The establishment of the common market of transportation services is in the focus of the Eurasian Economic Union (EEU)
Simplified Transit Rules
Since 2006 Belarus has been working hard to make the most of its transit opportunities. Roads have been renovated, roadside service has been improved, largescale infrastructure projects have been launched. Today the efforts to boost the country’s transit potential are guided by the transit promotion strategy for 20112015, the government program on transit development in 20112015 and the logistics system development program set to run until 2015. The last two documents complement each other. Indeed, you cannot make much money on transit as such. The experience of other countries has showed that most of the revenues come from associated services, like catering, accommodation, and of course loadingunloading and rekitting operations.
The efforts stipulated by the government program are already bearing fruit. According Located in the center of Europe, Belarus serves as a bridge between the European Union, Russia and Asia Pacific. Experts view the country as “European Panama”, the shortest way from one “ocean” into another. The efficient use of the favorable geographic location can improve Belarus’ image on the international market of transportation services and bring substantial revenues for the country’s budget. Belarus is busy expanding transport corridors, as this may give a powerful impetus to the country’s economic growth. Over the past years our country has made substantial progress in this field. However, a number of important issues still have to be addressed to make Belarus even more attractive for international forwarders. to the Ministry of Transport and Communications, in 2011 transit generated $2.8 billion in revenues for Belarus, in 2012 the figure exceeded $3 billion, and in 2013 the revenues were estimated at over $3.1 billion. Revenues from cargo transit by rail, road and air accounted for more than 70% of all the transit revenues in 2013.
Belarus is crossed by two PanEuropean Transport Corridors (routes II, IX and the IXB branch). The share of transit cargo transported by road through Belarus accounts for 70% of all the transit cargo and makes up more than 16 million tonnes. Foreign forwarders account for the bulk of road haulage, while the share of domestic forwarders stands at about 11%. Over the past 15 years road haulage through Belarus has quadrupled. Nevertheless, only a third of the throughput capacity of major roads is utilized so far, which allows building up the volume of road haulage every year.
Most of transit cargo (about 9495%) is transported along route
II and partially route IXB of the PanEuropean Transport Corridor towards the BelarusPoland and BelarusLithuania sections of the border. The bulk of transit cargo is transported to and from Russia. Other major destination countries are Poland, Germany, Lithuania, Ukraine, Belgium, the Netherlands, Central Asia and the Caucasus. In H1 2014 over 750,000 trips were made by foreign cargo carriers across Belarus, down 1.2% as compared with the same period last year. One of the reasons behind this fall is that transit through Belarus heavily depends on the volume of foreign trade of Russia that imported less during the period under review.
To make transit more attractive Belarus has adopted a number of regulations to simplify customs rules and other controls in road transportation. Thus, the list of documents subject to verification by the customs authorities at the border has been reduced as much as possible (down to four points). The range of nonfood alcoholcontaining products subject to mandatory escort during transportation has been streamlined. Laws have been amended to make penalties for customs offences commensurate with their severity. This has reduced significantly the cases of confiscation of goods and transport vehicles. By using modern information technologies in customs clearance and controls, the regulatory bodies have established interagency cooperation on the exchange of electronic documents. This helped avoid overlapping of functions. Electronic declaration of goods has allowed carriers to spend less time on customs procedures (down from 46 hours to 15 minutes) and enterprises to cut down on financial costs. The list of documents to be submitted to the customs authorities has been reduced as the system of edeclaration went online. A new procedure of border crossing of persons, transport, goods and animals was enacted on 1 January this year to reduce the downtime of vehicles at the border.
In H1 2014 more than 750,000 transit truck trips were made by foreign carriers through Belarus, down 1.2% from the same period a year earlier
The functions related to sanitary and quarantine control of goods have been transferred to the customs authorities at border crossing points; sanitary and quarantine control functions in respect of natural persons have been vested with the border guard service, the Transport Ministry explained.
In general, the regulatory framework in the country has been improved considerably, and it is now easier and relatively less expensive for carriers to cross the territory of Belarus. Of particular importance are the changes in the customs legislation, which is most relevant to cargo operators.
