budapest (Hungary). Participants discussed priorities for the development of the Transsib and the prospects for increasing transit on this route.
Sergey Aristov, Secretary of the State – Deputy Transport Minister of Russia, talked about measures to be taken to upgrade the infrastructure of the Transsib, which are envisaged in the Strategy of Railways Development in the RF till 2030. 87.3 km long third tracks will be built, 25 stations will be reconstructed, power supplying facilities will be enhanced as well as depot and handling equipment at locomotive facilities. On the eastern section of the Transsib, plans have been made to develop stations and hubs (including Karymskaya, Chita, Khabarovsk, Ussuriisk) till 2015. According to the Strategy, the speed of container transportation on the Transsib will reach 1,000 km per day by 2015.
State-of-the-art infrastructure will be constructed on the Transsib in the future. Terminal and logistics centres will be built in Yekaterinburg, Novosibirsk, Irkutsk, and other cities in order to increase the efficiency of transport and logistics operations and speed up the flow of goods between Europe, Russia, the CIS countries, and the Asian and Pacific regions. “This will allow the formation of a single technological and informational platform to fulfill all of a customer’s needs,” emphasised S. Aristov.
According to the Ministry of Transport, priority investment projects for the enhancement of infrastructure of the Transsib in the Far Eastern and the Baikal regions include the development of the Vostochny – Nakhodka transport hub; the construction of the Kyzyl-Kuragino railway to develop the mineral resources base of the Tyva Republic and the creation of transport infrastructure for developing the mineral resources base on the south-east of Zabaikalsky Krai and the Republic of Buryatia. To remove barriers, it is planned to complete the reconstruction of the Lagar-Aulsky tunnel, the Kiparisovsky tunnel, the Vladivostok tunnel, and the Obluchensky tunnel, bridges over the Zeya and the Bureya, and a bridge on the Uglovaya – Nakhodka railway section. In order to remove bottle-necks, the capacity of the Taishet, Irkutsk, and Skovorodino stations is to be increased, by-passes for the Irkutsk and Chita transport hubs will be created and hi-tech rail lines are to be constructed. To provide for passenger and heavy freight trains, the construction of a river crossing over the Amur will be completed, and a tunnel under the Amur near Khabarovsk will be reconstructed.
Total investment in the BAM and the Transsib by 2018 will be RUB 562 billion. “These infrastructure projects along with organisational and technical improvements will achieve an important strategic national objective – to increase the amount of international freight transportation via the Russian railway network,” resumed S. Aristov.

To Simplify and Speed Up

In the opinion of Alexander Misharin, First Vice President of RZD, a key driver for the development of international trade is the simplification of border crossing procedures. “The presence of national borders with stringent customs requirements or other controlling regulations with a lot of bureaucratic and technological procedures significantly slows down the speed of cargo flows,” he noted and added that RZD actively interacts with the RF Federal Customs Service to solve these problems.
The United Nations Conference on Trade and Development (UNCTAD) estimates annual losses from difficulties at border crossings at $400 billion. Participants in the APEC summit believe that the effect from the simplification of border crossing procedures is twice as much as from a reduction of customs tariffs.
A popular present-day technology helping to avoid idling of freight at border crossings is the advance notification of customs bodies. Its implementation contributes to decreasing the total transit time and expanding the carrying capacity of railways. The Council of the Eurasian Economic Commission decided on the introduction of an obligatory notification of goods carried by rail to the Customs Union. This requirement comes into force on October 1, 2014.
TransContainer OJSC in cooperation with the Transport Development Group developed, tested, and began trial use of a universal software system. It allows participants of railway transportation to submit e-copies of documents, check them to rectify mistakes if there are any; make shipping documents match formats set by the Federal Customs Service; prepare advance information in the form of an arrival note and in the form of transit declaration and to submit it to the Federal Customs Service; and give advance information about cargo to RZD’s automated systems. Currently, in the words of Petr Baskakov, CEO of TransContainer, this software system is used at the Zabaikalsk border crossing for registering transit declarations and submitting advance information about freight from Chinese consignors and transport forwarders. “Utilisation of the system contributed to a significant decrease in the time needed for customs formalities and in the number of unaccepted containers, which reduced the amount of shunting works at border stations,” noted he.
“It is obvious that the creation of an integrated system of railway transportation covering the entire Eurasian space is urgently needed. We could even call it a race against time,” said A. Misharin. “Use of unified requirements contributes to a progress in the development of foreign trade transportation between Europe and Asia.”
Making railways more attractive for cargo owners greatly depends on the improvement of sectoral legislation. According to S. Aristov, draft federal law “On Direct Mixed (Combined) Transportation” developed by the Transport Ministry is very important for the interaction of different transport modes. “When adopted, it will help to answer many questions in the sphere of organising the work of railways, water transport, and other transport modes at transportation of exports, imports, and transit freight, and with the use of a single transport document and joint responsibility at cargo delivery,” commented S. Aristov.
Also, work is under way to make federal laws “On Railways in the RF” and “The Code of Railways in the RF” match the current needs of the freight transportation market. The State Duma is developing the draft law “On Transit.”
From January 1, 2014, fees for transit transportation of cargo via Russian railways will be calculated on the rates for international cargo transportation set in the Tariff Policy of the CIS countries, including states – members of the Common Economic Space. A single policy for tariff formation will be in force for all users of railway services in the 2014 charter year. When calculating railway tariffs on transit transportation of freight on the rates of the Tariff Policy, RZD will get the right to set or change the level of rates yearly in accordance with the statements of the Tariff Agreement, as accepted elsewhere in the world.

A Flexible Approach

“New economic conditions give us an excellent chance to attract additional cargo flows, and increase the competitiveness of the Transsib,” believes Gennady Bessonov, Secretary General of the CCTT. “The present-day transport market is favourable for those able to react to the needs of consignors quickly and effectively, consolidating the efforts of private companies, state bodies, and non-commercial unions, and making use of the strong points of all participants in the logistics chain.” In its turn, the CCTT carries out work to organise and provide freight transportation by container trains.
In 2013, the CCTT participated in new transport and logistics projects, particularly the launch of container trains on the routes Sbornaya-Ugolnaya – Kleschikha, Nakhodka-Vostochnaya – Ulugbeck (Uzbekistan), Kleschikha – St Petersburg-Tovarny-Vitebsky, Paneriai (Lithuania) – Kostanai (Kazakhstan).
G. Bessonov named the following priorities of the CCTT for the short-term:
• work aimed at simplification of border crossing procedures as a basic guideline for enhancing the global transport system;
• an increase in activity to implement the single informational and technological system of transportation via the Transsib;
• creation of competitive through tariff rates;
• increasing the efficiency of different transport modes, especially by rail and sea;
• an upgrade of transport safety standards.
In the near future, the Integrated Transport and Logistics Company (OTLK) will become the integrator, the developer, and the operator of the Eurasian transport and logistics system. It will unite the logistics assets of Russia, Kazakhstan, and Belarus: five transport and logistics companies, almost 32,000 wagons for container transportation, about 70,000 large-capacity containers, more than 250 sales points, a network of almost 70 terminals, three of which are on the border with China (Zabaikalsk, Dostyk, Altynkol) and two – on the border with the EU (Brest and Dobra). All these assets will be connected by means of a single IT-system.
“A powerful logistics system is needed to increase transit transportation. It will increase the efficient use of wagons and optimise the logistics of containers,” believes P. Baskakov. According to him, empty mileage can be reduced by 50%, and the transit time can be reduced by 4-5 days, which can reduce the cost of transportation by 15-20%.
At the same time, P. Baskakov says, competitive through tariffs comprise not just special rates for the use of the infrastructure services, but also a technologies surcharge to pay for enhancing the efficiency of transport equipment on the basis of the unified rules for pricing policy, shared use of rolling stock fleets, implementation of integrated technology and standards for transport and logistics services in the CES. In his opinion, a new system of price formation must be implemented, and there must be unified rules of pricing policy in the framework of the Eurasian transport corridor.  “Tariff formation must be flexible, able to react quickly to market changes, which is especially important for a commercial container business. Today, as a rule, only operators react to the market, reducing the wagon component in tariffs according to the season, migration of flows, and other factors. In cooperation with railway administrations, investment in service should be made. Keeping the wagon component of the tariff reasonable allows a railcar operator to earn money, and to attract new investors and capital to the sector, renew rolling stock, and create stimuli for investment in the development of new types of wagons,” noted P. Baskakov.

A Balance of Cargo Flows

Pavel Sokolov, CEO of RZD Logistics OJSC, believes that logistics solutions for the creation of China – Europe –­ China ring routes should be found to reduce the costs of transit. “Our experience shows that neither infrastructure barriers, nor competition are the most important factors in the success or failure of a transit service. The main factor is the balance in cargo flows from China to Europe and back,” P. Sokolov is sure.
In his words, it is not enough to search for a back load from Europe to China. “Undoubtedly, it is possible to increase the volume of transportation from Europe to China offering prices almost equal to the cost price of the transportation. Forecasts say, however, that even then the volume of direct transit from Europe to China barely exceeds 60% of the volume of direct transit from China to Europe by 2020,” says P. Sokolov.
It means that more complicated logistics solutions must be found – to build chains from Europe to the European part of Russia, then use domestic transportation beyond the Urals and to the Far East, and from Russia to Kazakhstan or China. That’s how expenses on transit from China to Europe can be minimised, he believes. And in this case a company will offer its customers a service allowing switching their cargoes from sea transport to the railway.
For that, one should actively market transport services on these routes, paying attention to organising shuttle container trains to Moscow and other of the largest cities in Russia. Additionally, one should attract cargoes to the railway from Europe to Russia. By 2020, forecast cargo flows from Europe will require at least five trains departing on this route every day. It means that organisers of transportation will have to compete fiercely with road hauliers.
“Today, the situation is not always favourable to railways. For example, on the route from Bratislava to Moscow the cost of transportation by rail is more than 30% higher than by road transport, and taking into account the larger volume of a European truck trailer – by 45%,” says P. Sokolov. “The conclusion is: if we want to successfully compete with road vehicles or other transport modes, we need to reduce the cost of transportation by rail.”
The largest players in the market of railway transit from China to Europe are KazTransService, BelInterTrans, TransContainer, FELB, RZD Logistics, and InterRailTrans. “Often they compete with each other trying to attract cargo volumes offering cheap prices, and pay little attention to the balance in cargo flows. All companies should cooperate to develop transit and create new schemes to optimise the mileage of containers and rolling stock. It is possible in case of a clear segmentation of the geography of transportation and levels of logistics services provided by each party,” says P. Sokolov.
Therefore, success depends on the well-coordinated work of all participants of the transportation. And mutual benefit is very important. Practice shows that most efficient projects appear during a discussion. In this sense, the CCTT is a unique organisation for exchanging opinions and making optimal decisions. ®
By Elena Ushkova

[~DETAIL_TEXT] =>

Infrastructural Breakthrough

On November 14-15, 2013, the XXII Plenary session of the international association “The Coordinating Council on Trans-Siberian Transportation” (CCTT) was held in Budapest (Hungary). Participants discussed priorities for the development of the Transsib and the prospects for increasing transit on this route.
Sergey Aristov, Secretary of the State – Deputy Transport Minister of Russia, talked about measures to be taken to upgrade the infrastructure of the Transsib, which are envisaged in the Strategy of Railways Development in the RF till 2030. 87.3 km long third tracks will be built, 25 stations will be reconstructed, power supplying facilities will be enhanced as well as depot and handling equipment at locomotive facilities. On the eastern section of the Transsib, plans have been made to develop stations and hubs (including Karymskaya, Chita, Khabarovsk, Ussuriisk) till 2015. According to the Strategy, the speed of container transportation on the Transsib will reach 1,000 km per day by 2015.
State-of-the-art infrastructure will be constructed on the Transsib in the future. Terminal and logistics centres will be built in Yekaterinburg, Novosibirsk, Irkutsk, and other cities in order to increase the efficiency of transport and logistics operations and speed up the flow of goods between Europe, Russia, the CIS countries, and the Asian and Pacific regions. “This will allow the formation of a single technological and informational platform to fulfill all of a customer’s needs,” emphasised S. Aristov.
According to the Ministry of Transport, priority investment projects for the enhancement of infrastructure of the Transsib in the Far Eastern and the Baikal regions include the development of the Vostochny – Nakhodka transport hub; the construction of the Kyzyl-Kuragino railway to develop the mineral resources base of the Tyva Republic and the creation of transport infrastructure for developing the mineral resources base on the south-east of Zabaikalsky Krai and the Republic of Buryatia. To remove barriers, it is planned to complete the reconstruction of the Lagar-Aulsky tunnel, the Kiparisovsky tunnel, the Vladivostok tunnel, and the Obluchensky tunnel, bridges over the Zeya and the Bureya, and a bridge on the Uglovaya – Nakhodka railway section. In order to remove bottle-necks, the capacity of the Taishet, Irkutsk, and Skovorodino stations is to be increased, by-passes for the Irkutsk and Chita transport hubs will be created and hi-tech rail lines are to be constructed. To provide for passenger and heavy freight trains, the construction of a river crossing over the Amur will be completed, and a tunnel under the Amur near Khabarovsk will be reconstructed.
Total investment in the BAM and the Transsib by 2018 will be RUB 562 billion. “These infrastructure projects along with organisational and technical improvements will achieve an important strategic national objective – to increase the amount of international freight transportation via the Russian railway network,” resumed S. Aristov.

