Magazines — RZD-Partner International — 2 (14) April-June 2008
2 (14) April-June 2008
Logistics Destroys Borders: The question whether to open a representative office or not is urgent for many Russian transport and logistics companies. RZD Conquers The Middle East: Early this year, OAO RZD won several international tenders held in Saudi Arabia and Algeria. Also, the first infrastructure contract with Iran was concluded. Meanwhile, OAO RZD waits for new tenders.
“Freight Will Always Find The Path Of Least Resistance”: Mr Stig Nerdal, UIC Project Director, talks about the opportunities for integrating the RF into the international transport system.
Spending a Sixth of Annual Revenue on Repairs: The main problems for private wagon owners in Russia are the quality and terms of repair as well as harmonisation of the delivery process for spares.
Contents
Editorial
EDITORIAL
Saudi Arabia, Algerian, Iran, Armenia – you’ve probably heard the names of these countries in relation to OAO RZD’s (The Russian railways JSC) activities. The company is confidently breaking its borders to win tenders throughout the Middle East and the CIS (pp. 32–37). The last gains of RZD reflect not only the fact that Russian engineers and builders have profound and useful know-how, but also the trend towards internationalisation of railways, which they desperately lack.“I Provoke Business into Criticism”
INTERVIEW
Serious reform is going on in the Russian transport sector, and its target is liberalisation. The RZD-Partner International asked Igor Levitin, Russian Minister of Transport, to comment on his vision of the reform.
Logistics Destroys Borders
The question whether to open a representative office or not is urgent for many Russian transport and logistics companies. The answer to it depends on the development strategy of a company and on the need to control the process of packaging and dispatching the cargo to another country. Obviously, the number of affiliates in foreign states will increase because of the growth of transport flows between the EU and Russia.
“Railways Have Good Opportunities. And They Should Be Used Better!”
Since motorways, ports and sea lines are overloaded, there appears the demand for railway transport services in spite of less profitable rates in comparison with sea transport and smaller opportunities to deliver goods door-to-door as with road transport. Werner Albert, Chairman of the Board of Directors of TransInvest Holding AG and President of Association of European Transsiberian Operators (GETO), and Hans Reinhard, CEO of InterRail Holding AG, told The RZD-Partner International about their vision of developing land routes between Europe and Russia and Europe and Asia.50 countries, two borders – and a single consignment note
A year-and-a-half has passed since a unified CIM\SMGS consignment note, used for transportation between the countries with the 1,520 and 1,430 mm-wide gauge standards, was put into operation. And it has showed its advantages. Once additional documents regulating consignment applications are approved, railway transport will increase its competitiveness significantly. It seems that it is high time cargo owners in Europe took the new opportunities into consideration.
Panorama. Economics.
ECONOMICS / Panorama
In March, Russian Railways signed a memorandum to start pre-project research on extending a broad-gauge track to Central Europe with railway companies in Austria, Slovakia and Ukraine. The cost of the project is estimated at USD 4.3 billion and will be shared among the signatories to the memorandum in proportion to the length of the new track passing through each country. Deutsche Bahn is also interested in the project.Reform Is Going On
ECONOMICS / Reform
Valery Veremeyev, Head of Corporate Building and Reform Department of OAO RZD, speaks about the problems and progress of Russian railway reform.
From the People’s Republic of China to the USA via the Trans-Siberian Railway
ECONOMICS / Transport Corridors
Russian Railways, together with its western colleagues, are considering the various uses of the Russian Federation Transit System. One such project is the transport corridor, N.E.W., which is planned to transport cargoes from the People’s Republic of China via the Trans-Siberian Railway to North-West ports and further on, across the Atlantic Ocean to the USA. This route is 1,200 kilometres shorter than the current route through the Pacific Ocean.RZD Conquers The Middle East
ECONOMICS / Projects and Investments
For the first time in many years, RZD plans to head for the foreign construction market to offer the corporation’s experience. And the plan is likely to be a success. Early this year, OAO RZD won several international tenders held in Saudi Arabia and Algeria. Also, the first infrastructure contract with Iran was concluded. Meanwhile, OAO RZD waits for new tenders.Armenian Breakthrough
ECONOMICS / CIS and Baltic States
Not long ago the official session summing up the results of the concession tender held by Armenian Railway took place. It was no surprise that OAO RZD was the winner. Currently, the corporation is taking steps to implement its perspective plans in Armenia. But how worthy is the planned investment and how beneficial is the new investment mechanism for both sides?“All economic risks seem nothing compared to the experience we can get”
INTERVIEW
Alexander Kuznetsov, CEO of South-Caucasian Railway comments on how profitable planned investment and the new investment model is overall.
