Lu­cra­tive Business

The es­tab­lish­ment of the common mar­ket of trans­porta­tion ser­vices is in the fo­cus of the Eurasian Eco­nomic Union (EEU)

Economy of Belarus - - FRONT PAGE - Irina KONTSAVENKO

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.

Break­ing Bar­ri­ers

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.

Rail­way Trans­porta­tion

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.

Source: Be­laru­sian Rail­way

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