Russian Railway to Provide Faster Delivery to Attract Cargo

Russian rail monopoly RZD is planning at the start of next year to  introduce new services that will cut transit times by rail on some routes by 15 to 17 percent, the Journal of Commerce reports.

RZD hopes the reductions will make rail more attractive to shippers who overwhelmingly rely on trucking despite its higher costs because of the faster transit times. As a general rule, the cost of transportation by truck is 35 to 40 percent more expensive than rail and 50 to 60 percent faster.

RZD is accomplishing the transit time savings through the introduction of more door-to-door and just-in-time schemes and greater use of a single window for customs, according to a spokesperson for Oleg Belozerov, the head of RZD. The railway will also begin high-speed rail services for container cargo.

At present the average speed of container trains is 8.1 miles per hour because of slow operations, mainly related to rearranging and sorting containers and wagons on trains.

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Russian Customs to Improve Filing Process

 To eliminate redundancy, The Russian Federal Customs Service decided that customs paperwork is to be filed only electronically, according to a report in the Journal of Commerce.
Removing the requirement for  hard copies  should cut transportation costs by 10 to 15 percent. In addition, the customs agency also plans to establish a central location to handle customs declarations and automate those declarations. The central location is expected to come online next month, while the phasing out of hard copy documentation will take place over the coming months.
The customs agency has already started to improve its operation.  Those efforts included introducing electronic filing, reducing the amount of paperwork required, and allowing shippers to create online profiles the agency can use to look at their shipping history- all of which makes it less likely such shippers will face delays.
The results of the efforts are noticeable. The time it now takes for customs clearance at Baltic customs has fallen since 2016.  Customs clearance for exports takes 1 hour instead of 2 hours as in last year. The time for  customs clearance of import also has been reduced from 29 minutes to 18 minutes.

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Black Sea Freeze Hitting Major Ports and Affecting Grain Exports

The severe cold  across eastern Europe is raising concerns about grain-shipments  as icy conditions restrict navigation at some of the region’s most important ports, Bloomberg reports.

Severe freeze  is affecting  vessels at Bulgaria’s Varna port and navigation in the Hungarian part of the Danube river has been suspended. Romania’s major grain-exporting hub of Constanta was disrupted last week and also at least three ports in Ukraine’s Odessa region have limited ship movements due to ice.

As forecasters expect another cold spell next week in Ukraine, traders are concerned ports may close again and slow exports. The Black Sea region accounts for about a quarter of the world’s grain shipments and further disruptions may help boost wheat and corn prices.

In Bulgaria, ship movement is suspended in some parts at the port of Varna, while terminals at Burgas have reopened after closing on Tuesday.  There’s no information yet that grain exports will be impacted and shipments are taking place as normal, the Agriculture and Food Ministry said.

Ice-related restrictions mean ship loading may be slightly slower in Reni, Izmail and Ust-Dunaysk in Ukraine’s Odessa region, according to a spokesman for the nation’s Administration of Seaports, and the Infrastructure Ministry. Other ports in Bilhorod-Dnistrovskyi, Mykolayiv, and Oktyabrsk have taken similar measures.

In the Hungarian section of the Danube, ice breakers are in use near Gyor by the Austrian border and on the Tisza river close to Szeged near Serbia to clear way for ports, a spokeswoman for the National Water Authority said. Hungary is a large corn producer.

Traders are also closely watching weather conditions because severe cold can damage crops during winter dormancy.

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Shippers Push Against Bureaucracy at Russian Ports

Russia’s leading shippers and transport companies have formally petitioned the Ministry of Transport to drastically reduce the customs paperwork needed for imports and exports, as the Journal of Commerce reports.

Although European ports have streamlined their customs paperwork, Russian import and export paperwork remains extraneous and unwieldy, which shippers say leads to bureaucratic delays and hurdles that increase their costs 15 percent to 20 percent.

“Since June 1, 2015, European ports switched to one electronic document, not requiring any paper copies of the documentation,” said Vladimir Korostelev, head of a working group on monitoring marine checkpoints in Russia’s legislative body. “Russian seaports may require up to 44 forms of paper documents.”

