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Telegram of OAO RZD № ЦКПФР-218 from November 3, 2005

As of January 1, 2006, the VAT rate for import freight transportation by railway amounts to 18%.

Under the Federal law № 119-ФЗ "On amendments to Chapter 21, Part 2 of the Tax Code of the Russian Federation and on annihilation of some statements in the acts of the Russian Federation legislation about taxes and dues" from July 22, 2005, which implements amendments and supplements to Paragraph 1, Article 164 of the Tax Code of the Russian Federation, as of 00.00 a.m. January 1, 2006, the VAT rate for import freight transportation to the Russian Federation by railway amounts to 18%. This includes such services as freight transportation and freight forwarding organization; transportation, loading and handling of goods imported into the Russian Federation and other similar services.

The time  mentioned is to be recorded at the border check-points and port railway stations from which import cargo is dispatched.

Give instructions to employees in charge. Inform consignors, consignees, and forwarding organizations.



On OAO RZD's registration of a transit declaration at the entrance port railway stationsfor domestic and international customs transit. Decree № 1386 r by OAO RZD from August 18, 2005

To improve services provided to consignees and forwarding companies, to fasten freight transportation and OAO RZD's transport means, based on Items 80, 81 and 169 of the Customs Code of the Russian Federation:

1. As of October 1, 2005, at the entrance port railway stations, registration of the transit declarations on behalf of OAO RZD is provided by the customs brokers holding agent contracts with OAO RZD for providing services of registering transit declarations for domestic customs transit and international customs transit, according to the list in the enclosure (hereafter referred to as "customs brokers").

2. The following order of transportation documents registration and of transit declaration at the port railway stations applies:

a) a customs broker, based on the data, mentioned in the transportation and shipping documentation provided by a consignor, a forwarder or another person (a forwarder), registers officially a transit declaration, which, together with the other documents required, is passed to the customs to be licensed for domestic or international transit with all the notes filled in;

being licensed for domestic or international customs transit and having controlled that there are all the necessary stamps and notes set by the customs in the transit declaration and in the transportation documents for the freight, the customs broker gives the documents to the forwarder for further cargo clearance; 

the port railway station, when taking the freight to be transported, mentions the due for transit declaration registration (roubles) and marks the goods as "Due for Transit Declaration in accordance with OAO RZD's Decree" from ___ №___ ; the code of a customs broker is also required:

import freight - in the transport railway invoice and in the rail register of direct railway communication (forms ГУ-27 and ГУ-29), in the "Tariff notes" column;

transit freight - in the additional copy of rail register in one of the issues 55-58, and freight transportation to Finland - in the transportation document of Soviet-Finnish communication Issue 54 or 55 or 59. 

b) at the port railway, when registering transportation documents for import freight using automatic systems, the due of transit declaration registration is implemented. The code of payment is 05 "Due for Transit Declaration Registration"; the code of a customs broker is also to be named;

the dues for transit declaration registration, as set in the transportation documents on import freight, are paid to port railways in the correspondent reference parts of ФДУ-5 form, and are registered in the common Code of Income of ФДУ-5 form (issue "Additional Dues", line "including dues for transit declaration registration") for Zheldorraschet, Transcontainer, and Refservice;

when the freight is delivered, the dues for transit declaration registration are calculated if necessary;

c) registration of dues for transit declaration registration for transit freight transportation via border railway stations and registration of transportation documents for transit freight transportation, registration of the cost for transportation of import freight carried to the subsidiaries of OAO RZD, as well as OAO RZD affiliates' reports about services provided, are realized according to the order implemented by Decree №85 p. of OAO RZD from January 26, 2005.

3. The Head of Customs-Broker Activities Department A.Kakhdze is in charge of the Decree implementation.

S.Kozyrev

Vice-president of OAO RZD



Enclosure to Decree № 1386 r by OAO RZD from August 18, 2005

List of customs brokers who have concluded agent contracts with OAO RZD for providing services of registering transit declarations at the entrance port railway stations

1. DALK JSC (customs broker code 03), in accordance with additional agreement №2 from August 15, 2005 to contract № 1617 from December 30, 2004 between OAO RZD and DALK JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Novorossiysk 521001 (exp.) of the Severo-Kavkazskaya Railway;

Temryuk 527807 (exp.) of the Severo-Kavkazskaya Railway;

Tuapse 533102 (exp.) of the Severo-Kavkazskaya Railway;

Avtovo 035601 (exp.) of the October Railway;

New Port 035902 (exp.) of the October Railway.

2. Rostek-DV-Service JSC (customs broker code 04), in accordance with additional agreement № 2 from August 15, 2005 to contract № 1624 from December 31, 2004 between OAO RZD and Rostek-DV-Service JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway;

Nakhodka 984700 (exp.), 984803 (exp. of coal) of the Far-Eastern Railway.

3. Rostek-Primorye CJSC (customs broker code 05), in accordance with agreement № 659 from August 15, 2005 between OAO RZD and Rostek-Primorye CJSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Vladivostok 980200 (exp.) of the Far-Eastern Railway;

Mys Churkin 980906 (exp.) of the Far-Eastern Railway;

Gaidamak 980501 (exp.) of the Far-Eastern Railway;

Pervaya Rechka 981203 (exp.) of the Far-Eastern Railway.

4. Trans-Business Expedition JSC (customs broker code 06), in accordance with agreement № 660 from August 15, 2005 between OAO RZD and Trans-Business Expedition JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the entrance port railway station of Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway.

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Telegram of OAO RZD № ЦКПФР-218 from November 3, 2005

As of January 1, 2006, the VAT rate for import freight transportation by railway amounts to 18%.

Under the Federal law № 119-ФЗ "On amendments to Chapter 21, Part 2 of the Tax Code of the Russian Federation and on annihilation of some statements in the acts of the Russian Federation legislation about taxes and dues" from July 22, 2005, which implements amendments and supplements to Paragraph 1, Article 164 of the Tax Code of the Russian Federation, as of 00.00 a.m. January 1, 2006, the VAT rate for import freight transportation to the Russian Federation by railway amounts to 18%. This includes such services as freight transportation and freight forwarding organization; transportation, loading and handling of goods imported into the Russian Federation and other similar services.

The time  mentioned is to be recorded at the border check-points and port railway stations from which import cargo is dispatched.

Give instructions to employees in charge. Inform consignors, consignees, and forwarding organizations.



On OAO RZD's registration of a transit declaration at the entrance port railway stationsfor domestic and international customs transit. Decree № 1386 r by OAO RZD from August 18, 2005

To improve services provided to consignees and forwarding companies, to fasten freight transportation and OAO RZD's transport means, based on Items 80, 81 and 169 of the Customs Code of the Russian Federation:

1. As of October 1, 2005, at the entrance port railway stations, registration of the transit declarations on behalf of OAO RZD is provided by the customs brokers holding agent contracts with OAO RZD for providing services of registering transit declarations for domestic customs transit and international customs transit, according to the list in the enclosure (hereafter referred to as "customs brokers").

2. The following order of transportation documents registration and of transit declaration at the port railway stations applies:

a) a customs broker, based on the data, mentioned in the transportation and shipping documentation provided by a consignor, a forwarder or another person (a forwarder), registers officially a transit declaration, which, together with the other documents required, is passed to the customs to be licensed for domestic or international transit with all the notes filled in;

being licensed for domestic or international customs transit and having controlled that there are all the necessary stamps and notes set by the customs in the transit declaration and in the transportation documents for the freight, the customs broker gives the documents to the forwarder for further cargo clearance; 

the port railway station, when taking the freight to be transported, mentions the due for transit declaration registration (roubles) and marks the goods as "Due for Transit Declaration in accordance with OAO RZD's Decree" from ___ №___ ; the code of a customs broker is also required:

import freight - in the transport railway invoice and in the rail register of direct railway communication (forms ГУ-27 and ГУ-29), in the "Tariff notes" column;

transit freight - in the additional copy of rail register in one of the issues 55-58, and freight transportation to Finland - in the transportation document of Soviet-Finnish communication Issue 54 or 55 or 59. 

b) at the port railway, when registering transportation documents for import freight using automatic systems, the due of transit declaration registration is implemented. The code of payment is 05 "Due for Transit Declaration Registration"; the code of a customs broker is also to be named;

the dues for transit declaration registration, as set in the transportation documents on import freight, are paid to port railways in the correspondent reference parts of ФДУ-5 form, and are registered in the common Code of Income of ФДУ-5 form (issue "Additional Dues", line "including dues for transit declaration registration") for Zheldorraschet, Transcontainer, and Refservice;

when the freight is delivered, the dues for transit declaration registration are calculated if necessary;

c) registration of dues for transit declaration registration for transit freight transportation via border railway stations and registration of transportation documents for transit freight transportation, registration of the cost for transportation of import freight carried to the subsidiaries of OAO RZD, as well as OAO RZD affiliates' reports about services provided, are realized according to the order implemented by Decree №85 p. of OAO RZD from January 26, 2005.

3. The Head of Customs-Broker Activities Department A.Kakhdze is in charge of the Decree implementation.

S.Kozyrev

Vice-president of OAO RZD



Enclosure to Decree № 1386 r by OAO RZD from August 18, 2005

List of customs brokers who have concluded agent contracts with OAO RZD for providing services of registering transit declarations at the entrance port railway stations

1. DALK JSC (customs broker code 03), in accordance with additional agreement №2 from August 15, 2005 to contract № 1617 from December 30, 2004 between OAO RZD and DALK JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Novorossiysk 521001 (exp.) of the Severo-Kavkazskaya Railway;

Temryuk 527807 (exp.) of the Severo-Kavkazskaya Railway;

Tuapse 533102 (exp.) of the Severo-Kavkazskaya Railway;

Avtovo 035601 (exp.) of the October Railway;

New Port 035902 (exp.) of the October Railway.

2. Rostek-DV-Service JSC (customs broker code 04), in accordance with additional agreement № 2 from August 15, 2005 to contract № 1624 from December 31, 2004 between OAO RZD and Rostek-DV-Service JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway;

Nakhodka 984700 (exp.), 984803 (exp. of coal) of the Far-Eastern Railway.

3. Rostek-Primorye CJSC (customs broker code 05), in accordance with agreement № 659 from August 15, 2005 between OAO RZD and Rostek-Primorye CJSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Vladivostok 980200 (exp.) of the Far-Eastern Railway;

Mys Churkin 980906 (exp.) of the Far-Eastern Railway;

Gaidamak 980501 (exp.) of the Far-Eastern Railway;

Pervaya Rechka 981203 (exp.) of the Far-Eastern Railway.

4. Trans-Business Expedition JSC (customs broker code 06), in accordance with agreement № 660 from August 15, 2005 between OAO RZD and Trans-Business Expedition JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the entrance port railway station of Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway.

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Telegram of OAO RZD № ЦКПФР-218 from November 3, 2005

As of January 1, 2006, the VAT rate for import freight transportation by railway amounts to 18%.

Under the Federal law № 119-ФЗ "On amendments to Chapter 21, Part 2 of the Tax Code of the Russian Federation and on annihilation of some statements in the acts of the Russian Federation legislation about taxes and dues" from July 22, 2005, which implements amendments and supplements to Paragraph 1, Article 164 of the Tax Code of the Russian Federation, as of 00.00 a.m. January 1, 2006, the VAT rate for import freight transportation to the Russian Federation by railway amounts to 18%. This includes such services as freight transportation and freight forwarding organization; transportation, loading and handling of goods imported into the Russian Federation and other similar services.

The time  mentioned is to be recorded at the border check-points and port railway stations from which import cargo is dispatched.

Give instructions to employees in charge. Inform consignors, consignees, and forwarding organizations.



On OAO RZD's registration of a transit declaration at the entrance port railway stationsfor domestic and international customs transit. Decree № 1386 r by OAO RZD from August 18, 2005

To improve services provided to consignees and forwarding companies, to fasten freight transportation and OAO RZD's transport means, based on Items 80, 81 and 169 of the Customs Code of the Russian Federation:

1. As of October 1, 2005, at the entrance port railway stations, registration of the transit declarations on behalf of OAO RZD is provided by the customs brokers holding agent contracts with OAO RZD for providing services of registering transit declarations for domestic customs transit and international customs transit, according to the list in the enclosure (hereafter referred to as "customs brokers").

2. The following order of transportation documents registration and of transit declaration at the port railway stations applies:

a) a customs broker, based on the data, mentioned in the transportation and shipping documentation provided by a consignor, a forwarder or another person (a forwarder), registers officially a transit declaration, which, together with the other documents required, is passed to the customs to be licensed for domestic or international transit with all the notes filled in;

being licensed for domestic or international customs transit and having controlled that there are all the necessary stamps and notes set by the customs in the transit declaration and in the transportation documents for the freight, the customs broker gives the documents to the forwarder for further cargo clearance; 

the port railway station, when taking the freight to be transported, mentions the due for transit declaration registration (roubles) and marks the goods as "Due for Transit Declaration in accordance with OAO RZD's Decree" from ___ №___ ; the code of a customs broker is also required:

import freight - in the transport railway invoice and in the rail register of direct railway communication (forms ГУ-27 and ГУ-29), in the "Tariff notes" column;

transit freight - in the additional copy of rail register in one of the issues 55-58, and freight transportation to Finland - in the transportation document of Soviet-Finnish communication Issue 54 or 55 or 59. 

b) at the port railway, when registering transportation documents for import freight using automatic systems, the due of transit declaration registration is implemented. The code of payment is 05 "Due for Transit Declaration Registration"; the code of a customs broker is also to be named;

the dues for transit declaration registration, as set in the transportation documents on import freight, are paid to port railways in the correspondent reference parts of ФДУ-5 form, and are registered in the common Code of Income of ФДУ-5 form (issue "Additional Dues", line "including dues for transit declaration registration") for Zheldorraschet, Transcontainer, and Refservice;

when the freight is delivered, the dues for transit declaration registration are calculated if necessary;

c) registration of dues for transit declaration registration for transit freight transportation via border railway stations and registration of transportation documents for transit freight transportation, registration of the cost for transportation of import freight carried to the subsidiaries of OAO RZD, as well as OAO RZD affiliates' reports about services provided, are realized according to the order implemented by Decree №85 p. of OAO RZD from January 26, 2005.

3. The Head of Customs-Broker Activities Department A.Kakhdze is in charge of the Decree implementation.

S.Kozyrev

Vice-president of OAO RZD



Enclosure to Decree № 1386 r by OAO RZD from August 18, 2005

List of customs brokers who have concluded agent contracts with OAO RZD for providing services of registering transit declarations at the entrance port railway stations

1. DALK JSC (customs broker code 03), in accordance with additional agreement №2 from August 15, 2005 to contract № 1617 from December 30, 2004 between OAO RZD and DALK JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Novorossiysk 521001 (exp.) of the Severo-Kavkazskaya Railway;

Temryuk 527807 (exp.) of the Severo-Kavkazskaya Railway;

Tuapse 533102 (exp.) of the Severo-Kavkazskaya Railway;

Avtovo 035601 (exp.) of the October Railway;

New Port 035902 (exp.) of the October Railway.

2. Rostek-DV-Service JSC (customs broker code 04), in accordance with additional agreement № 2 from August 15, 2005 to contract № 1624 from December 31, 2004 between OAO RZD and Rostek-DV-Service JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway;

Nakhodka 984700 (exp.), 984803 (exp. of coal) of the Far-Eastern Railway.

3. Rostek-Primorye CJSC (customs broker code 05), in accordance with agreement № 659 from August 15, 2005 between OAO RZD and Rostek-Primorye CJSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Vladivostok 980200 (exp.) of the Far-Eastern Railway;

Mys Churkin 980906 (exp.) of the Far-Eastern Railway;

Gaidamak 980501 (exp.) of the Far-Eastern Railway;

Pervaya Rechka 981203 (exp.) of the Far-Eastern Railway.

4. Trans-Business Expedition JSC (customs broker code 06), in accordance with agreement № 660 from August 15, 2005 between OAO RZD and Trans-Business Expedition JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the entrance port railway station of Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway.

    [~DETAIL_TEXT] => 










Telegram of OAO RZD № ЦКПФР-218 from November 3, 2005

As of January 1, 2006, the VAT rate for import freight transportation by railway amounts to 18%.

Under the Federal law № 119-ФЗ "On amendments to Chapter 21, Part 2 of the Tax Code of the Russian Federation and on annihilation of some statements in the acts of the Russian Federation legislation about taxes and dues" from July 22, 2005, which implements amendments and supplements to Paragraph 1, Article 164 of the Tax Code of the Russian Federation, as of 00.00 a.m. January 1, 2006, the VAT rate for import freight transportation to the Russian Federation by railway amounts to 18%. This includes such services as freight transportation and freight forwarding organization; transportation, loading and handling of goods imported into the Russian Federation and other similar services.

The time  mentioned is to be recorded at the border check-points and port railway stations from which import cargo is dispatched.

Give instructions to employees in charge. Inform consignors, consignees, and forwarding organizations.



On OAO RZD's registration of a transit declaration at the entrance port railway stationsfor domestic and international customs transit. Decree № 1386 r by OAO RZD from August 18, 2005

To improve services provided to consignees and forwarding companies, to fasten freight transportation and OAO RZD's transport means, based on Items 80, 81 and 169 of the Customs Code of the Russian Federation:

1. As of October 1, 2005, at the entrance port railway stations, registration of the transit declarations on behalf of OAO RZD is provided by the customs brokers holding agent contracts with OAO RZD for providing services of registering transit declarations for domestic customs transit and international customs transit, according to the list in the enclosure (hereafter referred to as "customs brokers").

2. The following order of transportation documents registration and of transit declaration at the port railway stations applies:

a) a customs broker, based on the data, mentioned in the transportation and shipping documentation provided by a consignor, a forwarder or another person (a forwarder), registers officially a transit declaration, which, together with the other documents required, is passed to the customs to be licensed for domestic or international transit with all the notes filled in;

being licensed for domestic or international customs transit and having controlled that there are all the necessary stamps and notes set by the customs in the transit declaration and in the transportation documents for the freight, the customs broker gives the documents to the forwarder for further cargo clearance; 

the port railway station, when taking the freight to be transported, mentions the due for transit declaration registration (roubles) and marks the goods as "Due for Transit Declaration in accordance with OAO RZD's Decree" from ___ №___ ; the code of a customs broker is also required:

import freight - in the transport railway invoice and in the rail register of direct railway communication (forms ГУ-27 and ГУ-29), in the "Tariff notes" column;

transit freight - in the additional copy of rail register in one of the issues 55-58, and freight transportation to Finland - in the transportation document of Soviet-Finnish communication Issue 54 or 55 or 59. 

b) at the port railway, when registering transportation documents for import freight using automatic systems, the due of transit declaration registration is implemented. The code of payment is 05 "Due for Transit Declaration Registration"; the code of a customs broker is also to be named;

the dues for transit declaration registration, as set in the transportation documents on import freight, are paid to port railways in the correspondent reference parts of ФДУ-5 form, and are registered in the common Code of Income of ФДУ-5 form (issue "Additional Dues", line "including dues for transit declaration registration") for Zheldorraschet, Transcontainer, and Refservice;

when the freight is delivered, the dues for transit declaration registration are calculated if necessary;

c) registration of dues for transit declaration registration for transit freight transportation via border railway stations and registration of transportation documents for transit freight transportation, registration of the cost for transportation of import freight carried to the subsidiaries of OAO RZD, as well as OAO RZD affiliates' reports about services provided, are realized according to the order implemented by Decree №85 p. of OAO RZD from January 26, 2005.

3. The Head of Customs-Broker Activities Department A.Kakhdze is in charge of the Decree implementation.

S.Kozyrev

Vice-president of OAO RZD



Enclosure to Decree № 1386 r by OAO RZD from August 18, 2005

List of customs brokers who have concluded agent contracts with OAO RZD for providing services of registering transit declarations at the entrance port railway stations

1. DALK JSC (customs broker code 03), in accordance with additional agreement №2 from August 15, 2005 to contract № 1617 from December 30, 2004 between OAO RZD and DALK JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Novorossiysk 521001 (exp.) of the Severo-Kavkazskaya Railway;

Temryuk 527807 (exp.) of the Severo-Kavkazskaya Railway;

Tuapse 533102 (exp.) of the Severo-Kavkazskaya Railway;

Avtovo 035601 (exp.) of the October Railway;

New Port 035902 (exp.) of the October Railway.

2. Rostek-DV-Service JSC (customs broker code 04), in accordance with additional agreement № 2 from August 15, 2005 to contract № 1624 from December 31, 2004 between OAO RZD and Rostek-DV-Service JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway;

Nakhodka 984700 (exp.), 984803 (exp. of coal) of the Far-Eastern Railway.

3. Rostek-Primorye CJSC (customs broker code 05), in accordance with agreement № 659 from August 15, 2005 between OAO RZD and Rostek-Primorye CJSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the following entrance port railway stations:

Vladivostok 980200 (exp.) of the Far-Eastern Railway;

Mys Churkin 980906 (exp.) of the Far-Eastern Railway;

Gaidamak 980501 (exp.) of the Far-Eastern Railway;

Pervaya Rechka 981203 (exp.) of the Far-Eastern Railway.

4. Trans-Business Expedition JSC (customs broker code 06), in accordance with agreement № 660 from August 15, 2005 between OAO RZD and Trans-Business Expedition JSC, registers on behalf of OAO RZD transit declarations for domestic customs transit and international customs transit at the entrance port railway station of Nakhodka-Vostochnaya 986103 (exp.) of the Far-Eastern Railway.

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The key term of the CEE Rail 2005 was the influence on performance and transport system of integration within the enlarged European community. Over 40 senior level speakers addressed their strategies and approaches and, most importantly, set out their plans for integration. "The Central and Eastern European rail industry is undergoing a challenging time", said the general director of MAVCARGO Mr. Imre Kovacs in his address to the delegates of the conference. "The role of improved rail infrastructure and services in CEE is crucial to the development of the regional economy and to its integration into a wider Europe. The task for tomorrow is to increase traffic via improved interoperability, alongside the challenges and opportunities liberalization and privatization will bring", added Mr. Kovacs.

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ALEXANDRA  PAVLOVA
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ALEXANDRA  PAVLOVA
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    [DETAIL_TEXT] => III International conference "OAO Russian railways on the transport services market: cooperation and partnership", organized by OAO RZD and the Editorship of  "RZD-Partner" business magazine, supported by the RF Ministry of Transport, attracted over 700 delegates from 20 countries worldwide, among which there were about 400 representatives of the major transport and industrial companiesin Russia.



Within the two-day forum chief-executives and decision-makers of the key market players discussed the crucial problems of transport branch, including the second stage of structural reform and legislative base, regulating transportation process participants relationships. The report of the president of OAO Russian Railways Vladimir Yakunin started the first-day plenary session and. Mr.Yakunin pointed out that due to some features of the structural railway reform unfolding OAO RZD faced stiff competition: the company's share in the aggregate volume of oilbulk transportation fell down from 48.1%, and for steel billets it went down from 83.3% to 45.0%. Moreover the company faces unequal approach in comparison with other market participants which could independently regulate their tariffs on provided services. Thus, one of the key objectives of OAO RZD in the sphere of freight transportation is to get a tool enabling to regulate the company's tariffs in the high competitive market sectors. Vladimir Yakunin emphasized that the company established its mission as meeting the market's demand for rail transport, improvement of efficiency and services and deep integration into the Eurasian transport system. According to the president, in order to meet the world standards of transportation and enhance the competitiveness of freight delivery for the global market, OAO RZD should make rail transport more attractive for foreign cargo owners (this concerns both the Transib and other international transport corridors which pass Russia) by improving operation technology, creating infrastructure enabling to provide services satisfying the world quality standards and finishing modernization of railways of Eastern Siberia and the Baikal region.