Panorama. Transportation
TRANSPORTATION / Panorama
As a rule, the first quarter of the year struck the keynote of activities at Russian railways. This year the Q1 results of OAO RZD were rather promising. Practically all targets set in the freight work plan were reached. A daily loading record was set and there were even less idling trains than usual.Russia Changes Timber Export Structure
TRANSPORTATION / Cargo and routes
The stage-by-stage increase of Russian export duties on logs is making for the liquidation of the export of this cargo and stimulation of the domestic timber-processing industry. In a year after the rates started to rise, timber processing grew in Russia. So, Russia will have to review the directions of export flow as well as transport capacities.
We Are Interested in Partnership
TRANSPORTATION / Container transportation
Nowadays, the volume of container transportation via the Transsib is growing by 50% a year, and yet the potential of the railway has not been fulfilled. Gennady Bessonov, General Secretary of the Coordinating Council on Transsiberian Transportation (CCTT), talks about the development of the Transsiberian railway.
Toll Roads Looking for Investors
TRANSPORTATION / Auto Transport
This year over RUR 300 billion will be spent on construction and maintenance of motorways from the federal budget of Russia. A significant part of the money will be invested into building toll roads. Some of the projects are being carried out already, although any investment company may still take part in it. It is desirable that such companies are experienced in construction and exploitation of such projects in different countries.Air Cargo Transportation Confident Of Take-Off
TRANSPORTATION / Air Transport
In 2007, the market for Russian cargo air transportation demonstrated dramatic growth. The results far surpassed those of their foreign counterparts. The growth amounted to 17%, whereas the Middle East air cargo market increased by 10% and South-Eastern Asia by 6%.Legislation: Targets Clear Cut
TRANSPORTATION / sea transport
Last year, the RF Ministry of Transport renewed the current normative and legislative base for several key sectors of the transport market. Alexey Klyavin, Director of State Policy for Sea and River Transport Department, Russian Ministry of Transport, told a correspondent of The RZD-Partner International about the changes in legislation and their consequences for the market.
Russian Southern Ports: Built to Surprise
TRANSPORTATION / Port
The reserves of the handling capacity of two basic Russian ports on the Black Sea shore – Novorossiysk and Tuapse – are almost exhausted. Meanwhile, in the Azov and the Black Sea basin, the cargo flow grows and the demand of cargo owners for freight transportation to the Mediterranean countries increases. Will Russian southern port accept the challenge?Panorama. Company
COMPANY / Panorama
According to Mikhail Akulov, Vice-President of Russian Railways, OAO RZD intends to attract USD 6 billion by 2010 by selling stakes in subsidiaries.Plan Over-fulfilled, Speed Increased, Profit Grew
COMPANY / OAO RZD
In 2007, the load plan of OAO RZD grew by 1% compared to last year’s results. Thus, the volumes increased by 2,5% (to 1.344billion tons) year-on-year. Together with quantity, some changes in quality can be also observed i.e. highly profitable cargoes became the leaders of growth.
“Freight Will Always Find The Path Of Least Resistance”
COMPANY / Doing Business in Russia
Russian railway companies are actively developing international activities: 1520 gauge will be extended to Europe and OAO RZD is creating joint ventures with the main European transport companies. Mr Stig Nerdal, UIC Project Director, talks about the opportunities for integrating the RF into the international transport system.
“68% of Market – That’s Our Slice of the Cake”
COMPANY / Doing Business in Russia
Cargo-luggage transportation occupies a unique niche in Russia. It has a lot of advantages: reliability, quick delivery and comparatively low tariffs. More than half of the market is in the hands of private companies. It’s a guarantee of high-level services for clients. The President of the Russian Association of Rail Shippers, “Union of Transport Companies”, Maxim Stepanov talks about trends for the sector’s development.
Five Years With No Laws
COMPANY / Operator
The last issue of The RZD-Partner International gave detailed analysis of specifics for independent railway operators in Russia. This report is focused on one of the major problems of the transport sector, which is relations between private operators and the only carrier, OAO RZD. In particular, this is mainly caused by a legislative vacuum, which prevents the establishment of market conditions in the railway business.Spending a Sixth of Annual Revenue on Repairs
PRODUCTION AND SERVICES / Rolling Stock
The main problems for private wagon owners in Russia are the quality and terms of repair as well as harmonisation of the delivery process for spares. After the Central Directorate for Wagon Repair was separated from the structure of OAO RZD, rolling stock owners and railwaymen are actively discussing ways to solve these problems.Shares of Russian Transport: Reliable And Still Cheap
PRODUCTION AND SERVICES / finances
The equities of Russian transport companies have a good potential: the sector is relatively underestimated and very promising. The world economic crisis has shown that shares and obligations of ports, railway operators and air companies may become the next point of Russian financial market growth. Analysts recommend investors, especially strategic ones, to purchase the shares now, instead of waiting until they become more expensive.