SUPPORT TO THE IMPLEMENTATION OF THE STRATEGIC WORK PROGRAMME OF THE SOUTH EAST EUROPE TRANSPORT OBSERVATORY

Transcription

1 APRIL 2015 EUROPEAN COMMISSION SUPPORT TO THE IMPLEMENTATION OF THE STRATEGIC WORK PROGRAMME OF THE SOUTH EAST EUROPE TRANSPORT OBSERVATORY (SEETO) TECHNICAL ASSISTANCE FINAL REPORT: ANALYTICAL REPORT FOR TRACK B) AND TRACK C) SUPPORTING THE FLAGSHIP AXES ACTION PLAN DISCLAIMER: The content of this report is the sole responsibility of the Framework Contractor and can in no way be taken to reflect the views of the European Union

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3 ADDRESS COWI Belgium sprl Av. de Tervueren 13-B B-1040 Brussels Belgium TEL +32 (0) FAX +32 (0) WWW cowi.com APRIL 2015 EUROPEAN COMMISSION SUPPORT TO THE IMPLEMENTATION OF THE STRATEGIC WORK PROGRAMME OF THE SOUTH EAST EUROPE TRANSPORT OBSERVATORY (SEETO) TECHNICAL ASSISTANCE FINAL REPORT: ANALYTICAL REPORT FOR TRACK B) AND TRACK C) SUPPORTING THE FLAGSHIP AXES ACTION PLAN PROJECT NO. 2013/ (MFC2-332) DOCUMENT NO. Final Report VERSION 2 DATE OF ISSUE 13/04/2015 PREPARED Tatjana Mirkovic and Klaus Uhl CHECKED Thiago Joe Souza Tavares APPROVED Thiago Joe Souza Tavares

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7 Final Project Report Page 1 CONTENTS Executive Summary 1 1 Introduction Project Objectives 10 2 Project activities and outputs Review of project activities for Project track b) and Project Track c) and of their outputs: findings, conclusions and recommendations Action Plan with implementing measures Analysis of the current BCA situation Missions to BCPs, terminals and ports in the SEETO Region Meetings held with main project stakeholders: SEETO RW WG ; SEETO SC Organisation of SEETO Workshops Establishment of an inter-institutional horizontal Working Group on Transport Facilitation Impact on the transport market/competition 27 4 Conclusions and recommendations 1 LIST OF ANNEXES Annex 1: Terms of Reference Annex 2: Mission trips to BCPs, ports, terminals, participation to SEETO RWWG and SC Annex 3: Checklist DG MOVE Annex 4: Criteria of evaluation of existing and for the preparation of new BC Agreements Annex 5: Questionnaires for rail and road BCPs and terminals

8 Annex 6: What are the main provisions of 2012/34/EU to be observed? Annex 7: Programme and list of participants of WS 1 Annex 8: Agenda and list of participants of WS 2in Belgrade Annex 9: Terms of Reference / Mandate for Working Group for Transport Facilitation Annex 10: Missions Report (Fact-finding mission report) Annex 11: Administrative information about per diems

9 Final Project Report Page 1 Abbreviations ALB AMM BC BCA BCP BPA BiH BG CARDS Consultant CRO DG ELARG DG NEAR DG MOVE EBRD EU EC GR HU HeK/KR HSH/AR HZ/CR IFI IM IR Albania Annual Meeting of Ministers Border Crossing Border Crossing Agreement Border Crossing Point Border Police Agreement Bosnia and Herzegovina Bulgaria Community Assistance for Reconstruction, Development and Stabilisation COWI, TYPSA, GOPA Croatia Directorate General for Enlargement Directorate Neighbourhood and Enlargement negotiations Directorate General for Mobility and Transport European Bank of Reconstruction and Development European Union European Commission Greece Hungary Kosovo Railways Albanian Railways Croatian Railways International Financial Institution Infrastructure Manager Inception Report KOS Kosovo* 1 MAK MAP former Yugoslav Republic of Macedonia Multi Annual Plan 1 *This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo declaration of independence.

