Interview with Gennady Bessonov, Secretary General of the Coordinating Council of Transsiberian Transportation (CCTT)
Progress with the development of cross-border connections in the Eurasian platform have headed the bill in the past years, especially since an intensification of railway routes is desirable in this region mostly for giving up maritime routes which are longer and more expensive for operators and final customers. Development of the Trans-Siberian and Baikal-Amur routes, cooperation between different countries for consolidating transit documents, the possibility to harmonise railway legislation, the high level of investments necessary for infrastructure and rolling stock, the facilitation of customs fees, the improvement of container transport, as well as the opportunities for railway business development between Europe and Asia are topics of major interest for the railway sectors of both parties, Europe and Asia.
Mr Gennady Bessonov, Secretary General of the Coordinating Council of Transsiberian Transportation (CCTT,) talks about these very current and interesting topics in his interview for Railway Pro.
Railway PRO: At the beginning of the year, Russian authorities announced investments of around EUR 6.5 Billion by 2017 in the modernization of the Baikal-Amur (BAM) and Trans-Siberian railways. More exactly, five sections of the Trans-Siberian will be rehabilitated. What benefits do these investments bring to both local and international traffic?
G. Bessonov: Developing the East operating domain of Russian Railways, primarily the Trans-Siberian Mainline (TSM) and the Baikal-Amur Mainline (BAM), is the infrastructure priority, due to expanding market for intercontinental freight transport and logistics services and the trend for big West European, US and Japanese companies to move their manufacturing and industry to China, Indonesia and other Asian countries. RZD OAO is actively preparing for an increase in freight volumes, especially in the Far East. In the view of growing freight traffic we rely largely on the Trans-Siberian Mainline as part of the East-West transit corridor.
Last year Russian government approved RZD’s programme of modernization of the Trans-Siberian Mainline (TSM) and Baikal-Amur Mainline (BAM) by 2020 worth 562 billion roubles, 302 and 260 billion to have been invested by RZD and state sources respectively. Today RZD estimate the total cost of the TSM and BAM modernization programme at 1.2 trillion roubles. The updated project regards the freight flows from Kuzbass and the forecast more than double growth by 2020 to 71.8 million tonnes.
BAM neighbouring regions host more than 25% of Russia’s lead, copper and vanadium deposits and more than half of zinc reserves. BAM and Transsib modernization will provide the capacities, necessary for further development of extracting industry in the regions.
Elimination of bottlenecks, increase in capacities and reduction of traffic load on infrastructure will ameliorate business activity in Eastern Siberia and the Far East, improve their transit capabilities and contribute to realizing transit traffic opportunities of Russia in general. Through traffic from Asia to Europe will partly shift from the sea route to the rail one, the delivery time of the latter being about three times less.
Railway PRO: Can you tell us a few words about the cooperation protocol that the Coordinating Council on Trans-Siberian Transportation (CCTT) and Russian Railways (RZD) signed in order to improve traffic on the Trans-Siberian route by 2020?
G. Bessonov: RZD is one of the major founders of the CCTT, which is constantly working within its objectives towards increasing the competitiveness of Trans-Siberian transportation and searching for coordinated approaches to its development, aiming for the Trans-Siberian route achieving a leading position in the global freight transport market. The CCTT take are involved in developing a set of long-term measures to TSR freight transport commercially attractive and cost efficient, as well as to maximize the efficiency of interaction between all parties in the logistics chain. These activities provide for a comprehensive approach to developing Trans-Siberian container services, involving railways, sea legs and ports, featuring freight forwarders and freight forwarders’ associations of Europe, Russia, the Republic of Korea, Japan and Austria. They also include steps towards establishing a competitive rate for foreign trade and transit shipments, improving TSR foreign trade and transit shipment logistics, and refining the principles of cooperation between CCTT member railways, freight forwarders and operators on the TSR freight-attracting activities. The CCTT also internationally coordinate the activities of parties involved in Trans-Siberian transportation (to ensure on-time delivery and safety of cargo) and provide information support for transport services.
Our events and activities are focused on the key aspects of freight transport development, such as introducing new logistic solutions and management schemes, wide use of advanced technologies and attracting investments into innovative business projects. The decisions taken by CCTT members are used by RZD as a basis for their long-term development concepts and concrete steps to solve the problems of the ever-changing market for transport services.