Improvement of the legislation is an important factor that contributes to the development of transit. However, it should be remembered that no country is safe from possible risks of technological, macroeconomic and political nature. Thus, the Belarusian transit business that is sensitive to changes in the Russian market has been having hard times since August this year. Some carriers have lost a large chunk of their order intakes over Russia’s oneyear ban on food imports from the European Union, the United States, Canada, Australia and Norway. The eastern neighbor has banned the import of many kinds of meat, fish, milk and dairy products, fruits, vegetables and nuts. According to the Transport Ministry, the companies that transport goods in refrigerated trailers have been affected the most. The ministry intends to make up for the losses by means of increasing deliveries of Belarusian food products to Russia. The unused refrigerating fleet will be used for that. The Ministry of Agriculture and Food, the Trade Ministry, Belgospishcheprom concern, Belcoopsoyuz association and regional executive committees have been instructed to make maximum use of the services of Belarusian carriers. In addition, consultations were held with the Transport Ministry of the Russian Federation on the use, along with Russian carriers, of the services of Belarusian companies and diversification of supplies of meat,
Belarusian carriers reported $1,133.1 million in foreign currency earnings from services in overseas markets in 2013, up 11.6% from 2012
fish, milk, fruit and vegetables from the countries that did not come under the ban.
Apart from the recent food ban, Belarusian carriers have to deal with oldtime issues, too. For example, the national residence principle is still in place in the Customs Union. It means that cargoes that go to Russia or Kazakhstan from third countries via Belarus cannot undergo customs clearance in this country, nor can they be processed and stored here. The resident consignee will not be able to perform customs clearing of the cargo in Belarus without setting up a company. An efficient tax administration mechanism is needed to address the issue. In the EU, for instance, cargo is cleared by an authorized operator and is released into free circulation in one country while it can be destined to another, which will be stated in the declaration. VAT is paid in the country of destination. The Belarusian Association of International Road Carriers BAMAP believes that once the residence principle is abolished Belarus will be able to process transit cargo in its transport and logistics centers and transport it to the member states of the Customs Union and the Single Economic Space.
This way has been chosen by our neighbors, Poland and Lithuania, which in a short span of time became leading cargogenerating states in the EU. These countries
ship, process and store goods produced in or coming from the EU and secure their delivery to Russia, Belarus, and other countries, the BAMAP association stressed.
The authorization system for the transportation of cargo from the countries outside the Eurasian Economic Union (EEU) also remains unchanged in the Customs Union. Theoretically, national haulers can take cargo from a neighboring state and deliver it, for instance, to some destination point in Russia. Yet, as specialists explain, the product cannot cross the Russian border without a permit.
The quota of permits for cargo transportation to and from third countries is limited. Following the agreement with Russia the Belarusian quota has been increased by 2,000 permits this year. Besides, an agreement was reached to increase the quota by 3,000 permits in 2015 and 2016. The Eurasian Economic Union Treaty that comes into force on 1 January 2015 will help address a number of issues. Thus, the system of authorization will be abolished for cargo transportation inside the Eurasian Economic Union in the bilateral communication, transit as well as between other EEU member states.
Another decision envisages gradual liberalization of cabotage haulage – the movement of goods within a state – by 2025. The prospects of the authorization being annulled in the near future are vague, as our partners in the Customs Union try to protect their road carriers as Belarusians are quite competitive.
Along with the effort to address transit issues at the interstate level, Belarus needs to develop the road service infrastructure and improve the quality of roads on a national scale. By the way, repairs are currently in progress on the highways of the first category leading from Minsk to oblast capitals. A project for the second Minsk ring road is in the pipeline.
According to the BAMAP association, the further increase in cargo transit will prompt the introduction of a differentiated rate for road toll payments taking into account ecological standards of the vehicle. By the way, Belarus has one of the most ecofriendly vehicle fleets among neighboring countries. More than half of the vehicles used for international transportation comply with the Euro4 and Euro5 standards.
“New approaches to imposing seasonal restrictions on travelling along generaluse roads will be beneficial as well. It is also essential to take into account the experience of neighboring countries where spring restrictions are not applied to international road transportation,” representatives of BAMAP say.
Belarus has a number of popular railway routes for transit cargo transportation. The major routes are ZaolshaBigosovo that are used to transport Russian and Kazakhstani cargo to Latvian ports, OsinovkaGudogai and ZakopytyeGudogai that are used to transport goods between Kaliningrad Oblast and Lithuania. However, today Russia is redirecting its export flows from Lithuanian and Latvian ports to its ports on the Baltic Sea. Russia is building new transshipment facilities there in order to increase the railway throughput capacity near the sea gates. According to the Transport Ministry, in 2013 the volume of transit cargo transported by Belarusian Railways fell from 50.5 million tonnes to 46.7 million
tonnes, or 7.5%, as against 2011. At the same time, the volume of transit freight transportation went up 2.7% over 2012. In JanuaryJune 2014 the volume of transit freight transportation increased by 7% to reach 24 million tonnes as against the same period of the previous year. Transit accounted for 34.5% of the total transport flows. Coal, oil and oil products, fertilizers and ferrous metals are the major transit goods.