10 MNE MoU MZ/MR REBIS TF WG RU RBC RW WG SEE SEETO SC SRB TA Montenegro Memorandum of Understanding Macedonian Railways Regional Balkans Infrastructure Study Transport Facilitation Working Group Railway Undertaking Railway Border Crossing Railway Working Group South East Europe South East Europe Transport Observatory Steering Committee Serbia Technical Assistance TEAM Track expert b) and Track Expert c) TEN-T TF TF WG ToR WB WG WS ZCG/RM ZFBH/BHR ZRS/RSR ZS/SR Trans-European Networks (Transport) Task Force Trade Facilitation Working Group Terms of Reference World Bank Working Group Workshop Railways of Montenegro Bosnia and Herzegovina Federal Railways Republika Srpska Railways Serbian Railways

11 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 1 Observatory (SEETO) - TA Executive Summary 1. The main deliverable, the centre piece, of the project is a concrete ACTION PLAN. The proposed actions are the result of the field trips to the road and rail borders, ports and logistics centres as well as of the two workshop sessions with the private sector (shippers, transport operators, container shipping lines and ports) in Brussels and in Belgrade. Furthermore, there has been an intensive communication with the EC on the findings. The ACTION PLAN shall become the basis for a high-level decision by the competent SEETO ministries and the European Commission with the aim of establishing a Transport Facilitation Working Group, closely monitored, that implement the proposed activities or at least some of them. The ACTION PLAN is a self-standing document as main deliverable of this TA. 2. The field trips - the main basis for the analysis and recommendations of actions - showed that: Rail border crossing operations have not been improved since 2008 when the same expert TEAM had already visited the border crossing points (BCPs), proposed a model Border Crossing Agreement (BCA) which is, even today, five years later, in full conformity with the EU Directive 2012/34/EU. Although most of the SEETO Participants have aligned their rail legislation with the EU legislation and some have signed border agreements, using the SEETO model BCA, the practical implementation in the rail sector does not seem to have been successful. The transposition has not taken place or simply does not function. International freight rail performance has significantly diminished since 2009, in some cases, up to 70% in freight according to persons interviewed at the rail BCP and most of them have already been in service at that time - while border authorities at the road BCPs showed that international road transport has increased, sometimes, doubled and trebled.

12 Table 1 Number of trains per BCPs Number of trains/day (in 24h) in 2014 (source: Missions Report ) Number of trains/day (in 24h) in 2009 (source: TA SEETO ) CRO/ SRB/M MK HU/SER SRB/ SRB/MNE CRO/BiH CRO/B MK SRB KD D/G BG (Samac) ih D/K RE (Ploce) OS International passenger trains have become almost non-existent and service of passenger trains has deteriorated. Interesting is that fewer trains have not led to shorter dispatching times at the borders, since the rules and regulations have not changed. According to the technologia of the oulden times, normal freight despatching lasts between 90 and 180 minutes but in reality it can take longer, depending on various factors (outdated and fault-prone equipment, non coordination on traction on both sides of the border ) or when delays in long-distance international rail transport have disrupted the flow of transport and the reserved paths are no longer allocated. The IT revolution with electronic interchange of data among railways and with the customs has not yet reached the railways in the Balkans. Manual handling with outdated IT hardware in the railway stations does not speed up the process. Moreover, their colleagues from the customs and border police are fully equipped with modern IT. Road border crossing showed significant increases in lorry and bus movements, not to mention the use of individual cars leading to bottlenecks although the despatching time has decreased to 5-20 minutes per lorry or individual cars in normal times. However, the traffic volume is constantly growing and the number of border lanes is not sufficient thus leading to long waiting times at inadequate infrastructure (due to non-existing parking lots, at emergency lanes or simply on the road blocking the remaining mostly individual traffic). This situation leads to hygienic and other sanitary problems. For busses, it takes longer since border police does not yet uses portable electronic data transmission to check passengers in the bus. SEETO ports (Bar, Durres, Ploce, the Sava and Danube river ports) have not been able to develop attractive and competitive hinterland transport chains by rail, facing state-owned railway companies showing no interest or barring the mutual access to the rail network even when the port wishes to get active in the rail business. Some globally acting container shipping lines have withdrawn or significantly reduced their calls. SEETO ports are pure feeder shipping ports, which do not render them more competitive. The neighbouring EU ports in the Northern Adriatic or the Greek and/black Sea ports take a significant portion of the trade of the SEETO region. 2 The number of trains as counted on the BiH side. Bosnian trains can operate with a maximum of 1050 gross tones while Croatian train can operate more than 2000 gross-tonnes. In other words, Croatian trains are split up at the border. In Croatian terms, there are 2-3 trains per day.