The crucial importance of the Trans-Siberian railway was underlined not only by OAO RZD representatives but also by almost all speakers at the conference. The Finnish Railways were no exception. The CEO and the president of the VR Group Ltd. Henry Kuitunen admitted that very high expectations were placed on the enormous potential offered by the TSR traffic between Finland and China: "The land-based route via Russian-Chinese border crossing Zabaikalsk-Manchouli gives good possibilities for direct deliveries between Asia and Europe. In the future, also other transit routes via Russia by rail will offer an interesting alternative for sea transport".

At the conference in the framework of 10 round tables delegates also debated issues like improving of the quality of servicing cargo owners within the structural reform of the rail transport, development of the universal IT infrastructure of the Russian transport system, Russia's joining the WTO and prospects for development of foreign trade transportation, the new challenges for transport machinery in Russia and tariff regulation. 

Within the discussion on prospects of rail private carriers institution creation it was stated that only supporting and developing the operator movement, the Russian railways will be able to create a strong competitive railway infrastructure, able to satisfy on a new quality level transportation requirements of any client. As the senior deputy director of Mechel-Trans JCS Valery Artemchenko said, the legal status of an operator should be approved. The problem of giving the operators right of rolling stock repair and spares produce services is to be solved as fast as possible. Besides, the capacities for it should be separated from OAO RZD's ones. Flexible tariffs regulation is also important. "Companies-operators lack private gondola cars to carry coal from the Kuzbas to the Ural and to the European part of Russia, since there is no back loading, and all the profit get from freight transportation is spent on empty wagons transportation. This problem takes place at the Vostochno-Sibirskaya (Eastern-Siberian) Railway etc. To solve the problem is necessary to develop and approve methodical recommendations to calculate contractual tariffs for freight transportation on the level of the RF Governatural monopolyent (the Federal Tariff Service). Besides, Tariff Regulation № 10-01 should be the basis for it", said Mr. Artemchenko. 

Undefined status of core and non-core types of business of natural Monopolies was also covered respecting the private operators and OAO RZD as natural monopoly. "The principles of efficient control of natural monopoly reforming are necessary to be developed and approved by all the legislative and executive bodies. It should be done in order not to lose technical stability and to keep the safety of railway transport work, and to exclude the possibility of bankruptcy of the country's main carrier", commented the current situation the general director of the Institute of Problems of Natural Monopolies Yury Saakyan.

Another important sector of Russian railway market was discussed at round table on trends and innovations in container transportation. It is no secret that although Russia occupies favorable geographic position and Russian railways take about 7% from total length of railways in the world, they service only 20% of the world turnover. What are the reasons of such a disparity in proportions? "Everything goes well within traditional containerized cargo transportation directed to the European market. The situation differs greatly if to speak of containerized transportation along "North-South" and "East-West" directions", said the managing director of Eurosib Terminal JSC Alexander Gorodetsky. Possessing unique transport route - the Transsib Russian railways can transport goods from the countries of Asian-Pacific region to Europe and Russia quickly and effectively. Nevertheless, as Mr. Gorodetsky added, transit flow via Russia makes less than 1% from total volume of this transportation: "This can be changed only under conditions of through rate formation for a transit container along the whole Transsiberian route and elimination of such reasons as customs delays, rolling stock and containers deficit, ports and railways capacities etc". 

"Nowadays it is impossible to manage container transportation effectively without developed automatic systems, specialized in container transportation and container park management", said the director of Sungate JSC Alevtina Kirillova. "To create a new technology of intermodal transportation, based on e-logistic control, a single information space, a universal identifier of dispatch to provide supply compatibility in information systems and a high level of cooperation at e-documents circulation are necessary. To realize the possibilities of the technologies, a developed e-infrastructure of transport corridors is needed. Besides, the international standards of e-documents circulation should be developed".

As a conclusion to the forum the Conference resolution was issued and adopted during the final plenary session moderated by senior vice-president of OAO Russian Railways Vadim Morozov. According to the Resolution conference participants recommended the RF Ministry of Transport to enforce the approval of legislative base, ensuring effective interaction of rail infrastructure owners and operators, support OAO RZD initiatives for public-private partnership development and budgetary financing of key infrastructure projects, in particular frontier crossings in view of their importance for economy relations strengthening. 

Regarding the forthcoming Russia's joining the WTO delegates highlighted the necessity to focus on Russian sea ports competitiveness as well as create Unified information resource of transport system and introduce declaration of export, import and transit cargoes. Resolution also included the issues on passenger traffic. Conference participants pointed our the need for direct budget subsidizing of the Federal passenger company which is being established within OAO "RZD" reforming and recommended to the Federal Tariff Service to submit the project of Tariff Regulation №10-02-16 which regulates pricing for domestic and international traffic.



ALEXANDRA  PAVLOVA
    [~DETAIL_TEXT] => III International conference "OAO Russian railways on the transport services market: cooperation and partnership", organized by OAO RZD and the Editorship of  "RZD-Partner" business magazine, supported by the RF Ministry of Transport, attracted over 700 delegates from 20 countries worldwide, among which there were about 400 representatives of the major transport and industrial companiesin Russia.



Within the two-day forum chief-executives and decision-makers of the key market players discussed the crucial problems of transport branch, including the second stage of structural reform and legislative base, regulating transportation process participants relationships. The report of the president of OAO Russian Railways Vladimir Yakunin started the first-day plenary session and. Mr.Yakunin pointed out that due to some features of the structural railway reform unfolding OAO RZD faced stiff competition: the company's share in the aggregate volume of oilbulk transportation fell down from 48.1%, and for steel billets it went down from 83.3% to 45.0%. Moreover the company faces unequal approach in comparison with other market participants which could independently regulate their tariffs on provided services. Thus, one of the key objectives of OAO RZD in the sphere of freight transportation is to get a tool enabling to regulate the company's tariffs in the high competitive market sectors. Vladimir Yakunin emphasized that the company established its mission as meeting the market's demand for rail transport, improvement of efficiency and services and deep integration into the Eurasian transport system. According to the president, in order to meet the world standards of transportation and enhance the competitiveness of freight delivery for the global market, OAO RZD should make rail transport more attractive for foreign cargo owners (this concerns both the Transib and other international transport corridors which pass Russia) by improving operation technology, creating infrastructure enabling to provide services satisfying the world quality standards and finishing modernization of railways of Eastern Siberia and the Baikal region.

The crucial importance of the Trans-Siberian railway was underlined not only by OAO RZD representatives but also by almost all speakers at the conference. The Finnish Railways were no exception. The CEO and the president of the VR Group Ltd. Henry Kuitunen admitted that very high expectations were placed on the enormous potential offered by the TSR traffic between Finland and China: "The land-based route via Russian-Chinese border crossing Zabaikalsk-Manchouli gives good possibilities for direct deliveries between Asia and Europe. In the future, also other transit routes via Russia by rail will offer an interesting alternative for sea transport".

At the conference in the framework of 10 round tables delegates also debated issues like improving of the quality of servicing cargo owners within the structural reform of the rail transport, development of the universal IT infrastructure of the Russian transport system, Russia's joining the WTO and prospects for development of foreign trade transportation, the new challenges for transport machinery in Russia and tariff regulation. 

Within the discussion on prospects of rail private carriers institution creation it was stated that only supporting and developing the operator movement, the Russian railways will be able to create a strong competitive railway infrastructure, able to satisfy on a new quality level transportation requirements of any client. As the senior deputy director of Mechel-Trans JCS Valery Artemchenko said, the legal status of an operator should be approved. The problem of giving the operators right of rolling stock repair and spares produce services is to be solved as fast as possible. Besides, the capacities for it should be separated from OAO RZD's ones. Flexible tariffs regulation is also important. "Companies-operators lack private gondola cars to carry coal from the Kuzbas to the Ural and to the European part of Russia, since there is no back loading, and all the profit get from freight transportation is spent on empty wagons transportation. This problem takes place at the Vostochno-Sibirskaya (Eastern-Siberian) Railway etc. To solve the problem is necessary to develop and approve methodical recommendations to calculate contractual tariffs for freight transportation on the level of the RF Governatural monopolyent (the Federal Tariff Service). Besides, Tariff Regulation № 10-01 should be the basis for it", said Mr. Artemchenko. 

Undefined status of core and non-core types of business of natural Monopolies was also covered respecting the private operators and OAO RZD as natural monopoly. "The principles of efficient control of natural monopoly reforming are necessary to be developed and approved by all the legislative and executive bodies. It should be done in order not to lose technical stability and to keep the safety of railway transport work, and to exclude the possibility of bankruptcy of the country's main carrier", commented the current situation the general director of the Institute of Problems of Natural Monopolies Yury Saakyan.

Another important sector of Russian railway market was discussed at round table on trends and innovations in container transportation. It is no secret that although Russia occupies favorable geographic position and Russian railways take about 7% from total length of railways in the world, they service only 20% of the world turnover. What are the reasons of such a disparity in proportions? "Everything goes well within traditional containerized cargo transportation directed to the European market. The situation differs greatly if to speak of containerized transportation along "North-South" and "East-West" directions", said the managing director of Eurosib Terminal JSC Alexander Gorodetsky. Possessing unique transport route - the Transsib Russian railways can transport goods from the countries of Asian-Pacific region to Europe and Russia quickly and effectively. Nevertheless, as Mr. Gorodetsky added, transit flow via Russia makes less than 1% from total volume of this transportation: "This can be changed only under conditions of through rate formation for a transit container along the whole Transsiberian route and elimination of such reasons as customs delays, rolling stock and containers deficit, ports and railways capacities etc". 

"Nowadays it is impossible to manage container transportation effectively without developed automatic systems, specialized in container transportation and container park management", said the director of Sungate JSC Alevtina Kirillova. "To create a new technology of intermodal transportation, based on e-logistic control, a single information space, a universal identifier of dispatch to provide supply compatibility in information systems and a high level of cooperation at e-documents circulation are necessary. To realize the possibilities of the technologies, a developed e-infrastructure of transport corridors is needed. Besides, the international standards of e-documents circulation should be developed".

As a conclusion to the forum the Conference resolution was issued and adopted during the final plenary session moderated by senior vice-president of OAO Russian Railways Vadim Morozov. According to the Resolution conference participants recommended the RF Ministry of Transport to enforce the approval of legislative base, ensuring effective interaction of rail infrastructure owners and operators, support OAO RZD initiatives for public-private partnership development and budgetary financing of key infrastructure projects, in particular frontier crossings in view of their importance for economy relations strengthening. 

Regarding the forthcoming Russia's joining the WTO delegates highlighted the necessity to focus on Russian sea ports competitiveness as well as create Unified information resource of transport system and introduce declaration of export, import and transit cargoes. Resolution also included the issues on passenger traffic. Conference participants pointed our the need for direct budget subsidizing of the Federal passenger company which is being established within OAO "RZD" reforming and recommended to the Federal Tariff Service to submit the project of Tariff Regulation №10-02-16 which regulates pricing for domestic and international traffic.



ALEXANDRA  PAVLOVA
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    [DETAIL_TEXT] => III International conference "OAO Russian railways on the transport services market: cooperation and partnership", organized by OAO RZD and the Editorship of  "RZD-Partner" business magazine, supported by the RF Ministry of Transport, attracted over 700 delegates from 20 countries worldwide, among which there were about 400 representatives of the major transport and industrial companiesin Russia.



Within the two-day forum chief-executives and decision-makers of the key market players discussed the crucial problems of transport branch, including the second stage of structural reform and legislative base, regulating transportation process participants relationships. The report of the president of OAO Russian Railways Vladimir Yakunin started the first-day plenary session and. Mr.Yakunin pointed out that due to some features of the structural railway reform unfolding OAO RZD faced stiff competition: the company's share in the aggregate volume of oilbulk transportation fell down from 48.1%, and for steel billets it went down from 83.3% to 45.0%. Moreover the company faces unequal approach in comparison with other market participants which could independently regulate their tariffs on provided services. Thus, one of the key objectives of OAO RZD in the sphere of freight transportation is to get a tool enabling to regulate the company's tariffs in the high competitive market sectors. Vladimir Yakunin emphasized that the company established its mission as meeting the market's demand for rail transport, improvement of efficiency and services and deep integration into the Eurasian transport system. According to the president, in order to meet the world standards of transportation and enhance the competitiveness of freight delivery for the global market, OAO RZD should make rail transport more attractive for foreign cargo owners (this concerns both the Transib and other international transport corridors which pass Russia) by improving operation technology, creating infrastructure enabling to provide services satisfying the world quality standards and finishing modernization of railways of Eastern Siberia and the Baikal region.

The crucial importance of the Trans-Siberian railway was underlined not only by OAO RZD representatives but also by almost all speakers at the conference. The Finnish Railways were no exception. The CEO and the president of the VR Group Ltd. Henry Kuitunen admitted that very high expectations were placed on the enormous potential offered by the TSR traffic between Finland and China: "The land-based route via Russian-Chinese border crossing Zabaikalsk-Manchouli gives good possibilities for direct deliveries between Asia and Europe. In the future, also other transit routes via Russia by rail will offer an interesting alternative for sea transport".

At the conference in the framework of 10 round tables delegates also debated issues like improving of the quality of servicing cargo owners within the structural reform of the rail transport, development of the universal IT infrastructure of the Russian transport system, Russia's joining the WTO and prospects for development of foreign trade transportation, the new challenges for transport machinery in Russia and tariff regulation. 

Within the discussion on prospects of rail private carriers institution creation it was stated that only supporting and developing the operator movement, the Russian railways will be able to create a strong competitive railway infrastructure, able to satisfy on a new quality level transportation requirements of any client. As the senior deputy director of Mechel-Trans JCS Valery Artemchenko said, the legal status of an operator should be approved. The problem of giving the operators right of rolling stock repair and spares produce services is to be solved as fast as possible. Besides, the capacities for it should be separated from OAO RZD's ones. Flexible tariffs regulation is also important. "Companies-operators lack private gondola cars to carry coal from the Kuzbas to the Ural and to the European part of Russia, since there is no back loading, and all the profit get from freight transportation is spent on empty wagons transportation. This problem takes place at the Vostochno-Sibirskaya (Eastern-Siberian) Railway etc. To solve the problem is necessary to develop and approve methodical recommendations to calculate contractual tariffs for freight transportation on the level of the RF Governatural monopolyent (the Federal Tariff Service). Besides, Tariff Regulation № 10-01 should be the basis for it", said Mr. Artemchenko. 

Undefined status of core and non-core types of business of natural Monopolies was also covered respecting the private operators and OAO RZD as natural monopoly. "The principles of efficient control of natural monopoly reforming are necessary to be developed and approved by all the legislative and executive bodies. It should be done in order not to lose technical stability and to keep the safety of railway transport work, and to exclude the possibility of bankruptcy of the country's main carrier", commented the current situation the general director of the Institute of Problems of Natural Monopolies Yury Saakyan.

Another important sector of Russian railway market was discussed at round table on trends and innovations in container transportation. It is no secret that although Russia occupies favorable geographic position and Russian railways take about 7% from total length of railways in the world, they service only 20% of the world turnover. What are the reasons of such a disparity in proportions? "Everything goes well within traditional containerized cargo transportation directed to the European market. The situation differs greatly if to speak of containerized transportation along "North-South" and "East-West" directions", said the managing director of Eurosib Terminal JSC Alexander Gorodetsky. Possessing unique transport route - the Transsib Russian railways can transport goods from the countries of Asian-Pacific region to Europe and Russia quickly and effectively. Nevertheless, as Mr. Gorodetsky added, transit flow via Russia makes less than 1% from total volume of this transportation: "This can be changed only under conditions of through rate formation for a transit container along the whole Transsiberian route and elimination of such reasons as customs delays, rolling stock and containers deficit, ports and railways capacities etc". 

"Nowadays it is impossible to manage container transportation effectively without developed automatic systems, specialized in container transportation and container park management", said the director of Sungate JSC Alevtina Kirillova. "To create a new technology of intermodal transportation, based on e-logistic control, a single information space, a universal identifier of dispatch to provide supply compatibility in information systems and a high level of cooperation at e-documents circulation are necessary. To realize the possibilities of the technologies, a developed e-infrastructure of transport corridors is needed. Besides, the international standards of e-documents circulation should be developed".

As a conclusion to the forum the Conference resolution was issued and adopted during the final plenary session moderated by senior vice-president of OAO Russian Railways Vadim Morozov. According to the Resolution conference participants recommended the RF Ministry of Transport to enforce the approval of legislative base, ensuring effective interaction of rail infrastructure owners and operators, support OAO RZD initiatives for public-private partnership development and budgetary financing of key infrastructure projects, in particular frontier crossings in view of their importance for economy relations strengthening. 

Regarding the forthcoming Russia's joining the WTO delegates highlighted the necessity to focus on Russian sea ports competitiveness as well as create Unified information resource of transport system and introduce declaration of export, import and transit cargoes. Resolution also included the issues on passenger traffic. Conference participants pointed our the need for direct budget subsidizing of the Federal passenger company which is being established within OAO "RZD" reforming and recommended to the Federal Tariff Service to submit the project of Tariff Regulation №10-02-16 which regulates pricing for domestic and international traffic.



ALEXANDRA  PAVLOVA
    [~DETAIL_TEXT] => III International conference "OAO Russian railways on the transport services market: cooperation and partnership", organized by OAO RZD and the Editorship of  "RZD-Partner" business magazine, supported by the RF Ministry of Transport, attracted over 700 delegates from 20 countries worldwide, among which there were about 400 representatives of the major transport and industrial companiesin Russia.



Within the two-day forum chief-executives and decision-makers of the key market players discussed the crucial problems of transport branch, including the second stage of structural reform and legislative base, regulating transportation process participants relationships. The report of the president of OAO Russian Railways Vladimir Yakunin started the first-day plenary session and. Mr.Yakunin pointed out that due to some features of the structural railway reform unfolding OAO RZD faced stiff competition: the company's share in the aggregate volume of oilbulk transportation fell down from 48.1%, and for steel billets it went down from 83.3% to 45.0%. Moreover the company faces unequal approach in comparison with other market participants which could independently regulate their tariffs on provided services. Thus, one of the key objectives of OAO RZD in the sphere of freight transportation is to get a tool enabling to regulate the company's tariffs in the high competitive market sectors. Vladimir Yakunin emphasized that the company established its mission as meeting the market's demand for rail transport, improvement of efficiency and services and deep integration into the Eurasian transport system. According to the president, in order to meet the world standards of transportation and enhance the competitiveness of freight delivery for the global market, OAO RZD should make rail transport more attractive for foreign cargo owners (this concerns both the Transib and other international transport corridors which pass Russia) by improving operation technology, creating infrastructure enabling to provide services satisfying the world quality standards and finishing modernization of railways of Eastern Siberia and the Baikal region.

The crucial importance of the Trans-Siberian railway was underlined not only by OAO RZD representatives but also by almost all speakers at the conference. The Finnish Railways were no exception. The CEO and the president of the VR Group Ltd. Henry Kuitunen admitted that very high expectations were placed on the enormous potential offered by the TSR traffic between Finland and China: "The land-based route via Russian-Chinese border crossing Zabaikalsk-Manchouli gives good possibilities for direct deliveries between Asia and Europe. In the future, also other transit routes via Russia by rail will offer an interesting alternative for sea transport".

At the conference in the framework of 10 round tables delegates also debated issues like improving of the quality of servicing cargo owners within the structural reform of the rail transport, development of the universal IT infrastructure of the Russian transport system, Russia's joining the WTO and prospects for development of foreign trade transportation, the new challenges for transport machinery in Russia and tariff regulation. 

Within the discussion on prospects of rail private carriers institution creation it was stated that only supporting and developing the operator movement, the Russian railways will be able to create a strong competitive railway infrastructure, able to satisfy on a new quality level transportation requirements of any client. As the senior deputy director of Mechel-Trans JCS Valery Artemchenko said, the legal status of an operator should be approved. The problem of giving the operators right of rolling stock repair and spares produce services is to be solved as fast as possible. Besides, the capacities for it should be separated from OAO RZD's ones. Flexible tariffs regulation is also important. "Companies-operators lack private gondola cars to carry coal from the Kuzbas to the Ural and to the European part of Russia, since there is no back loading, and all the profit get from freight transportation is spent on empty wagons transportation. This problem takes place at the Vostochno-Sibirskaya (Eastern-Siberian) Railway etc. To solve the problem is necessary to develop and approve methodical recommendations to calculate contractual tariffs for freight transportation on the level of the RF Governatural monopolyent (the Federal Tariff Service). Besides, Tariff Regulation № 10-01 should be the basis for it", said Mr. Artemchenko. 

Undefined status of core and non-core types of business of natural Monopolies was also covered respecting the private operators and OAO RZD as natural monopoly. "The principles of efficient control of natural monopoly reforming are necessary to be developed and approved by all the legislative and executive bodies. It should be done in order not to lose technical stability and to keep the safety of railway transport work, and to exclude the possibility of bankruptcy of the country's main carrier", commented the current situation the general director of the Institute of Problems of Natural Monopolies Yury Saakyan.

Another important sector of Russian railway market was discussed at round table on trends and innovations in container transportation. It is no secret that although Russia occupies favorable geographic position and Russian railways take about 7% from total length of railways in the world, they service only 20% of the world turnover. What are the reasons of such a disparity in proportions? "Everything goes well within traditional containerized cargo transportation directed to the European market. The situation differs greatly if to speak of containerized transportation along "North-South" and "East-West" directions", said the managing director of Eurosib Terminal JSC Alexander Gorodetsky. Possessing unique transport route - the Transsib Russian railways can transport goods from the countries of Asian-Pacific region to Europe and Russia quickly and effectively. Nevertheless, as Mr. Gorodetsky added, transit flow via Russia makes less than 1% from total volume of this transportation: "This can be changed only under conditions of through rate formation for a transit container along the whole Transsiberian route and elimination of such reasons as customs delays, rolling stock and containers deficit, ports and railways capacities etc". 

"Nowadays it is impossible to manage container transportation effectively without developed automatic systems, specialized in container transportation and container park management", said the director of Sungate JSC Alevtina Kirillova. "To create a new technology of intermodal transportation, based on e-logistic control, a single information space, a universal identifier of dispatch to provide supply compatibility in information systems and a high level of cooperation at e-documents circulation are necessary. To realize the possibilities of the technologies, a developed e-infrastructure of transport corridors is needed. Besides, the international standards of e-documents circulation should be developed".

As a conclusion to the forum the Conference resolution was issued and adopted during the final plenary session moderated by senior vice-president of OAO Russian Railways Vadim Morozov. According to the Resolution conference participants recommended the RF Ministry of Transport to enforce the approval of legislative base, ensuring effective interaction of rail infrastructure owners and operators, support OAO RZD initiatives for public-private partnership development and budgetary financing of key infrastructure projects, in particular frontier crossings in view of their importance for economy relations strengthening. 

Regarding the forthcoming Russia's joining the WTO delegates highlighted the necessity to focus on Russian sea ports competitiveness as well as create Unified information resource of transport system and introduce declaration of export, import and transit cargoes. Resolution also included the issues on passenger traffic. Conference participants pointed our the need for direct budget subsidizing of the Federal passenger company which is being established within OAO "RZD" reforming and recommended to the Federal Tariff Service to submit the project of Tariff Regulation №10-02-16 which regulates pricing for domestic and international traffic.



ALEXANDRA  PAVLOVA
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    [DETAIL_TEXT] => 

Developmental diseases

By the beginning of 2005, there were registered 1280 companies involved in the insurance business in Russia, with the authorized capital stock comprising at the moment RUR 139.3 bln.

Naturally, the large number of companies registered in the state register of insurance companies does not signify either the advanced development of the market, or lack of global economical and political problems in this sphere. 