To Simplify and Speed Up

In the opinion of Alexander Misharin, First Vice President of RZD, a key driver for the development of international trade is the simplification of border crossing procedures. “The presence of national borders with stringent customs requirements or other controlling regulations with a lot of bureaucratic and technological procedures significantly slows down the speed of cargo flows,” he noted and added that RZD actively interacts with the RF Federal Customs Service to solve these problems.
The United Nations Conference on Trade and Development (UNCTAD) estimates annual losses from difficulties at border crossings at $400 billion. Participants in the APEC summit believe that the effect from the simplification of border crossing procedures is twice as much as from a reduction of customs tariffs.
A popular present-day technology helping to avoid idling of freight at border crossings is the advance notification of customs bodies. Its implementation contributes to decreasing the total transit time and expanding the carrying capacity of railways. The Council of the Eurasian Economic Commission decided on the introduction of an obligatory notification of goods carried by rail to the Customs Union. This requirement comes into force on October 1, 2014.
TransContainer OJSC in cooperation with the Transport Development Group developed, tested, and began trial use of a universal software system. It allows participants of railway transportation to submit e-copies of documents, check them to rectify mistakes if there are any; make shipping documents match formats set by the Federal Customs Service; prepare advance information in the form of an arrival note and in the form of transit declaration and to submit it to the Federal Customs Service; and give advance information about cargo to RZD’s automated systems. Currently, in the words of Petr Baskakov, CEO of TransContainer, this software system is used at the Zabaikalsk border crossing for registering transit declarations and submitting advance information about freight from Chinese consignors and transport forwarders. “Utilisation of the system contributed to a significant decrease in the time needed for customs formalities and in the number of unaccepted containers, which reduced the amount of shunting works at border stations,” noted he.
“It is obvious that the creation of an integrated system of railway transportation covering the entire Eurasian space is urgently needed. We could even call it a race against time,” said A. Misharin. “Use of unified requirements contributes to a progress in the development of foreign trade transportation between Europe and Asia.”
Making railways more attractive for cargo owners greatly depends on the improvement of sectoral legislation. According to S. Aristov, draft federal law “On Direct Mixed (Combined) Transportation” developed by the Transport Ministry is very important for the interaction of different transport modes. “When adopted, it will help to answer many questions in the sphere of organising the work of railways, water transport, and other transport modes at transportation of exports, imports, and transit freight, and with the use of a single transport document and joint responsibility at cargo delivery,” commented S. Aristov.
Also, work is under way to make federal laws “On Railways in the RF” and “The Code of Railways in the RF” match the current needs of the freight transportation market. The State Duma is developing the draft law “On Transit.”
From January 1, 2014, fees for transit transportation of cargo via Russian railways will be calculated on the rates for international cargo transportation set in the Tariff Policy of the CIS countries, including states – members of the Common Economic Space. A single policy for tariff formation will be in force for all users of railway services in the 2014 charter year. When calculating railway tariffs on transit transportation of freight on the rates of the Tariff Policy, RZD will get the right to set or change the level of rates yearly in accordance with the statements of the Tariff Agreement, as accepted elsewhere in the world.

A Flexible Approach

“New economic conditions give us an excellent chance to attract additional cargo flows, and increase the competitiveness of the Transsib,” believes Gennady Bessonov, Secretary General of the CCTT. “The present-day transport market is favourable for those able to react to the needs of consignors quickly and effectively, consolidating the efforts of private companies, state bodies, and non-commercial unions, and making use of the strong points of all participants in the logistics chain.” In its turn, the CCTT carries out work to organise and provide freight transportation by container trains.
In 2013, the CCTT participated in new transport and logistics projects, particularly the launch of container trains on the routes Sbornaya-Ugolnaya – Kleschikha, Nakhodka-Vostochnaya – Ulugbeck (Uzbekistan), Kleschikha – St Petersburg-Tovarny-Vitebsky, Paneriai (Lithuania) – Kostanai (Kazakhstan).
G. Bessonov named the following priorities of the CCTT for the short-term:
• work aimed at simplification of border crossing procedures as a basic guideline for enhancing the global transport system;
• an increase in activity to implement the single informational and technological system of transportation via the Transsib;
• creation of competitive through tariff rates;
• increasing the efficiency of different transport modes, especially by rail and sea;
• an upgrade of transport safety standards.
In the near future, the Integrated Transport and Logistics Company (OTLK) will become the integrator, the developer, and the operator of the Eurasian transport and logistics system. It will unite the logistics assets of Russia, Kazakhstan, and Belarus: five transport and logistics companies, almost 32,000 wagons for container transportation, about 70,000 large-capacity containers, more than 250 sales points, a network of almost 70 terminals, three of which are on the border with China (Zabaikalsk, Dostyk, Altynkol) and two – on the border with the EU (Brest and Dobra). All these assets will be connected by means of a single IT-system.
“A powerful logistics system is needed to increase transit transportation. It will increase the efficient use of wagons and optimise the logistics of containers,” believes P. Baskakov. According to him, empty mileage can be reduced by 50%, and the transit time can be reduced by 4-5 days, which can reduce the cost of transportation by 15-20%.
At the same time, P. Baskakov says, competitive through tariffs comprise not just special rates for the use of the infrastructure services, but also a technologies surcharge to pay for enhancing the efficiency of transport equipment on the basis of the unified rules for pricing policy, shared use of rolling stock fleets, implementation of integrated technology and standards for transport and logistics services in the CES. In his opinion, a new system of price formation must be implemented, and there must be unified rules of pricing policy in the framework of the Eurasian transport corridor.  “Tariff formation must be flexible, able to react quickly to market changes, which is especially important for a commercial container business. Today, as a rule, only operators react to the market, reducing the wagon component in tariffs according to the season, migration of flows, and other factors. In cooperation with railway administrations, investment in service should be made. Keeping the wagon component of the tariff reasonable allows a railcar operator to earn money, and to attract new investors and capital to the sector, renew rolling stock, and create stimuli for investment in the development of new types of wagons,” noted P. Baskakov.

A Balance of Cargo Flows

Pavel Sokolov, CEO of RZD Logistics OJSC, believes that logistics solutions for the creation of China – Europe –­ China ring routes should be found to reduce the costs of transit. “Our experience shows that neither infrastructure barriers, nor competition are the most important factors in the success or failure of a transit service. The main factor is the balance in cargo flows from China to Europe and back,” P. Sokolov is sure.
In his words, it is not enough to search for a back load from Europe to China. “Undoubtedly, it is possible to increase the volume of transportation from Europe to China offering prices almost equal to the cost price of the transportation. Forecasts say, however, that even then the volume of direct transit from Europe to China barely exceeds 60% of the volume of direct transit from China to Europe by 2020,” says P. Sokolov.
It means that more complicated logistics solutions must be found – to build chains from Europe to the European part of Russia, then use domestic transportation beyond the Urals and to the Far East, and from Russia to Kazakhstan or China. That’s how expenses on transit from China to Europe can be minimised, he believes. And in this case a company will offer its customers a service allowing switching their cargoes from sea transport to the railway.
For that, one should actively market transport services on these routes, paying attention to organising shuttle container trains to Moscow and other of the largest cities in Russia. Additionally, one should attract cargoes to the railway from Europe to Russia. By 2020, forecast cargo flows from Europe will require at least five trains departing on this route every day. It means that organisers of transportation will have to compete fiercely with road hauliers.
“Today, the situation is not always favourable to railways. For example, on the route from Bratislava to Moscow the cost of transportation by rail is more than 30% higher than by road transport, and taking into account the larger volume of a European truck trailer – by 45%,” says P. Sokolov. “The conclusion is: if we want to successfully compete with road vehicles or other transport modes, we need to reduce the cost of transportation by rail.”
The largest players in the market of railway transit from China to Europe are KazTransService, BelInterTrans, TransContainer, FELB, RZD Logistics, and InterRailTrans. “Often they compete with each other trying to attract cargo volumes offering cheap prices, and pay little attention to the balance in cargo flows. All companies should cooperate to develop transit and create new schemes to optimise the mileage of containers and rolling stock. It is possible in case of a clear segmentation of the geography of transportation and levels of logistics services provided by each party,” says P. Sokolov.
Therefore, success depends on the well-coordinated work of all participants of the transportation. And mutual benefit is very important. Practice shows that most efficient projects appear during a discussion. In this sense, the CCTT is a unique organisation for exchanging opinions and making optimal decisions. ®
By Elena Ushkova

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Infrastructural Breakthrough

On November 14-15, 2013, the XXII Plenary session of the international association “The Coordinating Council on Trans-Siberian Transportation” (CCTT) was held in Budapest (Hungary). Participants discussed priorities for the development of the Transsib and the prospects for increasing transit on this route.
Sergey Aristov, Secretary of the State – Deputy Transport Minister of Russia, talked about measures to be taken to upgrade the infrastructure of the Transsib, which are envisaged in the Strategy of Railways Development in the RF till 2030. 87.3 km long third tracks will be built, 25 stations will be reconstructed, power supplying facilities will be enhanced as well as depot and handling equipment at locomotive facilities. On the eastern section of the Transsib, plans have been made to develop stations and hubs (including Karymskaya, Chita, Khabarovsk, Ussuriisk) till 2015. According to the Strategy, the speed of container transportation on the Transsib will reach 1,000 km per day by 2015.
State-of-the-art infrastructure will be constructed on the Transsib in the future. Terminal and logistics centres will be built in Yekaterinburg, Novosibirsk, Irkutsk, and other cities in order to increase the efficiency of transport and logistics operations and speed up the flow of goods between Europe, Russia, the CIS countries, and the Asian and Pacific regions. “This will allow the formation of a single technological and informational platform to fulfill all of a customer’s needs,” emphasised S. Aristov.
According to the Ministry of Transport, priority investment projects for the enhancement of infrastructure of the Transsib in the Far Eastern and the Baikal regions include the development of the Vostochny – Nakhodka transport hub; the construction of the Kyzyl-Kuragino railway to develop the mineral resources base of the Tyva Republic and the creation of transport infrastructure for developing the mineral resources base on the south-east of Zabaikalsky Krai and the Republic of Buryatia. To remove barriers, it is planned to complete the reconstruction of the Lagar-Aulsky tunnel, the Kiparisovsky tunnel, the Vladivostok tunnel, and the Obluchensky tunnel, bridges over the Zeya and the Bureya, and a bridge on the Uglovaya – Nakhodka railway section. In order to remove bottle-necks, the capacity of the Taishet, Irkutsk, and Skovorodino stations is to be increased, by-passes for the Irkutsk and Chita transport hubs will be created and hi-tech rail lines are to be constructed. To provide for passenger and heavy freight trains, the construction of a river crossing over the Amur will be completed, and a tunnel under the Amur near Khabarovsk will be reconstructed.
Total investment in the BAM and the Transsib by 2018 will be RUB 562 billion. “These infrastructure projects along with organisational and technical improvements will achieve an important strategic national objective – to increase the amount of international freight transportation via the Russian railway network,” resumed S. Aristov.

To Simplify and Speed Up

In the opinion of Alexander Misharin, First Vice President of RZD, a key driver for the development of international trade is the simplification of border crossing procedures. “The presence of national borders with stringent customs requirements or other controlling regulations with a lot of bureaucratic and technological procedures significantly slows down the speed of cargo flows,” he noted and added that RZD actively interacts with the RF Federal Customs Service to solve these problems.
The United Nations Conference on Trade and Development (UNCTAD) estimates annual losses from difficulties at border crossings at $400 billion. Participants in the APEC summit believe that the effect from the simplification of border crossing procedures is twice as much as from a reduction of customs tariffs.
A popular present-day technology helping to avoid idling of freight at border crossings is the advance notification of customs bodies. Its implementation contributes to decreasing the total transit time and expanding the carrying capacity of railways. The Council of the Eurasian Economic Commission decided on the introduction of an obligatory notification of goods carried by rail to the Customs Union. This requirement comes into force on October 1, 2014.
TransContainer OJSC in cooperation with the Transport Development Group developed, tested, and began trial use of a universal software system. It allows participants of railway transportation to submit e-copies of documents, check them to rectify mistakes if there are any; make shipping documents match formats set by the Federal Customs Service; prepare advance information in the form of an arrival note and in the form of transit declaration and to submit it to the Federal Customs Service; and give advance information about cargo to RZD’s automated systems. Currently, in the words of Petr Baskakov, CEO of TransContainer, this software system is used at the Zabaikalsk border crossing for registering transit declarations and submitting advance information about freight from Chinese consignors and transport forwarders. “Utilisation of the system contributed to a significant decrease in the time needed for customs formalities and in the number of unaccepted containers, which reduced the amount of shunting works at border stations,” noted he.
“It is obvious that the creation of an integrated system of railway transportation covering the entire Eurasian space is urgently needed. We could even call it a race against time,” said A. Misharin. “Use of unified requirements contributes to a progress in the development of foreign trade transportation between Europe and Asia.”
Making railways more attractive for cargo owners greatly depends on the improvement of sectoral legislation. According to S. Aristov, draft federal law “On Direct Mixed (Combined) Transportation” developed by the Transport Ministry is very important for the interaction of different transport modes. “When adopted, it will help to answer many questions in the sphere of organising the work of railways, water transport, and other transport modes at transportation of exports, imports, and transit freight, and with the use of a single transport document and joint responsibility at cargo delivery,” commented S. Aristov.
Also, work is under way to make federal laws “On Railways in the RF” and “The Code of Railways in the RF” match the current needs of the freight transportation market. The State Duma is developing the draft law “On Transit.”
From January 1, 2014, fees for transit transportation of cargo via Russian railways will be calculated on the rates for international cargo transportation set in the Tariff Policy of the CIS countries, including states – members of the Common Economic Space. A single policy for tariff formation will be in force for all users of railway services in the 2014 charter year. When calculating railway tariffs on transit transportation of freight on the rates of the Tariff Policy, RZD will get the right to set or change the level of rates yearly in accordance with the statements of the Tariff Agreement, as accepted elsewhere in the world.

A Flexible Approach

“New economic conditions give us an excellent chance to attract additional cargo flows, and increase the competitiveness of the Transsib,” believes Gennady Bessonov, Secretary General of the CCTT. “The present-day transport market is favourable for those able to react to the needs of consignors quickly and effectively, consolidating the efforts of private companies, state bodies, and non-commercial unions, and making use of the strong points of all participants in the logistics chain.” In its turn, the CCTT carries out work to organise and provide freight transportation by container trains.
In 2013, the CCTT participated in new transport and logistics projects, particularly the launch of container trains on the routes Sbornaya-Ugolnaya – Kleschikha, Nakhodka-Vostochnaya – Ulugbeck (Uzbekistan), Kleschikha – St Petersburg-Tovarny-Vitebsky, Paneriai (Lithuania) – Kostanai (Kazakhstan).
G. Bessonov named the following priorities of the CCTT for the short-term:
• work aimed at simplification of border crossing procedures as a basic guideline for enhancing the global transport system;
• an increase in activity to implement the single informational and technological system of transportation via the Transsib;
• creation of competitive through tariff rates;
• increasing the efficiency of different transport modes, especially by rail and sea;
• an upgrade of transport safety standards.
In the near future, the Integrated Transport and Logistics Company (OTLK) will become the integrator, the developer, and the operator of the Eurasian transport and logistics system. It will unite the logistics assets of Russia, Kazakhstan, and Belarus: five transport and logistics companies, almost 32,000 wagons for container transportation, about 70,000 large-capacity containers, more than 250 sales points, a network of almost 70 terminals, three of which are on the border with China (Zabaikalsk, Dostyk, Altynkol) and two – on the border with the EU (Brest and Dobra). All these assets will be connected by means of a single IT-system.
“A powerful logistics system is needed to increase transit transportation. It will increase the efficient use of wagons and optimise the logistics of containers,” believes P. Baskakov. According to him, empty mileage can be reduced by 50%, and the transit time can be reduced by 4-5 days, which can reduce the cost of transportation by 15-20%.
At the same time, P. Baskakov says, competitive through tariffs comprise not just special rates for the use of the infrastructure services, but also a technologies surcharge to pay for enhancing the efficiency of transport equipment on the basis of the unified rules for pricing policy, shared use of rolling stock fleets, implementation of integrated technology and standards for transport and logistics services in the CES. In his opinion, a new system of price formation must be implemented, and there must be unified rules of pricing policy in the framework of the Eurasian transport corridor.  “Tariff formation must be flexible, able to react quickly to market changes, which is especially important for a commercial container business. Today, as a rule, only operators react to the market, reducing the wagon component in tariffs according to the season, migration of flows, and other factors. In cooperation with railway administrations, investment in service should be made. Keeping the wagon component of the tariff reasonable allows a railcar operator to earn money, and to attract new investors and capital to the sector, renew rolling stock, and create stimuli for investment in the development of new types of wagons,” noted P. Baskakov.