13 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 3 Observatory (SEETO) - TA Inside the SEETO ports, the ownership, maintenance and operation of the rail infrastructure is not always transparent, leading to lack of activities for its improvement. The national railway legislation is not always clear about the role of the railways in ports. Non-aligned regulations in the respective rail and maritime legislation do not simplify the matter. Inland logistics centres with rail connections are rare, poorly equipped, dirty or neglected or simply scrap yards for old rail material whereas the road sector disposes of modern logistics centres mostly privately owned and run by European acting freight forwarders. An important result of the field missions was: Rail BCPs do not need any investment in rail infrastructure. Enough rail tracks and other rail equipment for train movement exists. Rail BCPs need a better infrastructure for the electronic transmission of data alongside the corridors among the infrastructure managers, railway undertakings, transport operators/freight forwarders to mention the most important. EC/SEETO decision-makers need support to eliminate the NON-PHYSICAL BARRIERS that are the real causes of delays. Their removal does not require high amounts of investment. In most cases, the removal needs the implementation of the laws already in force! The mental barrier of state-owned monopolistic enterprises expresses itself in the inherent lack of confidence in the other mostly state-owned railway company across the border. Road BCPs need road infrastructure for parking since they are located on points that, historically, have never been designed to be national borders. This is also due to the significant increase in road transport in the region (at the detriment of rail transport). Road BCPs need "single windows" and "one-stop-shops". It means that the border authorities of both countries should be in one single building or at least in one despatching cabin. For more details, see the field Mission reports in Annex 10: Missions Report (Fact-finding mission report). 3. The analysis of available statistical data showed that data are either old/outdated in this fast changing world where economic forecasts change at even shorter intervals and are therefore unreliable for medium term and long term decision-making. Sometimes data are well-adapted to prove the feasibility of some projects financed by the donors, in particular, the EU. Some data have been copied over years for newer reports without being checked in the field. 4. It is therefore more important to have the eyes and ears close to the markets and try to find indications for future trends. This TA with its field visits, workshops and interviews tried to find out such trends instead of making predictions based on historical time series and deterministic algorithms that do not take into consideration that transport

14 decision-makers in the region have more and more alternatives to select for their supply chains. 5. The results provoke the question always asked by those who wish to improve the situation: WHY? The two workshops in Brussels and Belgrade might give an explanation. Their particular feature was that only representatives were invited from the private sector, private rail operators and the ports as the principal feeders of the flagship corridors. They determine in the region why and how the goods are transported. The replies of the workshop participants to the WHY was (their own wording) 3 : Road is more flexible Road transport is more reliable, and if something happens, problems can easily be solved. Road transport is faster Inland waterway transport is not always an option along the corridor. Better corridor management [exists] in EU corridors and no cross-border corridor management in the region. Legal and institutional barriers for the development of the corridors Lack of a client-oriented attitude in the transport planning of governments Lack of client oriented attitude of the market players, in particular railways and ports, Lack of reliability, Lack of flexibility. Flexibility, when compared to road transport, is not the strongest point of rail transport Lack of information: Information in modern logistics chains is essential. Information steers all production and assembly processes. Railway operators and rail infrastructure managers lack client orientation and client friendliness at all levels, from management to drivers. The client requests must be leading, not offered services, and operators need to understand the clients transport needs. Longer transit times can be tackled with good planning. Lack of information Operational barriers Technical barriers Organisational barriers Price is the key Assuming that the price of rail transport is competitive with the price of other modes, the next important key success factors are: Service orientation, reliability, flexibility and information. The replies mirror the basic challenges in the SEETO region faced by those who decide on the use of the transport sector. Their observations are in agreement with those made during the field trips. 3 Note: The responses were formulated by the participants themselves, in English or translated. No participant was a native English speaker!

15 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 5 Observatory (SEETO) - TA An interesting fact is that the replies mention the SOFT problems (mentality) and nonphysical barriers confirming again the observations made during the field missions. 6. An important side result of the workshops was the conclusion that it is better for SEETO Secretariat to have close contacts with the transport decision-makers and to be closer to the markets in order to better understand the challenges in the field regarding the SEETO transport network and BCPs. 7. Since the European Transport Policy (White book on Transport and subsequent documents) emphasises on a SHIFT TO RAIL, the below Table gives an insight in the competitive situation of rail versus road in the SEETO region. Some remarks beforehand: The table shows a theoretical potential for international rail freight transport assuming a total shift of road transport to rail, using the equivalent of container trains. Although it is highly unrealistic that it will ever happen, it gives a feeling of the present market situation and the future market potential if the following is achieved: abolishment of non-physical barriers at the borders, introduction of electronic data transmission between the rail operators on both sides of the border and the corridor, open access to networks for other than the incumbent state-owned railways. The information is based on BCP information, mostly border police and customs the railways at the borders do not have any statistics on their competitors.