Not long ago, among the most common problems of the Russian insurance market were the cases of fraud, which, in experts' opinion, indicated the imperfection of the legal basis, as witnessed both on behalf of the insurance companies and of the customers. As the legislation developed and the qualification of the companies personnel increased, the frequency of customers cheating reduced manifold, but the problem of companies cheating remains. By all means, this has nothing to do with the insurance companies, who have long been working on the market and gained a reputation. By making a deal with an insurance company, it is worthwhile to make sure it is operating legally and its representatives - should it be individual persons or separate companies - have legal rights. 

The problem of cheating the customers and signing contracts with maximally balanced terms of insurance can be resolved by attracting professional consultants and mediators. But the institute of insurance brokers, who are to protect the customers' interests as well, is yet underdeveloped in Russia. This is partially due to the underdevelopment of insurance services that could be in real demand on the market. Another reason is the uneven concentration of insurance business: this is the so-called "problem of periphery", which implies that customers in minor towns cannot receive the full gamut of insurance services due to companies' lacking the properly "branchy" structure (for many insurance companies maintaining such a structure is unprofitable).



Who does not insure, does not win

The common for the Russian insurance business problems, naturally, have their effect on the transportation sector. According to certain expert estimations, no more than 20% of all consignments are provided with proper insurance, which can be proved by a simple calculation. In 2004 the total sum of charges comprised some RUR 7 bln, while the insurance companies' contracts liability - some RUR 1800 bln, which is manifold less than the country's cargo turnover. Thus, most of the cargoes in Russia are not being insured. At that one needs to bear in mind the fact that the situation may differ dramatically depending on the transportation mode and the kind of contract.

All the insurance companies agreed unanimously that the greatest share in the consignments insurance portfolio belongs to the export-import operations, while domestically carried cargoes are very seldom insured. First of all, these are the cargoes of large companies and industrial enterprises, insured in the framework of the general corporate insurance programs that cover, as a rule, all the customer's property, as well as its responsibility to third parties. Secondly, these are the cargoes of dynamically developing companies eager to work according to international standards. And the third (smallest) category of insurers are the consigners and freight forwarders who have already suffered losses caused by the consignment damage or destruction.

Another important peculiarity of Russia in terms of cargoes insurance is the specificity of its transport legislation in that it sets a higher carrier or freight forwarder responsibility for the cargo than it is prescribed by the international norms and regulations in common use. This causes certain complications, as in reality the financial state of the freight forwarding or carrying company does not always allow for covering the consigner's losses. At that, if for air transport the rules require obligatory insurance of the carrier responsibility, in railway or road transportation this requirement is not so categorical. Thus, following cargo damage or destruction, the consigner and the carrier (freight forwarder) may face a difficult situation, which can be resolved only in court. Moreover, during the legal proceedings aimed at determining the guilt of the carrier (which can last for several months or even years), the latter (or freight forwarder) is to discontinue its operation. In this light, the customers of small transport companies face a threat: if the court rules on reparation of damages, it may lead to the carrier bankruptcy, which would prevent it from carrying out the transportation contracts, thus resulting in the consigner's failure to meet its responsibility to third parties. In respect to freight forwarders this risk is even greater, as their major capital is not vehicles (or other property subject to arrest and penalty infliction), but non-material values - the personnel qualification, experience and knowledge.

It is another matter, whether it is necessary at all to insure consignment with the already insured carrier (freight-forwarder) responsibility, and to what extent can the insurance compensation cover the consigner's losses. Almost all insurance companies give a unanimous answer: the insurance compensation in case of insured carrier (freight-forwarder) responsibility is much less than the one paid according to the cargo insurance contracts. This aspect is not always taken into account by the consigners, even those whose cargoes are characterized by liquidity on criminal markets. In the meanwhile a considerable share of losses by transportation is still due to thefts.



On the crossroads

Despite all the problems and imperfections of the national legislation, the Russian insurance services market is developing dynamically, which is vividly illustrated by the constantly increasing interest towards it in foreign business circles. According to FSSN (Federal Service of Insurance Overseeing), by early 2005 (against 1 January 2004), among the Russian non-residents, there was a notable increase of capital from Canada - at 5.2 times, from Cyprus - at 3.68 times, from Germany - at 2.35 times, from the USA - at 1.46 times and capital from France was first registered. Nevertheless, Russia is currently on the crossroads, contemplating whether it would be to the good or evil to enter the WTO and to let large players with world reputation onto its domestic market. At that some experts fear lest the arrival of foreign insurance companies on the unprepared national market of foreign insurance companies will undermine the country's economic stability and put a stop to the positive development of the recent years. Other analysts believe that foreign companies will bring new technologies, raise the general level of insurance culture in the country and create the conditions necessary for the improvement of the insurance services quality.



GENNADY  BUGROV
    [~DETAIL_TEXT] => 

Developmental diseases

By the beginning of 2005, there were registered 1280 companies involved in the insurance business in Russia, with the authorized capital stock comprising at the moment RUR 139.3 bln.

Naturally, the large number of companies registered in the state register of insurance companies does not signify either the advanced development of the market, or lack of global economical and political problems in this sphere. 

Not long ago, among the most common problems of the Russian insurance market were the cases of fraud, which, in experts' opinion, indicated the imperfection of the legal basis, as witnessed both on behalf of the insurance companies and of the customers. As the legislation developed and the qualification of the companies personnel increased, the frequency of customers cheating reduced manifold, but the problem of companies cheating remains. By all means, this has nothing to do with the insurance companies, who have long been working on the market and gained a reputation. By making a deal with an insurance company, it is worthwhile to make sure it is operating legally and its representatives - should it be individual persons or separate companies - have legal rights. 

The problem of cheating the customers and signing contracts with maximally balanced terms of insurance can be resolved by attracting professional consultants and mediators. But the institute of insurance brokers, who are to protect the customers' interests as well, is yet underdeveloped in Russia. This is partially due to the underdevelopment of insurance services that could be in real demand on the market. Another reason is the uneven concentration of insurance business: this is the so-called "problem of periphery", which implies that customers in minor towns cannot receive the full gamut of insurance services due to companies' lacking the properly "branchy" structure (for many insurance companies maintaining such a structure is unprofitable).



Who does not insure, does not win

The common for the Russian insurance business problems, naturally, have their effect on the transportation sector. According to certain expert estimations, no more than 20% of all consignments are provided with proper insurance, which can be proved by a simple calculation. In 2004 the total sum of charges comprised some RUR 7 bln, while the insurance companies' contracts liability - some RUR 1800 bln, which is manifold less than the country's cargo turnover. Thus, most of the cargoes in Russia are not being insured. At that one needs to bear in mind the fact that the situation may differ dramatically depending on the transportation mode and the kind of contract.

All the insurance companies agreed unanimously that the greatest share in the consignments insurance portfolio belongs to the export-import operations, while domestically carried cargoes are very seldom insured. First of all, these are the cargoes of large companies and industrial enterprises, insured in the framework of the general corporate insurance programs that cover, as a rule, all the customer's property, as well as its responsibility to third parties. Secondly, these are the cargoes of dynamically developing companies eager to work according to international standards. And the third (smallest) category of insurers are the consigners and freight forwarders who have already suffered losses caused by the consignment damage or destruction.

Another important peculiarity of Russia in terms of cargoes insurance is the specificity of its transport legislation in that it sets a higher carrier or freight forwarder responsibility for the cargo than it is prescribed by the international norms and regulations in common use. This causes certain complications, as in reality the financial state of the freight forwarding or carrying company does not always allow for covering the consigner's losses. At that, if for air transport the rules require obligatory insurance of the carrier responsibility, in railway or road transportation this requirement is not so categorical. Thus, following cargo damage or destruction, the consigner and the carrier (freight forwarder) may face a difficult situation, which can be resolved only in court. Moreover, during the legal proceedings aimed at determining the guilt of the carrier (which can last for several months or even years), the latter (or freight forwarder) is to discontinue its operation. In this light, the customers of small transport companies face a threat: if the court rules on reparation of damages, it may lead to the carrier bankruptcy, which would prevent it from carrying out the transportation contracts, thus resulting in the consigner's failure to meet its responsibility to third parties. In respect to freight forwarders this risk is even greater, as their major capital is not vehicles (or other property subject to arrest and penalty infliction), but non-material values - the personnel qualification, experience and knowledge.

It is another matter, whether it is necessary at all to insure consignment with the already insured carrier (freight-forwarder) responsibility, and to what extent can the insurance compensation cover the consigner's losses. Almost all insurance companies give a unanimous answer: the insurance compensation in case of insured carrier (freight-forwarder) responsibility is much less than the one paid according to the cargo insurance contracts. This aspect is not always taken into account by the consigners, even those whose cargoes are characterized by liquidity on criminal markets. In the meanwhile a considerable share of losses by transportation is still due to thefts.



On the crossroads

Despite all the problems and imperfections of the national legislation, the Russian insurance services market is developing dynamically, which is vividly illustrated by the constantly increasing interest towards it in foreign business circles. According to FSSN (Federal Service of Insurance Overseeing), by early 2005 (against 1 January 2004), among the Russian non-residents, there was a notable increase of capital from Canada - at 5.2 times, from Cyprus - at 3.68 times, from Germany - at 2.35 times, from the USA - at 1.46 times and capital from France was first registered. Nevertheless, Russia is currently on the crossroads, contemplating whether it would be to the good or evil to enter the WTO and to let large players with world reputation onto its domestic market. At that some experts fear lest the arrival of foreign insurance companies on the unprepared national market of foreign insurance companies will undermine the country's economic stability and put a stop to the positive development of the recent years. Other analysts believe that foreign companies will bring new technologies, raise the general level of insurance culture in the country and create the conditions necessary for the improvement of the insurance services quality.



GENNADY  BUGROV
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    [DETAIL_TEXT] => 

Developmental diseases

By the beginning of 2005, there were registered 1280 companies involved in the insurance business in Russia, with the authorized capital stock comprising at the moment RUR 139.3 bln.

Naturally, the large number of companies registered in the state register of insurance companies does not signify either the advanced development of the market, or lack of global economical and political problems in this sphere. 

Not long ago, among the most common problems of the Russian insurance market were the cases of fraud, which, in experts' opinion, indicated the imperfection of the legal basis, as witnessed both on behalf of the insurance companies and of the customers. As the legislation developed and the qualification of the companies personnel increased, the frequency of customers cheating reduced manifold, but the problem of companies cheating remains. By all means, this has nothing to do with the insurance companies, who have long been working on the market and gained a reputation. By making a deal with an insurance company, it is worthwhile to make sure it is operating legally and its representatives - should it be individual persons or separate companies - have legal rights. 

The problem of cheating the customers and signing contracts with maximally balanced terms of insurance can be resolved by attracting professional consultants and mediators. But the institute of insurance brokers, who are to protect the customers' interests as well, is yet underdeveloped in Russia. This is partially due to the underdevelopment of insurance services that could be in real demand on the market. Another reason is the uneven concentration of insurance business: this is the so-called "problem of periphery", which implies that customers in minor towns cannot receive the full gamut of insurance services due to companies' lacking the properly "branchy" structure (for many insurance companies maintaining such a structure is unprofitable).



Who does not insure, does not win

The common for the Russian insurance business problems, naturally, have their effect on the transportation sector. According to certain expert estimations, no more than 20% of all consignments are provided with proper insurance, which can be proved by a simple calculation. In 2004 the total sum of charges comprised some RUR 7 bln, while the insurance companies' contracts liability - some RUR 1800 bln, which is manifold less than the country's cargo turnover. Thus, most of the cargoes in Russia are not being insured. At that one needs to bear in mind the fact that the situation may differ dramatically depending on the transportation mode and the kind of contract.

All the insurance companies agreed unanimously that the greatest share in the consignments insurance portfolio belongs to the export-import operations, while domestically carried cargoes are very seldom insured. First of all, these are the cargoes of large companies and industrial enterprises, insured in the framework of the general corporate insurance programs that cover, as a rule, all the customer's property, as well as its responsibility to third parties. Secondly, these are the cargoes of dynamically developing companies eager to work according to international standards. And the third (smallest) category of insurers are the consigners and freight forwarders who have already suffered losses caused by the consignment damage or destruction.

Another important peculiarity of Russia in terms of cargoes insurance is the specificity of its transport legislation in that it sets a higher carrier or freight forwarder responsibility for the cargo than it is prescribed by the international norms and regulations in common use. This causes certain complications, as in reality the financial state of the freight forwarding or carrying company does not always allow for covering the consigner's losses. At that, if for air transport the rules require obligatory insurance of the carrier responsibility, in railway or road transportation this requirement is not so categorical. Thus, following cargo damage or destruction, the consigner and the carrier (freight forwarder) may face a difficult situation, which can be resolved only in court. Moreover, during the legal proceedings aimed at determining the guilt of the carrier (which can last for several months or even years), the latter (or freight forwarder) is to discontinue its operation. In this light, the customers of small transport companies face a threat: if the court rules on reparation of damages, it may lead to the carrier bankruptcy, which would prevent it from carrying out the transportation contracts, thus resulting in the consigner's failure to meet its responsibility to third parties. In respect to freight forwarders this risk is even greater, as their major capital is not vehicles (or other property subject to arrest and penalty infliction), but non-material values - the personnel qualification, experience and knowledge.

It is another matter, whether it is necessary at all to insure consignment with the already insured carrier (freight-forwarder) responsibility, and to what extent can the insurance compensation cover the consigner's losses. Almost all insurance companies give a unanimous answer: the insurance compensation in case of insured carrier (freight-forwarder) responsibility is much less than the one paid according to the cargo insurance contracts. This aspect is not always taken into account by the consigners, even those whose cargoes are characterized by liquidity on criminal markets. In the meanwhile a considerable share of losses by transportation is still due to thefts.



On the crossroads

Despite all the problems and imperfections of the national legislation, the Russian insurance services market is developing dynamically, which is vividly illustrated by the constantly increasing interest towards it in foreign business circles. According to FSSN (Federal Service of Insurance Overseeing), by early 2005 (against 1 January 2004), among the Russian non-residents, there was a notable increase of capital from Canada - at 5.2 times, from Cyprus - at 3.68 times, from Germany - at 2.35 times, from the USA - at 1.46 times and capital from France was first registered. Nevertheless, Russia is currently on the crossroads, contemplating whether it would be to the good or evil to enter the WTO and to let large players with world reputation onto its domestic market. At that some experts fear lest the arrival of foreign insurance companies on the unprepared national market of foreign insurance companies will undermine the country's economic stability and put a stop to the positive development of the recent years. Other analysts believe that foreign companies will bring new technologies, raise the general level of insurance culture in the country and create the conditions necessary for the improvement of the insurance services quality.



GENNADY  BUGROV
    [~DETAIL_TEXT] => 

Developmental diseases

By the beginning of 2005, there were registered 1280 companies involved in the insurance business in Russia, with the authorized capital stock comprising at the moment RUR 139.3 bln.

Naturally, the large number of companies registered in the state register of insurance companies does not signify either the advanced development of the market, or lack of global economical and political problems in this sphere. 

Not long ago, among the most common problems of the Russian insurance market were the cases of fraud, which, in experts' opinion, indicated the imperfection of the legal basis, as witnessed both on behalf of the insurance companies and of the customers. As the legislation developed and the qualification of the companies personnel increased, the frequency of customers cheating reduced manifold, but the problem of companies cheating remains. By all means, this has nothing to do with the insurance companies, who have long been working on the market and gained a reputation. By making a deal with an insurance company, it is worthwhile to make sure it is operating legally and its representatives - should it be individual persons or separate companies - have legal rights. 

The problem of cheating the customers and signing contracts with maximally balanced terms of insurance can be resolved by attracting professional consultants and mediators. But the institute of insurance brokers, who are to protect the customers' interests as well, is yet underdeveloped in Russia. This is partially due to the underdevelopment of insurance services that could be in real demand on the market. Another reason is the uneven concentration of insurance business: this is the so-called "problem of periphery", which implies that customers in minor towns cannot receive the full gamut of insurance services due to companies' lacking the properly "branchy" structure (for many insurance companies maintaining such a structure is unprofitable).



Who does not insure, does not win

The common for the Russian insurance business problems, naturally, have their effect on the transportation sector. According to certain expert estimations, no more than 20% of all consignments are provided with proper insurance, which can be proved by a simple calculation. In 2004 the total sum of charges comprised some RUR 7 bln, while the insurance companies' contracts liability - some RUR 1800 bln, which is manifold less than the country's cargo turnover. Thus, most of the cargoes in Russia are not being insured. At that one needs to bear in mind the fact that the situation may differ dramatically depending on the transportation mode and the kind of contract.

All the insurance companies agreed unanimously that the greatest share in the consignments insurance portfolio belongs to the export-import operations, while domestically carried cargoes are very seldom insured. First of all, these are the cargoes of large companies and industrial enterprises, insured in the framework of the general corporate insurance programs that cover, as a rule, all the customer's property, as well as its responsibility to third parties. Secondly, these are the cargoes of dynamically developing companies eager to work according to international standards. And the third (smallest) category of insurers are the consigners and freight forwarders who have already suffered losses caused by the consignment damage or destruction.

Another important peculiarity of Russia in terms of cargoes insurance is the specificity of its transport legislation in that it sets a higher carrier or freight forwarder responsibility for the cargo than it is prescribed by the international norms and regulations in common use. This causes certain complications, as in reality the financial state of the freight forwarding or carrying company does not always allow for covering the consigner's losses. At that, if for air transport the rules require obligatory insurance of the carrier responsibility, in railway or road transportation this requirement is not so categorical. Thus, following cargo damage or destruction, the consigner and the carrier (freight forwarder) may face a difficult situation, which can be resolved only in court. Moreover, during the legal proceedings aimed at determining the guilt of the carrier (which can last for several months or even years), the latter (or freight forwarder) is to discontinue its operation. In this light, the customers of small transport companies face a threat: if the court rules on reparation of damages, it may lead to the carrier bankruptcy, which would prevent it from carrying out the transportation contracts, thus resulting in the consigner's failure to meet its responsibility to third parties. In respect to freight forwarders this risk is even greater, as their major capital is not vehicles (or other property subject to arrest and penalty infliction), but non-material values - the personnel qualification, experience and knowledge.

It is another matter, whether it is necessary at all to insure consignment with the already insured carrier (freight-forwarder) responsibility, and to what extent can the insurance compensation cover the consigner's losses. Almost all insurance companies give a unanimous answer: the insurance compensation in case of insured carrier (freight-forwarder) responsibility is much less than the one paid according to the cargo insurance contracts. This aspect is not always taken into account by the consigners, even those whose cargoes are characterized by liquidity on criminal markets. In the meanwhile a considerable share of losses by transportation is still due to thefts.



On the crossroads

Despite all the problems and imperfections of the national legislation, the Russian insurance services market is developing dynamically, which is vividly illustrated by the constantly increasing interest towards it in foreign business circles. According to FSSN (Federal Service of Insurance Overseeing), by early 2005 (against 1 January 2004), among the Russian non-residents, there was a notable increase of capital from Canada - at 5.2 times, from Cyprus - at 3.68 times, from Germany - at 2.35 times, from the USA - at 1.46 times and capital from France was first registered. Nevertheless, Russia is currently on the crossroads, contemplating whether it would be to the good or evil to enter the WTO and to let large players with world reputation onto its domestic market. At that some experts fear lest the arrival of foreign insurance companies on the unprepared national market of foreign insurance companies will undermine the country's economic stability and put a stop to the positive development of the recent years. Other analysts believe that foreign companies will bring new technologies, raise the general level of insurance culture in the country and create the conditions necessary for the improvement of the insurance services quality.



GENNADY  BUGROV
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Bordersand legislation systems

Currently there exists the following order of transportation documents registration. The freight transportation from the countries SMGS participants to the countries CIM participants in transit via the railways of Lithuania and Poland, which, having become EU-members, are participants of both transportation systems and have the right to re-register transportation documents from one legislation norm to the other, is carried out by means of re-registering transportation documents at the border-crossing stations. Cargoes transported from the countries participants of the SMGS system to Lithuania and Poland and back are registered with the SMGS waybill for the whole route. No customs inspection is carried out within the EU. But the cargoes imported on the Polish territory are subject to selective customs inspection by the state services cooperating with the customs administration. At the Polish border crossing stations located on the EU external border, the customs control is carried out according to the resolutions of the Council setting the Union's Customs Code, as well as in accordance with the internal customs rules of the Polish Republic. In accordance with the above mentioned rules, the cargoes arriving on the Polish territory by railway from non-EU member countries, supplied with the CIM waybill to follow through the EU territory are subject to simplified customs transit procedures, while control on the EU borders is carried out by customs bodies cooperating with the bodies of the Plants and Seeds Protection Inspection, Veterinary Inspection, Environment Inspectorate, Sanitary Inspection and the Agricultural Goods Quality Inspection.



Common rules for all

Lack of a common waybill for carrying cargoes between the countries applying the CIM waybill and those applying the SMGS waybill significantly complicates the freight transportation process, as the carriers have to re-register their transportation documents at the border. To resolve this problem, the Organization for Railways Cooperation and the International Railway Transport Committee (CIT) formed a joint working group to research the possibilities of combining the two transportation norms' and developing a unified waybill. This will not be a new document, but a compilation of CIM and SMGP waybills.

The following divisions of the RF Ministry of Transport are participating in the working group: the Department of State Policy in the Sphere of Railway, Sea and River Transport; the Department of International Cooperation and the Department of Legal Support for the Lawmaking Activity.

According to the deputy director of the Department of State Policy in the Sphere of Railway, Sea and River Transport of the RF Ministry of Transport Sergey Tugarinov, the unified waybill will have the following design: in the center of the document there will be a field with data common for the two norms. Specific fields will be separated and marked with different colours: the field for CIM data will be at the top and marked red, the SMGS field will be at the bottom.

According to the document developers, the waybill is to be accepted as a customs declaration, for which purpose they are closely cooperating with the customs services on revealing and resolving problems related to cargo sealing, documents registration, etc. The customs also requires an appendix and an invoice for the cargo to determine its cost (value). The consigner has the right to either fill out the field on the cargo cost in the unified waybill, or to attach an invoice.

Among the unsettled issues remains the matter of responsibility for the cargo integrity during the switch of legislations from CIM to SMGP on the border crossing post Malashevich-Brest with an accomponying switch of the gauge width. In case of cargo loss, it is important to identify which party is to be accountable for it, which requires a detailed agreement of certain theses in CIM and SMGS systems.

Besides, there remains a series of legal matters, such as that of nomenclature: one and the same cargo may have different names in different fields.

At present, the focus of the working group is the development of rules to fill out the unified waybill, claims, the deputy director of the Department of Legal Support for the Lawmaking Activity of the RF Ministry of Transport Alexey Druzhinin.

Initially, the form of the unified waybill was to be approved and presented in March 2006, but the Ministry of Transport representatives have doubts as to the possibility to meet the deadline, stressing that there are too many unresolved issues remaining yet. Experimental testing of the document was planned for September 2006.

Let us add that the introduction of the unified waybill in 2006 is conditioned by the necessity to carry out the changes in the EU states software. For the new EU members, this document will resolve the problem of applying the SMGS transport legislation.

The next meeting on the development of the unified waybill is scheduled for 13-15 December in Bern (Switzerland).