With the competition on the market of transportation services getting tougher, Belarusian Railways does its best to raise the transit attractiveness of the country. For example, the company pays special attention to the development of transportation by direct fast container trains. Last year Belarusian Railways found ways to accelerate the movement of container trains by means of reducing the time spent on cargo processing at the Brest railway junction. The time of stay at the BrestSeverny station was reduced from 24 hours to 10 hours, at the BrestVostochny station from 10 hours to 6 hours. In order to speed up the transit of trains and reduce costs the rail operator allows the transit of heavier and longer trains. It also allows extending the routes of cargo trains without reorganizing them.
What concerns container transportation, Belarusian Railways places special emphasis on cooperation with China. In May 2013 the Belarusian rail operator and the Coordinating Council on TransSiberian Transportation launched the Electronic Train project. This train travels from Chinese Chengdu to Polish Lodz. A container train to connect China and Germany (Zhengzhou – Hamburg) was launched in August 2013. Another project to deliver goods by container trains from China to Poland via Belarus was launched in spring. The project is implemented by the design office of the United Transport and Logistics Company and DHL GlobalForwarding.
“The Belarusian Railways’ infrastructure is good enough for the existing volumes of freight transportation. However, considering the increasing flow of container trains, the throughput capacity of stations and railway sections should be ramped up. There is a need to build the second and third main routes, electrify railway sections, automatize gravity yards, develop information systems,” said Belarusian Railways.
In 2013, one of the biggest railway stations in Kalinkovichi commissioned an automated complex to assemble and disassemble trains. It helps reduce time of handling the cars that pass Belarus in transit along PanEuropean Transport Corridor IX. By the end of the year Orsha Tsentralnaya’s receivinganddeparture tracks are expected to be extended, which will increase the flow of cargo on PanEuropean Corridor II. Apart from that, projects are underway to boost the throughput capacity of the Minsk railway junction and LuninetsSitnitsaKalinkovichi railway branch.
For the first time in the last 30 years Belarusian Railways has been implementing a major electrification project of the GomelZhlobinOsipovichi and ZhlobinKalinkovichi sections. Electrification of the OsipovichiZhlobin section (107km) was completed in September 2013. As a result, the total length of the electrified main lines exceeded 1000km and their share grew to 18%
of the total main lines. Currently construction and design works are in progress on the GomelZhlobin and ZhlobinKalinkovichi sections. This year electrification works are planned to be launched at the MolodechnoGudogaiState Border section as well.
A cooperation agreement in the area of electrification of the PolotskDaugavpils section was signed with Latvia. Belarusian Railways has also started developing new types of transportation such as traileronflatcar services (a combined railway and trailer transportation of cargo to the place of destination). Thus, the railway administrations of Belarus and Lithuania have been implementing a project on traileronflatcar transportation on the KolyadichiVilnius (Kaunas) route. Neman train has been transporting heavy duty trucks on its flatcars since November 2013. The duration of the trip is about 10 hours.
This type of transportation is beneficial both for truckers and railways that attract additional cargo flows. The former have to spend less time driving and idling at border crossings and customs. Today the Lithuanian and Belarusian partners are working together to expand the geography of the project and extend the routes to Draugyste and Klaipeda, says the Belarusian Railways administration.
Setting up a unified transport and logistics company (UTLC) by the rail operators of Belarus, Russia and Kazakhstan will significantly boost the transit opportunities of the future Eurasian Economic Union. Belarusian Railways, Russian Railways and NC KTZ have already agreed on the UTLC draft bylaws and a number of other internal documents. Currently the railway administrations are coordinating a shareholder’s agreement. The goal of the company and all the participants of the project will be to create a through route for land transportation of cargo from China to Europe. The UTLC is not simply a railway project. Projects of the similar scale do not exist in the CIS or in the Single Economic Space. One of the world’s largest logistic companies DHL has already showed interest in it.
Belarus will continue working on its transit capacities in the next five years. The major objectives of the policy remain the same. Great hopes are pinned on the fruitful cooperation within the Eurasian Economic Union.