16 Table 2: The market share road/rail for freight based on the BCP information CRO/ SRB SRB/M KD MK D/G HU/SER SRB/B G SRB/M NE CRO/B ih CRO/Bi H (Ploce) MKD/ KOS RE (Samac ) Trains/month Lorries/month Theoretical number of container train/month Theoretical number of container train/day At present no of trains/day At present (in lorry equivalent): Present market share of rail (%): Source: BCPs information received during field missions Results: Road prevails: The BCPs of Corridor X are the most frequented. Corridor Vc (Ploce) is frequented, too. Rail does not achieve more than 50% market share varying between 25% (f.ex. Subotica (HU/SRB) and 44% (CRO/BiH Ploce). Considerable potential for container trains sometimes up to three times more -. Even if only a small share of road transport will shift to rail, the number would easily double. 8. For the above reasons, the Consultant considers the following items as the most important ACTIONS for any decision-maker, be it the EU, SEETO, the ministries of the SEETO Participants or the international funding organisations: The ACTION PLAN with the adjacent mission reports that justify the proposed activities. The establishment of the Transport Facilitation Working Group with its sub-groups to implement the ACTION PLAN (as already decided by the SEETO Steering Committee in December 2014) See Action 1 of the ACTION PLAN -. The Transport Facilitation sub-groups to be organised according to flagship corridors to take account of the market and promote a certain degree of competition among the flagship corridor managers to be established see Actions of the ACTION PLAN. 4 The number of trains as counted on the BiH side. Bosnian trains can operate with a maximum of 1050 gross tones while Croation train can operate more than 2000 grosstonnes. In other words, Croatian trains are split up at the border. In Croatian terms, there are 2-3 trains per day.

17 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 7 Observatory (SEETO) - TA The market orientation of SEETO as a communicative turning plate for the transport sector and as an active pusher of activities instead of being a reporting organisation for ministries and other authorities. 9. The ACTION PLAN: The Consultant proposes to implement the following actions which are detailed in the ACTION PLAN. Rail (1): The most important action is to introduce the model SEETO BCA at all rail BCPs in all flagship corridors with their subsequent agreements for rail infrastructure managers, railway undertakings, customs, border police and other border authorities(see Actions 3, 12, 13, 14, 15, 19, and 32). No funding necessary, just willingness of the respective governments and their authorities, in particular, their state-owned railways (Infrastructure managers and railway undertakings)! RAIL (2): Implement the respective subsequent agreements for the existing BCAs at the rail BCPs: MKD-KOS, MNE-ALB and MKD-SRB (see above Actions). No funding necessary, just willingness of the respective governments and their authorities, in particular their state-owned railways (Infrastructure managers and railway undertakings). RAIL (3): Equip the rail BCAs with electronic data transmission and introduce the customs data transmission systems SEED (Systematic Electronic Exchange of Data) and/or NCTS for international rail freight transport (see ACTION 4). Funding necessary should not exceed (estimated) per BCP and another in each of the national centres. RAIL (4): Construct fencing at rail BCPs, example of good practice: Dimitrovgrad. Funding necessary, depending on the space. ROAD (1): Construct parking space and customs clearance terminals at most road BCPs (see ACTIONS 20, 28, 29)) Funding necessary, depending on the required space to be determined in detailed studies. ROAD (2): Introduce single window infrastructure, example of good practice: BCP MNE- ALB. Funding is necessary to be calculated case by case. 10. The activities would not require large amounts of funding per BCP and could be carried out in a short period thus ensuring a short-term success in trade facilitation. Implementing, in particular in the rail sector, important investment projects in rail infrastructure without having solved the border crossing issues will not achieve any increase in attractiveness and competitive advantage for the rail sector.

18 The investment project in rail infrastructure, new traction and wagons in the past 16 years (since the Consultant TEAM has been active in the region) have clearly shown that they have had NO IMPACT on the competitiveness of the rail. The increase in attractiveness and competitiveness of rail does not require enormous funding. It rather requires political will, new market-oriented structures and open minds of the incumbents and new players in the market.