IVAN  DENISENKO
    [~DETAIL_TEXT] => 

Bordersand legislation systems

Currently there exists the following order of transportation documents registration. The freight transportation from the countries SMGS participants to the countries CIM participants in transit via the railways of Lithuania and Poland, which, having become EU-members, are participants of both transportation systems and have the right to re-register transportation documents from one legislation norm to the other, is carried out by means of re-registering transportation documents at the border-crossing stations. Cargoes transported from the countries participants of the SMGS system to Lithuania and Poland and back are registered with the SMGS waybill for the whole route. No customs inspection is carried out within the EU. But the cargoes imported on the Polish territory are subject to selective customs inspection by the state services cooperating with the customs administration. At the Polish border crossing stations located on the EU external border, the customs control is carried out according to the resolutions of the Council setting the Union's Customs Code, as well as in accordance with the internal customs rules of the Polish Republic. In accordance with the above mentioned rules, the cargoes arriving on the Polish territory by railway from non-EU member countries, supplied with the CIM waybill to follow through the EU territory are subject to simplified customs transit procedures, while control on the EU borders is carried out by customs bodies cooperating with the bodies of the Plants and Seeds Protection Inspection, Veterinary Inspection, Environment Inspectorate, Sanitary Inspection and the Agricultural Goods Quality Inspection.



Common rules for all

Lack of a common waybill for carrying cargoes between the countries applying the CIM waybill and those applying the SMGS waybill significantly complicates the freight transportation process, as the carriers have to re-register their transportation documents at the border. To resolve this problem, the Organization for Railways Cooperation and the International Railway Transport Committee (CIT) formed a joint working group to research the possibilities of combining the two transportation norms' and developing a unified waybill. This will not be a new document, but a compilation of CIM and SMGP waybills.

The following divisions of the RF Ministry of Transport are participating in the working group: the Department of State Policy in the Sphere of Railway, Sea and River Transport; the Department of International Cooperation and the Department of Legal Support for the Lawmaking Activity.

According to the deputy director of the Department of State Policy in the Sphere of Railway, Sea and River Transport of the RF Ministry of Transport Sergey Tugarinov, the unified waybill will have the following design: in the center of the document there will be a field with data common for the two norms. Specific fields will be separated and marked with different colours: the field for CIM data will be at the top and marked red, the SMGS field will be at the bottom.

According to the document developers, the waybill is to be accepted as a customs declaration, for which purpose they are closely cooperating with the customs services on revealing and resolving problems related to cargo sealing, documents registration, etc. The customs also requires an appendix and an invoice for the cargo to determine its cost (value). The consigner has the right to either fill out the field on the cargo cost in the unified waybill, or to attach an invoice.

Among the unsettled issues remains the matter of responsibility for the cargo integrity during the switch of legislations from CIM to SMGP on the border crossing post Malashevich-Brest with an accomponying switch of the gauge width. In case of cargo loss, it is important to identify which party is to be accountable for it, which requires a detailed agreement of certain theses in CIM and SMGS systems.

Besides, there remains a series of legal matters, such as that of nomenclature: one and the same cargo may have different names in different fields.

At present, the focus of the working group is the development of rules to fill out the unified waybill, claims, the deputy director of the Department of Legal Support for the Lawmaking Activity of the RF Ministry of Transport Alexey Druzhinin.

Initially, the form of the unified waybill was to be approved and presented in March 2006, but the Ministry of Transport representatives have doubts as to the possibility to meet the deadline, stressing that there are too many unresolved issues remaining yet. Experimental testing of the document was planned for September 2006.

Let us add that the introduction of the unified waybill in 2006 is conditioned by the necessity to carry out the changes in the EU states software. For the new EU members, this document will resolve the problem of applying the SMGS transport legislation.

The next meeting on the development of the unified waybill is scheduled for 13-15 December in Bern (Switzerland).



IVAN  DENISENKO
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    [DETAIL_TEXT] => 

Bordersand legislation systems

Currently there exists the following order of transportation documents registration. The freight transportation from the countries SMGS participants to the countries CIM participants in transit via the railways of Lithuania and Poland, which, having become EU-members, are participants of both transportation systems and have the right to re-register transportation documents from one legislation norm to the other, is carried out by means of re-registering transportation documents at the border-crossing stations. Cargoes transported from the countries participants of the SMGS system to Lithuania and Poland and back are registered with the SMGS waybill for the whole route. No customs inspection is carried out within the EU. But the cargoes imported on the Polish territory are subject to selective customs inspection by the state services cooperating with the customs administration. At the Polish border crossing stations located on the EU external border, the customs control is carried out according to the resolutions of the Council setting the Union's Customs Code, as well as in accordance with the internal customs rules of the Polish Republic. In accordance with the above mentioned rules, the cargoes arriving on the Polish territory by railway from non-EU member countries, supplied with the CIM waybill to follow through the EU territory are subject to simplified customs transit procedures, while control on the EU borders is carried out by customs bodies cooperating with the bodies of the Plants and Seeds Protection Inspection, Veterinary Inspection, Environment Inspectorate, Sanitary Inspection and the Agricultural Goods Quality Inspection.



Common rules for all

Lack of a common waybill for carrying cargoes between the countries applying the CIM waybill and those applying the SMGS waybill significantly complicates the freight transportation process, as the carriers have to re-register their transportation documents at the border. To resolve this problem, the Organization for Railways Cooperation and the International Railway Transport Committee (CIT) formed a joint working group to research the possibilities of combining the two transportation norms' and developing a unified waybill. This will not be a new document, but a compilation of CIM and SMGP waybills.

The following divisions of the RF Ministry of Transport are participating in the working group: the Department of State Policy in the Sphere of Railway, Sea and River Transport; the Department of International Cooperation and the Department of Legal Support for the Lawmaking Activity.

According to the deputy director of the Department of State Policy in the Sphere of Railway, Sea and River Transport of the RF Ministry of Transport Sergey Tugarinov, the unified waybill will have the following design: in the center of the document there will be a field with data common for the two norms. Specific fields will be separated and marked with different colours: the field for CIM data will be at the top and marked red, the SMGS field will be at the bottom.

According to the document developers, the waybill is to be accepted as a customs declaration, for which purpose they are closely cooperating with the customs services on revealing and resolving problems related to cargo sealing, documents registration, etc. The customs also requires an appendix and an invoice for the cargo to determine its cost (value). The consigner has the right to either fill out the field on the cargo cost in the unified waybill, or to attach an invoice.

Among the unsettled issues remains the matter of responsibility for the cargo integrity during the switch of legislations from CIM to SMGP on the border crossing post Malashevich-Brest with an accomponying switch of the gauge width. In case of cargo loss, it is important to identify which party is to be accountable for it, which requires a detailed agreement of certain theses in CIM and SMGS systems.

Besides, there remains a series of legal matters, such as that of nomenclature: one and the same cargo may have different names in different fields.

At present, the focus of the working group is the development of rules to fill out the unified waybill, claims, the deputy director of the Department of Legal Support for the Lawmaking Activity of the RF Ministry of Transport Alexey Druzhinin.

Initially, the form of the unified waybill was to be approved and presented in March 2006, but the Ministry of Transport representatives have doubts as to the possibility to meet the deadline, stressing that there are too many unresolved issues remaining yet. Experimental testing of the document was planned for September 2006.

Let us add that the introduction of the unified waybill in 2006 is conditioned by the necessity to carry out the changes in the EU states software. For the new EU members, this document will resolve the problem of applying the SMGS transport legislation.

The next meeting on the development of the unified waybill is scheduled for 13-15 December in Bern (Switzerland).



IVAN  DENISENKO
    [~DETAIL_TEXT] => 

Bordersand legislation systems

Currently there exists the following order of transportation documents registration. The freight transportation from the countries SMGS participants to the countries CIM participants in transit via the railways of Lithuania and Poland, which, having become EU-members, are participants of both transportation systems and have the right to re-register transportation documents from one legislation norm to the other, is carried out by means of re-registering transportation documents at the border-crossing stations. Cargoes transported from the countries participants of the SMGS system to Lithuania and Poland and back are registered with the SMGS waybill for the whole route. No customs inspection is carried out within the EU. But the cargoes imported on the Polish territory are subject to selective customs inspection by the state services cooperating with the customs administration. At the Polish border crossing stations located on the EU external border, the customs control is carried out according to the resolutions of the Council setting the Union's Customs Code, as well as in accordance with the internal customs rules of the Polish Republic. In accordance with the above mentioned rules, the cargoes arriving on the Polish territory by railway from non-EU member countries, supplied with the CIM waybill to follow through the EU territory are subject to simplified customs transit procedures, while control on the EU borders is carried out by customs bodies cooperating with the bodies of the Plants and Seeds Protection Inspection, Veterinary Inspection, Environment Inspectorate, Sanitary Inspection and the Agricultural Goods Quality Inspection.



Common rules for all

Lack of a common waybill for carrying cargoes between the countries applying the CIM waybill and those applying the SMGS waybill significantly complicates the freight transportation process, as the carriers have to re-register their transportation documents at the border. To resolve this problem, the Organization for Railways Cooperation and the International Railway Transport Committee (CIT) formed a joint working group to research the possibilities of combining the two transportation norms' and developing a unified waybill. This will not be a new document, but a compilation of CIM and SMGP waybills.

The following divisions of the RF Ministry of Transport are participating in the working group: the Department of State Policy in the Sphere of Railway, Sea and River Transport; the Department of International Cooperation and the Department of Legal Support for the Lawmaking Activity.

According to the deputy director of the Department of State Policy in the Sphere of Railway, Sea and River Transport of the RF Ministry of Transport Sergey Tugarinov, the unified waybill will have the following design: in the center of the document there will be a field with data common for the two norms. Specific fields will be separated and marked with different colours: the field for CIM data will be at the top and marked red, the SMGS field will be at the bottom.

According to the document developers, the waybill is to be accepted as a customs declaration, for which purpose they are closely cooperating with the customs services on revealing and resolving problems related to cargo sealing, documents registration, etc. The customs also requires an appendix and an invoice for the cargo to determine its cost (value). The consigner has the right to either fill out the field on the cargo cost in the unified waybill, or to attach an invoice.

Among the unsettled issues remains the matter of responsibility for the cargo integrity during the switch of legislations from CIM to SMGP on the border crossing post Malashevich-Brest with an accomponying switch of the gauge width. In case of cargo loss, it is important to identify which party is to be accountable for it, which requires a detailed agreement of certain theses in CIM and SMGS systems.

Besides, there remains a series of legal matters, such as that of nomenclature: one and the same cargo may have different names in different fields.

At present, the focus of the working group is the development of rules to fill out the unified waybill, claims, the deputy director of the Department of Legal Support for the Lawmaking Activity of the RF Ministry of Transport Alexey Druzhinin.

Initially, the form of the unified waybill was to be approved and presented in March 2006, but the Ministry of Transport representatives have doubts as to the possibility to meet the deadline, stressing that there are too many unresolved issues remaining yet. Experimental testing of the document was planned for September 2006.

Let us add that the introduction of the unified waybill in 2006 is conditioned by the necessity to carry out the changes in the EU states software. For the new EU members, this document will resolve the problem of applying the SMGS transport legislation.

The next meeting on the development of the unified waybill is scheduled for 13-15 December in Bern (Switzerland).



IVAN  DENISENKO
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    [~PREVIEW_TEXT] => The next year's coming introduction of a unified waybill for operating in the second Pan-European Transport Corridor Berlin-Warsaw-Brest-Minsk-Moscow-Nizhny Novgorod will allow to carry out transportation from the countries using the CIM (Convention on the Contract for International Carriage of Goods by Rail) waybill to the countries using the SMGS (Agreement on International Freight Communication) waybill and vice versa withoutre-registering transportation documents.

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Still strong

Among the major factors that contributed to the beginning of the flow of long-term investments was the railway reform. It started in 2003 with the transformation of the RF Ministry of Railways (in charge of the whole locomotives and both passenger and freight rolling stock) in the Russian Railways JSC. The course taken by the RF Government to the formation in the railway transportation sphere of a competitive sector resulted also in active interest to the engineering industry on the part of business. At present the increasing demand conditioned by the OAO RZD needs has been joined by the growing number of orders on the part of rolling stock private owners. 

ZAO Transmashholding (TMH) is the largest Russian company uniting the leading railway machinery engineering enterprises. The industrial giant includes such well-known plants as the Novocherkasskiy Electrical Locomotives Plant (NEVZ), Oktyabrskiy Electrical Carriages Repairs Plant (St.-Petersburg), Bryanskiy and Demikhovskiy Engineering Plants (BMZ and DMZ), Penzadiezelmash, Kushvinskiy Transport Equipment Plant, Bezhitskiy Steel Mill and Muromskiy Pointer Plant, Tsentrosvar transport engineering research-and-production enterprise, MetroWagonMash and Kolomensky Plant. Besides, ZAO Transmashholding owns large stock packets of the Tverskoy Carriages Plant specializing in passenger carriages. The THM total sales increased in the past year by 50% to RUR 27.1 bln.

At present the holding keeps cooperating with foreign partners. The Russian company focuses on getting technology of some components production. Thus, in April 2005 Transmashholding together with the Siemens corporation founded OOO Transconverter - the joint venture specializing on producing converters, for electric locomotives and carriages. The German party gives the joint venture (in which the control shareholding is owned by TMH) the technology of converters producing. 

The second largest owner of engineering enterprises is OAO RZD, which includes mainly wagons and locomotives repair plants: Saranskiy Repair Plant, Roslavlskiy, Kanashskiy, and Barnaulskiy Carriages Repair Plants, and some more. Apart from repairs, most of them produce and supply spare parts: form wheel pairs, manufacture bogies, railway cisterns' platforms for boilers of various types and dimensions, and other units and parts. 

In freight wagons engineering prominent positions are held by such enterprises as OAO Altaivagon, OAO Abakanvagonmash, OAO Ruzkhimmash, Bryansky Engineering Plant and others. The Lyudinovskiy Diesel-Locomotive Plant is considered to be an interesting player on the engineering market: its diesel-locomotive shunters are viewed as promising ones as many of them are exploited by industrial enterprises.

It needs to be noted that despite the fact that most of the engineering enterprises belong to the private sector of economy, some plants remain in state ownership. The most prominent of them is a largest CIS producer of freight rolling stock - State-owned PO Uralwagonzavod. Besides, the adjacent sectors' enterprises are actively entering the railway engineering market. Thus, the large trucks producer - OAO KAMAZ - started in 2005 to produce at its subsidiary OAO KAMAZ-Instrumentspetsmash spare parts for Russian Railways. The output of certain items exceeds 60 thousand per annum. 

The plants of the former Soviet republics have also been actively entering the market, among which the leaders are Ukrainian engineering enterprises: OAO Dneprovagonmash, MZTM (Marioupol), Kryukovskiy Wagon Engineering Plant. The creation in 2004 of the ZAO TD Rusukrvagon, uniting the sales interests of two Ukrainian (OAO Dneprovagonmash and the Kremenchugskiy Steel Mill) and a Russian (OAO Metal Constructions Plant) enterprises, became a fine example of Russian and Ukrainian markets integration. Among the company's customers are the Novolipetskiy and Magnitogorskiy Metallurgical Mills, Mechel, SUEK, Apatite, ZAO Severstaltrans, and many others. 



Forecast is perfect

According to analysts the prospects of the Russian transport engineering industry of quite certain and positive, which is determined, first of all, by the increasing needs in the wagons and locomotives renovation. At present on the railway network there are exploited some 787.6 thousand freight wagons belonging directly to OAO RZD and to industrial enterprises and companies-operators. At that over 16% of this stock are wagons having exceeded their service life. Thus the period of economic crisis only increased the demand for the engineering industry production and no drop of demand is expected in the years to come. Thus, if in 2003 and 2004 OAO RZD purchased from the Russian producers 3.5 and 6 thousand of gondola carriages respectively, in 2005 the figure will be 8 thousand, while the Investment Program for 2006 provides for purchasing (by the leasing scheme) 5.3 thousand freight wagons more and the modernization of 5.5 thousand of old wagons. The total investment will comprise some RUR 10.6 bln.

The situation with other products is similar. In 2004 the Russian Railways received 540 of new locomotive-drawn (against 438 units in 2003), 82 of new mainline passenger locomotives, 278 sections of motor-car sections, there increased the amount of purchased electrical locomotives (by 79%) and diesel locomotives (by 20%). At that the increased demand on the part of OAO RZD is not the only chance for the engineering companies. The Government plans on the railway industry reform provide for the increase of the privately owned rolling stock up to the parity with the OAO RZD correlation 50/50 by 2010. 



Conception is needed

In the light of the significantly increased requirements to the transportation services quality on the part of the customers, as well as the need to cut the transportation prime cost, the transport companies set before the engineering enterprises the more and more complicated tasks. At that it is not only the matter of raising the technical and economic requirements to the rolling stock, but also of formation of a different ideology. 

"Today we should be talking of an industrial and innovative policy for the whole country", believes the OAO RZD president Vladimir Yakunin. Such a position of the head of the largest carrier company is shared by other market participants, as the RF Government has not so far completed the development of the common state policy to allow creating balanced conditions reflecting the interests of all the parties. 

The major problem in the relations between the transport and engineering companies is the matter of stability of prices for the products. Due to constantly increasing prime cost the wagons and locomotives produced by the companies are not always affordable for the railway, which is operating in the conditions of state-regulated tariffs. That is why OAO RZD considers it necessary for Russia to develop a comprehensive and integral Conception of the Railway Engineering Industry Development to create the necessary balance between the prices for the engineering products and the railway transportation tariffs. The company's experts believe this would give a powerful impetus to forward movement for both transport and engineering complexes. 

Not waiting for the Government resolutions, OAO RZD is already making efforts in this direction, cooperating closely with railway machinery producers. The company has signed long-term contracts with ZAO Transmashholding and Uralwagonzavod.



Only forward

Among the priorities set before the Russian engineering industry OAO RZD favours the development of powerful, competitive on the world market locomotives research-and-production. According to the company's management, the new locomotives' advantages should consist in increased reliability and efficiency together with reduced operation costs by means of increased terms of operation between repairs, which, in its turn would allow to direct more finances on purchasing wagons. At that it needs to be noted, that not all the operators hold this conception, as railway locomotives remain expensive and the companies' assets do not allow so far to purchase rolling stock of this category at a mass scale. Therefore, parallel to the development of new locomotives there is actively developing the sector of freight carriages engineering.

The main conceptual trend in the freight wagons engineering is the idea of designing rolling stock of new generation (with greater capacity and tonnage), with axial load of 25 tons. According to the calculations by Russian Scientific and Research Institute for Rail Transport (VNIIZhT), having carried out the feasibility studies on selecting the necessary parameters for these wagons, thanks to the increased loading of the wheel pairs on the rails the new wagons efficiency increases by 5-10%, while for specialized wagons this indicator reaches 15-20%. According to the technical requirements to all kinds of new generation wagons there has been prolonged their service life and operation period between repairs. Thus, the service life of a gondola car has been increased from 22 to 32 years, and the operation period between repairs - from 210 to 500 thousand kilometers.

On the other hand, despite the fact that many designs are considered to be quite promising, the share of the new generation wagons launched in manufacturing production is not sufficient so far. The reason for this is the state of bogies that are not ready for the new carriages and do not fully correspond to the requirements of the new epoch. Nevertheless, the works in this direction are under way. The Bryansky Engineering Plant (incorporated into TMH), State-owned PO Uralwagonzavod engineers are working most actively on designing the bogies with 25 tons axial load. In as far as 2000 Uralwagonzavod's experts presented the new bogie of 18-194 design. The first samples were not quite satisfying and in certain parameters did not surpass the old-design18-100 bogies. But the new design determined the direction of further research. At present the 18-194-1 design bogie (also known as 18-579) is under test at the VNIIZhT testing ground in Shcherbinka, in the course of which it demonstrates improved characteristics and results. In 2006 PO Uralwagonzavod may launch them in manufacturing production. 

In general, if the current growth rate preserves (in 2004 the railway engineering industry growth rate comprised 28%), the Russian rolling stock producers will be able in a few years to become a leading sector of the country's economy and take a decent stand in the international market. 



GENNADY  BUGROV
    [~DETAIL_TEXT] => 

Still strong

Among the major factors that contributed to the beginning of the flow of long-term investments was the railway reform. It started in 2003 with the transformation of the RF Ministry of Railways (in charge of the whole locomotives and both passenger and freight rolling stock) in the Russian Railways JSC. The course taken by the RF Government to the formation in the railway transportation sphere of a competitive sector resulted also in active interest to the engineering industry on the part of business. At present the increasing demand conditioned by the OAO RZD needs has been joined by the growing number of orders on the part of rolling stock private owners. 

ZAO Transmashholding (TMH) is the largest Russian company uniting the leading railway machinery engineering enterprises. The industrial giant includes such well-known plants as the Novocherkasskiy Electrical Locomotives Plant (NEVZ), Oktyabrskiy Electrical Carriages Repairs Plant (St.-Petersburg), Bryanskiy and Demikhovskiy Engineering Plants (BMZ and DMZ), Penzadiezelmash, Kushvinskiy Transport Equipment Plant, Bezhitskiy Steel Mill and Muromskiy Pointer Plant, Tsentrosvar transport engineering research-and-production enterprise, MetroWagonMash and Kolomensky Plant. Besides, ZAO Transmashholding owns large stock packets of the Tverskoy Carriages Plant specializing in passenger carriages. The THM total sales increased in the past year by 50% to RUR 27.1 bln.

At present the holding keeps cooperating with foreign partners. The Russian company focuses on getting technology of some components production. Thus, in April 2005 Transmashholding together with the Siemens corporation founded OOO Transconverter - the joint venture specializing on producing converters, for electric locomotives and carriages. The German party gives the joint venture (in which the control shareholding is owned by TMH) the technology of converters producing. 

The second largest owner of engineering enterprises is OAO RZD, which includes mainly wagons and locomotives repair plants: Saranskiy Repair Plant, Roslavlskiy, Kanashskiy, and Barnaulskiy Carriages Repair Plants, and some more. Apart from repairs, most of them produce and supply spare parts: form wheel pairs, manufacture bogies, railway cisterns' platforms for boilers of various types and dimensions, and other units and parts. 

In freight wagons engineering prominent positions are held by such enterprises as OAO Altaivagon, OAO Abakanvagonmash, OAO Ruzkhimmash, Bryansky Engineering Plant and others. The Lyudinovskiy Diesel-Locomotive Plant is considered to be an interesting player on the engineering market: its diesel-locomotive shunters are viewed as promising ones as many of them are exploited by industrial enterprises.

It needs to be noted that despite the fact that most of the engineering enterprises belong to the private sector of economy, some plants remain in state ownership. The most prominent of them is a largest CIS producer of freight rolling stock - State-owned PO Uralwagonzavod. Besides, the adjacent sectors' enterprises are actively entering the railway engineering market. Thus, the large trucks producer - OAO KAMAZ - started in 2005 to produce at its subsidiary OAO KAMAZ-Instrumentspetsmash spare parts for Russian Railways. The output of certain items exceeds 60 thousand per annum. 

The plants of the former Soviet republics have also been actively entering the market, among which the leaders are Ukrainian engineering enterprises: OAO Dneprovagonmash, MZTM (Marioupol), Kryukovskiy Wagon Engineering Plant. The creation in 2004 of the ZAO TD Rusukrvagon, uniting the sales interests of two Ukrainian (OAO Dneprovagonmash and the Kremenchugskiy Steel Mill) and a Russian (OAO Metal Constructions Plant) enterprises, became a fine example of Russian and Ukrainian markets integration. Among the company's customers are the Novolipetskiy and Magnitogorskiy Metallurgical Mills, Mechel, SUEK, Apatite, ZAO Severstaltrans, and many others. 



Forecast is perfect

According to analysts the prospects of the Russian transport engineering industry of quite certain and positive, which is determined, first of all, by the increasing needs in the wagons and locomotives renovation. At present on the railway network there are exploited some 787.6 thousand freight wagons belonging directly to OAO RZD and to industrial enterprises and companies-operators. At that over 16% of this stock are wagons having exceeded their service life. Thus the period of economic crisis only increased the demand for the engineering industry production and no drop of demand is expected in the years to come. Thus, if in 2003 and 2004 OAO RZD purchased from the Russian producers 3.5 and 6 thousand of gondola carriages respectively, in 2005 the figure will be 8 thousand, while the Investment Program for 2006 provides for purchasing (by the leasing scheme) 5.3 thousand freight wagons more and the modernization of 5.5 thousand of old wagons. The total investment will comprise some RUR 10.6 bln.