A Balance of Cargo Flows

Pavel Sokolov, CEO of RZD Logistics OJSC, believes that logistics solutions for the creation of China – Europe –­ China ring routes should be found to reduce the costs of transit. “Our experience shows that neither infrastructure barriers, nor competition are the most important factors in the success or failure of a transit service. The main factor is the balance in cargo flows from China to Europe and back,” P. Sokolov is sure.
In his words, it is not enough to search for a back load from Europe to China. “Undoubtedly, it is possible to increase the volume of transportation from Europe to China offering prices almost equal to the cost price of the transportation. Forecasts say, however, that even then the volume of direct transit from Europe to China barely exceeds 60% of the volume of direct transit from China to Europe by 2020,” says P. Sokolov.
It means that more complicated logistics solutions must be found – to build chains from Europe to the European part of Russia, then use domestic transportation beyond the Urals and to the Far East, and from Russia to Kazakhstan or China. That’s how expenses on transit from China to Europe can be minimised, he believes. And in this case a company will offer its customers a service allowing switching their cargoes from sea transport to the railway.
For that, one should actively market transport services on these routes, paying attention to organising shuttle container trains to Moscow and other of the largest cities in Russia. Additionally, one should attract cargoes to the railway from Europe to Russia. By 2020, forecast cargo flows from Europe will require at least five trains departing on this route every day. It means that organisers of transportation will have to compete fiercely with road hauliers.
“Today, the situation is not always favourable to railways. For example, on the route from Bratislava to Moscow the cost of transportation by rail is more than 30% higher than by road transport, and taking into account the larger volume of a European truck trailer – by 45%,” says P. Sokolov. “The conclusion is: if we want to successfully compete with road vehicles or other transport modes, we need to reduce the cost of transportation by rail.”
The largest players in the market of railway transit from China to Europe are KazTransService, BelInterTrans, TransContainer, FELB, RZD Logistics, and InterRailTrans. “Often they compete with each other trying to attract cargo volumes offering cheap prices, and pay little attention to the balance in cargo flows. All companies should cooperate to develop transit and create new schemes to optimise the mileage of containers and rolling stock. It is possible in case of a clear segmentation of the geography of transportation and levels of logistics services provided by each party,” says P. Sokolov.
Therefore, success depends on the well-coordinated work of all participants of the transportation. And mutual benefit is very important. Practice shows that most efficient projects appear during a discussion. In this sense, the CCTT is a unique organisation for exchanging opinions and making optimal decisions. ®
By Elena Ushkova

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Infrastructural Breakthrough

On November 14-15, 2013, the XXII Plenary session of the international association “The Coordinating Council on Trans-Siberian Transportation” (CCTT) was held in Budapest (Hungary). Participants discussed priorities for the development of the Transsib and the prospects for increasing transit on this route.
Sergey Aristov, Secretary of the State – Deputy Transport Minister of Russia, talked about measures to be taken to upgrade the infrastructure of the Transsib, which are envisaged in the Strategy of Railways Development in the RF till 2030. 87.3 km long third tracks will be built, 25 stations will be reconstructed, power supplying facilities will be enhanced as well as depot and handling equipment at locomotive facilities. On the eastern section of the Transsib, plans have been made to develop stations and hubs (including Karymskaya, Chita, Khabarovsk, Ussuriisk) till 2015. According to the Strategy, the speed of container transportation on the Transsib will reach 1,000 km per day by 2015.
State-of-the-art infrastructure will be constructed on the Transsib in the future. Terminal and logistics centres will be built in Yekaterinburg, Novosibirsk, Irkutsk, and other cities in order to increase the efficiency of transport and logistics operations and speed up the flow of goods between Europe, Russia, the CIS countries, and the Asian and Pacific regions. “This will allow the formation of a single technological and informational platform to fulfill all of a customer’s needs,” emphasised S. Aristov.
According to the Ministry of Transport, priority investment projects for the enhancement of infrastructure of the Transsib in the Far Eastern and the Baikal regions include the development of the Vostochny – Nakhodka transport hub; the construction of the Kyzyl-Kuragino railway to develop the mineral resources base of the Tyva Republic and the creation of transport infrastructure for developing the mineral resources base on the south-east of Zabaikalsky Krai and the Republic of Buryatia. To remove barriers, it is planned to complete the reconstruction of the Lagar-Aulsky tunnel, the Kiparisovsky tunnel, the Vladivostok tunnel, and the Obluchensky tunnel, bridges over the Zeya and the Bureya, and a bridge on the Uglovaya – Nakhodka railway section. In order to remove bottle-necks, the capacity of the Taishet, Irkutsk, and Skovorodino stations is to be increased, by-passes for the Irkutsk and Chita transport hubs will be created and hi-tech rail lines are to be constructed. To provide for passenger and heavy freight trains, the construction of a river crossing over the Amur will be completed, and a tunnel under the Amur near Khabarovsk will be reconstructed.
Total investment in the BAM and the Transsib by 2018 will be RUB 562 billion. “These infrastructure projects along with organisational and technical improvements will achieve an important strategic national objective – to increase the amount of international freight transportation via the Russian railway network,” resumed S. Aristov.

To Simplify and Speed Up

In the opinion of Alexander Misharin, First Vice President of RZD, a key driver for the development of international trade is the simplification of border crossing procedures. “The presence of national borders with stringent customs requirements or other controlling regulations with a lot of bureaucratic and technological procedures significantly slows down the speed of cargo flows,” he noted and added that RZD actively interacts with the RF Federal Customs Service to solve these problems.
The United Nations Conference on Trade and Development (UNCTAD) estimates annual losses from difficulties at border crossings at $400 billion. Participants in the APEC summit believe that the effect from the simplification of border crossing procedures is twice as much as from a reduction of customs tariffs.
A popular present-day technology helping to avoid idling of freight at border crossings is the advance notification of customs bodies. Its implementation contributes to decreasing the total transit time and expanding the carrying capacity of railways. The Council of the Eurasian Economic Commission decided on the introduction of an obligatory notification of goods carried by rail to the Customs Union. This requirement comes into force on October 1, 2014.
TransContainer OJSC in cooperation with the Transport Development Group developed, tested, and began trial use of a universal software system. It allows participants of railway transportation to submit e-copies of documents, check them to rectify mistakes if there are any; make shipping documents match formats set by the Federal Customs Service; prepare advance information in the form of an arrival note and in the form of transit declaration and to submit it to the Federal Customs Service; and give advance information about cargo to RZD’s automated systems. Currently, in the words of Petr Baskakov, CEO of TransContainer, this software system is used at the Zabaikalsk border crossing for registering transit declarations and submitting advance information about freight from Chinese consignors and transport forwarders. “Utilisation of the system contributed to a significant decrease in the time needed for customs formalities and in the number of unaccepted containers, which reduced the amount of shunting works at border stations,” noted he.
“It is obvious that the creation of an integrated system of railway transportation covering the entire Eurasian space is urgently needed. We could even call it a race against time,” said A. Misharin. “Use of unified requirements contributes to a progress in the development of foreign trade transportation between Europe and Asia.”
Making railways more attractive for cargo owners greatly depends on the improvement of sectoral legislation. According to S. Aristov, draft federal law “On Direct Mixed (Combined) Transportation” developed by the Transport Ministry is very important for the interaction of different transport modes. “When adopted, it will help to answer many questions in the sphere of organising the work of railways, water transport, and other transport modes at transportation of exports, imports, and transit freight, and with the use of a single transport document and joint responsibility at cargo delivery,” commented S. Aristov.
Also, work is under way to make federal laws “On Railways in the RF” and “The Code of Railways in the RF” match the current needs of the freight transportation market. The State Duma is developing the draft law “On Transit.”
From January 1, 2014, fees for transit transportation of cargo via Russian railways will be calculated on the rates for international cargo transportation set in the Tariff Policy of the CIS countries, including states – members of the Common Economic Space. A single policy for tariff formation will be in force for all users of railway services in the 2014 charter year. When calculating railway tariffs on transit transportation of freight on the rates of the Tariff Policy, RZD will get the right to set or change the level of rates yearly in accordance with the statements of the Tariff Agreement, as accepted elsewhere in the world.

A Flexible Approach

“New economic conditions give us an excellent chance to attract additional cargo flows, and increase the competitiveness of the Transsib,” believes Gennady Bessonov, Secretary General of the CCTT. “The present-day transport market is favourable for those able to react to the needs of consignors quickly and effectively, consolidating the efforts of private companies, state bodies, and non-commercial unions, and making use of the strong points of all participants in the logistics chain.” In its turn, the CCTT carries out work to organise and provide freight transportation by container trains.
In 2013, the CCTT participated in new transport and logistics projects, particularly the launch of container trains on the routes Sbornaya-Ugolnaya – Kleschikha, Nakhodka-Vostochnaya – Ulugbeck (Uzbekistan), Kleschikha – St Petersburg-Tovarny-Vitebsky, Paneriai (Lithuania) – Kostanai (Kazakhstan).
G. Bessonov named the following priorities of the CCTT for the short-term:
• work aimed at simplification of border crossing procedures as a basic guideline for enhancing the global transport system;
• an increase in activity to implement the single informational and technological system of transportation via the Transsib;
• creation of competitive through tariff rates;
• increasing the efficiency of different transport modes, especially by rail and sea;
• an upgrade of transport safety standards.
In the near future, the Integrated Transport and Logistics Company (OTLK) will become the integrator, the developer, and the operator of the Eurasian transport and logistics system. It will unite the logistics assets of Russia, Kazakhstan, and Belarus: five transport and logistics companies, almost 32,000 wagons for container transportation, about 70,000 large-capacity containers, more than 250 sales points, a network of almost 70 terminals, three of which are on the border with China (Zabaikalsk, Dostyk, Altynkol) and two – on the border with the EU (Brest and Dobra). All these assets will be connected by means of a single IT-system.
“A powerful logistics system is needed to increase transit transportation. It will increase the efficient use of wagons and optimise the logistics of containers,” believes P. Baskakov. According to him, empty mileage can be reduced by 50%, and the transit time can be reduced by 4-5 days, which can reduce the cost of transportation by 15-20%.
At the same time, P. Baskakov says, competitive through tariffs comprise not just special rates for the use of the infrastructure services, but also a technologies surcharge to pay for enhancing the efficiency of transport equipment on the basis of the unified rules for pricing policy, shared use of rolling stock fleets, implementation of integrated technology and standards for transport and logistics services in the CES. In his opinion, a new system of price formation must be implemented, and there must be unified rules of pricing policy in the framework of the Eurasian transport corridor.  “Tariff formation must be flexible, able to react quickly to market changes, which is especially important for a commercial container business. Today, as a rule, only operators react to the market, reducing the wagon component in tariffs according to the season, migration of flows, and other factors. In cooperation with railway administrations, investment in service should be made. Keeping the wagon component of the tariff reasonable allows a railcar operator to earn money, and to attract new investors and capital to the sector, renew rolling stock, and create stimuli for investment in the development of new types of wagons,” noted P. Baskakov.

A Balance of Cargo Flows

Pavel Sokolov, CEO of RZD Logistics OJSC, believes that logistics solutions for the creation of China – Europe –­ China ring routes should be found to reduce the costs of transit. “Our experience shows that neither infrastructure barriers, nor competition are the most important factors in the success or failure of a transit service. The main factor is the balance in cargo flows from China to Europe and back,” P. Sokolov is sure.
In his words, it is not enough to search for a back load from Europe to China. “Undoubtedly, it is possible to increase the volume of transportation from Europe to China offering prices almost equal to the cost price of the transportation. Forecasts say, however, that even then the volume of direct transit from Europe to China barely exceeds 60% of the volume of direct transit from China to Europe by 2020,” says P. Sokolov.
It means that more complicated logistics solutions must be found – to build chains from Europe to the European part of Russia, then use domestic transportation beyond the Urals and to the Far East, and from Russia to Kazakhstan or China. That’s how expenses on transit from China to Europe can be minimised, he believes. And in this case a company will offer its customers a service allowing switching their cargoes from sea transport to the railway.
For that, one should actively market transport services on these routes, paying attention to organising shuttle container trains to Moscow and other of the largest cities in Russia. Additionally, one should attract cargoes to the railway from Europe to Russia. By 2020, forecast cargo flows from Europe will require at least five trains departing on this route every day. It means that organisers of transportation will have to compete fiercely with road hauliers.
“Today, the situation is not always favourable to railways. For example, on the route from Bratislava to Moscow the cost of transportation by rail is more than 30% higher than by road transport, and taking into account the larger volume of a European truck trailer – by 45%,” says P. Sokolov. “The conclusion is: if we want to successfully compete with road vehicles or other transport modes, we need to reduce the cost of transportation by rail.”
The largest players in the market of railway transit from China to Europe are KazTransService, BelInterTrans, TransContainer, FELB, RZD Logistics, and InterRailTrans. “Often they compete with each other trying to attract cargo volumes offering cheap prices, and pay little attention to the balance in cargo flows. All companies should cooperate to develop transit and create new schemes to optimise the mileage of containers and rolling stock. It is possible in case of a clear segmentation of the geography of transportation and levels of logistics services provided by each party,” says P. Sokolov.
Therefore, success depends on the well-coordinated work of all participants of the transportation. And mutual benefit is very important. Practice shows that most efficient projects appear during a discussion. In this sense, the CCTT is a unique organisation for exchanging opinions and making optimal decisions. ®
By Elena Ushkova

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The development of the Trans-Siberian Mainline is a priority set by the Russian Government for RZD for the mid- and a long-term. What objectives should be accomplished to increase the attractiveness of the Transsib for customers?

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РЖД-Партнер

Container Trains Gain a Foothold in the Market

Container Trains Gain a Foothold in the Market

Transportation of freight by express container trains continues to develop on the “1520 space”, but its potential is not being fully realised. What are the most successful projects, and what do member states of the Customs Union do to increase the competitiveness of their transit routes?