19 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 9 Observatory (SEETO) - TA 1 Introduction The report is structured as follows: After presenting the Project Objectives, Chapter 2 will deal with the review of project activities for Project track b) rail - and Project Track c) road - and of their outputs: findings, conclusions and recommendations with respect to visibility action such as the participation in Railway Working Groups (RWWG), the two workshops in Brussels and Belgrade with the private sector, suggestions on the organisation and structure of the Transport Facilitation Working Group (TFWG). It will also tackle the legal issue of BCAs, particular the non-conformity of the existing BCAs with EU legislation and briefly describe the model SEETO BC, the customs issue and the flagship corridor subject. Chapter 2 will deal also with the Fact-finding Missions to the border-crossings, ports and inland terminals, the organisation of the missions as well as the major issue: Border crossing, hinterland logistics and port. The fact finding missions are the basis for the ACTION PLAN. Details are illustrated with some rare photos taken in the Annex 10: Missions Report (Factfinding mission report)annex 10: Missions Report (Fact-finding mission report). The findings have been transformed into activities that form the contents of the ACTION PLAN. In fact, the Consultant considers the ACTION PLAN (it is a separate document) as the principal output of the project since it is supposed to be the guideline for measures to be undertaken by Brussels and the competent ministers of the SEETO region to render the SEETO transport sector more attractive and competitive. Chapter 3 will deal with market and the competition, an issue often forgotten when funding is demanded. It will repeat what has already been demonstrated in the EXECUTIVE SUMMARY. The SEETO rail sector is far away from an open rail market and has not changed in the past 6 years. The replies of the private sector to the WHY will be detailed. Chapter 3 will also analyse the flagship corridors and show their importance for the market players. The Consultant will not present unreliable and potentially outdated data (as already mentioned) but will rather focus on the perception of the transport market players since their demand should lead to investments in transport infrastructure and have a positive impact on the sector.

20 Chapter 4 will present the conclusions which will surely be discussed in the up-coming SEETO Steering Committee meetings. 1.1 Project Objectives The ToR of the project with objectives and results is given in Annex 1: Terms of Reference. To summarise the most important items of the ToR: The global objective of the project is: to support the implementation of the Strategic Work Programme of the South East Europe Transport Observatory (SEETO) with the aim of fully integrating South East Europe into the European Transport market. The specific objective is: "to implement the following project tasks: improved data collection and analysis mechanism, support the implementation of the Railway Addendum to the MoU, advise on harmonisation of transport related border-crossing procedures, support to improving road safety auditing programmes of the regional participants." The specific objective is to implement the following project tasks as defined in the Strategic Work programme: Project track b). Support the implementation of the Railway Addendum to the MoU: Project track c). Advise on harmonisation of transport related border crossing procedures: The most important general results of the project are: An action plan that should be based on the following elements according to the ToR. For Project track b): Description and analysis of the railway lines and terminals on the flagship corridor with data on infrastructure standards of designated sections with identification of bottlenecks and key problems (capacity, speed restrictions, level crossings etc.). Analysis of the socioeconomic costs and benefits stemming from the establishment of the freight corridor (general economic situation, rail transport cost compared with other transport modes, logistics costs, actual volumes, type of goods and modal split, trans corridor flows, transport customers' requirements, market analysis, terminal demand in qualitative and quantitative terms etc.). The final outcome should be an analysis on clear corridor perspective and possibilities of intermodal transport. The assessment of the quality of service on the entire corridor and terminals (journey times, punctuality, planned improvements, loading/unloading time on terminals, actual

21 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 11 Observatory (SEETO) - TA performance and quality with potential for further improvements etc.) in order to determine the performance indicators on the flagship corridors. Determination of non-physical barriers which affect the continuity of transport flows (implementation of border crossing agreements, border crossing waiting times, potential access problems to terminals, non-utilization of modern technological systems etc.) with set of measures and best EU practices to facilitate rail transport. For Project track c): to establish an appropriate and operational interface of key national, regional and international stakeholders, including transport and logistics operators to introduce set of best practice methods and measurable performance indicators regarding the increase of quality of transport services in road sector and cross-border operations on the basis of assessing the legal flaws, malpractices and bilateral impediments among the Regional Participants and/or on a particular transport axis between RPs and neighbouring countries, as well as developing a mechanism for monitoring the progress in meeting the indicators to raise the political awareness and commitment along the process and to promote the overall benefits of the transport facilitation, as well as the general political and economic cooperation in the wider region

22 2 Project activities and outputs 2.1 Review of project activities for Project track b) and Project Track c) and of their outputs: findings, conclusions and recommendations During the Inception period of the project, it was agreed between Consultant and EC DG MOVE/SEETO to have a joint ACTION PLAN under Project Track b) and Project Track c) as well as a joint Final Report. The report should give an insight on how the two main objectives of the action plan as well as the requested outputs from the ToR have been achieved via various inputs (visits of ports/bcps, workshops, RWWG meetings, REBIS study, stakeholder meetings) and translated into the ACTION PLAN. The two main objectives of the ACTION PLAN are the following: identify potential investments and measures that would enhance the efficiency performance of the flagship corridor on SEETO Comprehensive Network elaborate substantial measures and recommendations for addressing the analysed barriers and harmonisation of procedures. And the expected results as listed below (taken from the ToR but simplified): a) Description and analysis of the railway lines and terminals on the flagship corridor b) Analysis of the socioeconomic costs and benefits stemming from the establishment of the freight corridor c) The assessment of the quality of service on the entire corridor and terminals d) Determining of non-physical barriers which affect the continuity of transport flows e) Elaboration of the rationale of the establishing an inter-institutional horizontal Working Group on transport facilitation f) Establishment of contacts with key national, regional and international stakeholders, including transport and logistics operators

