Container Transit Is Not Main Target

23.05.2007 (17:16)

The Trans-Siberian Railway does its best to compensate for the reduction of transit cargo transportation volume by means of export and import freight, and successfully enough. But all the same, what is the prospect of recommence of container transit? Alexander Kolik, Deputy Director General of TransCar international logistic company, presents his vision on the future of that problem.

- Mr. Kolik, how now it is possible to characterize a situation in the transit market?

- After last year's rise of tariffs the demand for the Trans-Siberian Railway as a transit line has obviously decreased. As it is known, last years the basic part of container transit was made by freights addressed to Finland for the subsequent import to Russia. Apparently, they continue all as to be imported to Russia via Finland and other European countries. But now the cargoes are carried by sea. Figures prove that. In the first half of 2006 the container freight traffic via the port of Kotka grew by 30 %, the volume of the Finnish export to Russia - by 20%, and deliveries of household electronics to Russia from the countries of Southeast Asia via Finland - by 22%.

As a whole it is necessary to say, that there are no objective prerequisites for positive changes of the market situation.

- What is the main obstacle for the Russian transit?

- It is cost of the sea container charter which constantly decreases. Several rises of rates caused by periodically arising lack of the tonnage, the common long-term tendency do not change. For example, in 2005 the delivery of a 40-foot container from Shanghai to Rotterdam by sea could cost the customer $2.1 thousand, and in the middle of 2006 it made $1.8 thousand. During the same period the price of the same transportation by an overland route came to $2 thousand. Figures are approximate as the rate counting per one container depends on the size of a consignment, needs for return of the container and a lot of other conditions. But the main bad news is that the largest container consignors privately receive from sea container lines essential (20-25 % and more) wholesale discounts against rates published and discussed by experts. There is a struggle for these consignors on the transit market. And the main weapon of sea carriers is the constant increase in individual tonnage of linear container vessels.

In1997 the carrying capacity of the world's largest container vessel was 6,800 TEU, and experts only discussed possibility of construction of vessels with the capacity of 8,000 TEU. Now such vessel as “EMMA MAERSK’ is launched, and its carrying capacity is 13.5 thousand containers! Parameters of average capacity of vessels of container fleet quickly grow, causing the decrease in costs of carriers and tariff rates.

As for the basic components of the overland transit tariff - costs of rail transportation of containers grow, and there are objective system reasons for that.

- Do you think, that the level of the tariff of RZD has reached the lowest mark and there will be no its further decrease?

- As it is known, for many years the transit container tariff was frozen in order to attract and keep the freight traffic. But the launch of OAO RZD (and the company’s activity is to base on market mechanisms) has forced to put the transit tariff to a level adequating, at least, to real costs. Probably, the rates implemented at the beginning of 2006 were correspondent to them. I suggest - speaking about the foreseeable future - that the railway transit tariff through Russia if it begins to be formed on the basis of costs, will increase. OAO RZD will be solving uneasy problems of restoration of normal investment cycle and serious technological updating. During such periods, tariffs of monopolies do not decrease. One of priorities of a current stage of reform of railway transportation is a refusal from internal subsidizing one type of freight traffic at the expense of others. As for the cargo transportation business, there are no reasons for which container transit should become an exception.

Such reasons can arise only at a higher level. If restoration and development of transit transportation will be regarded as a political problem adequate decisions will be necessary, more complex, than habitual "strong-willed" decrease in tariffs. Precise explanations will be required, at whose expenses and in what volume transit transportation should be subsidized. I believe it will be very difficult to offer a reasonable solution of a similar problem in conditions of re-structuring of OAO RZD’s business and before Russia’s joining the WTO.

- Thus, it is possible to say, that the prospects of recommence of the Russian container transit appear not too encouraging…

- Is it so bad in a current situation? In the first years of market economic reforms when “the transit idea” was formulated and propagandized actively, the main argument was an opportunity to recover transport, to involve investments, to lead technological modernization of ports and other infrastructure, to create workplaces due to attraction of transit freight traffics. There were no other targets during the crisis period, as well as no investment resources.

The theme of transit has entered into those years in transport (and not only) documents of various levels and since then continued to pass from one document to another with preservation of practically constant set of estimations and arguments.

Meanwhile, for the last 8-10 years the situation absolutely changed. Especially at the Euro-Asian market of transit services. In economy and in transport system of the country – it improved obviously.

Stable growth of economy generates growing requirement for transportation of all kinds of cargoes. Russia became the largest export power. Container import grows steadily. Large infrastructural investors and serious private businessmen have come to the transport sector. The potential of development of transport is connected with disclosing huge Russian domestic markets. Transit has ceased to be almost that unique point of growth for which it would be necessary to struggle in every way.

- By what were the “old priorities” replaced?

- I dare to assume, that nowadays the development of a container infrastructure inside the country to provide containerized cargo export and increase of domestic container transportation are much more important for the Russian economy. We shall recollect that today no more than 6% Russian export cargoes that can be containerized is sent in containers. It practically means isolation of Russia from the global transport system in which the factor of the containerization of freight traffic has exceeded 70%. Container terminals in Russian seaports are well equipped, however a significant part of container cargoes in ports is taken out of containers. Yes, «the customs factor» works, but there is also another reason – the lack of a container infrastructure at the domestic transport network, an insufficient level of container railway service. Customs rules can be changed quickly enough whereas the development of a container infrastructure is a problem, and its solution will take many years.

I believe, that if efforts of the state, OAO RZD and independent operators and investors are concentrated on the system creation of a sufficient number of the logistic centers with container terminals, on the organization of regular container services between these centers, on development of a full spectrum of the modern services connected with container business necessary for growing economy, it will bring to the country long-term benefits.

As for transit, the situation in the future can change for the better. But if Russia in seven or ten years turns into a "container" country, it will easily master Asian-European, and any other transit container flows.

By Victoria Merkusheva