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Successful Projects
Efficient usage of the potential of transit countries as the link between the East and the West is impossible without containerisation of railway cargo flows. The widespread use of containers fulfils the constantly growing needs of consignors, who want a high quality logistics process, speed, safety, cost effectiveness, and guarantees of the safety of freight.  
At present, the level of containerisation in Russia, Belarus, and Kazakhstan is approximately 4-5% of the total cargo flow, while in Western Europe it is about 35%. This gap negatively impacts on the development of logistics technologies in the Customs Union and the optimisation of transport expenses for customers.
The largest international projects for container block trains, which are being carried out, are those such as “Viking” (links the Baltic and the Black Sea regions), “Zubr” (a joint project of railways of Belarus, Latvia, Estonia, and Ukraine), “Mongolian Vector” (from Brest to Mongolia and Chine), “New Silk Road” (Chongqing - Duisburg), “Moskvich” (Duisburg - Moscow), “Mercury” (Klaipeda - Moscow), “Saule” or “Sun Train” (Chongqing (China) – Antwerp (Belgium) via Shyashtokai (Lithuania) and Klaipeda (Lithuania) – Gudogai – Ozinki (Russia) – Almaty (Kazakhstan)). Special attention should be paid to transportation of car components for car manufacturing corporations VW (Germany – the Czech Republic – Slovakia – Hungary – Poland – Belarus - Russia), Peugeot Citroen (France – Germany – Belarus - Russia), Ford (Duisburg - Chongqing), BMW (Leipzig - Shenyang), Skoda (the Czech Republic - Kazakhstan), KIA (Slovakia - Kazakhstan).
One of the most successful projects is the “Viking” train. In 10 years it gained a large client base due to combining opportunities for different transport modes, warehousing logistics services, and door-to-door cargo delivery without the necessity of reloading at gauge changes. All these allowed “Viking” to become a profitable solution on the route the Black Sea – the Baltic Sea and successfully compete with road transport. The train carries approximately 60,000 TEU per annum. More than 350,000 TEU has been transported by train since it was put into operation.
The “Mercury” container train carries 20-, 40-, and 45-foot universal and specialised containers on the route Klaipeda/Kaliningrad – Minsk – Moscow and back. Due to such advantages as the speed of delivery (it takes the train 48 hours to cover the 1,288km long Kaliningrad – Moscow section), on-time arrival at its destination point, simplified customs and border procedures, and guarantee of cargo safety, the train became a regular feature on the route Klaipeda – Minsk – Moscow in March 2013. The AAA Intermodal is responsible for forming the train and its departure from Klaipeda.
“Despite a high market capacity, there are difficulties with filling the trains,” says Sergey Kupreev, Director General of Belintertrans – Transport and Logistics Centre (BTLC). “Containers are often carried not at the rates of a container train, but at the rates of batch consignments.” In March – August 2013, the train made 7 journeys and transported 238 TEU. The most part of its cargo was foodstuffs, tiles, and other day-to-day goods. The train returned empty.
In the future, the container train is supposed to form simultaneously in Kaliningrad and Klaipeda, from where its sections will be delivered to the Lithuanian station Vaidotai (Vilnius) and joined there together in a full-fledged train. Then the train will travel to Minsk. The capacity of the “Mercury” can amount to 114 TEU if a part of cargo is transferred from road transport to railways. It is planned to make the train weekly and depart it on a timetabled day of the week, which will allow planning time for goods delivery and container turnover.
The “New Silk Road” container service was put into operation on the Chongqing – Duisburg route in 2011. The project was carried out as a joint venture between YuXinOu (Chongqing) Logistics company Ltd., established by RZD Logistics, Kaztransservice, DB Schenker Logistics, and China Railway International Multimodal Transport Сo., Ltd. (CRIMT). The service has proved its competitiveness. The time of transportation on the 10,769 km long route was 15 days, and later it was reduced to 12 days. This year the train departs twice a week. In the first half of 2013, 15 such trains carried 1,232 TEU. Another large project is the “Baltic-Transit” train on the route Hamburg – Riga – Ozinki – Galaba. In 2012, there were 105 container trains on the route, and 23 in 6 months of 2013.

A Priority Transit Route
“The development of the Transsib as the backbone for the Eurasian direction “the East – the West” is one of the priority objectives for Russia, especially amid the globalisation of the world economy and integrating processes, such as the creation of the Common Economic Space, Russia joining the WTO, and the extension of the European Union,” notes Vadim Morozov, First Vice President of RZD. As is already known, container transportation via the Trans-Siberian Mainline reduces cargo delivery time by 10-15 days in comparison with the trans-ocean route via the Suez Canal.
In 2012, the total international transportation volume of large- and medium containers via the Transsib amounted to 554,000 TEU, almost 20% up on 2011. There was a 17.5% increase in eight months in 2013. Despite significant growth rates, a little more than 1% of the total container freight flow between Western Europe and Asia is carried via Russia.
If the trend is overcome, and 600,000-800,000 transit containers are attracted to the Transsib, additional revenue for Russian transport companies could amount to $2 billion per annum. Obviously, these are the volumes and revenues we can get after the relevant conditions for the development of export-import and transit potential of the Transsib are created.
According to V. Morozov, for that, the Trans-Siberian route should be considered as a single trans-continental link between the countries of the Asian and the Pacific regions, the CIS, the Baltic States, and Europe. “In this sense, a lot of attention must be paid to the creation of a whole balanced railway infrastructure focused on the transport cooperation between countries,” he says.
A whole package of measures has been carried out by Russian Railways to develop the infrastructure in the RF: sections of the Transsib were electrified, bridges and tunnels were reconstructed, large marshalling yards and port stations were built and reconstructed. The RF Government adjusted the scheme of funding the modernisation of the Trans-Siberian and Baikal-Amur Mainlines till 2018. When these decisions are put into practice, it will remove bottle-necks and stimulate the further development of container transportation.
As for the development of the so-called western part of the international corridor, in particular the extension of the broad gauge to Vienna, according to different estimations, it will attract an additional 16-24 million tons of freight per annum by 2050. Meanwhile, in the eastern part of the international railway corridor (a railway section from the Tumangan station in Russia to the Rason port), the reconstruction of the railway section of the Khasan-Rason line was completed in September 2013. 
To attract the attention of leading transnational consignors to transportation on the Trans-Siberian route, it is planned to provide popular and competitive logistics services and products, particularly, the “door-to-door” service, development of optimum logistics for intermodal transportation, dispatch of regular container trains on schedule.
The work of RZD showed that the service of express transportation of container trains “Transsib in 7 Days” is very popular. Nowadays, there are about 10 such trains in motion daily. In the framework of the further enhancement of the technology of work, this service will be developed. The speed of trains is 1,200 km per day now, and by 2015 it is set to increase to 1,500 km per day.

International Cooperation
According to S. Kupreev, the major barriers preventing an increase in the share of railway container transportation to the EU and back via the CES member states are the lack of a unified adjusted tariff rate, insufficient quality of services, and a low transit speed, especially because of long idling time during customs procedures.
Step-by-step removal of bottle-necks, an intensive development of the cooperation between railway administrations and container operators in the near future will have a positive influence on transportation volumes. Therefore, there will be a need for state-of-the-art logistics terminals, especially at border crossing points, for servicing container trains in the shortest time possible. Using the advantages of the logistics of railways and motor transport, BTLC organises combined transportation services to the Customs Union, Western Europe, and the CIS with cargo delivery by container semi-trucks and sidelifters to the consignee’s warehouse, including customs registration, storage and complex servicing of imports, export, and transit freight. The use of semi-trucks allows loading and unloading of containers from railway flat wagons, semi-trucks and from land anywhere. No special equipment is needed for large-capacity containers.
Kazakhstan also improves its services actively. The main advantage of cargo transportation from China to Europe via Kazakhstan is cargo transportation at affordable prices and in a relatively short term. In line with attracting customers to new routes, NC Kazakhstan Temir Zholy JSC (KTZ) is engaged in developing the infrastructure of railways in the republic and freight terminals.
A multimodal operator is being launched by Kazakhstan Temir Zholy, to which transportation by all transport modes, port infrastructure, and the terminal network are transferred. International operators such as Dubai Port World (who manage the Aktau sea port and SEZ Khorgos – Eastern Gates JSC) and Swissport (who manage the network of airports) are attracted to manage transport logistics facilities. KTZ and Lianyungang Port Company agreed to launch a joint venture. “It is necessary to carry out the project of extending the Lianyungang port, with the participation of KTZ, to create conditions for the transportation of Kazakh exports to South-Eastern Asia and for the consolidation of transit cargoes to the regions of Central and Southern Asia, Europe, and Caucasus,” explains a representative of KTZ Express JSC (a single centre providing transport and logistics services in the Republic of Kazakhstan) Nurzhan Alpyspekov. The design and estimate documentation for the construction of a terminal in the Lianyungang port will be negotiated with China in the first half of 2014, and works will start in the second half of 2014.
Also, KTZ reached an agreement with representatives of Transport and Logistics Complex “Sian” (China) about cooperation in the sector of freight transportation via Kazakhstan to countries in Central Asia. “At the initial stage, Chinese and Kazakh specialists will begin work to organise regular transportation from TLC “Sian” to Almaty with further distribution of fast moving consumer goods to Central Asia. In the future, we will analyse the opportunity to organise terminal handling and cargo distribution in the special economic zone “Khorgos – Eastern Gates”, they said in Kedentransservice JSC. The SEZ has a number of advantages: its geographical location at the junction of the East and the West, an off-dock terminal is an essential part of the transport zone, one-window principle, tax and customs privileges and preferences, etc. It is planned that in addition to transit transportation via Kazakhstan, a terminal handling service and goods reloading service on special rates will be provided to Chinese consignors. As a multimodal border station, Khorgos already dispatches cargo to Europe and Central Asia, warehouse storage and so distribution services are also available.
In the short-term prospect, a unique opportunity to organise weekly container shuttle trains destined for Europe will appear at the border of Kazakhstan and China. Taking into account the increasing annual volume of freight serviced between China and the Republic of Kazakhstan (17 million tons in 2012, the outlook for 2013 is 19 million tons), there will be a demand for this service, and it will be popular.
To attract transit cargo flows, KTZ is carrying out projects contributing to simplifying the process of organising international supplies of goods and re-directing cargo flows from sea lines to the trans-Kazakh route. A part of the cargo flow has been switched to the railway, particularly due to such trains as Chongqing – Duisburg and Chengdu – Lodz. In the first half of 2013, the number of container trains in Kazakhstan increased by 10%. New projects are constantly launched. At the end of September, for example, a container train with car components for a new car assembling plant for Peugeot in Kostanai was launched. Amid some decline in tariffs on container transportation via the Transsib and Mongolia, Kazakh companies are analysing the introduction of relevant measures by KTZ. Implementation of a single methods to calculate the tariff rate per 1 container-km with the introduction of special rates for container trains moving via Kazakhstan and then to the Transsib and the railways of Belarus as well as adjustment of special rates on backload is being discussed as a possible way out. There is an objective to double the transit freight flow via Kazakhstan to at least 50 million tons by 2020.  
All parties agree that success is possible only by acting jointly. It is important to use the advantages of every country and every transport mode. In the current economic climate, timely fulfillment of customers’ need for cargo transportation requires a full range of services in the sectors of transport forwarding, warehousing, customs, and informational logistics. ®
By Elena Ushkova

[~DETAIL_TEXT] =>

Successful Projects
Efficient usage of the potential of transit countries as the link between the East and the West is impossible without containerisation of railway cargo flows. The widespread use of containers fulfils the constantly growing needs of consignors, who want a high quality logistics process, speed, safety, cost effectiveness, and guarantees of the safety of freight.  
At present, the level of containerisation in Russia, Belarus, and Kazakhstan is approximately 4-5% of the total cargo flow, while in Western Europe it is about 35%. This gap negatively impacts on the development of logistics technologies in the Customs Union and the optimisation of transport expenses for customers.
The largest international projects for container block trains, which are being carried out, are those such as “Viking” (links the Baltic and the Black Sea regions), “Zubr” (a joint project of railways of Belarus, Latvia, Estonia, and Ukraine), “Mongolian Vector” (from Brest to Mongolia and Chine), “New Silk Road” (Chongqing - Duisburg), “Moskvich” (Duisburg - Moscow), “Mercury” (Klaipeda - Moscow), “Saule” or “Sun Train” (Chongqing (China) – Antwerp (Belgium) via Shyashtokai (Lithuania) and Klaipeda (Lithuania) – Gudogai – Ozinki (Russia) – Almaty (Kazakhstan)). Special attention should be paid to transportation of car components for car manufacturing corporations VW (Germany – the Czech Republic – Slovakia – Hungary – Poland – Belarus - Russia), Peugeot Citroen (France – Germany – Belarus - Russia), Ford (Duisburg - Chongqing), BMW (Leipzig - Shenyang), Skoda (the Czech Republic - Kazakhstan), KIA (Slovakia - Kazakhstan).
One of the most successful projects is the “Viking” train. In 10 years it gained a large client base due to combining opportunities for different transport modes, warehousing logistics services, and door-to-door cargo delivery without the necessity of reloading at gauge changes. All these allowed “Viking” to become a profitable solution on the route the Black Sea – the Baltic Sea and successfully compete with road transport. The train carries approximately 60,000 TEU per annum. More than 350,000 TEU has been transported by train since it was put into operation.
The “Mercury” container train carries 20-, 40-, and 45-foot universal and specialised containers on the route Klaipeda/Kaliningrad – Minsk – Moscow and back. Due to such advantages as the speed of delivery (it takes the train 48 hours to cover the 1,288km long Kaliningrad – Moscow section), on-time arrival at its destination point, simplified customs and border procedures, and guarantee of cargo safety, the train became a regular feature on the route Klaipeda – Minsk – Moscow in March 2013. The AAA Intermodal is responsible for forming the train and its departure from Klaipeda.
“Despite a high market capacity, there are difficulties with filling the trains,” says Sergey Kupreev, Director General of Belintertrans – Transport and Logistics Centre (BTLC). “Containers are often carried not at the rates of a container train, but at the rates of batch consignments.” In March – August 2013, the train made 7 journeys and transported 238 TEU. The most part of its cargo was foodstuffs, tiles, and other day-to-day goods. The train returned empty.
In the future, the container train is supposed to form simultaneously in Kaliningrad and Klaipeda, from where its sections will be delivered to the Lithuanian station Vaidotai (Vilnius) and joined there together in a full-fledged train. Then the train will travel to Minsk. The capacity of the “Mercury” can amount to 114 TEU if a part of cargo is transferred from road transport to railways. It is planned to make the train weekly and depart it on a timetabled day of the week, which will allow planning time for goods delivery and container turnover.
The “New Silk Road” container service was put into operation on the Chongqing – Duisburg route in 2011. The project was carried out as a joint venture between YuXinOu (Chongqing) Logistics company Ltd., established by RZD Logistics, Kaztransservice, DB Schenker Logistics, and China Railway International Multimodal Transport Сo., Ltd. (CRIMT). The service has proved its competitiveness. The time of transportation on the 10,769 km long route was 15 days, and later it was reduced to 12 days. This year the train departs twice a week. In the first half of 2013, 15 such trains carried 1,232 TEU. Another large project is the “Baltic-Transit” train on the route Hamburg – Riga – Ozinki – Galaba. In 2012, there were 105 container trains on the route, and 23 in 6 months of 2013.