23 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 1 Observatory (SEETO) - TA g) a set of best practice methods and measurable performance indicators regarding the increase of quality of transport h) to raise the political awareness and commitment along the process and to promote the overall benefits of the transport facilitation, as well as the general political and economic cooperation in the wider region In agreement with the EC, preparation of study concerning a description and analysis of railway lines by assessing the current situation and analysis of socioeconomic costs (description of rail characteristics, maintenance of rail tracks) was not carried out for the railway lines but only for BCPs and presented in the Fact-finding Missions Report. Instead, the Action Plan is focusing on the short-term benefits to establish corridors that could cope with the transport demand and how to overcome the non-physical barriers. The following sub-chapters present how the Action Plan s two main objectives and the expected results were implemented during the execution of the project. 2.2 Action Plan with implementing measures All activities done in this project for Project track b) and Project track c) are to be transposed into the ACTION PLAN (main deliverable) and the accompanying Final Report on project execution 5. Its implementation will also become the main task of the new TFWG to be established. Various reports have been written in the past, in particular the SEETO Report 2009, and no action has been undertaken. Concept of the ACTION PLAN The ACTION PLAN is structured in the following way: What is the expected result? A brief description of the potential outcome. It was not the task of the project to detail the outcome. What to do (measures to be undertaken)? A brief description of the main measure and some sub-measures. 5 During the drafting of the ACTION PLAN, the activities were more or less written down after each field visit, the TEAM found it useful to involve the EC at its earliest stage. Therefore, DG MOVE and DG NEAR received first drafts of ACTION PLAN and asked the TEAM to detail certain activities with the objective to present them AGAIN to DG NEAR and DG MOVE for implementation with estimated cost. DG MOVE involved SEETO who also supplied constructive comments. This fruitful interaction helped to improve the ACTION PLAN.

24 The activities are the direct outcome of the field visits, the interviews with market participants, the two workshops in Brussels and Belgrade and, partially of the recommendations of the SEETO 2009 report. Who does it (the responsible institution/agency that should be the leader for the implementation)? The decision on who is the responsible person or institution is paramount importance. The experience shows that THERE IS NO CLEAR RESPONSIBLE for actions proposed in various reports, even if they do not require any funds but simply engagement and maybe a relatively easy work to detail them. However, The lack of management and lobbying experience or sheer lack of interest have hampered execution of activities in the past. Therefore, the TEAM expects many discussions on the Who does it?, the responsibility, and recommends that the EC should closely monitor the actions. Who does it with whom (which are the competent institutions/agencies that should be involved to assist the responsible person or institution)? The TEAM expects similar reaction as for the "Who does it?. Until when (a tentative timeframe)? The time schedule proposed by the TEAM is purely arbitrary. This has to be decided by the TFWG and the responsible person.in charge of the activity. The estimated costs (Outlining the resources if necessary) The cost estimations proposed by the TEAM are estimations based on similar activities or projects carried in the region, in the process of implementation/tendering or data from similar projects in the EU, information received from people in the field that proposed or supported the activity. It was not the task of the project to carry out feasibility studies or costing studies for each activity. WHY? (Justification) This section gives a brief description of the reasoning of the activity and refers to the mission reports for more details (Annex 10: Missions Report (Fact-finding mission report). Again, it was not the task of the project to give detailed quantitative or qualitative data. The data received came from the observations, comments and suggestions, the TEAM received during the field trips. The proposed actions, being in reality short term actions, will have an immediate positive effect on the attractiveness and competitiveness of the corridors in the region.