The situation with other products is similar. In 2004 the Russian Railways received 540 of new locomotive-drawn (against 438 units in 2003), 82 of new mainline passenger locomotives, 278 sections of motor-car sections, there increased the amount of purchased electrical locomotives (by 79%) and diesel locomotives (by 20%). At that the increased demand on the part of OAO RZD is not the only chance for the engineering companies. The Government plans on the railway industry reform provide for the increase of the privately owned rolling stock up to the parity with the OAO RZD correlation 50/50 by 2010. 



Conception is needed

In the light of the significantly increased requirements to the transportation services quality on the part of the customers, as well as the need to cut the transportation prime cost, the transport companies set before the engineering enterprises the more and more complicated tasks. At that it is not only the matter of raising the technical and economic requirements to the rolling stock, but also of formation of a different ideology. 

"Today we should be talking of an industrial and innovative policy for the whole country", believes the OAO RZD president Vladimir Yakunin. Such a position of the head of the largest carrier company is shared by other market participants, as the RF Government has not so far completed the development of the common state policy to allow creating balanced conditions reflecting the interests of all the parties. 

The major problem in the relations between the transport and engineering companies is the matter of stability of prices for the products. Due to constantly increasing prime cost the wagons and locomotives produced by the companies are not always affordable for the railway, which is operating in the conditions of state-regulated tariffs. That is why OAO RZD considers it necessary for Russia to develop a comprehensive and integral Conception of the Railway Engineering Industry Development to create the necessary balance between the prices for the engineering products and the railway transportation tariffs. The company's experts believe this would give a powerful impetus to forward movement for both transport and engineering complexes. 

Not waiting for the Government resolutions, OAO RZD is already making efforts in this direction, cooperating closely with railway machinery producers. The company has signed long-term contracts with ZAO Transmashholding and Uralwagonzavod.



Only forward

Among the priorities set before the Russian engineering industry OAO RZD favours the development of powerful, competitive on the world market locomotives research-and-production. According to the company's management, the new locomotives' advantages should consist in increased reliability and efficiency together with reduced operation costs by means of increased terms of operation between repairs, which, in its turn would allow to direct more finances on purchasing wagons. At that it needs to be noted, that not all the operators hold this conception, as railway locomotives remain expensive and the companies' assets do not allow so far to purchase rolling stock of this category at a mass scale. Therefore, parallel to the development of new locomotives there is actively developing the sector of freight carriages engineering.

The main conceptual trend in the freight wagons engineering is the idea of designing rolling stock of new generation (with greater capacity and tonnage), with axial load of 25 tons. According to the calculations by Russian Scientific and Research Institute for Rail Transport (VNIIZhT), having carried out the feasibility studies on selecting the necessary parameters for these wagons, thanks to the increased loading of the wheel pairs on the rails the new wagons efficiency increases by 5-10%, while for specialized wagons this indicator reaches 15-20%. According to the technical requirements to all kinds of new generation wagons there has been prolonged their service life and operation period between repairs. Thus, the service life of a gondola car has been increased from 22 to 32 years, and the operation period between repairs - from 210 to 500 thousand kilometers.

On the other hand, despite the fact that many designs are considered to be quite promising, the share of the new generation wagons launched in manufacturing production is not sufficient so far. The reason for this is the state of bogies that are not ready for the new carriages and do not fully correspond to the requirements of the new epoch. Nevertheless, the works in this direction are under way. The Bryansky Engineering Plant (incorporated into TMH), State-owned PO Uralwagonzavod engineers are working most actively on designing the bogies with 25 tons axial load. In as far as 2000 Uralwagonzavod's experts presented the new bogie of 18-194 design. The first samples were not quite satisfying and in certain parameters did not surpass the old-design18-100 bogies. But the new design determined the direction of further research. At present the 18-194-1 design bogie (also known as 18-579) is under test at the VNIIZhT testing ground in Shcherbinka, in the course of which it demonstrates improved characteristics and results. In 2006 PO Uralwagonzavod may launch them in manufacturing production. 

In general, if the current growth rate preserves (in 2004 the railway engineering industry growth rate comprised 28%), the Russian rolling stock producers will be able in a few years to become a leading sector of the country's economy and take a decent stand in the international market. 



GENNADY  BUGROV
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Still strong

Among the major factors that contributed to the beginning of the flow of long-term investments was the railway reform. It started in 2003 with the transformation of the RF Ministry of Railways (in charge of the whole locomotives and both passenger and freight rolling stock) in the Russian Railways JSC. The course taken by the RF Government to the formation in the railway transportation sphere of a competitive sector resulted also in active interest to the engineering industry on the part of business. At present the increasing demand conditioned by the OAO RZD needs has been joined by the growing number of orders on the part of rolling stock private owners. 

ZAO Transmashholding (TMH) is the largest Russian company uniting the leading railway machinery engineering enterprises. The industrial giant includes such well-known plants as the Novocherkasskiy Electrical Locomotives Plant (NEVZ), Oktyabrskiy Electrical Carriages Repairs Plant (St.-Petersburg), Bryanskiy and Demikhovskiy Engineering Plants (BMZ and DMZ), Penzadiezelmash, Kushvinskiy Transport Equipment Plant, Bezhitskiy Steel Mill and Muromskiy Pointer Plant, Tsentrosvar transport engineering research-and-production enterprise, MetroWagonMash and Kolomensky Plant. Besides, ZAO Transmashholding owns large stock packets of the Tverskoy Carriages Plant specializing in passenger carriages. The THM total sales increased in the past year by 50% to RUR 27.1 bln.

At present the holding keeps cooperating with foreign partners. The Russian company focuses on getting technology of some components production. Thus, in April 2005 Transmashholding together with the Siemens corporation founded OOO Transconverter - the joint venture specializing on producing converters, for electric locomotives and carriages. The German party gives the joint venture (in which the control shareholding is owned by TMH) the technology of converters producing. 

The second largest owner of engineering enterprises is OAO RZD, which includes mainly wagons and locomotives repair plants: Saranskiy Repair Plant, Roslavlskiy, Kanashskiy, and Barnaulskiy Carriages Repair Plants, and some more. Apart from repairs, most of them produce and supply spare parts: form wheel pairs, manufacture bogies, railway cisterns' platforms for boilers of various types and dimensions, and other units and parts. 

In freight wagons engineering prominent positions are held by such enterprises as OAO Altaivagon, OAO Abakanvagonmash, OAO Ruzkhimmash, Bryansky Engineering Plant and others. The Lyudinovskiy Diesel-Locomotive Plant is considered to be an interesting player on the engineering market: its diesel-locomotive shunters are viewed as promising ones as many of them are exploited by industrial enterprises.

It needs to be noted that despite the fact that most of the engineering enterprises belong to the private sector of economy, some plants remain in state ownership. The most prominent of them is a largest CIS producer of freight rolling stock - State-owned PO Uralwagonzavod. Besides, the adjacent sectors' enterprises are actively entering the railway engineering market. Thus, the large trucks producer - OAO KAMAZ - started in 2005 to produce at its subsidiary OAO KAMAZ-Instrumentspetsmash spare parts for Russian Railways. The output of certain items exceeds 60 thousand per annum. 

The plants of the former Soviet republics have also been actively entering the market, among which the leaders are Ukrainian engineering enterprises: OAO Dneprovagonmash, MZTM (Marioupol), Kryukovskiy Wagon Engineering Plant. The creation in 2004 of the ZAO TD Rusukrvagon, uniting the sales interests of two Ukrainian (OAO Dneprovagonmash and the Kremenchugskiy Steel Mill) and a Russian (OAO Metal Constructions Plant) enterprises, became a fine example of Russian and Ukrainian markets integration. Among the company's customers are the Novolipetskiy and Magnitogorskiy Metallurgical Mills, Mechel, SUEK, Apatite, ZAO Severstaltrans, and many others. 



Forecast is perfect

According to analysts the prospects of the Russian transport engineering industry of quite certain and positive, which is determined, first of all, by the increasing needs in the wagons and locomotives renovation. At present on the railway network there are exploited some 787.6 thousand freight wagons belonging directly to OAO RZD and to industrial enterprises and companies-operators. At that over 16% of this stock are wagons having exceeded their service life. Thus the period of economic crisis only increased the demand for the engineering industry production and no drop of demand is expected in the years to come. Thus, if in 2003 and 2004 OAO RZD purchased from the Russian producers 3.5 and 6 thousand of gondola carriages respectively, in 2005 the figure will be 8 thousand, while the Investment Program for 2006 provides for purchasing (by the leasing scheme) 5.3 thousand freight wagons more and the modernization of 5.5 thousand of old wagons. The total investment will comprise some RUR 10.6 bln.

The situation with other products is similar. In 2004 the Russian Railways received 540 of new locomotive-drawn (against 438 units in 2003), 82 of new mainline passenger locomotives, 278 sections of motor-car sections, there increased the amount of purchased electrical locomotives (by 79%) and diesel locomotives (by 20%). At that the increased demand on the part of OAO RZD is not the only chance for the engineering companies. The Government plans on the railway industry reform provide for the increase of the privately owned rolling stock up to the parity with the OAO RZD correlation 50/50 by 2010. 



Conception is needed

In the light of the significantly increased requirements to the transportation services quality on the part of the customers, as well as the need to cut the transportation prime cost, the transport companies set before the engineering enterprises the more and more complicated tasks. At that it is not only the matter of raising the technical and economic requirements to the rolling stock, but also of formation of a different ideology. 

"Today we should be talking of an industrial and innovative policy for the whole country", believes the OAO RZD president Vladimir Yakunin. Such a position of the head of the largest carrier company is shared by other market participants, as the RF Government has not so far completed the development of the common state policy to allow creating balanced conditions reflecting the interests of all the parties. 

The major problem in the relations between the transport and engineering companies is the matter of stability of prices for the products. Due to constantly increasing prime cost the wagons and locomotives produced by the companies are not always affordable for the railway, which is operating in the conditions of state-regulated tariffs. That is why OAO RZD considers it necessary for Russia to develop a comprehensive and integral Conception of the Railway Engineering Industry Development to create the necessary balance between the prices for the engineering products and the railway transportation tariffs. The company's experts believe this would give a powerful impetus to forward movement for both transport and engineering complexes. 

Not waiting for the Government resolutions, OAO RZD is already making efforts in this direction, cooperating closely with railway machinery producers. The company has signed long-term contracts with ZAO Transmashholding and Uralwagonzavod.



Only forward

Among the priorities set before the Russian engineering industry OAO RZD favours the development of powerful, competitive on the world market locomotives research-and-production. According to the company's management, the new locomotives' advantages should consist in increased reliability and efficiency together with reduced operation costs by means of increased terms of operation between repairs, which, in its turn would allow to direct more finances on purchasing wagons. At that it needs to be noted, that not all the operators hold this conception, as railway locomotives remain expensive and the companies' assets do not allow so far to purchase rolling stock of this category at a mass scale. Therefore, parallel to the development of new locomotives there is actively developing the sector of freight carriages engineering.

The main conceptual trend in the freight wagons engineering is the idea of designing rolling stock of new generation (with greater capacity and tonnage), with axial load of 25 tons. According to the calculations by Russian Scientific and Research Institute for Rail Transport (VNIIZhT), having carried out the feasibility studies on selecting the necessary parameters for these wagons, thanks to the increased loading of the wheel pairs on the rails the new wagons efficiency increases by 5-10%, while for specialized wagons this indicator reaches 15-20%. According to the technical requirements to all kinds of new generation wagons there has been prolonged their service life and operation period between repairs. Thus, the service life of a gondola car has been increased from 22 to 32 years, and the operation period between repairs - from 210 to 500 thousand kilometers.

On the other hand, despite the fact that many designs are considered to be quite promising, the share of the new generation wagons launched in manufacturing production is not sufficient so far. The reason for this is the state of bogies that are not ready for the new carriages and do not fully correspond to the requirements of the new epoch. Nevertheless, the works in this direction are under way. The Bryansky Engineering Plant (incorporated into TMH), State-owned PO Uralwagonzavod engineers are working most actively on designing the bogies with 25 tons axial load. In as far as 2000 Uralwagonzavod's experts presented the new bogie of 18-194 design. The first samples were not quite satisfying and in certain parameters did not surpass the old-design18-100 bogies. But the new design determined the direction of further research. At present the 18-194-1 design bogie (also known as 18-579) is under test at the VNIIZhT testing ground in Shcherbinka, in the course of which it demonstrates improved characteristics and results. In 2006 PO Uralwagonzavod may launch them in manufacturing production. 

In general, if the current growth rate preserves (in 2004 the railway engineering industry growth rate comprised 28%), the Russian rolling stock producers will be able in a few years to become a leading sector of the country's economy and take a decent stand in the international market. 



GENNADY  BUGROV
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Still strong

Among the major factors that contributed to the beginning of the flow of long-term investments was the railway reform. It started in 2003 with the transformation of the RF Ministry of Railways (in charge of the whole locomotives and both passenger and freight rolling stock) in the Russian Railways JSC. The course taken by the RF Government to the formation in the railway transportation sphere of a competitive sector resulted also in active interest to the engineering industry on the part of business. At present the increasing demand conditioned by the OAO RZD needs has been joined by the growing number of orders on the part of rolling stock private owners. 

ZAO Transmashholding (TMH) is the largest Russian company uniting the leading railway machinery engineering enterprises. The industrial giant includes such well-known plants as the Novocherkasskiy Electrical Locomotives Plant (NEVZ), Oktyabrskiy Electrical Carriages Repairs Plant (St.-Petersburg), Bryanskiy and Demikhovskiy Engineering Plants (BMZ and DMZ), Penzadiezelmash, Kushvinskiy Transport Equipment Plant, Bezhitskiy Steel Mill and Muromskiy Pointer Plant, Tsentrosvar transport engineering research-and-production enterprise, MetroWagonMash and Kolomensky Plant. Besides, ZAO Transmashholding owns large stock packets of the Tverskoy Carriages Plant specializing in passenger carriages. The THM total sales increased in the past year by 50% to RUR 27.1 bln.

At present the holding keeps cooperating with foreign partners. The Russian company focuses on getting technology of some components production. Thus, in April 2005 Transmashholding together with the Siemens corporation founded OOO Transconverter - the joint venture specializing on producing converters, for electric locomotives and carriages. The German party gives the joint venture (in which the control shareholding is owned by TMH) the technology of converters producing. 

The second largest owner of engineering enterprises is OAO RZD, which includes mainly wagons and locomotives repair plants: Saranskiy Repair Plant, Roslavlskiy, Kanashskiy, and Barnaulskiy Carriages Repair Plants, and some more. Apart from repairs, most of them produce and supply spare parts: form wheel pairs, manufacture bogies, railway cisterns' platforms for boilers of various types and dimensions, and other units and parts. 

In freight wagons engineering prominent positions are held by such enterprises as OAO Altaivagon, OAO Abakanvagonmash, OAO Ruzkhimmash, Bryansky Engineering Plant and others. The Lyudinovskiy Diesel-Locomotive Plant is considered to be an interesting player on the engineering market: its diesel-locomotive shunters are viewed as promising ones as many of them are exploited by industrial enterprises.

It needs to be noted that despite the fact that most of the engineering enterprises belong to the private sector of economy, some plants remain in state ownership. The most prominent of them is a largest CIS producer of freight rolling stock - State-owned PO Uralwagonzavod. Besides, the adjacent sectors' enterprises are actively entering the railway engineering market. Thus, the large trucks producer - OAO KAMAZ - started in 2005 to produce at its subsidiary OAO KAMAZ-Instrumentspetsmash spare parts for Russian Railways. The output of certain items exceeds 60 thousand per annum. 

The plants of the former Soviet republics have also been actively entering the market, among which the leaders are Ukrainian engineering enterprises: OAO Dneprovagonmash, MZTM (Marioupol), Kryukovskiy Wagon Engineering Plant. The creation in 2004 of the ZAO TD Rusukrvagon, uniting the sales interests of two Ukrainian (OAO Dneprovagonmash and the Kremenchugskiy Steel Mill) and a Russian (OAO Metal Constructions Plant) enterprises, became a fine example of Russian and Ukrainian markets integration. Among the company's customers are the Novolipetskiy and Magnitogorskiy Metallurgical Mills, Mechel, SUEK, Apatite, ZAO Severstaltrans, and many others. 



Forecast is perfect

According to analysts the prospects of the Russian transport engineering industry of quite certain and positive, which is determined, first of all, by the increasing needs in the wagons and locomotives renovation. At present on the railway network there are exploited some 787.6 thousand freight wagons belonging directly to OAO RZD and to industrial enterprises and companies-operators. At that over 16% of this stock are wagons having exceeded their service life. Thus the period of economic crisis only increased the demand for the engineering industry production and no drop of demand is expected in the years to come. Thus, if in 2003 and 2004 OAO RZD purchased from the Russian producers 3.5 and 6 thousand of gondola carriages respectively, in 2005 the figure will be 8 thousand, while the Investment Program for 2006 provides for purchasing (by the leasing scheme) 5.3 thousand freight wagons more and the modernization of 5.5 thousand of old wagons. The total investment will comprise some RUR 10.6 bln.

The situation with other products is similar. In 2004 the Russian Railways received 540 of new locomotive-drawn (against 438 units in 2003), 82 of new mainline passenger locomotives, 278 sections of motor-car sections, there increased the amount of purchased electrical locomotives (by 79%) and diesel locomotives (by 20%). At that the increased demand on the part of OAO RZD is not the only chance for the engineering companies. The Government plans on the railway industry reform provide for the increase of the privately owned rolling stock up to the parity with the OAO RZD correlation 50/50 by 2010. 



Conception is needed

In the light of the significantly increased requirements to the transportation services quality on the part of the customers, as well as the need to cut the transportation prime cost, the transport companies set before the engineering enterprises the more and more complicated tasks. At that it is not only the matter of raising the technical and economic requirements to the rolling stock, but also of formation of a different ideology. 

"Today we should be talking of an industrial and innovative policy for the whole country", believes the OAO RZD president Vladimir Yakunin. Such a position of the head of the largest carrier company is shared by other market participants, as the RF Government has not so far completed the development of the common state policy to allow creating balanced conditions reflecting the interests of all the parties. 

The major problem in the relations between the transport and engineering companies is the matter of stability of prices for the products. Due to constantly increasing prime cost the wagons and locomotives produced by the companies are not always affordable for the railway, which is operating in the conditions of state-regulated tariffs. That is why OAO RZD considers it necessary for Russia to develop a comprehensive and integral Conception of the Railway Engineering Industry Development to create the necessary balance between the prices for the engineering products and the railway transportation tariffs. The company's experts believe this would give a powerful impetus to forward movement for both transport and engineering complexes. 

Not waiting for the Government resolutions, OAO RZD is already making efforts in this direction, cooperating closely with railway machinery producers. The company has signed long-term contracts with ZAO Transmashholding and Uralwagonzavod.



Only forward

Among the priorities set before the Russian engineering industry OAO RZD favours the development of powerful, competitive on the world market locomotives research-and-production. According to the company's management, the new locomotives' advantages should consist in increased reliability and efficiency together with reduced operation costs by means of increased terms of operation between repairs, which, in its turn would allow to direct more finances on purchasing wagons. At that it needs to be noted, that not all the operators hold this conception, as railway locomotives remain expensive and the companies' assets do not allow so far to purchase rolling stock of this category at a mass scale. Therefore, parallel to the development of new locomotives there is actively developing the sector of freight carriages engineering.

The main conceptual trend in the freight wagons engineering is the idea of designing rolling stock of new generation (with greater capacity and tonnage), with axial load of 25 tons. According to the calculations by Russian Scientific and Research Institute for Rail Transport (VNIIZhT), having carried out the feasibility studies on selecting the necessary parameters for these wagons, thanks to the increased loading of the wheel pairs on the rails the new wagons efficiency increases by 5-10%, while for specialized wagons this indicator reaches 15-20%. According to the technical requirements to all kinds of new generation wagons there has been prolonged their service life and operation period between repairs. Thus, the service life of a gondola car has been increased from 22 to 32 years, and the operation period between repairs - from 210 to 500 thousand kilometers.

On the other hand, despite the fact that many designs are considered to be quite promising, the share of the new generation wagons launched in manufacturing production is not sufficient so far. The reason for this is the state of bogies that are not ready for the new carriages and do not fully correspond to the requirements of the new epoch. Nevertheless, the works in this direction are under way. The Bryansky Engineering Plant (incorporated into TMH), State-owned PO Uralwagonzavod engineers are working most actively on designing the bogies with 25 tons axial load. In as far as 2000 Uralwagonzavod's experts presented the new bogie of 18-194 design. The first samples were not quite satisfying and in certain parameters did not surpass the old-design18-100 bogies. But the new design determined the direction of further research. At present the 18-194-1 design bogie (also known as 18-579) is under test at the VNIIZhT testing ground in Shcherbinka, in the course of which it demonstrates improved characteristics and results. In 2006 PO Uralwagonzavod may launch them in manufacturing production. 

In general, if the current growth rate preserves (in 2004 the railway engineering industry growth rate comprised 28%), the Russian rolling stock producers will be able in a few years to become a leading sector of the country's economy and take a decent stand in the international market. 



GENNADY  BUGROV
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- Mr. Posner, why did RDC decide to participate in the tender on purchase of the shares of EVR? What strategic objectives did RDC set?

- RDC's business is investment in and management of railways in a number of countries, we are focused on what we describe as "emerging corridors in emerging markets". Our company owns railway assets in the USA, Argentina, Guatemala, Peru, Malawi, Mozambique and Estonia. And every case has its own particular history. Speaking about Estonia, it is the only vertically-integrated privatization of a national railway in Europe. Investment in EVR for us is a strategic opportunity to become involved in the former Soviet rail system, which is still the world's largest.

- Could you tell us a bit more about privatization of EVR.

- We could speak of four key reasons of Estonia's decision to privatize railway: to upgrade the railway's assets to the best international standards; to eliminate financial demands on the state; to generate cash from privatization, dividends etc.; and to reduce costs and improve service, thereby improving the competitiveness of the transit sector. Thus, core infrastructure and freight business were privatized through sale of majority of the state's shares; freight operators got provision for open access; intercity passenger service also moved to private companies and urban passenger service moved to a public company. We took part in the tender. Initially offer of Baltic Rail Services (BRS), of which RDC is a shareholder, was the second place one, as another consortium offered a higher price for the shares. However, that offer proved to be illusory and the government subsequently accepted ours. This ultimately resulted in BRS owning 2/3 of the shares of EVR, the other 1/3 of the shares remain in state hands.

- Has BRS faced any difficulties in Estonia? Could you define peculiar features of work in the market on the territory of the former Soviet Union?

- Initially there were some difficulties, as BRS bought the stock of a company, EVR, that , while relatively well organized and efficient still suffered from years of underinvestment in locomotives and infrastructure. But we were able to make major operational improvements by replacing the entire fleet of main line locomotives with more efficient General Electric units, and quickly moved to modernize and improve the organizational structure.

Concerning features of work on the territory of the former Soviet Union, I would like to mention that former Soviet republics are characterized by very high rail market share and heavy density of traffic. In this regard, they are the closest to the railways of North America. The institutional environment, however, is much different as the vast majority of the network is state-owned and the environment is much more heavily regulated. EVR heavily depends on Russian cargo flows to be carried in the highly competitive Baltic corridor; our greatest challenge is to influence Russian cargo flows despite having little influence over Russian tariffs.