A Priority Transit Route
“The development of the Transsib as the backbone for the Eurasian direction “the East – the West” is one of the priority objectives for Russia, especially amid the globalisation of the world economy and integrating processes, such as the creation of the Common Economic Space, Russia joining the WTO, and the extension of the European Union,” notes Vadim Morozov, First Vice President of RZD. As is already known, container transportation via the Trans-Siberian Mainline reduces cargo delivery time by 10-15 days in comparison with the trans-ocean route via the Suez Canal.
In 2012, the total international transportation volume of large- and medium containers via the Transsib amounted to 554,000 TEU, almost 20% up on 2011. There was a 17.5% increase in eight months in 2013. Despite significant growth rates, a little more than 1% of the total container freight flow between Western Europe and Asia is carried via Russia.
If the trend is overcome, and 600,000-800,000 transit containers are attracted to the Transsib, additional revenue for Russian transport companies could amount to $2 billion per annum. Obviously, these are the volumes and revenues we can get after the relevant conditions for the development of export-import and transit potential of the Transsib are created.
According to V. Morozov, for that, the Trans-Siberian route should be considered as a single trans-continental link between the countries of the Asian and the Pacific regions, the CIS, the Baltic States, and Europe. “In this sense, a lot of attention must be paid to the creation of a whole balanced railway infrastructure focused on the transport cooperation between countries,” he says.
A whole package of measures has been carried out by Russian Railways to develop the infrastructure in the RF: sections of the Transsib were electrified, bridges and tunnels were reconstructed, large marshalling yards and port stations were built and reconstructed. The RF Government adjusted the scheme of funding the modernisation of the Trans-Siberian and Baikal-Amur Mainlines till 2018. When these decisions are put into practice, it will remove bottle-necks and stimulate the further development of container transportation.
As for the development of the so-called western part of the international corridor, in particular the extension of the broad gauge to Vienna, according to different estimations, it will attract an additional 16-24 million tons of freight per annum by 2050. Meanwhile, in the eastern part of the international railway corridor (a railway section from the Tumangan station in Russia to the Rason port), the reconstruction of the railway section of the Khasan-Rason line was completed in September 2013. 
To attract the attention of leading transnational consignors to transportation on the Trans-Siberian route, it is planned to provide popular and competitive logistics services and products, particularly, the “door-to-door” service, development of optimum logistics for intermodal transportation, dispatch of regular container trains on schedule.
The work of RZD showed that the service of express transportation of container trains “Transsib in 7 Days” is very popular. Nowadays, there are about 10 such trains in motion daily. In the framework of the further enhancement of the technology of work, this service will be developed. The speed of trains is 1,200 km per day now, and by 2015 it is set to increase to 1,500 km per day.

International Cooperation
According to S. Kupreev, the major barriers preventing an increase in the share of railway container transportation to the EU and back via the CES member states are the lack of a unified adjusted tariff rate, insufficient quality of services, and a low transit speed, especially because of long idling time during customs procedures.
Step-by-step removal of bottle-necks, an intensive development of the cooperation between railway administrations and container operators in the near future will have a positive influence on transportation volumes. Therefore, there will be a need for state-of-the-art logistics terminals, especially at border crossing points, for servicing container trains in the shortest time possible. Using the advantages of the logistics of railways and motor transport, BTLC organises combined transportation services to the Customs Union, Western Europe, and the CIS with cargo delivery by container semi-trucks and sidelifters to the consignee’s warehouse, including customs registration, storage and complex servicing of imports, export, and transit freight. The use of semi-trucks allows loading and unloading of containers from railway flat wagons, semi-trucks and from land anywhere. No special equipment is needed for large-capacity containers.
Kazakhstan also improves its services actively. The main advantage of cargo transportation from China to Europe via Kazakhstan is cargo transportation at affordable prices and in a relatively short term. In line with attracting customers to new routes, NC Kazakhstan Temir Zholy JSC (KTZ) is engaged in developing the infrastructure of railways in the republic and freight terminals.
A multimodal operator is being launched by Kazakhstan Temir Zholy, to which transportation by all transport modes, port infrastructure, and the terminal network are transferred. International operators such as Dubai Port World (who manage the Aktau sea port and SEZ Khorgos – Eastern Gates JSC) and Swissport (who manage the network of airports) are attracted to manage transport logistics facilities. KTZ and Lianyungang Port Company agreed to launch a joint venture. “It is necessary to carry out the project of extending the Lianyungang port, with the participation of KTZ, to create conditions for the transportation of Kazakh exports to South-Eastern Asia and for the consolidation of transit cargoes to the regions of Central and Southern Asia, Europe, and Caucasus,” explains a representative of KTZ Express JSC (a single centre providing transport and logistics services in the Republic of Kazakhstan) Nurzhan Alpyspekov. The design and estimate documentation for the construction of a terminal in the Lianyungang port will be negotiated with China in the first half of 2014, and works will start in the second half of 2014.
Also, KTZ reached an agreement with representatives of Transport and Logistics Complex “Sian” (China) about cooperation in the sector of freight transportation via Kazakhstan to countries in Central Asia. “At the initial stage, Chinese and Kazakh specialists will begin work to organise regular transportation from TLC “Sian” to Almaty with further distribution of fast moving consumer goods to Central Asia. In the future, we will analyse the opportunity to organise terminal handling and cargo distribution in the special economic zone “Khorgos – Eastern Gates”, they said in Kedentransservice JSC. The SEZ has a number of advantages: its geographical location at the junction of the East and the West, an off-dock terminal is an essential part of the transport zone, one-window principle, tax and customs privileges and preferences, etc. It is planned that in addition to transit transportation via Kazakhstan, a terminal handling service and goods reloading service on special rates will be provided to Chinese consignors. As a multimodal border station, Khorgos already dispatches cargo to Europe and Central Asia, warehouse storage and so distribution services are also available.
In the short-term prospect, a unique opportunity to organise weekly container shuttle trains destined for Europe will appear at the border of Kazakhstan and China. Taking into account the increasing annual volume of freight serviced between China and the Republic of Kazakhstan (17 million tons in 2012, the outlook for 2013 is 19 million tons), there will be a demand for this service, and it will be popular.
To attract transit cargo flows, KTZ is carrying out projects contributing to simplifying the process of organising international supplies of goods and re-directing cargo flows from sea lines to the trans-Kazakh route. A part of the cargo flow has been switched to the railway, particularly due to such trains as Chongqing – Duisburg and Chengdu – Lodz. In the first half of 2013, the number of container trains in Kazakhstan increased by 10%. New projects are constantly launched. At the end of September, for example, a container train with car components for a new car assembling plant for Peugeot in Kostanai was launched. Amid some decline in tariffs on container transportation via the Transsib and Mongolia, Kazakh companies are analysing the introduction of relevant measures by KTZ. Implementation of a single methods to calculate the tariff rate per 1 container-km with the introduction of special rates for container trains moving via Kazakhstan and then to the Transsib and the railways of Belarus as well as adjustment of special rates on backload is being discussed as a possible way out. There is an objective to double the transit freight flow via Kazakhstan to at least 50 million tons by 2020.  
All parties agree that success is possible only by acting jointly. It is important to use the advantages of every country and every transport mode. In the current economic climate, timely fulfillment of customers’ need for cargo transportation requires a full range of services in the sectors of transport forwarding, warehousing, customs, and informational logistics. ®
By Elena Ushkova

[DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>

Transportation of freight by express container trains continues to develop on the “1520 space”, but its potential is not being fully realised. What are the most successful projects, and what do member states of the Customs Union do to increase the competitiveness of their transit routes?

[~PREVIEW_TEXT] =>

Transportation of freight by express container trains continues to develop on the “1520 space”, but its potential is not being fully realised. What are the most successful projects, and what do member states of the Customs Union do to increase the competitiveness of their transit routes?

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Successful Projects
Efficient usage of the potential of transit countries as the link between the East and the West is impossible without containerisation of railway cargo flows. The widespread use of containers fulfils the constantly growing needs of consignors, who want a high quality logistics process, speed, safety, cost effectiveness, and guarantees of the safety of freight.  
At present, the level of containerisation in Russia, Belarus, and Kazakhstan is approximately 4-5% of the total cargo flow, while in Western Europe it is about 35%. This gap negatively impacts on the development of logistics technologies in the Customs Union and the optimisation of transport expenses for customers.
The largest international projects for container block trains, which are being carried out, are those such as “Viking” (links the Baltic and the Black Sea regions), “Zubr” (a joint project of railways of Belarus, Latvia, Estonia, and Ukraine), “Mongolian Vector” (from Brest to Mongolia and Chine), “New Silk Road” (Chongqing - Duisburg), “Moskvich” (Duisburg - Moscow), “Mercury” (Klaipeda - Moscow), “Saule” or “Sun Train” (Chongqing (China) – Antwerp (Belgium) via Shyashtokai (Lithuania) and Klaipeda (Lithuania) – Gudogai – Ozinki (Russia) – Almaty (Kazakhstan)). Special attention should be paid to transportation of car components for car manufacturing corporations VW (Germany – the Czech Republic – Slovakia – Hungary – Poland – Belarus - Russia), Peugeot Citroen (France – Germany – Belarus - Russia), Ford (Duisburg - Chongqing), BMW (Leipzig - Shenyang), Skoda (the Czech Republic - Kazakhstan), KIA (Slovakia - Kazakhstan).
One of the most successful projects is the “Viking” train. In 10 years it gained a large client base due to combining opportunities for different transport modes, warehousing logistics services, and door-to-door cargo delivery without the necessity of reloading at gauge changes. All these allowed “Viking” to become a profitable solution on the route the Black Sea – the Baltic Sea and successfully compete with road transport. The train carries approximately 60,000 TEU per annum. More than 350,000 TEU has been transported by train since it was put into operation.
The “Mercury” container train carries 20-, 40-, and 45-foot universal and specialised containers on the route Klaipeda/Kaliningrad – Minsk – Moscow and back. Due to such advantages as the speed of delivery (it takes the train 48 hours to cover the 1,288km long Kaliningrad – Moscow section), on-time arrival at its destination point, simplified customs and border procedures, and guarantee of cargo safety, the train became a regular feature on the route Klaipeda – Minsk – Moscow in March 2013. The AAA Intermodal is responsible for forming the train and its departure from Klaipeda.
“Despite a high market capacity, there are difficulties with filling the trains,” says Sergey Kupreev, Director General of Belintertrans – Transport and Logistics Centre (BTLC). “Containers are often carried not at the rates of a container train, but at the rates of batch consignments.” In March – August 2013, the train made 7 journeys and transported 238 TEU. The most part of its cargo was foodstuffs, tiles, and other day-to-day goods. The train returned empty.
In the future, the container train is supposed to form simultaneously in Kaliningrad and Klaipeda, from where its sections will be delivered to the Lithuanian station Vaidotai (Vilnius) and joined there together in a full-fledged train. Then the train will travel to Minsk. The capacity of the “Mercury” can amount to 114 TEU if a part of cargo is transferred from road transport to railways. It is planned to make the train weekly and depart it on a timetabled day of the week, which will allow planning time for goods delivery and container turnover.
The “New Silk Road” container service was put into operation on the Chongqing – Duisburg route in 2011. The project was carried out as a joint venture between YuXinOu (Chongqing) Logistics company Ltd., established by RZD Logistics, Kaztransservice, DB Schenker Logistics, and China Railway International Multimodal Transport Сo., Ltd. (CRIMT). The service has proved its competitiveness. The time of transportation on the 10,769 km long route was 15 days, and later it was reduced to 12 days. This year the train departs twice a week. In the first half of 2013, 15 such trains carried 1,232 TEU. Another large project is the “Baltic-Transit” train on the route Hamburg – Riga – Ozinki – Galaba. In 2012, there were 105 container trains on the route, and 23 in 6 months of 2013.

A Priority Transit Route
“The development of the Transsib as the backbone for the Eurasian direction “the East – the West” is one of the priority objectives for Russia, especially amid the globalisation of the world economy and integrating processes, such as the creation of the Common Economic Space, Russia joining the WTO, and the extension of the European Union,” notes Vadim Morozov, First Vice President of RZD. As is already known, container transportation via the Trans-Siberian Mainline reduces cargo delivery time by 10-15 days in comparison with the trans-ocean route via the Suez Canal.
In 2012, the total international transportation volume of large- and medium containers via the Transsib amounted to 554,000 TEU, almost 20% up on 2011. There was a 17.5% increase in eight months in 2013. Despite significant growth rates, a little more than 1% of the total container freight flow between Western Europe and Asia is carried via Russia.
If the trend is overcome, and 600,000-800,000 transit containers are attracted to the Transsib, additional revenue for Russian transport companies could amount to $2 billion per annum. Obviously, these are the volumes and revenues we can get after the relevant conditions for the development of export-import and transit potential of the Transsib are created.
According to V. Morozov, for that, the Trans-Siberian route should be considered as a single trans-continental link between the countries of the Asian and the Pacific regions, the CIS, the Baltic States, and Europe. “In this sense, a lot of attention must be paid to the creation of a whole balanced railway infrastructure focused on the transport cooperation between countries,” he says.
A whole package of measures has been carried out by Russian Railways to develop the infrastructure in the RF: sections of the Transsib were electrified, bridges and tunnels were reconstructed, large marshalling yards and port stations were built and reconstructed. The RF Government adjusted the scheme of funding the modernisation of the Trans-Siberian and Baikal-Amur Mainlines till 2018. When these decisions are put into practice, it will remove bottle-necks and stimulate the further development of container transportation.
As for the development of the so-called western part of the international corridor, in particular the extension of the broad gauge to Vienna, according to different estimations, it will attract an additional 16-24 million tons of freight per annum by 2050. Meanwhile, in the eastern part of the international railway corridor (a railway section from the Tumangan station in Russia to the Rason port), the reconstruction of the railway section of the Khasan-Rason line was completed in September 2013. 
To attract the attention of leading transnational consignors to transportation on the Trans-Siberian route, it is planned to provide popular and competitive logistics services and products, particularly, the “door-to-door” service, development of optimum logistics for intermodal transportation, dispatch of regular container trains on schedule.
The work of RZD showed that the service of express transportation of container trains “Transsib in 7 Days” is very popular. Nowadays, there are about 10 such trains in motion daily. In the framework of the further enhancement of the technology of work, this service will be developed. The speed of trains is 1,200 km per day now, and by 2015 it is set to increase to 1,500 km per day.