25 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 3 Observatory (SEETO) - TA Structure of the ACTION PLAN The ACTION PLAN is structured according to flagship axis corridors. This structure supported by DG MOVE will render possible a market-oriented approach. Furthermore, if the subgroups of the TFWG will be organised according to corridors, the sub-groups will tackle the proposed activities in a holistic approach. They will be able to prove to the market that there is a will to improve the supply chains using the corridors. Lastly, a certain competitive behaviour might emerge since some corridors are in direct competition with each other. This applies in particular to the corridors of Ploce and Bar with their markets in Serbia/ Hungary, not to mention Corridor X that is already in full competition with the EU corridor IV to Turkey via Ruse and pretty soon with the Bulgarian corridor via the new Danube bridge Calafat Vidin to Greece. Involvement of the EC during the drafting of the ACTION PLAN The team involved the EC at an early stage during the drafting of the ACTION PLAN to ensure the coherence of the Consultant's approach with the objectives of the DG MOVE and DG NEAR. Progress monitoring mechanism for ACTION PLAN An efficient and transparent monitoring is the key to a successful implementation of the Action Plan. Action Plans that have been carefully prepared, the implementation of which has not be properly and seriously monitored cannot be consider sustainable and will sooner or later lose their meaning, their role and they will disintegrate. To properly monitor the ACTION PLAN, those who monitor, those who are monitored and the means of monitoring have to be determined. Finally the timing of monitoring should be well known. Although this project aims at the regional harmonisation and integration, it is worthwhile discussing whether the monitoring shall be carried out regionally if considering the past performance on monitoring. The Consultant suggests a compromise. The monitoring shall be carried out by the future TFWG under the chairmanship of the EC with the support of SEETO Secretariat. The members of the TF WG come from the relevant ministries in charge of trade, customs, border policy, inspections matters in each SEETO Participant. The chairman is from DG MOVE. In this way, there is the direct link between the SEETO Participants and DG MOVE. They would need to meet no more than twice a year, since most of the implementation work is done by the SUB-GROUPS. The organisation of the sub-groups is presented further down. The TF WG directly reports to Brussels and to the SEETO Steering Committee. In addition, TF WG will prepare a comprehensive annual report on the progress of the implementation of the ACTION PLAN. It will then be sent to DG MOVE, DG NEAR, SEETO Steering Committee, to the AMM and to IFI for their due consideration.

26 If the next SEETO Annual Ministerial Meeting adopts the ACTION PLAN, the Ministers can give the mandate to the TF WG in order to propose remedial actions to the Ministers at future annual ministerial meetings in case of deviations and delays. Revision of the ACTION PLAN and dissemination First drafts of the ACTION PLAN were already presented to and discussed with the SEETO Steering committee in Pristina on and in Brussels on DG MOVE/DG NEAR already discussed them internally and gave feed-back to the TEAM. First results were equally presented to the RWWG at all meetings in The final ACTION PLAN will be presented to the first RWWG in 2015 in Podgorica on Conclusions The status of implementation of BCP agreements can be found of the justification part of the proposed actions in the ACTION PLAN. The major challenges of road BCP are not bilateral or legal instruments at the border but the electronic transmission among border authorities of both sides at the border. This ACTION PLAN aims to create the framework for the implementation of the outputs and measures suggested by this project in order to achieve the overall goal of the project which is: The ACTION PLAN comprehensively answers to the questions what to do, who does it, with whom, till when and how to implement the proposed actions. It also goes one step further by suggesting the monitoring methods, which are necessary in order to attain the specific objective. The TF WG shall be responsible for the monitoring of its implementation in close collaboration with the SEETO Secretariat. The resources needed are minimal and totally manageable for the SEETO Participants and for the SEETO Secretariat. Finally, the commitment of SEETO Participants is needed to the common goal that this project has outlined and a vision for the quickest possible integration of SEETO Region into the European Transport Community and eventually into the European Union. Recommendations 1. The ACTION PLAN will be presented to RPs on the RW WG in first quarter of After the preparation of a short policy paper that comes from the Action Plan, it will be adopted during the SEETO SC and finally prepared for Ministerial meeting which will be held in December 2015.