- Could you comment on the disputable situation of American Locomotives' operating in Estonia?

- EVR purchased 74 used General Electric (GE) locomotives and with minimal modification put them into immediate service on EVR. They have proven as reliable and efficient in Estonian service as in the USA and Peru (where, on our Central Andino affiliate they operate reliably at 4200 meters), and we are very pleased with their performance; at the time of purchase, locomotive prices in North America were low and this was an important step in the economic fulfillment of our business plan. I have ridden on our GEs in both Estonia and Peru many times - these are good locomotives!

There have been allegations that the locomotives have somehow compromised safety and other considerations; however, we pride ourselves on our safety record and more to the point as business people would not consciously set out to cause accidents or damage the infrastructure that a few years ago we paid USD 60 mln for.

- Please, evaluate the situation after the Railways Act implementation in 2003.

- Estonia's Railways Act of 2003 was passed under the guise of adherence to the EU norms but represents a far more punitive and confiscatory regime than can be found anywhere else in Europe and is especially difficult for a private company. As a highly competitive market, the Baltic transit business is not driven by regulation, but rather competition. The Railways Act was thus based on a highly flawed justification, and further has made it more difficult to manage the company as both our operations and revenue stream are now controlled by a newly appointed government agency, the Railway Inspectorate. But more to the point, there was a very specific Open Access regime agreed to at the time of privatization in 2001; this was arbitrarily superseded by the Railways Act of 2003. When we bought the shares of EVR Open Access capacity amounted to 20% and in 2003 it was increased to 100%. This had the effect of confiscating much of the value that BRS paid for. Due to the Railway Inspectorate's imposition of an unsustainable access tariff regime, on a financial basis EVR has gone from profitable to marginally profitable last year. And if in the short-term view the situation is profitable for clients as infrastructure tariff is extremely low, in long-term outlook it leads to lack of financial resources for infrastructure maintenance and development.

Despite all these, we believe that EVR is a model for Europe in terms of efficiency. We hope, in the long-term interests of not only EVR but also the Estonian transit business this can be resolved fairly.

- How could you characterize the existing competition in Estonia?

- As mentioned above, the Baltic transit business is highly competitive; EVR's job is to make Estonian ports competitive with Russian, Latvian, Lithuanian terminals. However, now we face competition using our own infrastructure, at prices that are not only below market but also below cost. Thus, we are competing with one hand tied behind our back. In other words, we are bound by the Railways Act and are obeying the law, while at the same time challenging the Act on a number of fronts.

- What are RDC' further plans in the Estonian market? Is EVR planned to be sold?

- RDC has no plans to sell its interest in EVR. For us it is strategic to have a presence in the former Soviet Union. While this investment has proven to be much more difficult than anticipated , it is a story that is just beginning and we are in it for the long haul. And we are interested in organizing transport business in the CIS in future. The key point is to find the right partners, as we have in BRS. We feel our business strengths to be in railway operations and investment but have no particular advantage when it comes to the understanding of politics, culture or local economics. For this reason, in every country in which we operate our strength is measured by who our partners are and how well we work with them.



Interviewed by  TATYANA  TOKAREVA
    [~DETAIL_TEXT] => 

- Mr. Posner, why did RDC decide to participate in the tender on purchase of the shares of EVR? What strategic objectives did RDC set?

- RDC's business is investment in and management of railways in a number of countries, we are focused on what we describe as "emerging corridors in emerging markets". Our company owns railway assets in the USA, Argentina, Guatemala, Peru, Malawi, Mozambique and Estonia. And every case has its own particular history. Speaking about Estonia, it is the only vertically-integrated privatization of a national railway in Europe. Investment in EVR for us is a strategic opportunity to become involved in the former Soviet rail system, which is still the world's largest.

- Could you tell us a bit more about privatization of EVR.

- We could speak of four key reasons of Estonia's decision to privatize railway: to upgrade the railway's assets to the best international standards; to eliminate financial demands on the state; to generate cash from privatization, dividends etc.; and to reduce costs and improve service, thereby improving the competitiveness of the transit sector. Thus, core infrastructure and freight business were privatized through sale of majority of the state's shares; freight operators got provision for open access; intercity passenger service also moved to private companies and urban passenger service moved to a public company. We took part in the tender. Initially offer of Baltic Rail Services (BRS), of which RDC is a shareholder, was the second place one, as another consortium offered a higher price for the shares. However, that offer proved to be illusory and the government subsequently accepted ours. This ultimately resulted in BRS owning 2/3 of the shares of EVR, the other 1/3 of the shares remain in state hands.

- Has BRS faced any difficulties in Estonia? Could you define peculiar features of work in the market on the territory of the former Soviet Union?

- Initially there were some difficulties, as BRS bought the stock of a company, EVR, that , while relatively well organized and efficient still suffered from years of underinvestment in locomotives and infrastructure. But we were able to make major operational improvements by replacing the entire fleet of main line locomotives with more efficient General Electric units, and quickly moved to modernize and improve the organizational structure.

Concerning features of work on the territory of the former Soviet Union, I would like to mention that former Soviet republics are characterized by very high rail market share and heavy density of traffic. In this regard, they are the closest to the railways of North America. The institutional environment, however, is much different as the vast majority of the network is state-owned and the environment is much more heavily regulated. EVR heavily depends on Russian cargo flows to be carried in the highly competitive Baltic corridor; our greatest challenge is to influence Russian cargo flows despite having little influence over Russian tariffs.

- Could you comment on the disputable situation of American Locomotives' operating in Estonia?

- EVR purchased 74 used General Electric (GE) locomotives and with minimal modification put them into immediate service on EVR. They have proven as reliable and efficient in Estonian service as in the USA and Peru (where, on our Central Andino affiliate they operate reliably at 4200 meters), and we are very pleased with their performance; at the time of purchase, locomotive prices in North America were low and this was an important step in the economic fulfillment of our business plan. I have ridden on our GEs in both Estonia and Peru many times - these are good locomotives!

There have been allegations that the locomotives have somehow compromised safety and other considerations; however, we pride ourselves on our safety record and more to the point as business people would not consciously set out to cause accidents or damage the infrastructure that a few years ago we paid USD 60 mln for.

- Please, evaluate the situation after the Railways Act implementation in 2003.

- Estonia's Railways Act of 2003 was passed under the guise of adherence to the EU norms but represents a far more punitive and confiscatory regime than can be found anywhere else in Europe and is especially difficult for a private company. As a highly competitive market, the Baltic transit business is not driven by regulation, but rather competition. The Railways Act was thus based on a highly flawed justification, and further has made it more difficult to manage the company as both our operations and revenue stream are now controlled by a newly appointed government agency, the Railway Inspectorate. But more to the point, there was a very specific Open Access regime agreed to at the time of privatization in 2001; this was arbitrarily superseded by the Railways Act of 2003. When we bought the shares of EVR Open Access capacity amounted to 20% and in 2003 it was increased to 100%. This had the effect of confiscating much of the value that BRS paid for. Due to the Railway Inspectorate's imposition of an unsustainable access tariff regime, on a financial basis EVR has gone from profitable to marginally profitable last year. And if in the short-term view the situation is profitable for clients as infrastructure tariff is extremely low, in long-term outlook it leads to lack of financial resources for infrastructure maintenance and development.

Despite all these, we believe that EVR is a model for Europe in terms of efficiency. We hope, in the long-term interests of not only EVR but also the Estonian transit business this can be resolved fairly.

- How could you characterize the existing competition in Estonia?

- As mentioned above, the Baltic transit business is highly competitive; EVR's job is to make Estonian ports competitive with Russian, Latvian, Lithuanian terminals. However, now we face competition using our own infrastructure, at prices that are not only below market but also below cost. Thus, we are competing with one hand tied behind our back. In other words, we are bound by the Railways Act and are obeying the law, while at the same time challenging the Act on a number of fronts.

- What are RDC' further plans in the Estonian market? Is EVR planned to be sold?

- RDC has no plans to sell its interest in EVR. For us it is strategic to have a presence in the former Soviet Union. While this investment has proven to be much more difficult than anticipated , it is a story that is just beginning and we are in it for the long haul. And we are interested in organizing transport business in the CIS in future. The key point is to find the right partners, as we have in BRS. We feel our business strengths to be in railway operations and investment but have no particular advantage when it comes to the understanding of politics, culture or local economics. For this reason, in every country in which we operate our strength is measured by who our partners are and how well we work with them.



Interviewed by  TATYANA  TOKAREVA
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- Mr. Posner, why did RDC decide to participate in the tender on purchase of the shares of EVR? What strategic objectives did RDC set?

- RDC's business is investment in and management of railways in a number of countries, we are focused on what we describe as "emerging corridors in emerging markets". Our company owns railway assets in the USA, Argentina, Guatemala, Peru, Malawi, Mozambique and Estonia. And every case has its own particular history. Speaking about Estonia, it is the only vertically-integrated privatization of a national railway in Europe. Investment in EVR for us is a strategic opportunity to become involved in the former Soviet rail system, which is still the world's largest.

- Could you tell us a bit more about privatization of EVR.

- We could speak of four key reasons of Estonia's decision to privatize railway: to upgrade the railway's assets to the best international standards; to eliminate financial demands on the state; to generate cash from privatization, dividends etc.; and to reduce costs and improve service, thereby improving the competitiveness of the transit sector. Thus, core infrastructure and freight business were privatized through sale of majority of the state's shares; freight operators got provision for open access; intercity passenger service also moved to private companies and urban passenger service moved to a public company. We took part in the tender. Initially offer of Baltic Rail Services (BRS), of which RDC is a shareholder, was the second place one, as another consortium offered a higher price for the shares. However, that offer proved to be illusory and the government subsequently accepted ours. This ultimately resulted in BRS owning 2/3 of the shares of EVR, the other 1/3 of the shares remain in state hands.

- Has BRS faced any difficulties in Estonia? Could you define peculiar features of work in the market on the territory of the former Soviet Union?

- Initially there were some difficulties, as BRS bought the stock of a company, EVR, that , while relatively well organized and efficient still suffered from years of underinvestment in locomotives and infrastructure. But we were able to make major operational improvements by replacing the entire fleet of main line locomotives with more efficient General Electric units, and quickly moved to modernize and improve the organizational structure.

Concerning features of work on the territory of the former Soviet Union, I would like to mention that former Soviet republics are characterized by very high rail market share and heavy density of traffic. In this regard, they are the closest to the railways of North America. The institutional environment, however, is much different as the vast majority of the network is state-owned and the environment is much more heavily regulated. EVR heavily depends on Russian cargo flows to be carried in the highly competitive Baltic corridor; our greatest challenge is to influence Russian cargo flows despite having little influence over Russian tariffs.

- Could you comment on the disputable situation of American Locomotives' operating in Estonia?

- EVR purchased 74 used General Electric (GE) locomotives and with minimal modification put them into immediate service on EVR. They have proven as reliable and efficient in Estonian service as in the USA and Peru (where, on our Central Andino affiliate they operate reliably at 4200 meters), and we are very pleased with their performance; at the time of purchase, locomotive prices in North America were low and this was an important step in the economic fulfillment of our business plan. I have ridden on our GEs in both Estonia and Peru many times - these are good locomotives!

There have been allegations that the locomotives have somehow compromised safety and other considerations; however, we pride ourselves on our safety record and more to the point as business people would not consciously set out to cause accidents or damage the infrastructure that a few years ago we paid USD 60 mln for.

- Please, evaluate the situation after the Railways Act implementation in 2003.

- Estonia's Railways Act of 2003 was passed under the guise of adherence to the EU norms but represents a far more punitive and confiscatory regime than can be found anywhere else in Europe and is especially difficult for a private company. As a highly competitive market, the Baltic transit business is not driven by regulation, but rather competition. The Railways Act was thus based on a highly flawed justification, and further has made it more difficult to manage the company as both our operations and revenue stream are now controlled by a newly appointed government agency, the Railway Inspectorate. But more to the point, there was a very specific Open Access regime agreed to at the time of privatization in 2001; this was arbitrarily superseded by the Railways Act of 2003. When we bought the shares of EVR Open Access capacity amounted to 20% and in 2003 it was increased to 100%. This had the effect of confiscating much of the value that BRS paid for. Due to the Railway Inspectorate's imposition of an unsustainable access tariff regime, on a financial basis EVR has gone from profitable to marginally profitable last year. And if in the short-term view the situation is profitable for clients as infrastructure tariff is extremely low, in long-term outlook it leads to lack of financial resources for infrastructure maintenance and development.

Despite all these, we believe that EVR is a model for Europe in terms of efficiency. We hope, in the long-term interests of not only EVR but also the Estonian transit business this can be resolved fairly.

- How could you characterize the existing competition in Estonia?

- As mentioned above, the Baltic transit business is highly competitive; EVR's job is to make Estonian ports competitive with Russian, Latvian, Lithuanian terminals. However, now we face competition using our own infrastructure, at prices that are not only below market but also below cost. Thus, we are competing with one hand tied behind our back. In other words, we are bound by the Railways Act and are obeying the law, while at the same time challenging the Act on a number of fronts.

- What are RDC' further plans in the Estonian market? Is EVR planned to be sold?

- RDC has no plans to sell its interest in EVR. For us it is strategic to have a presence in the former Soviet Union. While this investment has proven to be much more difficult than anticipated , it is a story that is just beginning and we are in it for the long haul. And we are interested in organizing transport business in the CIS in future. The key point is to find the right partners, as we have in BRS. We feel our business strengths to be in railway operations and investment but have no particular advantage when it comes to the understanding of politics, culture or local economics. For this reason, in every country in which we operate our strength is measured by who our partners are and how well we work with them.



Interviewed by  TATYANA  TOKAREVA
    [~DETAIL_TEXT] => 

- Mr. Posner, why did RDC decide to participate in the tender on purchase of the shares of EVR? What strategic objectives did RDC set?

- RDC's business is investment in and management of railways in a number of countries, we are focused on what we describe as "emerging corridors in emerging markets". Our company owns railway assets in the USA, Argentina, Guatemala, Peru, Malawi, Mozambique and Estonia. And every case has its own particular history. Speaking about Estonia, it is the only vertically-integrated privatization of a national railway in Europe. Investment in EVR for us is a strategic opportunity to become involved in the former Soviet rail system, which is still the world's largest.

- Could you tell us a bit more about privatization of EVR.

- We could speak of four key reasons of Estonia's decision to privatize railway: to upgrade the railway's assets to the best international standards; to eliminate financial demands on the state; to generate cash from privatization, dividends etc.; and to reduce costs and improve service, thereby improving the competitiveness of the transit sector. Thus, core infrastructure and freight business were privatized through sale of majority of the state's shares; freight operators got provision for open access; intercity passenger service also moved to private companies and urban passenger service moved to a public company. We took part in the tender. Initially offer of Baltic Rail Services (BRS), of which RDC is a shareholder, was the second place one, as another consortium offered a higher price for the shares. However, that offer proved to be illusory and the government subsequently accepted ours. This ultimately resulted in BRS owning 2/3 of the shares of EVR, the other 1/3 of the shares remain in state hands.

- Has BRS faced any difficulties in Estonia? Could you define peculiar features of work in the market on the territory of the former Soviet Union?

- Initially there were some difficulties, as BRS bought the stock of a company, EVR, that , while relatively well organized and efficient still suffered from years of underinvestment in locomotives and infrastructure. But we were able to make major operational improvements by replacing the entire fleet of main line locomotives with more efficient General Electric units, and quickly moved to modernize and improve the organizational structure.

Concerning features of work on the territory of the former Soviet Union, I would like to mention that former Soviet republics are characterized by very high rail market share and heavy density of traffic. In this regard, they are the closest to the railways of North America. The institutional environment, however, is much different as the vast majority of the network is state-owned and the environment is much more heavily regulated. EVR heavily depends on Russian cargo flows to be carried in the highly competitive Baltic corridor; our greatest challenge is to influence Russian cargo flows despite having little influence over Russian tariffs.

- Could you comment on the disputable situation of American Locomotives' operating in Estonia?

- EVR purchased 74 used General Electric (GE) locomotives and with minimal modification put them into immediate service on EVR. They have proven as reliable and efficient in Estonian service as in the USA and Peru (where, on our Central Andino affiliate they operate reliably at 4200 meters), and we are very pleased with their performance; at the time of purchase, locomotive prices in North America were low and this was an important step in the economic fulfillment of our business plan. I have ridden on our GEs in both Estonia and Peru many times - these are good locomotives!

There have been allegations that the locomotives have somehow compromised safety and other considerations; however, we pride ourselves on our safety record and more to the point as business people would not consciously set out to cause accidents or damage the infrastructure that a few years ago we paid USD 60 mln for.

- Please, evaluate the situation after the Railways Act implementation in 2003.

- Estonia's Railways Act of 2003 was passed under the guise of adherence to the EU norms but represents a far more punitive and confiscatory regime than can be found anywhere else in Europe and is especially difficult for a private company. As a highly competitive market, the Baltic transit business is not driven by regulation, but rather competition. The Railways Act was thus based on a highly flawed justification, and further has made it more difficult to manage the company as both our operations and revenue stream are now controlled by a newly appointed government agency, the Railway Inspectorate. But more to the point, there was a very specific Open Access regime agreed to at the time of privatization in 2001; this was arbitrarily superseded by the Railways Act of 2003. When we bought the shares of EVR Open Access capacity amounted to 20% and in 2003 it was increased to 100%. This had the effect of confiscating much of the value that BRS paid for. Due to the Railway Inspectorate's imposition of an unsustainable access tariff regime, on a financial basis EVR has gone from profitable to marginally profitable last year. And if in the short-term view the situation is profitable for clients as infrastructure tariff is extremely low, in long-term outlook it leads to lack of financial resources for infrastructure maintenance and development.

Despite all these, we believe that EVR is a model for Europe in terms of efficiency. We hope, in the long-term interests of not only EVR but also the Estonian transit business this can be resolved fairly.

- How could you characterize the existing competition in Estonia?

- As mentioned above, the Baltic transit business is highly competitive; EVR's job is to make Estonian ports competitive with Russian, Latvian, Lithuanian terminals. However, now we face competition using our own infrastructure, at prices that are not only below market but also below cost. Thus, we are competing with one hand tied behind our back. In other words, we are bound by the Railways Act and are obeying the law, while at the same time challenging the Act on a number of fronts.

- What are RDC' further plans in the Estonian market? Is EVR planned to be sold?

- RDC has no plans to sell its interest in EVR. For us it is strategic to have a presence in the former Soviet Union. While this investment has proven to be much more difficult than anticipated , it is a story that is just beginning and we are in it for the long haul. And we are interested in organizing transport business in the CIS in future. The key point is to find the right partners, as we have in BRS. We feel our business strengths to be in railway operations and investment but have no particular advantage when it comes to the understanding of politics, culture or local economics. For this reason, in every country in which we operate our strength is measured by who our partners are and how well we work with them.



Interviewed by  TATYANA  TOKAREVA
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Everything for Tourists

The idea of building a new passenger port in the western part of Vasilyevsky Island appeared in 2002, though the need for such a project had appeared much earlier. In spite of the total tourist flow going down, lately the number of people arriving in St.-Petersburg has increased threefold. Meanwhile, because of the lack of a separate passenger terminal, passengers of long-length cruise liners are serviced by a freight port, which is inconvenient for the tourists, as well as for the port (65% of the passengers coming to St.-Petersburg by water transport, arrive at the berths of a commercial port, 18% - at the passenger terminal, and the rest - at the mouth of Neva). Besides, only 200 meters long vessels can run along the present-day sea canal, while the modern cruise liners, carrying the most part of passengers, are about 300 meters long. 

At first, several options for the terminal location, such as Kronshtadt, Lomonosov and Peterhof, were discussed. The western part of Vasilyevsky Island in St.-Petersburg was finally chosen, because, if a cruise liner is to stop there, tourists can easily get to the city center. Besides, in that part of the Finnish Gulf there is a system of sea navigation. 

In 2002, the scale of the project was different. However, at the meeting of the city Government, where its initiator, Sea Facade of St.-Petersburg JSC, gave a report on the project, it was suggested such a passenger complex should be built so as to become not only the sea gates of St.-Petersburg, but the main entrance to Russia as well. Besides, the conditions for Vasilyevsky Island social infrastructure must be created there.  

18 specialized project organizations, including GT Morstroy CJSC and Lenmorniiproject OJSC, participated in the development of the technical and economic basis of the sea passenger terminal project. Russian and foreign experts also took part in it. 



Who Invests

The customer of the federal part of works (reconstruction of access duct) is Rosmorport. A consortium of six leading companies in the sphere (VAN Oord and Marin Contractors BV, Engineering Corporation Transstroy CJSC, Baltdraga CJSC, Corporation PTSP JSC, Portovy Flot CJSC, and Baltic Dredging Company CJSC) will fulfill the dredging and ground alluvium. 

The main shareholder of the projects of sea passenger terminal construction and development of the western part of Vasilyevsky Island is the group of companies First Quantum, famous for its participation in different projects in the sea transportation sphere. Nowadays negotiations are held with some Russian and foreign investors who showed interest in the project. The companies specializing in sea passenger transportation - Russian and foreign developers - as well as professional Finnish investors (banks, investment funds etc.) can also be attracted. The names of the potential partners and investors will not be disclosed till the end of negotiations. 

The federal authorities, represented by Rosmorport, construct the access duct, water area, means of navigation supply and provide the equipment of customs check-points at their own expense. A private investor is to deal with ground alluvium and its engineering preparation, as well as build the hydrotechnical constructions of the passenger terminal land infrastructure, a complex of other buildings and a business-park. The Government of St.-Petersburg invests into the engineering, social, city and transport infrastructure of the project.

In 2008 three berths will be built on the newly created territory. They will be able to service 300 meters long cruise liners. The construction of the new passenger terminal is to be completed by late 2011. By that time, the terminal's berths with the total length of 2,248 meters will be able to service up to seven passenger and ferry liners. Experts believe that the flow of passengers arriving in St.-Petersburg by sea will increase twofold at least, when the new terminal is put into operation. The terminal will bring at least USD 56 mln into the regional budget annually, and about USD 69 mln into the federal one. The passenger terminal will be able to service about 12,000 tourists daily.

According to the President of Managing Company Sea Facade JSC Shavkat Kary-Niyazov, the company in co-operation with the profile committees of the city and specialized organizations is developing the documentation for the engineering basis of the project. The calculations show that over USD 250 mln is to be spent on the development of engineering networks on the ground alluvium and on the reconstruction of water- and electricity-supply networks; about USD 50 mln is required for project-exploration works.



Changes Before the Start

At the town-planning Council session held in October, during the discussion of the project of sea passenger terminal and business center construction in the western part of Vasilyevsky Island, S.Kary-Niyazov reported that the "functional content of the project has changed".

Representatives of the company claim that it is quite a routine working situation within plan correction, especially taking into account the scale of the project and its significance for the city. Investors decided to construct 3-4 smaller terminals along the berthage, as the foreign experts advised, instead of a huge passenger terminal.

The customer agreed to correct the plan of the project, because construction of several terminals will enable to divide passenger flows, which will influence the terminal's capacity. Besides, the terminals will be put into operation one by one, which will reduce the terms of the project construction. By July 2006, the project of the sea passenger terminal planning will be sent to the Government of St.-Petersburg. The investment contract with the Government ofSt.-Petersburg is still being developed, since the questions of interaction and division of power between the federal center and the subject of the Federation are not clearly outlined yet. 

Nevertheless, on October 24, 2005, dredging works started in the sector of the main navigating channel. According to the project, the depth of the canal is to be 10 meters, with the width of the bottom 140 meters.  Dredging operations to be completed in November-December 2007 will be performed simultaneously with ground alluvium. Ground alluvium will start in May 2006 after the opening of the navigation.