International Cooperation
According to S. Kupreev, the major barriers preventing an increase in the share of railway container transportation to the EU and back via the CES member states are the lack of a unified adjusted tariff rate, insufficient quality of services, and a low transit speed, especially because of long idling time during customs procedures.
Step-by-step removal of bottle-necks, an intensive development of the cooperation between railway administrations and container operators in the near future will have a positive influence on transportation volumes. Therefore, there will be a need for state-of-the-art logistics terminals, especially at border crossing points, for servicing container trains in the shortest time possible. Using the advantages of the logistics of railways and motor transport, BTLC organises combined transportation services to the Customs Union, Western Europe, and the CIS with cargo delivery by container semi-trucks and sidelifters to the consignee’s warehouse, including customs registration, storage and complex servicing of imports, export, and transit freight. The use of semi-trucks allows loading and unloading of containers from railway flat wagons, semi-trucks and from land anywhere. No special equipment is needed for large-capacity containers.
Kazakhstan also improves its services actively. The main advantage of cargo transportation from China to Europe via Kazakhstan is cargo transportation at affordable prices and in a relatively short term. In line with attracting customers to new routes, NC Kazakhstan Temir Zholy JSC (KTZ) is engaged in developing the infrastructure of railways in the republic and freight terminals.
A multimodal operator is being launched by Kazakhstan Temir Zholy, to which transportation by all transport modes, port infrastructure, and the terminal network are transferred. International operators such as Dubai Port World (who manage the Aktau sea port and SEZ Khorgos – Eastern Gates JSC) and Swissport (who manage the network of airports) are attracted to manage transport logistics facilities. KTZ and Lianyungang Port Company agreed to launch a joint venture. “It is necessary to carry out the project of extending the Lianyungang port, with the participation of KTZ, to create conditions for the transportation of Kazakh exports to South-Eastern Asia and for the consolidation of transit cargoes to the regions of Central and Southern Asia, Europe, and Caucasus,” explains a representative of KTZ Express JSC (a single centre providing transport and logistics services in the Republic of Kazakhstan) Nurzhan Alpyspekov. The design and estimate documentation for the construction of a terminal in the Lianyungang port will be negotiated with China in the first half of 2014, and works will start in the second half of 2014.
Also, KTZ reached an agreement with representatives of Transport and Logistics Complex “Sian” (China) about cooperation in the sector of freight transportation via Kazakhstan to countries in Central Asia. “At the initial stage, Chinese and Kazakh specialists will begin work to organise regular transportation from TLC “Sian” to Almaty with further distribution of fast moving consumer goods to Central Asia. In the future, we will analyse the opportunity to organise terminal handling and cargo distribution in the special economic zone “Khorgos – Eastern Gates”, they said in Kedentransservice JSC. The SEZ has a number of advantages: its geographical location at the junction of the East and the West, an off-dock terminal is an essential part of the transport zone, one-window principle, tax and customs privileges and preferences, etc. It is planned that in addition to transit transportation via Kazakhstan, a terminal handling service and goods reloading service on special rates will be provided to Chinese consignors. As a multimodal border station, Khorgos already dispatches cargo to Europe and Central Asia, warehouse storage and so distribution services are also available.
In the short-term prospect, a unique opportunity to organise weekly container shuttle trains destined for Europe will appear at the border of Kazakhstan and China. Taking into account the increasing annual volume of freight serviced between China and the Republic of Kazakhstan (17 million tons in 2012, the outlook for 2013 is 19 million tons), there will be a demand for this service, and it will be popular.
To attract transit cargo flows, KTZ is carrying out projects contributing to simplifying the process of organising international supplies of goods and re-directing cargo flows from sea lines to the trans-Kazakh route. A part of the cargo flow has been switched to the railway, particularly due to such trains as Chongqing – Duisburg and Chengdu – Lodz. In the first half of 2013, the number of container trains in Kazakhstan increased by 10%. New projects are constantly launched. At the end of September, for example, a container train with car components for a new car assembling plant for Peugeot in Kostanai was launched. Amid some decline in tariffs on container transportation via the Transsib and Mongolia, Kazakh companies are analysing the introduction of relevant measures by KTZ. Implementation of a single methods to calculate the tariff rate per 1 container-km with the introduction of special rates for container trains moving via Kazakhstan and then to the Transsib and the railways of Belarus as well as adjustment of special rates on backload is being discussed as a possible way out. There is an objective to double the transit freight flow via Kazakhstan to at least 50 million tons by 2020.  
All parties agree that success is possible only by acting jointly. It is important to use the advantages of every country and every transport mode. In the current economic climate, timely fulfillment of customers’ need for cargo transportation requires a full range of services in the sectors of transport forwarding, warehousing, customs, and informational logistics. ®
By Elena Ushkova

[~DETAIL_TEXT] =>

Successful Projects
Efficient usage of the potential of transit countries as the link between the East and the West is impossible without containerisation of railway cargo flows. The widespread use of containers fulfils the constantly growing needs of consignors, who want a high quality logistics process, speed, safety, cost effectiveness, and guarantees of the safety of freight.  
At present, the level of containerisation in Russia, Belarus, and Kazakhstan is approximately 4-5% of the total cargo flow, while in Western Europe it is about 35%. This gap negatively impacts on the development of logistics technologies in the Customs Union and the optimisation of transport expenses for customers.
The largest international projects for container block trains, which are being carried out, are those such as “Viking” (links the Baltic and the Black Sea regions), “Zubr” (a joint project of railways of Belarus, Latvia, Estonia, and Ukraine), “Mongolian Vector” (from Brest to Mongolia and Chine), “New Silk Road” (Chongqing - Duisburg), “Moskvich” (Duisburg - Moscow), “Mercury” (Klaipeda - Moscow), “Saule” or “Sun Train” (Chongqing (China) – Antwerp (Belgium) via Shyashtokai (Lithuania) and Klaipeda (Lithuania) – Gudogai – Ozinki (Russia) – Almaty (Kazakhstan)). Special attention should be paid to transportation of car components for car manufacturing corporations VW (Germany – the Czech Republic – Slovakia – Hungary – Poland – Belarus - Russia), Peugeot Citroen (France – Germany – Belarus - Russia), Ford (Duisburg - Chongqing), BMW (Leipzig - Shenyang), Skoda (the Czech Republic - Kazakhstan), KIA (Slovakia - Kazakhstan).
One of the most successful projects is the “Viking” train. In 10 years it gained a large client base due to combining opportunities for different transport modes, warehousing logistics services, and door-to-door cargo delivery without the necessity of reloading at gauge changes. All these allowed “Viking” to become a profitable solution on the route the Black Sea – the Baltic Sea and successfully compete with road transport. The train carries approximately 60,000 TEU per annum. More than 350,000 TEU has been transported by train since it was put into operation.
The “Mercury” container train carries 20-, 40-, and 45-foot universal and specialised containers on the route Klaipeda/Kaliningrad – Minsk – Moscow and back. Due to such advantages as the speed of delivery (it takes the train 48 hours to cover the 1,288km long Kaliningrad – Moscow section), on-time arrival at its destination point, simplified customs and border procedures, and guarantee of cargo safety, the train became a regular feature on the route Klaipeda – Minsk – Moscow in March 2013. The AAA Intermodal is responsible for forming the train and its departure from Klaipeda.
“Despite a high market capacity, there are difficulties with filling the trains,” says Sergey Kupreev, Director General of Belintertrans – Transport and Logistics Centre (BTLC). “Containers are often carried not at the rates of a container train, but at the rates of batch consignments.” In March – August 2013, the train made 7 journeys and transported 238 TEU. The most part of its cargo was foodstuffs, tiles, and other day-to-day goods. The train returned empty.
In the future, the container train is supposed to form simultaneously in Kaliningrad and Klaipeda, from where its sections will be delivered to the Lithuanian station Vaidotai (Vilnius) and joined there together in a full-fledged train. Then the train will travel to Minsk. The capacity of the “Mercury” can amount to 114 TEU if a part of cargo is transferred from road transport to railways. It is planned to make the train weekly and depart it on a timetabled day of the week, which will allow planning time for goods delivery and container turnover.
The “New Silk Road” container service was put into operation on the Chongqing – Duisburg route in 2011. The project was carried out as a joint venture between YuXinOu (Chongqing) Logistics company Ltd., established by RZD Logistics, Kaztransservice, DB Schenker Logistics, and China Railway International Multimodal Transport Сo., Ltd. (CRIMT). The service has proved its competitiveness. The time of transportation on the 10,769 km long route was 15 days, and later it was reduced to 12 days. This year the train departs twice a week. In the first half of 2013, 15 such trains carried 1,232 TEU. Another large project is the “Baltic-Transit” train on the route Hamburg – Riga – Ozinki – Galaba. In 2012, there were 105 container trains on the route, and 23 in 6 months of 2013.

A Priority Transit Route
“The development of the Transsib as the backbone for the Eurasian direction “the East – the West” is one of the priority objectives for Russia, especially amid the globalisation of the world economy and integrating processes, such as the creation of the Common Economic Space, Russia joining the WTO, and the extension of the European Union,” notes Vadim Morozov, First Vice President of RZD. As is already known, container transportation via the Trans-Siberian Mainline reduces cargo delivery time by 10-15 days in comparison with the trans-ocean route via the Suez Canal.
In 2012, the total international transportation volume of large- and medium containers via the Transsib amounted to 554,000 TEU, almost 20% up on 2011. There was a 17.5% increase in eight months in 2013. Despite significant growth rates, a little more than 1% of the total container freight flow between Western Europe and Asia is carried via Russia.
If the trend is overcome, and 600,000-800,000 transit containers are attracted to the Transsib, additional revenue for Russian transport companies could amount to $2 billion per annum. Obviously, these are the volumes and revenues we can get after the relevant conditions for the development of export-import and transit potential of the Transsib are created.
According to V. Morozov, for that, the Trans-Siberian route should be considered as a single trans-continental link between the countries of the Asian and the Pacific regions, the CIS, the Baltic States, and Europe. “In this sense, a lot of attention must be paid to the creation of a whole balanced railway infrastructure focused on the transport cooperation between countries,” he says.
A whole package of measures has been carried out by Russian Railways to develop the infrastructure in the RF: sections of the Transsib were electrified, bridges and tunnels were reconstructed, large marshalling yards and port stations were built and reconstructed. The RF Government adjusted the scheme of funding the modernisation of the Trans-Siberian and Baikal-Amur Mainlines till 2018. When these decisions are put into practice, it will remove bottle-necks and stimulate the further development of container transportation.
As for the development of the so-called western part of the international corridor, in particular the extension of the broad gauge to Vienna, according to different estimations, it will attract an additional 16-24 million tons of freight per annum by 2050. Meanwhile, in the eastern part of the international railway corridor (a railway section from the Tumangan station in Russia to the Rason port), the reconstruction of the railway section of the Khasan-Rason line was completed in September 2013. 
To attract the attention of leading transnational consignors to transportation on the Trans-Siberian route, it is planned to provide popular and competitive logistics services and products, particularly, the “door-to-door” service, development of optimum logistics for intermodal transportation, dispatch of regular container trains on schedule.
The work of RZD showed that the service of express transportation of container trains “Transsib in 7 Days” is very popular. Nowadays, there are about 10 such trains in motion daily. In the framework of the further enhancement of the technology of work, this service will be developed. The speed of trains is 1,200 km per day now, and by 2015 it is set to increase to 1,500 km per day.

International Cooperation
According to S. Kupreev, the major barriers preventing an increase in the share of railway container transportation to the EU and back via the CES member states are the lack of a unified adjusted tariff rate, insufficient quality of services, and a low transit speed, especially because of long idling time during customs procedures.
Step-by-step removal of bottle-necks, an intensive development of the cooperation between railway administrations and container operators in the near future will have a positive influence on transportation volumes. Therefore, there will be a need for state-of-the-art logistics terminals, especially at border crossing points, for servicing container trains in the shortest time possible. Using the advantages of the logistics of railways and motor transport, BTLC organises combined transportation services to the Customs Union, Western Europe, and the CIS with cargo delivery by container semi-trucks and sidelifters to the consignee’s warehouse, including customs registration, storage and complex servicing of imports, export, and transit freight. The use of semi-trucks allows loading and unloading of containers from railway flat wagons, semi-trucks and from land anywhere. No special equipment is needed for large-capacity containers.
Kazakhstan also improves its services actively. The main advantage of cargo transportation from China to Europe via Kazakhstan is cargo transportation at affordable prices and in a relatively short term. In line with attracting customers to new routes, NC Kazakhstan Temir Zholy JSC (KTZ) is engaged in developing the infrastructure of railways in the republic and freight terminals.
A multimodal operator is being launched by Kazakhstan Temir Zholy, to which transportation by all transport modes, port infrastructure, and the terminal network are transferred. International operators such as Dubai Port World (who manage the Aktau sea port and SEZ Khorgos – Eastern Gates JSC) and Swissport (who manage the network of airports) are attracted to manage transport logistics facilities. KTZ and Lianyungang Port Company agreed to launch a joint venture. “It is necessary to carry out the project of extending the Lianyungang port, with the participation of KTZ, to create conditions for the transportation of Kazakh exports to South-Eastern Asia and for the consolidation of transit cargoes to the regions of Central and Southern Asia, Europe, and Caucasus,” explains a representative of KTZ Express JSC (a single centre providing transport and logistics services in the Republic of Kazakhstan) Nurzhan Alpyspekov. The design and estimate documentation for the construction of a terminal in the Lianyungang port will be negotiated with China in the first half of 2014, and works will start in the second half of 2014.
Also, KTZ reached an agreement with representatives of Transport and Logistics Complex “Sian” (China) about cooperation in the sector of freight transportation via Kazakhstan to countries in Central Asia. “At the initial stage, Chinese and Kazakh specialists will begin work to organise regular transportation from TLC “Sian” to Almaty with further distribution of fast moving consumer goods to Central Asia. In the future, we will analyse the opportunity to organise terminal handling and cargo distribution in the special economic zone “Khorgos – Eastern Gates”, they said in Kedentransservice JSC. The SEZ has a number of advantages: its geographical location at the junction of the East and the West, an off-dock terminal is an essential part of the transport zone, one-window principle, tax and customs privileges and preferences, etc. It is planned that in addition to transit transportation via Kazakhstan, a terminal handling service and goods reloading service on special rates will be provided to Chinese consignors. As a multimodal border station, Khorgos already dispatches cargo to Europe and Central Asia, warehouse storage and so distribution services are also available.
In the short-term prospect, a unique opportunity to organise weekly container shuttle trains destined for Europe will appear at the border of Kazakhstan and China. Taking into account the increasing annual volume of freight serviced between China and the Republic of Kazakhstan (17 million tons in 2012, the outlook for 2013 is 19 million tons), there will be a demand for this service, and it will be popular.
To attract transit cargo flows, KTZ is carrying out projects contributing to simplifying the process of organising international supplies of goods and re-directing cargo flows from sea lines to the trans-Kazakh route. A part of the cargo flow has been switched to the railway, particularly due to such trains as Chongqing – Duisburg and Chengdu – Lodz. In the first half of 2013, the number of container trains in Kazakhstan increased by 10%. New projects are constantly launched. At the end of September, for example, a container train with car components for a new car assembling plant for Peugeot in Kostanai was launched. Amid some decline in tariffs on container transportation via the Transsib and Mongolia, Kazakh companies are analysing the introduction of relevant measures by KTZ. Implementation of a single methods to calculate the tariff rate per 1 container-km with the introduction of special rates for container trains moving via Kazakhstan and then to the Transsib and the railways of Belarus as well as adjustment of special rates on backload is being discussed as a possible way out. There is an objective to double the transit freight flow via Kazakhstan to at least 50 million tons by 2020.  
All parties agree that success is possible only by acting jointly. It is important to use the advantages of every country and every transport mode. In the current economic climate, timely fulfillment of customers’ need for cargo transportation requires a full range of services in the sectors of transport forwarding, warehousing, customs, and informational logistics. ®
By Elena Ushkova

[DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>

Transportation of freight by express container trains continues to develop on the “1520 space”, but its potential is not being fully realised. What are the most successful projects, and what do member states of the Customs Union do to increase the competitiveness of their transit routes?