This extra documentation means it can take two to three days for cargo to clear a Russian port compared with several hours in most of Europe, according to Sergey Malakhov, head of Nadezhny Zapchasti, a large distributor of Russian auto parts from China.

Although these issues affect all Russian ports, they are most seriously impacting southern ports, particularly Novorossiysk. The situation in the Russian northwest, home to the biggest Russian gateway of St. Petersburg, is slightly better.

Russian port administrations say they understand the frustration, but there is little they can do to fix the problem.

Legislative Order No. 140 of the Russian Ministry of Transport and Article 159 of the Customs Code of Russia, requires shippers and transport companies to present up to 29 documents during the handling and execution of cargo at Russian seaports, according to Vladimir Korolev, first deputy captain of the Novorossiysk seaport.

The government is aware of the problems with having too much required paperwork, and efforts to solve them are well underway, including the use of a single window known as Morskoi Port, according to a spokesperson of Minister of Transport Maxim Sokolov. The ministry believes that the new system, which was first used at some ports on Oct. 1, will correct most of these problems by the end of this year.

The Morskoi Port system is full of flaws and weaknesses, and it requires the input of excessive information such as various HS codes, commodity costs, and other information, shippers told Additionally, Russian customs regulations mandate that transportation companies provide that information, but the transporters are usually unable to do so because they accept containers that have already been packed and sealed.

Shippers and transport companies will come to appreciate the new system and fully realize its benefits next year, the ministry said.

Starting next year, cargo clearance at Russian ports should take no more than two hours, according to statements from Oleg Makarsksy, deputy chief of Russian Baltic Customs.

Russian Rail, Road Shippers to Adopt New Contract System

Russian auto and railway carriers will soon adopt a new contracting system,  the Journal of Commerce reports.

The “take-or-pay” system is based on shippers buying space well ahead of time and making binding minimum quantity commitments that if broken could cause shippers to incur penalties of 15 percent to 20 percent of their contract with the carrier. The exact penalty has not been determined, and the system is expected to take effect next year. Money from take-or-pay contracts will be spent on infrastructure expansion and improvements.

The new system is meant to provide shippers with long-term pricing certainty and increase infrastructure investment, as well guarantee shippers space on trucks and trains if they sign such contracts, but shippers worry they will not be able to get space if they do not.

As Russia’s economy has struggled, auto and rail operators have had to look elsewhere for infrastructure funding, and this new contracting system provides an alternative to reliance upon the government, which has tightened its purse strings.

The take-or-pay system is already used in the Russian energy sector, providing the funding for new investments in gas fields and pipelines.

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Russia’s “Platon” Truck Toll to Increase Haulage Rates

Russian shippers and transportation companies say they will have to increase their rates by 10 percent to 15 percent to keep up with the cost increases created by Russia’s “Platon” truck toll, according to information provided by the Journal of Commerce.

As we have reported earlier, starting November 15th  federal highway tolls for trucking companies hauling more than 12 tons  will double to  3.73 rubles ($0.05) per kilometer (0.62 miles). The increases will be felt mostly on federal highways such as the M4.

Transporters will have no choice but to raise rates for the majority of cargo, according to Vladislav Danilov, head of Transportnik, one of Russia’s largest trucking companies.

Platon had been in a pilot phase for the last several months, and so the burden of the new toll has so far not been too heavy because there was insufficient infrastructure to adequately track trucks and collect all the tolls.

The Russian government has denied that the toll will result in higher shipping rates or final prices for consumers.

Truckers  joined the legal challenge said the toll was excessive taxation because they already have to pay vehicle and fuel taxes. The constitutional court rejected these claims, however, and there are no plans to further delay the Platon toll.

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Russia plans new border crossing fee

The Russian Ministry of Transport plans to establish new taxes on border crossings, as  Russian “Kommersant” reports.

Shippers using road or rail to get goods into Russia from another country will have to pay a new fee as of January 1st, 2017.