For instance, RZD’s Programme for the Development of Container Transport on the Trans-Siberian Route for the Period Until 2015, adopted in June 2009, was based on the decisions of the previous Plenary Meetings of the CCTT. The investments into the budget for implementing this programme until 2015 total about 11 billion roubles.
Transsib in 7 Days is an innovative transport project developed and launched as part of the programme, which will make a 7-day delivery time and 1500 km per day block speed possible for freight trains running from Far East ports of Russia to the western borders.
We presume that increasing transit traffic is possible only through adopting block container train technologies, providing for a fixed train schedule and block speed of over 1200 km per day. The time of delivery from northeast provinces of China, the Republic of Korea and Japan to Europe must not exceed 17-20 days, provided that the difference between the prices for rail and sea do not exceed 1000 USD.
Railway PRO: What can you tell us about the measures adopted to improve and increase container traffic in order to attract a higher volume of the goods of foreign operators on the Trans-Siberian route?
G. Bessonov: Improving container transport and attracting more cargo on the TSR have become more relevant than ever before, and all the problems related need a comprehensive approach to tackle.
First, to improve the competitiveness of Trans-Siberian transport services against both alternative modes of transport and routes and attract more cargo RZD uses tariff setting. For instance, since 2012 the rates for container train services from Europe to China via Ukrainian border crossing stations, Brest and Zabaikalsk have been reduced by 33% and those from Russia to Uzbekistan via Russian Far East ports. Moreover, since 2014 RZD has reduced cargo handling rate by 11% for container train services on the route Kanisay – Krasnoye from China and backwards via Brest.
Second, a favourable customs framework is essential for competitive growth, and this is an area of RZD’s cooperation with the Federal Customs Service of Russia. To adopt advance electronic presentation of cargo information to customs RZD and the Federal Customs Service are developing a special communication system. Advance presentation of information on cargo, which is subject to customs control, rules out delays caused by incorrect or incomplete information provided by the cargo owner and reduces overall transit time.
Nevertheless, the speed, at which goods are transported across Russia, is not the only aspect of TSR’s efficiency as an international transport corridor. It should ultimately give the economy more than just carrying capacities. There is a need to ensure not only highest possible speed of cargo flows and least possible transport expenses, but also to offer transport services of a new quality standard, which meet international requirements.
To maintain a competitive quality standard it is just as important to ensure a safety and security. Satellite technologies have become an important component of traffic management and security systems. It is worth mentioning RZD is now replacing separate components of such systems with innovative end-to-end technologies.
Advanced IT is a key tool for a comprehensive approach to increasing competitiveness of TSR container services and attracting more goods. Apart from conditioning the TSR to adopt electronic carriage and technological documents to facilitate exchange of information between all the parties involved in freight traffic, we, the CCTT, are also promoting the use of software and hardware complexes and legal electronic document management
Railway PRO: What are the measures implemented to develop railway connections with Central Asia and the Caucasus, Central and Eastern Europe, as well as with Scandinavia and the Baltic States?
G. Bessonov: As I mentioned before, great investments in modernisation and development of the TSM and BAM serve not only the interests of domestic transportation, but also contribute to unleashing Russia’s transit traffic potential. An increase in transit volumes on the Transsib, being the backbone of the East-West ITC, will boost the development of regular rail communication between various regions of Europe and Asia.
Even now there is a number of successful transit services, launched with the participation of the CCTT, which connect the regions you have mentioned. The Baltic Transit, for instance, is one of the most outstanding services, which celebrated its 10th anniversary last year. The service carries goods from big Baltic ports (including Riga, Ventspils, Tallinn, Muuga, Paldiski and Klaipeda) to Kazakhstan, Central Asia, Afghanistan, Iran and China. Eurasia-1 and Eurasia-2 container services link the ports of Riga with Central and Southeast Asia. Annual growth of their cargo volumes clearly indicates their success.
Developing infrastructure and growing carrying capacities will result in an increase in the number of services like these, connecting opposite ends of Eurasia, including the regions you have asked about.