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Transportation of freight by express container trains continues to develop on the “1520 space”, but its potential is not being fully realised. What are the most successful projects, and what do member states of the Customs Union do to increase the competitiveness of their transit routes?

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РЖД-Партнер

News

Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 

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Global Ports Buys Main Competitor to Become Dominant Force On Market
Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 
The enlarged group has approximately 1.12 million TEU of available capacity enabling it to accommodate throughput growth while reducing the group’s capital expenditure for the next few years. The combination of NCC and Global Ports will enable shipping line customers to benefit from network savings through improved call rationalization, improved berth utilization and enhanced productivity.
The NCC’s key assets are the First Container Terminal in St. Petersburg and the Ust-Luga Container Terminal in the port of Ust-Luga neighbouring to St. Petersburg.  Their annual handling capacity is about 1.7 million TEUs, and this can be significantly expanded in response to market demand.
As Nikita Mishin, chairman of the board of Global Ports, commented, by acquiring NCC and bringing the companies together, Global Ports confirmed its market leadership and created a company with an enviable position in the high-growth Russian container market. NCC is not only considered to be one of the largest container terminal operators in Russia and Eastern Europe, it is also a highly profitable one with a track record of more than 10 years of excellent performance.
Analysts say that even after the deal, Global Ports is not in a position to be able to manipulate the market in Russia with a share of 35%. And even with a 72% share in St. Petersburg the company’s dominating role will not influence the level of competition. At the same time the optimization of using port facilities may enhance Russia’s competitiveness in the Baltic.

RZD to Build a Network of Logistics Complexes to Enter 3PL Market
RZD is implementing a series of projects to transform itself into a supply chain management expert to meet the needs of shippers interested in the full range of logistics services. One of the biggest initiatives here is the construction of a network of transport and logistics centres (TLC).
The first stage of TLC can attract up to 100-120 million tons of additional cargo per annum to the railways, said the company. It is believed that the development of such logistics complexes in Kaliningrad, Yekaterinburg, Volgograd, etc. is as important as the terminal and logistics infrastructure of the Moscow transport hub, particularly such TLCs as “Bely Rast”, Stupino, Mozhaisk, and the marshalling yards at Kuntsevo-2 and Moscow-Yaroslavskaya railway stations. As a whole, the first stage includes ten complexes with further expansion planned.
The complexes are scheduled to enter service in 2014-2015, but industry experts express concerns that the timetable might slip due to the poor economic outlook. The complexes will be providing the full range of logistics services now available at specialized warehouses for transport and logistics companies. RZD’s facilities will enable it to handle rail cargo too. This type of service is in high demand today, but still not nationally available.
The project reflects RZD’s strategy to become a 3PL provider capable of handling any customer’s needs. As a survey conducted by The RZD-Partner Publishing House in 2012-2013 reveals, shippers often face the need to buy some services beyond traditional rail transportation from a factory to a customer’s yard. And there are offers of 3PL from rail operators. But it is often the case that shippers feel the price is too high and prefer doing supply chain management themselves. The same situation is often seen regarding the cooperation between shippers and logistics companies. This market picture obviously assumes there is a  gap in the market, so it is a logical solution from RZD available in every part of the country to cover existing demand.

RZD Offers to Subsidise Leasing of Locomotives

RZD takes all measures necessary to eliminate its lack of locomotives, and is spending additional funds to buy more machines than ever.
In 2013, RZD acquired 803 locomotives marking a post-Soviet era record. In 2003, when the Ministry of Railways was transformed into an open joint stock company, Russian Railways, that figure went down to just 55 items. Over the next year, 2014-2015, RZD is going to buy more than 2.000 locomotives, replacing old machines from the Soviet period. The figure was stated by the company representative in December.
At the same time Vladimir Yakunin, President of RZD, said at the 11th international conference “Market of Transport Services: Cooperation and Partnership” that it was necessary to consider new ways to finance improvements in the company’s locomotive garage. “If the state subsidises leasing payments, it will contribute to the renewal of the locomotive fleet”, he said. This model has been already tested in the aviation sector. Additionally, two pilot projects for financing leasing of locomotives have been carried out. “Our cashflow is not enough to pay for loans. If the government guarantees to cover our leasing payments, we can renew the locomotive fleet quickly,” added the RZD President.
While the reaction of state authorities is still unknown, RZD is taking steps to improve the maintenance of the existing fleet and to enhance efficiency and reduce costs. In 2013, maintenance and repair functions were outsourced to OOO “TMH-Service”, a part of national locomotive producer Transmashholding. The area of competence of TMH Service is full maintenance of locomotives and their repair, the income of the company depends on how much work every loco does. In the case of downtime of a machine, TMH gets no money thus it is crucially interested in a constant flow of work. This has already resulted in the repair time for locos under TMH Service’s control being reduced two to fourfold depending on the type of operation.

RZD Faces Slow Economy, Fall in Loading Volumes, Suburban Issues
Vladimir Yakunin, President of RZD, summed up the operational performance of the railway network in January-November 2013, which reflects an approximate result of 2013 as a whole.
“The loading plan was carried out in November. The average daily loading volume reached almost 3.45 million tons, which is 2.6 % lower than in November 2012,” said Mr Yakunin. “Loading in the 11 months from January-November 2013 decreased by 3.1 % compared to the same period last year.”November maintained the positive trend in the block speed of freight routes, which rose to 521 km / day, an increase of 5.3% on October 2013.
“We must try to increase these figures yet further by ensuring continuity and stability in the transportation process, as well as by improving cooperation with maritime transport,” said Vladimir Yakunin. “The work of the railways around the ports in the processing chain affects the adjacent rail network and so on right back to the origination of cargo traffic zones.”
Summarising the performance of the passenger business by the RZD holding in the 11 months of the year so far, the President said that passenger turnover on the infrastructure of Russian Railways had decreased by 4.2% compared to the same period in 2012, with long-distance passenger traffic falling by 6.4%, although suburban commuter traffic increased by 3.8%.
The most difficult question is currently the role of suburban commuter rail transport in the socio-economic development of Russia’s regions.
“As a result of the subsidised fares paid by the people of the Russian Federation, suburban railway companies expect a loss of 9 billion roubles in 2013, which will increase the accumulated debt of these carriers to RZD”, said Mr Yakunin. “The Company will be forced to find its own resources to maintain, repair and operate the rolling stock and pay wages to the locomotive crews.”
Total losses to the RZD holding from commuter services in 2013 alone are expected to be about 22 billion roubles, including losses in Russia’s regions of about 9 billion roubles.

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Global Ports Buys Main Competitor to Become Dominant Force On Market
Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 
The enlarged group has approximately 1.12 million TEU of available capacity enabling it to accommodate throughput growth while reducing the group’s capital expenditure for the next few years. The combination of NCC and Global Ports will enable shipping line customers to benefit from network savings through improved call rationalization, improved berth utilization and enhanced productivity.
The NCC’s key assets are the First Container Terminal in St. Petersburg and the Ust-Luga Container Terminal in the port of Ust-Luga neighbouring to St. Petersburg.  Their annual handling capacity is about 1.7 million TEUs, and this can be significantly expanded in response to market demand.
As Nikita Mishin, chairman of the board of Global Ports, commented, by acquiring NCC and bringing the companies together, Global Ports confirmed its market leadership and created a company with an enviable position in the high-growth Russian container market. NCC is not only considered to be one of the largest container terminal operators in Russia and Eastern Europe, it is also a highly profitable one with a track record of more than 10 years of excellent performance.
Analysts say that even after the deal, Global Ports is not in a position to be able to manipulate the market in Russia with a share of 35%. And even with a 72% share in St. Petersburg the company’s dominating role will not influence the level of competition. At the same time the optimization of using port facilities may enhance Russia’s competitiveness in the Baltic.

RZD to Build a Network of Logistics Complexes to Enter 3PL Market
RZD is implementing a series of projects to transform itself into a supply chain management expert to meet the needs of shippers interested in the full range of logistics services. One of the biggest initiatives here is the construction of a network of transport and logistics centres (TLC).
The first stage of TLC can attract up to 100-120 million tons of additional cargo per annum to the railways, said the company. It is believed that the development of such logistics complexes in Kaliningrad, Yekaterinburg, Volgograd, etc. is as important as the terminal and logistics infrastructure of the Moscow transport hub, particularly such TLCs as “Bely Rast”, Stupino, Mozhaisk, and the marshalling yards at Kuntsevo-2 and Moscow-Yaroslavskaya railway stations. As a whole, the first stage includes ten complexes with further expansion planned.
The complexes are scheduled to enter service in 2014-2015, but industry experts express concerns that the timetable might slip due to the poor economic outlook. The complexes will be providing the full range of logistics services now available at specialized warehouses for transport and logistics companies. RZD’s facilities will enable it to handle rail cargo too. This type of service is in high demand today, but still not nationally available.
The project reflects RZD’s strategy to become a 3PL provider capable of handling any customer’s needs. As a survey conducted by The RZD-Partner Publishing House in 2012-2013 reveals, shippers often face the need to buy some services beyond traditional rail transportation from a factory to a customer’s yard. And there are offers of 3PL from rail operators. But it is often the case that shippers feel the price is too high and prefer doing supply chain management themselves. The same situation is often seen regarding the cooperation between shippers and logistics companies. This market picture obviously assumes there is a  gap in the market, so it is a logical solution from RZD available in every part of the country to cover existing demand.

RZD Offers to Subsidise Leasing of Locomotives

RZD takes all measures necessary to eliminate its lack of locomotives, and is spending additional funds to buy more machines than ever.
In 2013, RZD acquired 803 locomotives marking a post-Soviet era record. In 2003, when the Ministry of Railways was transformed into an open joint stock company, Russian Railways, that figure went down to just 55 items. Over the next year, 2014-2015, RZD is going to buy more than 2.000 locomotives, replacing old machines from the Soviet period. The figure was stated by the company representative in December.
At the same time Vladimir Yakunin, President of RZD, said at the 11th international conference “Market of Transport Services: Cooperation and Partnership” that it was necessary to consider new ways to finance improvements in the company’s locomotive garage. “If the state subsidises leasing payments, it will contribute to the renewal of the locomotive fleet”, he said. This model has been already tested in the aviation sector. Additionally, two pilot projects for financing leasing of locomotives have been carried out. “Our cashflow is not enough to pay for loans. If the government guarantees to cover our leasing payments, we can renew the locomotive fleet quickly,” added the RZD President.
While the reaction of state authorities is still unknown, RZD is taking steps to improve the maintenance of the existing fleet and to enhance efficiency and reduce costs. In 2013, maintenance and repair functions were outsourced to OOO “TMH-Service”, a part of national locomotive producer Transmashholding. The area of competence of TMH Service is full maintenance of locomotives and their repair, the income of the company depends on how much work every loco does. In the case of downtime of a machine, TMH gets no money thus it is crucially interested in a constant flow of work. This has already resulted in the repair time for locos under TMH Service’s control being reduced two to fourfold depending on the type of operation.

RZD Faces Slow Economy, Fall in Loading Volumes, Suburban Issues
Vladimir Yakunin, President of RZD, summed up the operational performance of the railway network in January-November 2013, which reflects an approximate result of 2013 as a whole.
“The loading plan was carried out in November. The average daily loading volume reached almost 3.45 million tons, which is 2.6 % lower than in November 2012,” said Mr Yakunin. “Loading in the 11 months from January-November 2013 decreased by 3.1 % compared to the same period last year.”November maintained the positive trend in the block speed of freight routes, which rose to 521 km / day, an increase of 5.3% on October 2013.
“We must try to increase these figures yet further by ensuring continuity and stability in the transportation process, as well as by improving cooperation with maritime transport,” said Vladimir Yakunin. “The work of the railways around the ports in the processing chain affects the adjacent rail network and so on right back to the origination of cargo traffic zones.”
Summarising the performance of the passenger business by the RZD holding in the 11 months of the year so far, the President said that passenger turnover on the infrastructure of Russian Railways had decreased by 4.2% compared to the same period in 2012, with long-distance passenger traffic falling by 6.4%, although suburban commuter traffic increased by 3.8%.
The most difficult question is currently the role of suburban commuter rail transport in the socio-economic development of Russia’s regions.
“As a result of the subsidised fares paid by the people of the Russian Federation, suburban railway companies expect a loss of 9 billion roubles in 2013, which will increase the accumulated debt of these carriers to RZD”, said Mr Yakunin. “The Company will be forced to find its own resources to maintain, repair and operate the rolling stock and pay wages to the locomotive crews.”
Total losses to the RZD holding from commuter services in 2013 alone are expected to be about 22 billion roubles, including losses in Russia’s regions of about 9 billion roubles.

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Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 

[~PREVIEW_TEXT] =>

Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 

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Global Ports Buys Main Competitor to Become Dominant Force On Market
Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 
The enlarged group has approximately 1.12 million TEU of available capacity enabling it to accommodate throughput growth while reducing the group’s capital expenditure for the next few years. The combination of NCC and Global Ports will enable shipping line customers to benefit from network savings through improved call rationalization, improved berth utilization and enhanced productivity.
The NCC’s key assets are the First Container Terminal in St. Petersburg and the Ust-Luga Container Terminal in the port of Ust-Luga neighbouring to St. Petersburg.  Their annual handling capacity is about 1.7 million TEUs, and this can be significantly expanded in response to market demand.
As Nikita Mishin, chairman of the board of Global Ports, commented, by acquiring NCC and bringing the companies together, Global Ports confirmed its market leadership and created a company with an enviable position in the high-growth Russian container market. NCC is not only considered to be one of the largest container terminal operators in Russia and Eastern Europe, it is also a highly profitable one with a track record of more than 10 years of excellent performance.
Analysts say that even after the deal, Global Ports is not in a position to be able to manipulate the market in Russia with a share of 35%. And even with a 72% share in St. Petersburg the company’s dominating role will not influence the level of competition. At the same time the optimization of using port facilities may enhance Russia’s competitiveness in the Baltic.