The fees will be based on the tonnage hauled by trains and trucks, and the exact amount of the fee will be announced later in the year.

The money received from the taxes will be used to modernize the country’s border crossings, which need $4 billion in investments, according to the Russian Ministry of Transport.

Shipping companies say that the additional border taxes will cause a tariff increase, which will, in turn, increase the market for products. This might negatively influence  exports to Russia.

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New Truck Route to Connect China and Russia

Next month a new roadway connecting Russia and China via Mongolia will be opened, according to the Journal of Commerce.

The route will cut 1,400 kilometers and four days from the transit between southern China and the European portion of Russia, and a rule change will cut costs by allowing Russian trucks deeper into Chinese territory.

The rule change allows Russian trucks to hauled cargo as far into China as the port city of Tianjin and capital of Beijing. Russian trucks were previously barred from traveling that deep into China, so shipments had to be transshipped or placed with a new carrier once they crossed the Chinese border, according to the Russian Association of Auto Carriers.

The new route, which will pass through and connect the cities of Ulan-Ude, Russia; Ulaanbaatar, Mongolia; and Tianjin, China, brings the number of trucking corridors connecting Russia and China to four, according to Maxim Sokolov, Russia’s minister of transportation.

The other corridors pass through Blagoveshchensk in Russia’s Far East, the southeastern Trans-Baikal Territory, and Kazakhstan.

The new transit options between the two countries is expected to provide a boost to their container trade. Shippers will welcome the new routing option as the volume of cargo trucks hauled between Russia and China has risen significantly in recent years.

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Russia to Review Trucking Regulations

The Russian government has designed a set of measures that seek to ease the regulatory burden on the truckers as they struggle against weak demand,  theJournal of Commerce reports.

The proposed changes include streamlining regulations and red tape, changing regulations related to truck weight limitations, and stepping up anti corruption efforts via amendments to the existing criminal code.

The first big  change is the reduction of the number of agencies that have a say in regulating the trucking sector. As it stands, a number of both federal and regional agencies are involved in issuing necessary paperwork and other regulatory matters. These agencies include the Department of the Russian Transport Inspectorate, the State Automobile Inspectorate, the Russian Federal Road Service, and others, the functions of many of which are redundant.

The government now plans to consolidate many of these agencies and their functions into a single body that will be spun out of the Ministry of Transport later this year. The government also said it plans to cut the number of regulations directed at the trucking sector.

One such regulation that has drawn the ire of shippers took effect July 1, 2015. The rule set a maximum weight limit of 44 tons for trucks traveling Russian roadways and instituted joint liability of up to 1 million rubles ($20,000) for both the trucker and the shipper, if a violation is found. Shippers say they do not have control over the weight of their loads as they make their way through the supply chain because the cargo is in the care of transportation companies.

Among the planned changes is the increase of  the 44-ton limit  for trucks and also the shipper liability for violations could be eliminated.

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Finland-Russia to Establish NR Rail

Ahead of the expected imminent ratification of a bilateral agreement liberalizing the market for cross-border rail freight between Finland and Russia, Finland’s Nurminen Logistics Group and Russia’s Rustranscom have announced the formation of NR Rail,  officials report.

A jointly owned company, NR Rail, a subsidiary of the Nurminen Logistics Group, will offer new alternatives for import and export traffic between Finland and Russia.

The agreement between Finland and Russia would allow rail transport undertakings in the European Economic Area to operate cross-border services on the Finnish network. However it would not open the Russian domestic market to EU operators, or open the Finnish market to Russian operators.

NR Rail is due to invest in modern locomotives and enhanced cost-effectiveness. The amount and the schedule of investment in locomotives will depend on the development of customer volumes. The company’s new service concept will be the first of its kind in Finland.

In future, Nurminen Logistics will be able to offer its own locomotives as part of a comprehensive service offering comprising wagons, terminals, railway yards and forwarding services at border crossings in Imatra, Niirala and Vainikkala. Nurminen Logistics’ Russian partner offers not only access to considerable resources but also new opportunities on markets in the east, including China and CIS nations.

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