NADEZHDA  VTORUSHINA
    [~DETAIL_TEXT] => 

Everything for Tourists

The idea of building a new passenger port in the western part of Vasilyevsky Island appeared in 2002, though the need for such a project had appeared much earlier. In spite of the total tourist flow going down, lately the number of people arriving in St.-Petersburg has increased threefold. Meanwhile, because of the lack of a separate passenger terminal, passengers of long-length cruise liners are serviced by a freight port, which is inconvenient for the tourists, as well as for the port (65% of the passengers coming to St.-Petersburg by water transport, arrive at the berths of a commercial port, 18% - at the passenger terminal, and the rest - at the mouth of Neva). Besides, only 200 meters long vessels can run along the present-day sea canal, while the modern cruise liners, carrying the most part of passengers, are about 300 meters long. 

At first, several options for the terminal location, such as Kronshtadt, Lomonosov and Peterhof, were discussed. The western part of Vasilyevsky Island in St.-Petersburg was finally chosen, because, if a cruise liner is to stop there, tourists can easily get to the city center. Besides, in that part of the Finnish Gulf there is a system of sea navigation. 

In 2002, the scale of the project was different. However, at the meeting of the city Government, where its initiator, Sea Facade of St.-Petersburg JSC, gave a report on the project, it was suggested such a passenger complex should be built so as to become not only the sea gates of St.-Petersburg, but the main entrance to Russia as well. Besides, the conditions for Vasilyevsky Island social infrastructure must be created there.  

18 specialized project organizations, including GT Morstroy CJSC and Lenmorniiproject OJSC, participated in the development of the technical and economic basis of the sea passenger terminal project. Russian and foreign experts also took part in it. 



Who Invests

The customer of the federal part of works (reconstruction of access duct) is Rosmorport. A consortium of six leading companies in the sphere (VAN Oord and Marin Contractors BV, Engineering Corporation Transstroy CJSC, Baltdraga CJSC, Corporation PTSP JSC, Portovy Flot CJSC, and Baltic Dredging Company CJSC) will fulfill the dredging and ground alluvium. 

The main shareholder of the projects of sea passenger terminal construction and development of the western part of Vasilyevsky Island is the group of companies First Quantum, famous for its participation in different projects in the sea transportation sphere. Nowadays negotiations are held with some Russian and foreign investors who showed interest in the project. The companies specializing in sea passenger transportation - Russian and foreign developers - as well as professional Finnish investors (banks, investment funds etc.) can also be attracted. The names of the potential partners and investors will not be disclosed till the end of negotiations. 

The federal authorities, represented by Rosmorport, construct the access duct, water area, means of navigation supply and provide the equipment of customs check-points at their own expense. A private investor is to deal with ground alluvium and its engineering preparation, as well as build the hydrotechnical constructions of the passenger terminal land infrastructure, a complex of other buildings and a business-park. The Government of St.-Petersburg invests into the engineering, social, city and transport infrastructure of the project.

In 2008 three berths will be built on the newly created territory. They will be able to service 300 meters long cruise liners. The construction of the new passenger terminal is to be completed by late 2011. By that time, the terminal's berths with the total length of 2,248 meters will be able to service up to seven passenger and ferry liners. Experts believe that the flow of passengers arriving in St.-Petersburg by sea will increase twofold at least, when the new terminal is put into operation. The terminal will bring at least USD 56 mln into the regional budget annually, and about USD 69 mln into the federal one. The passenger terminal will be able to service about 12,000 tourists daily.

According to the President of Managing Company Sea Facade JSC Shavkat Kary-Niyazov, the company in co-operation with the profile committees of the city and specialized organizations is developing the documentation for the engineering basis of the project. The calculations show that over USD 250 mln is to be spent on the development of engineering networks on the ground alluvium and on the reconstruction of water- and electricity-supply networks; about USD 50 mln is required for project-exploration works.



Changes Before the Start

At the town-planning Council session held in October, during the discussion of the project of sea passenger terminal and business center construction in the western part of Vasilyevsky Island, S.Kary-Niyazov reported that the "functional content of the project has changed".

Representatives of the company claim that it is quite a routine working situation within plan correction, especially taking into account the scale of the project and its significance for the city. Investors decided to construct 3-4 smaller terminals along the berthage, as the foreign experts advised, instead of a huge passenger terminal.

The customer agreed to correct the plan of the project, because construction of several terminals will enable to divide passenger flows, which will influence the terminal's capacity. Besides, the terminals will be put into operation one by one, which will reduce the terms of the project construction. By July 2006, the project of the sea passenger terminal planning will be sent to the Government of St.-Petersburg. The investment contract with the Government ofSt.-Petersburg is still being developed, since the questions of interaction and division of power between the federal center and the subject of the Federation are not clearly outlined yet. 

Nevertheless, on October 24, 2005, dredging works started in the sector of the main navigating channel. According to the project, the depth of the canal is to be 10 meters, with the width of the bottom 140 meters.  Dredging operations to be completed in November-December 2007 will be performed simultaneously with ground alluvium. Ground alluvium will start in May 2006 after the opening of the navigation.



NADEZHDA  VTORUSHINA
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    [DETAIL_TEXT] => 

Everything for Tourists

The idea of building a new passenger port in the western part of Vasilyevsky Island appeared in 2002, though the need for such a project had appeared much earlier. In spite of the total tourist flow going down, lately the number of people arriving in St.-Petersburg has increased threefold. Meanwhile, because of the lack of a separate passenger terminal, passengers of long-length cruise liners are serviced by a freight port, which is inconvenient for the tourists, as well as for the port (65% of the passengers coming to St.-Petersburg by water transport, arrive at the berths of a commercial port, 18% - at the passenger terminal, and the rest - at the mouth of Neva). Besides, only 200 meters long vessels can run along the present-day sea canal, while the modern cruise liners, carrying the most part of passengers, are about 300 meters long. 

At first, several options for the terminal location, such as Kronshtadt, Lomonosov and Peterhof, were discussed. The western part of Vasilyevsky Island in St.-Petersburg was finally chosen, because, if a cruise liner is to stop there, tourists can easily get to the city center. Besides, in that part of the Finnish Gulf there is a system of sea navigation. 

In 2002, the scale of the project was different. However, at the meeting of the city Government, where its initiator, Sea Facade of St.-Petersburg JSC, gave a report on the project, it was suggested such a passenger complex should be built so as to become not only the sea gates of St.-Petersburg, but the main entrance to Russia as well. Besides, the conditions for Vasilyevsky Island social infrastructure must be created there.  

18 specialized project organizations, including GT Morstroy CJSC and Lenmorniiproject OJSC, participated in the development of the technical and economic basis of the sea passenger terminal project. Russian and foreign experts also took part in it. 



Who Invests

The customer of the federal part of works (reconstruction of access duct) is Rosmorport. A consortium of six leading companies in the sphere (VAN Oord and Marin Contractors BV, Engineering Corporation Transstroy CJSC, Baltdraga CJSC, Corporation PTSP JSC, Portovy Flot CJSC, and Baltic Dredging Company CJSC) will fulfill the dredging and ground alluvium. 

The main shareholder of the projects of sea passenger terminal construction and development of the western part of Vasilyevsky Island is the group of companies First Quantum, famous for its participation in different projects in the sea transportation sphere. Nowadays negotiations are held with some Russian and foreign investors who showed interest in the project. The companies specializing in sea passenger transportation - Russian and foreign developers - as well as professional Finnish investors (banks, investment funds etc.) can also be attracted. The names of the potential partners and investors will not be disclosed till the end of negotiations. 

The federal authorities, represented by Rosmorport, construct the access duct, water area, means of navigation supply and provide the equipment of customs check-points at their own expense. A private investor is to deal with ground alluvium and its engineering preparation, as well as build the hydrotechnical constructions of the passenger terminal land infrastructure, a complex of other buildings and a business-park. The Government of St.-Petersburg invests into the engineering, social, city and transport infrastructure of the project.

In 2008 three berths will be built on the newly created territory. They will be able to service 300 meters long cruise liners. The construction of the new passenger terminal is to be completed by late 2011. By that time, the terminal's berths with the total length of 2,248 meters will be able to service up to seven passenger and ferry liners. Experts believe that the flow of passengers arriving in St.-Petersburg by sea will increase twofold at least, when the new terminal is put into operation. The terminal will bring at least USD 56 mln into the regional budget annually, and about USD 69 mln into the federal one. The passenger terminal will be able to service about 12,000 tourists daily.

According to the President of Managing Company Sea Facade JSC Shavkat Kary-Niyazov, the company in co-operation with the profile committees of the city and specialized organizations is developing the documentation for the engineering basis of the project. The calculations show that over USD 250 mln is to be spent on the development of engineering networks on the ground alluvium and on the reconstruction of water- and electricity-supply networks; about USD 50 mln is required for project-exploration works.



Changes Before the Start

At the town-planning Council session held in October, during the discussion of the project of sea passenger terminal and business center construction in the western part of Vasilyevsky Island, S.Kary-Niyazov reported that the "functional content of the project has changed".

Representatives of the company claim that it is quite a routine working situation within plan correction, especially taking into account the scale of the project and its significance for the city. Investors decided to construct 3-4 smaller terminals along the berthage, as the foreign experts advised, instead of a huge passenger terminal.

The customer agreed to correct the plan of the project, because construction of several terminals will enable to divide passenger flows, which will influence the terminal's capacity. Besides, the terminals will be put into operation one by one, which will reduce the terms of the project construction. By July 2006, the project of the sea passenger terminal planning will be sent to the Government of St.-Petersburg. The investment contract with the Government ofSt.-Petersburg is still being developed, since the questions of interaction and division of power between the federal center and the subject of the Federation are not clearly outlined yet. 

Nevertheless, on October 24, 2005, dredging works started in the sector of the main navigating channel. According to the project, the depth of the canal is to be 10 meters, with the width of the bottom 140 meters.  Dredging operations to be completed in November-December 2007 will be performed simultaneously with ground alluvium. Ground alluvium will start in May 2006 after the opening of the navigation.



NADEZHDA  VTORUSHINA
    [~DETAIL_TEXT] => 

Everything for Tourists

The idea of building a new passenger port in the western part of Vasilyevsky Island appeared in 2002, though the need for such a project had appeared much earlier. In spite of the total tourist flow going down, lately the number of people arriving in St.-Petersburg has increased threefold. Meanwhile, because of the lack of a separate passenger terminal, passengers of long-length cruise liners are serviced by a freight port, which is inconvenient for the tourists, as well as for the port (65% of the passengers coming to St.-Petersburg by water transport, arrive at the berths of a commercial port, 18% - at the passenger terminal, and the rest - at the mouth of Neva). Besides, only 200 meters long vessels can run along the present-day sea canal, while the modern cruise liners, carrying the most part of passengers, are about 300 meters long. 

At first, several options for the terminal location, such as Kronshtadt, Lomonosov and Peterhof, were discussed. The western part of Vasilyevsky Island in St.-Petersburg was finally chosen, because, if a cruise liner is to stop there, tourists can easily get to the city center. Besides, in that part of the Finnish Gulf there is a system of sea navigation. 

In 2002, the scale of the project was different. However, at the meeting of the city Government, where its initiator, Sea Facade of St.-Petersburg JSC, gave a report on the project, it was suggested such a passenger complex should be built so as to become not only the sea gates of St.-Petersburg, but the main entrance to Russia as well. Besides, the conditions for Vasilyevsky Island social infrastructure must be created there.  

18 specialized project organizations, including GT Morstroy CJSC and Lenmorniiproject OJSC, participated in the development of the technical and economic basis of the sea passenger terminal project. Russian and foreign experts also took part in it. 



Who Invests

The customer of the federal part of works (reconstruction of access duct) is Rosmorport. A consortium of six leading companies in the sphere (VAN Oord and Marin Contractors BV, Engineering Corporation Transstroy CJSC, Baltdraga CJSC, Corporation PTSP JSC, Portovy Flot CJSC, and Baltic Dredging Company CJSC) will fulfill the dredging and ground alluvium. 

The main shareholder of the projects of sea passenger terminal construction and development of the western part of Vasilyevsky Island is the group of companies First Quantum, famous for its participation in different projects in the sea transportation sphere. Nowadays negotiations are held with some Russian and foreign investors who showed interest in the project. The companies specializing in sea passenger transportation - Russian and foreign developers - as well as professional Finnish investors (banks, investment funds etc.) can also be attracted. The names of the potential partners and investors will not be disclosed till the end of negotiations. 

The federal authorities, represented by Rosmorport, construct the access duct, water area, means of navigation supply and provide the equipment of customs check-points at their own expense. A private investor is to deal with ground alluvium and its engineering preparation, as well as build the hydrotechnical constructions of the passenger terminal land infrastructure, a complex of other buildings and a business-park. The Government of St.-Petersburg invests into the engineering, social, city and transport infrastructure of the project.

In 2008 three berths will be built on the newly created territory. They will be able to service 300 meters long cruise liners. The construction of the new passenger terminal is to be completed by late 2011. By that time, the terminal's berths with the total length of 2,248 meters will be able to service up to seven passenger and ferry liners. Experts believe that the flow of passengers arriving in St.-Petersburg by sea will increase twofold at least, when the new terminal is put into operation. The terminal will bring at least USD 56 mln into the regional budget annually, and about USD 69 mln into the federal one. The passenger terminal will be able to service about 12,000 tourists daily.

According to the President of Managing Company Sea Facade JSC Shavkat Kary-Niyazov, the company in co-operation with the profile committees of the city and specialized organizations is developing the documentation for the engineering basis of the project. The calculations show that over USD 250 mln is to be spent on the development of engineering networks on the ground alluvium and on the reconstruction of water- and electricity-supply networks; about USD 50 mln is required for project-exploration works.



Changes Before the Start

At the town-planning Council session held in October, during the discussion of the project of sea passenger terminal and business center construction in the western part of Vasilyevsky Island, S.Kary-Niyazov reported that the "functional content of the project has changed".

Representatives of the company claim that it is quite a routine working situation within plan correction, especially taking into account the scale of the project and its significance for the city. Investors decided to construct 3-4 smaller terminals along the berthage, as the foreign experts advised, instead of a huge passenger terminal.

The customer agreed to correct the plan of the project, because construction of several terminals will enable to divide passenger flows, which will influence the terminal's capacity. Besides, the terminals will be put into operation one by one, which will reduce the terms of the project construction. By July 2006, the project of the sea passenger terminal planning will be sent to the Government of St.-Petersburg. The investment contract with the Government ofSt.-Petersburg is still being developed, since the questions of interaction and division of power between the federal center and the subject of the Federation are not clearly outlined yet. 

Nevertheless, on October 24, 2005, dredging works started in the sector of the main navigating channel. According to the project, the depth of the canal is to be 10 meters, with the width of the bottom 140 meters.  Dredging operations to be completed in November-December 2007 will be performed simultaneously with ground alluvium. Ground alluvium will start in May 2006 after the opening of the navigation.



NADEZHDA  VTORUSHINA
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    [DETAIL_TEXT] => 

- Mr. Chmelev, could you comment on the main results of the year?

- The volume of freight carried by our company increases constantly. The tendency is supposed to remain, according to forecasts. Firstly, it is because the volume of Magnitogorsk Iron and Steel Works output grows. Over 90% of the cargo carried by MMK-Trans JSC is either export produce, or the raw materials of MMK-Trans carried by the company's rolling stock, as well as by the park of other companies. In 9 months the export of the company's metal produce made over 3 mln tons. 

In spite of the Q1 of 2005 financial results falling behind the planned ones, which can be explained by the company's business restructuring, the results of 9 months prove our successful work: in January-September the revenue grew by 12.6% year-on-year.

Thus, in spite of the tough competition, the Magnitogorsk Iron and Steel Works and our company will do our best to keep the positive dynamics of transportation and to improve the quality of services. An important event in the company's life was the debut issue of bonds for the total sum of RUR 650 mln in July 2005. As a result, the company was the first rolling stock operator to enter the loan market. MMK-Trans was a pioneer in the sphere, as well as in the sphere of rolling stock leasing. By doing it, the company also hit a strategic target of creating a public loan market in the railway freight forwarding sector. 

Besides, an important event of the year was the development of transportation schemes, including the Ukrainian ore mining and processing enterprise: in the last five months MMK-Trans transported about 2 mln tons of iron ore from Poltavsky and Northern ore mining and processing enterprises.

- Has the company's rolling-stock park been used efficiently in 2005?

- It is possible to say so, as the efficiency of private rolling-stock park usage constantly increases due to the implementation of new logistic solutions and schemes. Our company has developed the following scheme: when MMK's produce is transported for export in one direction, the cargo of commercial clients, as well as iron ore for the iron and steel works, is carried in the reverse direction. The scheme enables us to minimize expenses on the wagons getting back empty. Besides, the company offers tank-wagons for rent. 

- Do you plan to expand the park of rolling stock? To purchase locomotives, for example?

- Yes, of course. Moreover, we believe, the dynamical growth of the rolling stock park is one of the key directions in the company's development. As for the purchase of locomotives, it is not improbable that such purchases will take place. However, a lot will depend on the tariff policy of OAO RZD and whether the locomotive constituent will be separated off of the total tariff, as well as on its volume.

- Does MMK-Trans rent rolling stock owned by OAO RZD?

- Yes, until recently we rented 1,500 gondola cars and 750 flat wagons. We had to give up rent of OAO RZD's gondola cars because of the high rent charge. As for the flat wagons, we rented them at the end of 2002. They could not operate, since they had no bottoms or boards. Naturally, we spent about USD 2 mln to repair the wagons, because we could not use them in that condition. 

I would like to highlight that the organized efficient management of 750 rented flat-wagons reduced the total lack of rolling-stock of the Yuzhno-Uralskaya (South-Ural) Railway. We have used them up to now: our company plans to purchase the flat wagons. We have already discussed the question with the authorities of OAO RZD, and the problem is almost solved. 

- What are the company's relations with OAO RZD?

- We have a positive experience of cooperation and partner relations with the Yuzhno-Uralskaya Railway, which understands our problems and helps us to solve them. In particular, now there is a question of flat-wagons purchase and the authorities of the Yuzhno-Uralskaya Railway have signed a respective petition. We believe, the successful cooperation of three sides - the consignor, the carrier and the company-operator - would be impossible without understanding each other's problems and trying to solve them.

- Could you comment on the acting system of tariffs formation and on the Federal Tariff Service policy concerning the sphere?

- I believe, the acting model of tariffs formation helped to reach two basic targets. Firstly, it made the purchase of rolling stock attractive for private capital. Secondly, it enabled us to stimulate the development of transportation-in-private-wagons schemes, in which Russian consignees and consignors are interested.

- Do you think the increase of tariffs on transportation to Russian ports in the framework of Russia's joining the WTO will influence the traditional transportation schemes?

- I think, yes. In particular, some routes will be re-oriented from Russian ports to border crossings, or to the port of the CIS and the Baltic states. It is obvious that tariffs increase will influence Russian ports, which will have to reduce prices for their services (freight handling and vessel charter) to attract clients.



Interviewed by  NADEZHDA  VTORUSHINA
    [~DETAIL_TEXT] => 

- Mr. Chmelev, could you comment on the main results of the year?

- The volume of freight carried by our company increases constantly. The tendency is supposed to remain, according to forecasts. Firstly, it is because the volume of Magnitogorsk Iron and Steel Works output grows. Over 90% of the cargo carried by MMK-Trans JSC is either export produce, or the raw materials of MMK-Trans carried by the company's rolling stock, as well as by the park of other companies. In 9 months the export of the company's metal produce made over 3 mln tons. 

In spite of the Q1 of 2005 financial results falling behind the planned ones, which can be explained by the company's business restructuring, the results of 9 months prove our successful work: in January-September the revenue grew by 12.6% year-on-year.

Thus, in spite of the tough competition, the Magnitogorsk Iron and Steel Works and our company will do our best to keep the positive dynamics of transportation and to improve the quality of services. An important event in the company's life was the debut issue of bonds for the total sum of RUR 650 mln in July 2005. As a result, the company was the first rolling stock operator to enter the loan market. MMK-Trans was a pioneer in the sphere, as well as in the sphere of rolling stock leasing. By doing it, the company also hit a strategic target of creating a public loan market in the railway freight forwarding sector. 

Besides, an important event of the year was the development of transportation schemes, including the Ukrainian ore mining and processing enterprise: in the last five months MMK-Trans transported about 2 mln tons of iron ore from Poltavsky and Northern ore mining and processing enterprises.

- Has the company's rolling-stock park been used efficiently in 2005?

- It is possible to say so, as the efficiency of private rolling-stock park usage constantly increases due to the implementation of new logistic solutions and schemes. Our company has developed the following scheme: when MMK's produce is transported for export in one direction, the cargo of commercial clients, as well as iron ore for the iron and steel works, is carried in the reverse direction. The scheme enables us to minimize expenses on the wagons getting back empty. Besides, the company offers tank-wagons for rent. 

- Do you plan to expand the park of rolling stock? To purchase locomotives, for example?

- Yes, of course. Moreover, we believe, the dynamical growth of the rolling stock park is one of the key directions in the company's development. As for the purchase of locomotives, it is not improbable that such purchases will take place. However, a lot will depend on the tariff policy of OAO RZD and whether the locomotive constituent will be separated off of the total tariff, as well as on its volume.

- Does MMK-Trans rent rolling stock owned by OAO RZD?

- Yes, until recently we rented 1,500 gondola cars and 750 flat wagons. We had to give up rent of OAO RZD's gondola cars because of the high rent charge. As for the flat wagons, we rented them at the end of 2002. They could not operate, since they had no bottoms or boards. Naturally, we spent about USD 2 mln to repair the wagons, because we could not use them in that condition. 

I would like to highlight that the organized efficient management of 750 rented flat-wagons reduced the total lack of rolling-stock of the Yuzhno-Uralskaya (South-Ural) Railway. We have used them up to now: our company plans to purchase the flat wagons. We have already discussed the question with the authorities of OAO RZD, and the problem is almost solved. 

- What are the company's relations with OAO RZD?

- We have a positive experience of cooperation and partner relations with the Yuzhno-Uralskaya Railway, which understands our problems and helps us to solve them. In particular, now there is a question of flat-wagons purchase and the authorities of the Yuzhno-Uralskaya Railway have signed a respective petition. We believe, the successful cooperation of three sides - the consignor, the carrier and the company-operator - would be impossible without understanding each other's problems and trying to solve them.

- Could you comment on the acting system of tariffs formation and on the Federal Tariff Service policy concerning the sphere?

- I believe, the acting model of tariffs formation helped to reach two basic targets. Firstly, it made the purchase of rolling stock attractive for private capital. Secondly, it enabled us to stimulate the development of transportation-in-private-wagons schemes, in which Russian consignees and consignors are interested.

- Do you think the increase of tariffs on transportation to Russian ports in the framework of Russia's joining the WTO will influence the traditional transportation schemes?

- I think, yes. In particular, some routes will be re-oriented from Russian ports to border crossings, or to the port of the CIS and the Baltic states. It is obvious that tariffs increase will influence Russian ports, which will have to reduce prices for their services (freight handling and vessel charter) to attract clients.



Interviewed by  NADEZHDA  VTORUSHINA
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    [DETAIL_TEXT] => 

- Mr. Chmelev, could you comment on the main results of the year?

- The volume of freight carried by our company increases constantly. The tendency is supposed to remain, according to forecasts. Firstly, it is because the volume of Magnitogorsk Iron and Steel Works output grows. Over 90% of the cargo carried by MMK-Trans JSC is either export produce, or the raw materials of MMK-Trans carried by the company's rolling stock, as well as by the park of other companies. In 9 months the export of the company's metal produce made over 3 mln tons. 