RZD to Build a Network of Logistics Complexes to Enter 3PL Market
RZD is implementing a series of projects to transform itself into a supply chain management expert to meet the needs of shippers interested in the full range of logistics services. One of the biggest initiatives here is the construction of a network of transport and logistics centres (TLC).
The first stage of TLC can attract up to 100-120 million tons of additional cargo per annum to the railways, said the company. It is believed that the development of such logistics complexes in Kaliningrad, Yekaterinburg, Volgograd, etc. is as important as the terminal and logistics infrastructure of the Moscow transport hub, particularly such TLCs as “Bely Rast”, Stupino, Mozhaisk, and the marshalling yards at Kuntsevo-2 and Moscow-Yaroslavskaya railway stations. As a whole, the first stage includes ten complexes with further expansion planned.
The complexes are scheduled to enter service in 2014-2015, but industry experts express concerns that the timetable might slip due to the poor economic outlook. The complexes will be providing the full range of logistics services now available at specialized warehouses for transport and logistics companies. RZD’s facilities will enable it to handle rail cargo too. This type of service is in high demand today, but still not nationally available.
The project reflects RZD’s strategy to become a 3PL provider capable of handling any customer’s needs. As a survey conducted by The RZD-Partner Publishing House in 2012-2013 reveals, shippers often face the need to buy some services beyond traditional rail transportation from a factory to a customer’s yard. And there are offers of 3PL from rail operators. But it is often the case that shippers feel the price is too high and prefer doing supply chain management themselves. The same situation is often seen regarding the cooperation between shippers and logistics companies. This market picture obviously assumes there is a  gap in the market, so it is a logical solution from RZD available in every part of the country to cover existing demand.

RZD Offers to Subsidise Leasing of Locomotives

RZD takes all measures necessary to eliminate its lack of locomotives, and is spending additional funds to buy more machines than ever.
In 2013, RZD acquired 803 locomotives marking a post-Soviet era record. In 2003, when the Ministry of Railways was transformed into an open joint stock company, Russian Railways, that figure went down to just 55 items. Over the next year, 2014-2015, RZD is going to buy more than 2.000 locomotives, replacing old machines from the Soviet period. The figure was stated by the company representative in December.
At the same time Vladimir Yakunin, President of RZD, said at the 11th international conference “Market of Transport Services: Cooperation and Partnership” that it was necessary to consider new ways to finance improvements in the company’s locomotive garage. “If the state subsidises leasing payments, it will contribute to the renewal of the locomotive fleet”, he said. This model has been already tested in the aviation sector. Additionally, two pilot projects for financing leasing of locomotives have been carried out. “Our cashflow is not enough to pay for loans. If the government guarantees to cover our leasing payments, we can renew the locomotive fleet quickly,” added the RZD President.
While the reaction of state authorities is still unknown, RZD is taking steps to improve the maintenance of the existing fleet and to enhance efficiency and reduce costs. In 2013, maintenance and repair functions were outsourced to OOO “TMH-Service”, a part of national locomotive producer Transmashholding. The area of competence of TMH Service is full maintenance of locomotives and their repair, the income of the company depends on how much work every loco does. In the case of downtime of a machine, TMH gets no money thus it is crucially interested in a constant flow of work. This has already resulted in the repair time for locos under TMH Service’s control being reduced two to fourfold depending on the type of operation.

RZD Faces Slow Economy, Fall in Loading Volumes, Suburban Issues
Vladimir Yakunin, President of RZD, summed up the operational performance of the railway network in January-November 2013, which reflects an approximate result of 2013 as a whole.
“The loading plan was carried out in November. The average daily loading volume reached almost 3.45 million tons, which is 2.6 % lower than in November 2012,” said Mr Yakunin. “Loading in the 11 months from January-November 2013 decreased by 3.1 % compared to the same period last year.”November maintained the positive trend in the block speed of freight routes, which rose to 521 km / day, an increase of 5.3% on October 2013.
“We must try to increase these figures yet further by ensuring continuity and stability in the transportation process, as well as by improving cooperation with maritime transport,” said Vladimir Yakunin. “The work of the railways around the ports in the processing chain affects the adjacent rail network and so on right back to the origination of cargo traffic zones.”
Summarising the performance of the passenger business by the RZD holding in the 11 months of the year so far, the President said that passenger turnover on the infrastructure of Russian Railways had decreased by 4.2% compared to the same period in 2012, with long-distance passenger traffic falling by 6.4%, although suburban commuter traffic increased by 3.8%.
The most difficult question is currently the role of suburban commuter rail transport in the socio-economic development of Russia’s regions.
“As a result of the subsidised fares paid by the people of the Russian Federation, suburban railway companies expect a loss of 9 billion roubles in 2013, which will increase the accumulated debt of these carriers to RZD”, said Mr Yakunin. “The Company will be forced to find its own resources to maintain, repair and operate the rolling stock and pay wages to the locomotive crews.”
Total losses to the RZD holding from commuter services in 2013 alone are expected to be about 22 billion roubles, including losses in Russia’s regions of about 9 billion roubles.

[~DETAIL_TEXT] =>

Global Ports Buys Main Competitor to Become Dominant Force On Market
Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 
The enlarged group has approximately 1.12 million TEU of available capacity enabling it to accommodate throughput growth while reducing the group’s capital expenditure for the next few years. The combination of NCC and Global Ports will enable shipping line customers to benefit from network savings through improved call rationalization, improved berth utilization and enhanced productivity.
The NCC’s key assets are the First Container Terminal in St. Petersburg and the Ust-Luga Container Terminal in the port of Ust-Luga neighbouring to St. Petersburg.  Their annual handling capacity is about 1.7 million TEUs, and this can be significantly expanded in response to market demand.
As Nikita Mishin, chairman of the board of Global Ports, commented, by acquiring NCC and bringing the companies together, Global Ports confirmed its market leadership and created a company with an enviable position in the high-growth Russian container market. NCC is not only considered to be one of the largest container terminal operators in Russia and Eastern Europe, it is also a highly profitable one with a track record of more than 10 years of excellent performance.
Analysts say that even after the deal, Global Ports is not in a position to be able to manipulate the market in Russia with a share of 35%. And even with a 72% share in St. Petersburg the company’s dominating role will not influence the level of competition. At the same time the optimization of using port facilities may enhance Russia’s competitiveness in the Baltic.

RZD to Build a Network of Logistics Complexes to Enter 3PL Market
RZD is implementing a series of projects to transform itself into a supply chain management expert to meet the needs of shippers interested in the full range of logistics services. One of the biggest initiatives here is the construction of a network of transport and logistics centres (TLC).
The first stage of TLC can attract up to 100-120 million tons of additional cargo per annum to the railways, said the company. It is believed that the development of such logistics complexes in Kaliningrad, Yekaterinburg, Volgograd, etc. is as important as the terminal and logistics infrastructure of the Moscow transport hub, particularly such TLCs as “Bely Rast”, Stupino, Mozhaisk, and the marshalling yards at Kuntsevo-2 and Moscow-Yaroslavskaya railway stations. As a whole, the first stage includes ten complexes with further expansion planned.
The complexes are scheduled to enter service in 2014-2015, but industry experts express concerns that the timetable might slip due to the poor economic outlook. The complexes will be providing the full range of logistics services now available at specialized warehouses for transport and logistics companies. RZD’s facilities will enable it to handle rail cargo too. This type of service is in high demand today, but still not nationally available.
The project reflects RZD’s strategy to become a 3PL provider capable of handling any customer’s needs. As a survey conducted by The RZD-Partner Publishing House in 2012-2013 reveals, shippers often face the need to buy some services beyond traditional rail transportation from a factory to a customer’s yard. And there are offers of 3PL from rail operators. But it is often the case that shippers feel the price is too high and prefer doing supply chain management themselves. The same situation is often seen regarding the cooperation between shippers and logistics companies. This market picture obviously assumes there is a  gap in the market, so it is a logical solution from RZD available in every part of the country to cover existing demand.

RZD Offers to Subsidise Leasing of Locomotives

RZD takes all measures necessary to eliminate its lack of locomotives, and is spending additional funds to buy more machines than ever.
In 2013, RZD acquired 803 locomotives marking a post-Soviet era record. In 2003, when the Ministry of Railways was transformed into an open joint stock company, Russian Railways, that figure went down to just 55 items. Over the next year, 2014-2015, RZD is going to buy more than 2.000 locomotives, replacing old machines from the Soviet period. The figure was stated by the company representative in December.
At the same time Vladimir Yakunin, President of RZD, said at the 11th international conference “Market of Transport Services: Cooperation and Partnership” that it was necessary to consider new ways to finance improvements in the company’s locomotive garage. “If the state subsidises leasing payments, it will contribute to the renewal of the locomotive fleet”, he said. This model has been already tested in the aviation sector. Additionally, two pilot projects for financing leasing of locomotives have been carried out. “Our cashflow is not enough to pay for loans. If the government guarantees to cover our leasing payments, we can renew the locomotive fleet quickly,” added the RZD President.
While the reaction of state authorities is still unknown, RZD is taking steps to improve the maintenance of the existing fleet and to enhance efficiency and reduce costs. In 2013, maintenance and repair functions were outsourced to OOO “TMH-Service”, a part of national locomotive producer Transmashholding. The area of competence of TMH Service is full maintenance of locomotives and their repair, the income of the company depends on how much work every loco does. In the case of downtime of a machine, TMH gets no money thus it is crucially interested in a constant flow of work. This has already resulted in the repair time for locos under TMH Service’s control being reduced two to fourfold depending on the type of operation.

RZD Faces Slow Economy, Fall in Loading Volumes, Suburban Issues
Vladimir Yakunin, President of RZD, summed up the operational performance of the railway network in January-November 2013, which reflects an approximate result of 2013 as a whole.
“The loading plan was carried out in November. The average daily loading volume reached almost 3.45 million tons, which is 2.6 % lower than in November 2012,” said Mr Yakunin. “Loading in the 11 months from January-November 2013 decreased by 3.1 % compared to the same period last year.”November maintained the positive trend in the block speed of freight routes, which rose to 521 km / day, an increase of 5.3% on October 2013.
“We must try to increase these figures yet further by ensuring continuity and stability in the transportation process, as well as by improving cooperation with maritime transport,” said Vladimir Yakunin. “The work of the railways around the ports in the processing chain affects the adjacent rail network and so on right back to the origination of cargo traffic zones.”
Summarising the performance of the passenger business by the RZD holding in the 11 months of the year so far, the President said that passenger turnover on the infrastructure of Russian Railways had decreased by 4.2% compared to the same period in 2012, with long-distance passenger traffic falling by 6.4%, although suburban commuter traffic increased by 3.8%.
The most difficult question is currently the role of suburban commuter rail transport in the socio-economic development of Russia’s regions.
“As a result of the subsidised fares paid by the people of the Russian Federation, suburban railway companies expect a loss of 9 billion roubles in 2013, which will increase the accumulated debt of these carriers to RZD”, said Mr Yakunin. “The Company will be forced to find its own resources to maintain, repair and operate the rolling stock and pay wages to the locomotive crews.”
Total losses to the RZD holding from commuter services in 2013 alone are expected to be about 22 billion roubles, including losses in Russia’s regions of about 9 billion roubles.

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Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 

[~PREVIEW_TEXT] =>

Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports. 
The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. 

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=> [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => Y [VERSION] => 2 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Выпуск [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => 94702 [PROPERTY_VALUE_ID] => 96781:93 [DESCRIPTION] => [~VALUE] => 94702 [~DESCRIPTION] => ) [BLOG_POST_ID] => Array ( [ID] => 94 [IBLOCK_ID] => 25 [NAME] => ID поста блога для комментариев [ACTIVE] => Y [SORT] => 500 [CODE] => BLOG_POST_ID [DEFAULT_VALUE] => [PROPERTY_TYPE] => N [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => L [MULTIPLE] => N [XML_ID] => [FILE_TYPE] => [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 1 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => ID поста блога для комментариев [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => 96781:94 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) [BLOG_COMMENTS_CNT] => Array ( [ID] => 95 [IBLOCK_ID] => 25 [NAME] => Количество комментариев [ACTIVE] => Y [SORT] => 500 [CODE] => BLOG_COMMENTS_CNT [DEFAULT_VALUE] => [PROPERTY_TYPE] => N [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => L [MULTIPLE] => N [XML_ID] => [FILE_TYPE] => [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 1 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Количество комментариев [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => 96781:95 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) [MORE_PHOTO] => Array ( [ID] => 98 [IBLOCK_ID] => 25 [NAME] => Дополнительные фотографии [ACTIVE] => Y [SORT] => 500 [CODE] => MORE_PHOTO [DEFAULT_VALUE] => [PROPERTY_TYPE] => F [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => L [MULTIPLE] => Y [XML_ID] => [FILE_TYPE] => jpg, gif, bmp, png, jpeg [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 2 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Дополнительные фотографии [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) [PUBLIC_ACCESS] => Array ( [ID] => 110 [IBLOCK_ID] => 25 [NAME] => Открытый доступ [ACTIVE] => Y [SORT] => 500 [CODE] => PUBLIC_ACCESS [DEFAULT_VALUE] => [PROPERTY_TYPE] => L [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => C [MULTIPLE] => N [XML_ID] => [FILE_TYPE] => [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 2 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Открытый доступ [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => 96781:110 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => [VALUE_ENUM_ID] => ) [ATTACHED_PDF] => Array ( [ID] => 324 [IBLOCK_ID] => 25 [NAME] => Прикрепленный PDF [ACTIVE] => Y [SORT] => 500 [CODE] => ATTACHED_PDF [DEFAULT_VALUE] => [PROPERTY_TYPE] => F [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => L [MULTIPLE] => N [XML_ID] => [FILE_TYPE] => pdf [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 2 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Прикрепленный PDF [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => 96781:324 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) ) [DISPLAY_PROPERTIES] => Array ( ) [IPROPERTY_VALUES] => Array ( [SECTION_META_TITLE] => News [SECTION_META_KEYWORDS] => news [SECTION_META_DESCRIPTION] => <p>Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports.  <br /> The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. </p> [ELEMENT_META_TITLE] => News [ELEMENT_META_KEYWORDS] => news [ELEMENT_META_DESCRIPTION] => <p>Global Ports Investments PLC acquired 100% of the second largest container terminals operator in Russia for $291 million and 18% of the enlarged share capital of Global Ports.  <br /> The deal strengthens the company’s position in the growing Russian container market and provides potential for greater operational efficiency through improved terminal network management and a reduction in overhead costs as well as the centralization of support functions, said Global Ports in a press-release. </p> [SECTION_PICTURE_FILE_ALT] => News [SECTION_PICTURE_FILE_TITLE] => News [SECTION_DETAIL_PICTURE_FILE_ALT] => News [SECTION_DETAIL_PICTURE_FILE_TITLE] => News [ELEMENT_PREVIEW_PICTURE_FILE_ALT] => News [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => News [ELEMENT_DETAIL_PICTURE_FILE_ALT] => News [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => News ) )



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