Besides, simplification of customs procedures contributes to the development of cost-efficient freight services, too, for instance, the use of single transport document for all containers making up a block train.
Railway PRO: What can you tell us about the use of the CIM/SMGS consignment note? How useful is it and what benefits does it bring to cross-border interoperability?
G. Bessonov: The CIM/SMGS consignment note frees the parties involved in transport operations from rewriting carriage documents when crossing the border between states of two different legal frameworks, CIM and SMGS, which saves the consignor 40 euros per each document. Being recognized as an international customs and banking document, it significantly simplifies customs formalities and reduces delays at the border stations by 10-12 hours. The CIM/SMGS consignment note ensures a high level of legal certainty clearly sets the route and distributes transport expenses between the consignor and consignee. Moreover, it is a guarantee of compensation of losses in case of damage to or loss of the cargo as well as prevents inevitable system errors of document conversion.
Since adopted in 2006, the coverage of the CIM/SMGS consignment note has increased manifold and is still growing. This is, to my mind, the key indicator that the CIM/SMGS consignment note is an effective tool for legal interoperability.
Railway PRO: In your opinion, what are the efficient measures for the integration of the Trans-Siberian in the European and global transport systems?
G. Bessonov: The integration of Russian railway system, including its backbone, the Trans-Siberian mainline, into the global transport network is one of the major strategic objectives of RZD, the achievement of which greatly influences the company’s position in the global transport market. The TSM is integrated in transport networks through infrastructure projects, which expand the coverage of Trans-Siberian freight services and potentially attract more cargo flows. Besides, deep integration of the TSM, which is the basis of the rail network of Russia, into the European and Euro-Asian transport systems contributes to attracting transit cargoes, which is another strategic objective aimed at increasing competitiveness of Russian Railways.
For instance, Russia could set up the shortest transit corridor Asia-Europe-Asia and successfully compete with the sea route via the Suez Canal by means of a direct rail communication with the Republic of Korea through modernizing the Trans-Korean mainline and connecting it to the Transsib.
In the course of this project RZD is developing a new route for container traffic: port of Rajin (North Korea) – Tumangan (North Korea) – Khasan (Russia) – Russian rail network – Europe. The project includes the reconstruction of the rail line between Tumangan and Rajin in North Korea, construction of a container terminal in the port of Rajin and establishing regular freight services involving the new infrastructure.
The opening ceremony of the Khasan – Rajin rail line took place on 22nd September 2013 in the port of Rajin after its reconstruction. The project has opened new opportunities for multilateral international cooperation, which is important for the Rason special economic zone of North Korea, Russian Far East and the whole countries.
In the course of integrating Russian railway network into the European transport system the project of a 1520 mm rail line from Kosice (Slovakia) to Bratislava and Vienna is actively implemented by a four-party joint venture of Austria, Slovakia, Ukraine and Russia. Lots of managers of the European transport sector, our colleagues from Ukraine, international transport professionals support this integration initiative. Besides, the project has gained outspoken support by the EU.
In 2010 Roland Berger Strategy Consultants, an international consulting company, first presented their report on the prefeasibility study of the project, which had found that the project would be able to attract from 16 to 24 million tonnes of goods onto the route by 2050. Extension of the wide gauge rail line from Kosice to Bratislava and Vienna will also save time of wheelset change. And in the long run 33 countries of Western and Central Europe, Central Asia and Far East, as well as Russia, will economically benefit from it. A feasibility study of the project started in August 2013.
Working towards global integration of Russian Railways it is no less important to ensure competitive tariffs, to use information technologies and to establish legal interoperability of international freight traffic, and these matters are tackled through creating a common economic space of Russia, Kazakhstan and Belarus. Our railways are actively involved in this process. The traffic between our countries is barrier-free; we use common technologies and make our tariffs closer. All these activities significantly contribute to the competitiveness of rail freight services in the global market and improves their cost-efficiency, which is actually the ultimate objective of integrating Russian rail network and the TSM in particular.
Railway PRO: What is the current situation and how do you estimate the new business perspectives that refer to Europe-Asia railway traffic?