In spite of the Q1 of 2005 financial results falling behind the planned ones, which can be explained by the company's business restructuring, the results of 9 months prove our successful work: in January-September the revenue grew by 12.6% year-on-year.

Thus, in spite of the tough competition, the Magnitogorsk Iron and Steel Works and our company will do our best to keep the positive dynamics of transportation and to improve the quality of services. An important event in the company's life was the debut issue of bonds for the total sum of RUR 650 mln in July 2005. As a result, the company was the first rolling stock operator to enter the loan market. MMK-Trans was a pioneer in the sphere, as well as in the sphere of rolling stock leasing. By doing it, the company also hit a strategic target of creating a public loan market in the railway freight forwarding sector. 

Besides, an important event of the year was the development of transportation schemes, including the Ukrainian ore mining and processing enterprise: in the last five months MMK-Trans transported about 2 mln tons of iron ore from Poltavsky and Northern ore mining and processing enterprises.

- Has the company's rolling-stock park been used efficiently in 2005?

- It is possible to say so, as the efficiency of private rolling-stock park usage constantly increases due to the implementation of new logistic solutions and schemes. Our company has developed the following scheme: when MMK's produce is transported for export in one direction, the cargo of commercial clients, as well as iron ore for the iron and steel works, is carried in the reverse direction. The scheme enables us to minimize expenses on the wagons getting back empty. Besides, the company offers tank-wagons for rent. 

- Do you plan to expand the park of rolling stock? To purchase locomotives, for example?

- Yes, of course. Moreover, we believe, the dynamical growth of the rolling stock park is one of the key directions in the company's development. As for the purchase of locomotives, it is not improbable that such purchases will take place. However, a lot will depend on the tariff policy of OAO RZD and whether the locomotive constituent will be separated off of the total tariff, as well as on its volume.

- Does MMK-Trans rent rolling stock owned by OAO RZD?

- Yes, until recently we rented 1,500 gondola cars and 750 flat wagons. We had to give up rent of OAO RZD's gondola cars because of the high rent charge. As for the flat wagons, we rented them at the end of 2002. They could not operate, since they had no bottoms or boards. Naturally, we spent about USD 2 mln to repair the wagons, because we could not use them in that condition. 

I would like to highlight that the organized efficient management of 750 rented flat-wagons reduced the total lack of rolling-stock of the Yuzhno-Uralskaya (South-Ural) Railway. We have used them up to now: our company plans to purchase the flat wagons. We have already discussed the question with the authorities of OAO RZD, and the problem is almost solved. 

- What are the company's relations with OAO RZD?

- We have a positive experience of cooperation and partner relations with the Yuzhno-Uralskaya Railway, which understands our problems and helps us to solve them. In particular, now there is a question of flat-wagons purchase and the authorities of the Yuzhno-Uralskaya Railway have signed a respective petition. We believe, the successful cooperation of three sides - the consignor, the carrier and the company-operator - would be impossible without understanding each other's problems and trying to solve them.

- Could you comment on the acting system of tariffs formation and on the Federal Tariff Service policy concerning the sphere?

- I believe, the acting model of tariffs formation helped to reach two basic targets. Firstly, it made the purchase of rolling stock attractive for private capital. Secondly, it enabled us to stimulate the development of transportation-in-private-wagons schemes, in which Russian consignees and consignors are interested.

- Do you think the increase of tariffs on transportation to Russian ports in the framework of Russia's joining the WTO will influence the traditional transportation schemes?

- I think, yes. In particular, some routes will be re-oriented from Russian ports to border crossings, or to the port of the CIS and the Baltic states. It is obvious that tariffs increase will influence Russian ports, which will have to reduce prices for their services (freight handling and vessel charter) to attract clients.



Interviewed by  NADEZHDA  VTORUSHINA
    [~DETAIL_TEXT] => 

- Mr. Chmelev, could you comment on the main results of the year?

- The volume of freight carried by our company increases constantly. The tendency is supposed to remain, according to forecasts. Firstly, it is because the volume of Magnitogorsk Iron and Steel Works output grows. Over 90% of the cargo carried by MMK-Trans JSC is either export produce, or the raw materials of MMK-Trans carried by the company's rolling stock, as well as by the park of other companies. In 9 months the export of the company's metal produce made over 3 mln tons. 

In spite of the Q1 of 2005 financial results falling behind the planned ones, which can be explained by the company's business restructuring, the results of 9 months prove our successful work: in January-September the revenue grew by 12.6% year-on-year.

Thus, in spite of the tough competition, the Magnitogorsk Iron and Steel Works and our company will do our best to keep the positive dynamics of transportation and to improve the quality of services. An important event in the company's life was the debut issue of bonds for the total sum of RUR 650 mln in July 2005. As a result, the company was the first rolling stock operator to enter the loan market. MMK-Trans was a pioneer in the sphere, as well as in the sphere of rolling stock leasing. By doing it, the company also hit a strategic target of creating a public loan market in the railway freight forwarding sector. 

Besides, an important event of the year was the development of transportation schemes, including the Ukrainian ore mining and processing enterprise: in the last five months MMK-Trans transported about 2 mln tons of iron ore from Poltavsky and Northern ore mining and processing enterprises.

- Has the company's rolling-stock park been used efficiently in 2005?

- It is possible to say so, as the efficiency of private rolling-stock park usage constantly increases due to the implementation of new logistic solutions and schemes. Our company has developed the following scheme: when MMK's produce is transported for export in one direction, the cargo of commercial clients, as well as iron ore for the iron and steel works, is carried in the reverse direction. The scheme enables us to minimize expenses on the wagons getting back empty. Besides, the company offers tank-wagons for rent. 

- Do you plan to expand the park of rolling stock? To purchase locomotives, for example?

- Yes, of course. Moreover, we believe, the dynamical growth of the rolling stock park is one of the key directions in the company's development. As for the purchase of locomotives, it is not improbable that such purchases will take place. However, a lot will depend on the tariff policy of OAO RZD and whether the locomotive constituent will be separated off of the total tariff, as well as on its volume.

- Does MMK-Trans rent rolling stock owned by OAO RZD?

- Yes, until recently we rented 1,500 gondola cars and 750 flat wagons. We had to give up rent of OAO RZD's gondola cars because of the high rent charge. As for the flat wagons, we rented them at the end of 2002. They could not operate, since they had no bottoms or boards. Naturally, we spent about USD 2 mln to repair the wagons, because we could not use them in that condition. 

I would like to highlight that the organized efficient management of 750 rented flat-wagons reduced the total lack of rolling-stock of the Yuzhno-Uralskaya (South-Ural) Railway. We have used them up to now: our company plans to purchase the flat wagons. We have already discussed the question with the authorities of OAO RZD, and the problem is almost solved. 

- What are the company's relations with OAO RZD?

- We have a positive experience of cooperation and partner relations with the Yuzhno-Uralskaya Railway, which understands our problems and helps us to solve them. In particular, now there is a question of flat-wagons purchase and the authorities of the Yuzhno-Uralskaya Railway have signed a respective petition. We believe, the successful cooperation of three sides - the consignor, the carrier and the company-operator - would be impossible without understanding each other's problems and trying to solve them.

- Could you comment on the acting system of tariffs formation and on the Federal Tariff Service policy concerning the sphere?

- I believe, the acting model of tariffs formation helped to reach two basic targets. Firstly, it made the purchase of rolling stock attractive for private capital. Secondly, it enabled us to stimulate the development of transportation-in-private-wagons schemes, in which Russian consignees and consignors are interested.

- Do you think the increase of tariffs on transportation to Russian ports in the framework of Russia's joining the WTO will influence the traditional transportation schemes?

- I think, yes. In particular, some routes will be re-oriented from Russian ports to border crossings, or to the port of the CIS and the Baltic states. It is obvious that tariffs increase will influence Russian ports, which will have to reduce prices for their services (freight handling and vessel charter) to attract clients.



Interviewed by  NADEZHDA  VTORUSHINA
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    [DETAIL_TEXT] => 

Competitorsor Partners?

The launch of such a company will be a direct consequence of tough competition in the profitable cargo transportation sector. From the very beginning, creating a competitive environment in the railway freight transportation market was the main target of the sector's restructuring. Today the railmen are optimistic when speaking about the results achieved. According to the president of OAO RZD Vladimir Yakunin, the company's share in oil transportation is nowadays only 17.3% from the total volume (in 2003, it was over 30%, and in 2002 - 65%); the one in ore and coal transportation reduced from 72.2% in 2003 to 48.8%, and the one of steel fell from 83.3% to 45%. In fact, such a situation means that OAO RZD has yielded the most part of profitable cargo transportation volumes, which is the reason why the company receives less profit. 

On the one hand, OAO RZD admits the accuracy of such statements. However, the company points out the "losses" were a forced measure without which the formation of a competitive market would have been complicated. On the other hand, since the beginning of their work, companies-operators have gained experience in cooperation with clients, so now they can satisfy all the transport demands of a customer, showing more efficiency and flexibility than OAO RZD. Besides, if in the beginning the independent organizations were considered to be rolling stock operators with a number of forwarding functions, nowadays it is possible to say several large professional transport companies able to become alternative carriers have appeared in the Russian transportation market.

First of all, individual approach to every customer can be treated as a positive feature of companies-operators. Nowadays, companies-operators can offer complex services in transportation organization and supplying the necessary rolling stock. The same operators can be held responsible for the cargo within delivery process and function as consignors. Besides, they are ready to use their own locomotives and provide a complete range of freight operations, which includes loading liquid bulk. Independent transport companies can offer flexible tariff regulation (which is not the case of OAO RZD), but at the same time, they can't work as carriers, since the legislative base to provide a non-discriminating access to the railway infrastructure for all the market players has not been formed yet.

Thus, launching joint companies is the most simple and progressive solution that satisfies all the participants of the process. OAO RZD gets an opportunity to use the mechanism of flexible tariff, and the independent companies can efficiently use the developed logistic schemes and routes. 



Mutually Beneficial Cooperation

According to Vladimir Yakunin, today one of the main OAO RZD's targets in the freight transportation sphere is to set flexible tariff regulation mechanisms in the competitive market segments. For this purpose, the launch of subsidiaries will be continued in future. It is planned that next year such companies will become transport market players equal in rights with others. An example of successful functioning in such conditions is the Russian Troyka company specializing in container transportation. Through the launch of its subsidiaries, OAO RZD plans to strengthen its positions in the car, oil, timber and minerals transportation market.

Coming back to the issue of launching a joint company belonging to OAO RZD and New Forwarding Company, it is to be done on an equal footing. 3,000 tank-wagons and gondola cars will be included in the authorized capital. In five years time, the total park of the company is to reach 35,000 units of rolling stock, 70% of each will be owned by the company, and the rest 30% will be rented. 

"The main target of the company being launched is to become one of the key players in the freight transportation market (oil and products, produce of ferrous metallurgy, iron ore and coal concentrate)", the director general of the New Forwarding Company Igor Asaturov says. "The new company will provide services using the routes on which New Forwarding Company operates. Long-term contracts for freight transportation in private rolling stock organization will be signed with consignors. During the first two years of the joint company's operation, it is planned that the company will provide 1.8% of domestic and export coal transportation, 3.7% of iron ore transportation, over 5% of ferrous metals export and 6% of oil freight. During the next five years, the company is to occupy the leading positions of export oil (23%) and ferrous metals (28%) transportation".

Among other competitive advantages of the company being established experts name the opportunity to develop fast and to offer a flexible system of prices (in the framework of the stated tariffs difference) to the participants of the transportation process which will be based on the optimal routes developed. That will enable the company to meet interests of different clients and to reduce their expenses, as well as the expenses of the company. Besides, the business-plan envisages that, from the very start, the company will own a sufficient resource base to organize freight transportation in the market segments mentioned. Consolidating the accumulated experience and competitive advantages of the two founders will enable the new company to solve the clients' transport problems efficiently.



TATYANA  TOKAREVA
    [~DETAIL_TEXT] => 

Competitorsor Partners?

The launch of such a company will be a direct consequence of tough competition in the profitable cargo transportation sector. From the very beginning, creating a competitive environment in the railway freight transportation market was the main target of the sector's restructuring. Today the railmen are optimistic when speaking about the results achieved. According to the president of OAO RZD Vladimir Yakunin, the company's share in oil transportation is nowadays only 17.3% from the total volume (in 2003, it was over 30%, and in 2002 - 65%); the one in ore and coal transportation reduced from 72.2% in 2003 to 48.8%, and the one of steel fell from 83.3% to 45%. In fact, such a situation means that OAO RZD has yielded the most part of profitable cargo transportation volumes, which is the reason why the company receives less profit. 

On the one hand, OAO RZD admits the accuracy of such statements. However, the company points out the "losses" were a forced measure without which the formation of a competitive market would have been complicated. On the other hand, since the beginning of their work, companies-operators have gained experience in cooperation with clients, so now they can satisfy all the transport demands of a customer, showing more efficiency and flexibility than OAO RZD. Besides, if in the beginning the independent organizations were considered to be rolling stock operators with a number of forwarding functions, nowadays it is possible to say several large professional transport companies able to become alternative carriers have appeared in the Russian transportation market.

First of all, individual approach to every customer can be treated as a positive feature of companies-operators. Nowadays, companies-operators can offer complex services in transportation organization and supplying the necessary rolling stock. The same operators can be held responsible for the cargo within delivery process and function as consignors. Besides, they are ready to use their own locomotives and provide a complete range of freight operations, which includes loading liquid bulk. Independent transport companies can offer flexible tariff regulation (which is not the case of OAO RZD), but at the same time, they can't work as carriers, since the legislative base to provide a non-discriminating access to the railway infrastructure for all the market players has not been formed yet.

Thus, launching joint companies is the most simple and progressive solution that satisfies all the participants of the process. OAO RZD gets an opportunity to use the mechanism of flexible tariff, and the independent companies can efficiently use the developed logistic schemes and routes. 



Mutually Beneficial Cooperation

According to Vladimir Yakunin, today one of the main OAO RZD's targets in the freight transportation sphere is to set flexible tariff regulation mechanisms in the competitive market segments. For this purpose, the launch of subsidiaries will be continued in future. It is planned that next year such companies will become transport market players equal in rights with others. An example of successful functioning in such conditions is the Russian Troyka company specializing in container transportation. Through the launch of its subsidiaries, OAO RZD plans to strengthen its positions in the car, oil, timber and minerals transportation market.

Coming back to the issue of launching a joint company belonging to OAO RZD and New Forwarding Company, it is to be done on an equal footing. 3,000 tank-wagons and gondola cars will be included in the authorized capital. In five years time, the total park of the company is to reach 35,000 units of rolling stock, 70% of each will be owned by the company, and the rest 30% will be rented. 

"The main target of the company being launched is to become one of the key players in the freight transportation market (oil and products, produce of ferrous metallurgy, iron ore and coal concentrate)", the director general of the New Forwarding Company Igor Asaturov says. "The new company will provide services using the routes on which New Forwarding Company operates. Long-term contracts for freight transportation in private rolling stock organization will be signed with consignors. During the first two years of the joint company's operation, it is planned that the company will provide 1.8% of domestic and export coal transportation, 3.7% of iron ore transportation, over 5% of ferrous metals export and 6% of oil freight. During the next five years, the company is to occupy the leading positions of export oil (23%) and ferrous metals (28%) transportation".

Among other competitive advantages of the company being established experts name the opportunity to develop fast and to offer a flexible system of prices (in the framework of the stated tariffs difference) to the participants of the transportation process which will be based on the optimal routes developed. That will enable the company to meet interests of different clients and to reduce their expenses, as well as the expenses of the company. Besides, the business-plan envisages that, from the very start, the company will own a sufficient resource base to organize freight transportation in the market segments mentioned. Consolidating the accumulated experience and competitive advantages of the two founders will enable the new company to solve the clients' transport problems efficiently.



TATYANA  TOKAREVA
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Competitorsor Partners?

The launch of such a company will be a direct consequence of tough competition in the profitable cargo transportation sector. From the very beginning, creating a competitive environment in the railway freight transportation market was the main target of the sector's restructuring. Today the railmen are optimistic when speaking about the results achieved. According to the president of OAO RZD Vladimir Yakunin, the company's share in oil transportation is nowadays only 17.3% from the total volume (in 2003, it was over 30%, and in 2002 - 65%); the one in ore and coal transportation reduced from 72.2% in 2003 to 48.8%, and the one of steel fell from 83.3% to 45%. In fact, such a situation means that OAO RZD has yielded the most part of profitable cargo transportation volumes, which is the reason why the company receives less profit. 

On the one hand, OAO RZD admits the accuracy of such statements. However, the company points out the "losses" were a forced measure without which the formation of a competitive market would have been complicated. On the other hand, since the beginning of their work, companies-operators have gained experience in cooperation with clients, so now they can satisfy all the transport demands of a customer, showing more efficiency and flexibility than OAO RZD. Besides, if in the beginning the independent organizations were considered to be rolling stock operators with a number of forwarding functions, nowadays it is possible to say several large professional transport companies able to become alternative carriers have appeared in the Russian transportation market.

First of all, individual approach to every customer can be treated as a positive feature of companies-operators. Nowadays, companies-operators can offer complex services in transportation organization and supplying the necessary rolling stock. The same operators can be held responsible for the cargo within delivery process and function as consignors. Besides, they are ready to use their own locomotives and provide a complete range of freight operations, which includes loading liquid bulk. Independent transport companies can offer flexible tariff regulation (which is not the case of OAO RZD), but at the same time, they can't work as carriers, since the legislative base to provide a non-discriminating access to the railway infrastructure for all the market players has not been formed yet.

Thus, launching joint companies is the most simple and progressive solution that satisfies all the participants of the process. OAO RZD gets an opportunity to use the mechanism of flexible tariff, and the independent companies can efficiently use the developed logistic schemes and routes. 



Mutually Beneficial Cooperation

According to Vladimir Yakunin, today one of the main OAO RZD's targets in the freight transportation sphere is to set flexible tariff regulation mechanisms in the competitive market segments. For this purpose, the launch of subsidiaries will be continued in future. It is planned that next year such companies will become transport market players equal in rights with others. An example of successful functioning in such conditions is the Russian Troyka company specializing in container transportation. Through the launch of its subsidiaries, OAO RZD plans to strengthen its positions in the car, oil, timber and minerals transportation market.

Coming back to the issue of launching a joint company belonging to OAO RZD and New Forwarding Company, it is to be done on an equal footing. 3,000 tank-wagons and gondola cars will be included in the authorized capital. In five years time, the total park of the company is to reach 35,000 units of rolling stock, 70% of each will be owned by the company, and the rest 30% will be rented. 

"The main target of the company being launched is to become one of the key players in the freight transportation market (oil and products, produce of ferrous metallurgy, iron ore and coal concentrate)", the director general of the New Forwarding Company Igor Asaturov says. "The new company will provide services using the routes on which New Forwarding Company operates. Long-term contracts for freight transportation in private rolling stock organization will be signed with consignors. During the first two years of the joint company's operation, it is planned that the company will provide 1.8% of domestic and export coal transportation, 3.7% of iron ore transportation, over 5% of ferrous metals export and 6% of oil freight. During the next five years, the company is to occupy the leading positions of export oil (23%) and ferrous metals (28%) transportation".

Among other competitive advantages of the company being established experts name the opportunity to develop fast and to offer a flexible system of prices (in the framework of the stated tariffs difference) to the participants of the transportation process which will be based on the optimal routes developed. That will enable the company to meet interests of different clients and to reduce their expenses, as well as the expenses of the company. Besides, the business-plan envisages that, from the very start, the company will own a sufficient resource base to organize freight transportation in the market segments mentioned. Consolidating the accumulated experience and competitive advantages of the two founders will enable the new company to solve the clients' transport problems efficiently.



TATYANA  TOKAREVA
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Competitorsor Partners?

The launch of such a company will be a direct consequence of tough competition in the profitable cargo transportation sector. From the very beginning, creating a competitive environment in the railway freight transportation market was the main target of the sector's restructuring. Today the railmen are optimistic when speaking about the results achieved. According to the president of OAO RZD Vladimir Yakunin, the company's share in oil transportation is nowadays only 17.3% from the total volume (in 2003, it was over 30%, and in 2002 - 65%); the one in ore and coal transportation reduced from 72.2% in 2003 to 48.8%, and the one of steel fell from 83.3% to 45%. In fact, such a situation means that OAO RZD has yielded the most part of profitable cargo transportation volumes, which is the reason why the company receives less profit. 

On the one hand, OAO RZD admits the accuracy of such statements. However, the company points out the "losses" were a forced measure without which the formation of a competitive market would have been complicated. On the other hand, since the beginning of their work, companies-operators have gained experience in cooperation with clients, so now they can satisfy all the transport demands of a customer, showing more efficiency and flexibility than OAO RZD. Besides, if in the beginning the independent organizations were considered to be rolling stock operators with a number of forwarding functions, nowadays it is possible to say several large professional transport companies able to become alternative carriers have appeared in the Russian transportation market.

First of all, individual approach to every customer can be treated as a positive feature of companies-operators. Nowadays, companies-operators can offer complex services in transportation organization and supplying the necessary rolling stock. The same operators can be held responsible for the cargo within delivery process and function as consignors. Besides, they are ready to use their own locomotives and provide a complete range of freight operations, which includes loading liquid bulk. Independent transport companies can offer flexible tariff regulation (which is not the case of OAO RZD), but at the same time, they can't work as carriers, since the legislative base to provide a non-discriminating access to the railway infrastructure for all the market players has not been formed yet.

Thus, launching joint companies is the most simple and progressive solution that satisfies all the participants of the process. OAO RZD gets an opportunity to use the mechanism of flexible tariff, and the independent companies can efficiently use the developed logistic schemes and routes. 



Mutually Beneficial Cooperation

According to Vladimir Yakunin, today one of the main OAO RZD's targets in the freight transportation sphere is to set flexible tariff regulation mechanisms in the competitive market segments. For this purpose, the launch of subsidiaries will be continued in future. It is planned that next year such companies will become transport market players equal in rights with others. An example of successful functioning in such conditions is the Russian Troyka company specializing in container transportation. Through the launch of its subsidiaries, OAO RZD plans to strengthen its positions in the car, oil, timber and minerals transportation market.

Coming back to the issue of launching a joint company belonging to OAO RZD and New Forwarding Company, it is to be done on an equal footing. 3,000 tank-wagons and gondola cars will be included in the authorized capital. In five years time, the total park of the company is to reach 35,000 units of rolling stock, 70% of each will be owned by the company, and the rest 30% will be rented. 

"The main target of the company being launched is to become one of the key players in the freight transportation market (oil and products, produce of ferrous metallurgy, iron ore and coal concentrate)", the director general of the New Forwarding Company Igor Asaturov says. "The new company will provide services using the routes on which New Forwarding Company operates. Long-term contracts for freight transportation in private rolling stock organization will be signed with consignors. During the first two years of the joint company's operation, it is planned that the company will provide 1.8% of domestic and export coal transportation, 3.7% of iron ore transportation, over 5% of ferrous metals export and 6% of oil freight. During the next five years, the company is to occupy the leading positions of export oil (23%) and ferrous metals (28%) transportation".

Among other competitive advantages of the company being established experts name the opportunity to develop fast and to offer a flexible system of prices (in the framework of the stated tariffs difference) to the participants of the transportation process which will be based on the optimal routes developed. That will enable the company to meet interests of different clients and to reduce their expenses, as well as the expenses of the company. Besides, the business-plan envisages that, from the very start, the company will own a sufficient resource base to organize freight transportation in the market segments mentioned. Consolidating the accumulated experience and competitive advantages of the two founders will enable the new company to solve the clients' transport problems efficiently.



TATYANA  TOKAREVA
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