G. Bessonov: Europe – Asia Trans-Siberian container traffic totalled some 640 000 TEU in 2012, and it is expected to grow to 1 million TEU by 2020. Outstripping growth rates of container traffic are a global trend, with respect to which RZD developed the Conception for Integrated Development of Container Business.
The Conception outlines a series of measures essential for the development of container traffic, which facilitate the possible role of railways as an integrator of containerization in Russia.
One of the most important measures under the Conception is harmonization of transport law within the Euro-Asian transport network, simplifying border crossing procedures and eliminating the problems associated with division points.
It also provides for balanced tariff policy measures aimed at harmonized competitive end-to-end rates.
Besides, it promotes the principles of partnership to replace competition and contribute to the coordination of activities to develop the infrastructure of transport corridors and border crossing points.
The Conception outlines the need to attract large-scale long-term investments through setting up international investment companies. This will make it possible to focus the financial resources on the key areas and prevent the infringement of interests of single countries.
Another important point of logistics business development is creating logistics operator companies which offer a whole range of licensed transport, warehousing, customs broker and coordinating services.
An effective IT environment, ensuring continuous tracking of cargo and monitoring its safety is another key aspect of competitive and promising business projects.
Finally, the Conception stipulates the construction of “railway ports” in industrial and transport centres of our countries, as well as in China and Western Europe. It meets the needs of rapidly developing regions of China, where significant industrial capacities of manifold high-tech producers, carmakers and producers of consumer goods are located. These goods are sensitive to transport conditions, and delivery time is of primary importance for them. It is this source of cargo that will primarily raise the volumes Trans-Siberian traffic between Asia and Europe in the near future.
Even now we have a number of regular container services operated on the TSR, which connect the Asia-Pacific region with Europe and offer significant time saving as compared with the sea route. For example, the Chongqing (China) – Duisburg (Germany) block train service, a joint project of RZDL, Kaztransservis, Schenker China and CQCT saves about 50% of time as compared with the sea route and travels 11 180 km in 17 days. Another container train service Chengdu (China) – Duisburg (Poland) – Grossbeeren (Germany) by CRIMT, RZDL, Kaztransservis and Schenker China shows almost the same characteristics: its travel tame equals 16 days.
Growing high-tech production volumes will only raise the demand for high-quality transport services, therefore Trans-Siberian transport will offer great opportunities for business development.
As one of the priorities of its strategy, RZD establishes mutually beneficial partnership with adjacent railways, which comprise sections of international transport corridors, with the purpose of creating end-to-end transport products.
And it is the Coordinating Council on Trans-Siberian Transportation that plays an important role in fulfilling this objective.
Railway PRO: What can you tell us, in a few words, about the Memorandum of Understanding signed in 2012 between the Coordinating Council on Trans-Siberian Transportation and UIC? What news do you have and how does the memorandum evolve?
G. Bessonov: The Memorandum of Cooperation, signed by the CCTT and UIC in 2012, covers all the fundamental areas of joint work of our organizations as well as future areas of cooperation. It was worked out with due regard to the key world trends, which to some extent affect the areas of CCTT and UIC’s competence. These are globalization of economic processes and growth of Euro-Asian and transcontinental cargo flows. The Memorandum presents an exhaustive list of our lines of our cooperation: increasing competitiveness of international transportation, transport policy, security, use of IT and statistics, innovations, cooperation in the field of science and education.
In the course of joint work with the UIC Freight Platform the CCTT Secretariat participates in the meetings of the UIC Global Team of Experts on ITC, established under the auspices of the UIC Freight Department. The CCTT’s competence includes transport modeling (that is modeling the dependence between the delivery time and cost-efficiency; working out a competitive end-to-end rate) and logistics.
Regarding the UIC Security Platform, the CCTT Secretariat heads the subgroup on the security of international transport corridors of the Security – BIRC Working Group.
Presently our organizations cooperate through Expert Group on International Transport Corridors and Security BIRC working group and makes energetic efforts to develop an end-to-end technology for en route cargo safety. The group’s activities also include developing a joint CCTT-UIC guide book on safety of cargo carried in covered wagons and containers by rail between Europe and Asia.
The major areas of CCTT-UIC cooperation, outlined by the Memorandum, are continuously updated in the course of our joint work.
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