27 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 5 Observatory (SEETO) - TA 2.3 Analysis of the current BCA situation Rail Border Crossing Agreements (BCAs) Legal framework. (related to Point B2) The Consultant laid emphasis on the fact that any progress in cross-border transport depends on the legal framework. Without a legal basis, be it in the form of laws, administrative instructions, regulations or subsequent agreements with customs authorities, border police authorities, phyto-sanitary authorities and infrastructure managers at the border points, no improvement can be expected. The basis for the legal framework in the SEETO region comes from the EU legislation. According to the information contained in the annual country reports prepared by the EU delegations in each SEETO Participant and published on the EU website, all countries are in a process of aligning their transport legislation, in particular the rail, inland waterways and port legislation. In rail, all SEETO Participants have not yet adopted the recast (2012/34/EU). From a formal point of view, the legal framework for rail is set but it is a question of implementation of national laws and a question of political willingness combined with an intensive monitoring by the EU. The best solution is that SEETO Secretariat uses the EU monitoring reports to find out legal gaps and pitfalls and starts acting via the TFWG to be established since so far SEETO has not made any legal framework monitoring apart from report writing. In order to make a full use of the legal part of this Project for the future work of SEETO, it will be extremely useful to prepare a list of most important international treaties and conventions, as well as EU core transport legislation for different modes of transport. They should be accompanied with concise checklists cum questionnaires on how they are implemented/enforced (similar to the checklist provided in Annex 3: Checklist DG MOVE) for a future progress monitoring mechanism. The historical experience in the region clearly and unambiguously proves that without the legal framework, which has to be in compliance with the EU legislation, in particular Article 14 of the Directive 2012/34/EU and its forthcoming implementation acts, no progress can be envisaged. Once such border-crossing agreements, in conformity with EU legislation, have been signed and applied, the basis for an easy and time efficient dispatching at the border stations is set up. The major bottleneck and service quality obstacle at current SEETO borders is in the rail sector. With respect to the core challenge in rail transport, the application of the SEETO model BCA, (an agreement in full conformity with Directive 2012/34/EU), the Consultant used as a guiding line the checklist on the verification of the compliance of the cross-border Agreements with the recast Directive 2012/34/EU developed by the Directorate General MOVE (Annex 4: Criteria of evaluation of existing and for the preparation of new BC Agreements). The relevant legal

28 texts can be found in Annex 6: What are the main provisions of 2012/34/EU to be observed?). In addition, the criteria catalogue for the SEETO model BCA developed by SEETO (see SEETO Report 2009) was the basis for assessing the existing and future border-crossing agreements. The evaluation of existing rail BC Agreements on the basis of 18 specific criteria that derive from EU Legislation is one of the most important output. The criteria are: 1. Scope of agreement: Bilateral or multilateral application 2. Objective of the Agreement: Increase in competitiveness of rail sector, EU compliance 3. Open access for licensed rail operators to cross the border 4. Open access in the ZONE 5. Free border dispatching in the ZONE 6. Open principles of the procedures of control for the border authorities, in particular border police and customs 7. Free movement of the employees of the border authorities 8. Definition of border dispatching points 9. Service principle in the ZONE: Single window, one-stop-shop 10. Acceptance of International Conventions (e.g. COTIF - CIM -/SMGS) 11. Freedom of the use of transport documents other than CIM/SMGS 12. Freedom of organising one's own rail border dispatching 13. Freedom of the border authorities to conclude separate bilateral agreements between each other 14. Rail Infrastructure managers establish non-discriminatory rules for the rail operations in the ZONE - the Border Crossing network statement 15. Principle of transferring commercial and technical aspects to hinterland terminals 16. Independent authority (Border Crossing Commission) as regulator/arbitrator/quality commission 17. Freedom of choice of language 18. Agreement to publish all border crossing requirements by website So far the following BCA have been signed or are in the process of signature, which have used the SEETO model: Macedonia Kosovo Montenegro Albania Macedonia Serbia At first sight, this might be regarded as a success for the trade facilitation by rail, since the BCAs are in almost in full compliance with the 2012/34/EU. However, the required sub-agreements between the border authorities and between the rail infrastructure managers have not yet been concluded with the result that the new

29 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 7 Observatory (SEETO) - TA BCAs are not functioning and the "older" border despatching procedures continues to be applied. Such sub-agreements are: Framework Border-Crossing Agreement (BCA) Framework Border Police Agreement (BPA) Agreement between Infrastructure Managers on the Interconnection of Networks Agreement among Railway Undertakings concerning the Transfer of Wagons and Traction Regional Agreement for the Mutual Recognition of Train Driver Certificates Language tests Most sub- agreements were prepared during the SEETO 2009 project by the same TEAM using the above 18 criteria. The proposed agreements are fundamental to the SEETO Participants if they wish to: improve the competitiveness of their international rail traffic, simplify border crossing for their citizens and shippers using rail join the European Union. In other words, the opening of the rail borders has got stuck half way. A further problem at rail BCPs that has been intensively discussed in the SEETO RW WG - at which the TEAM regularly informed the members on the status of the project is the opening of the rail market of the SEETO Participants. There severe obstacles for private railway undertakings to run on the national networks or between the national networks of the SEETO Participants although most relevant railway laws - in conformity with the EU legislation - stipulate it. This lack of implementing the national railway laws and the new BCAs, intentionally or unintentionally, leads to the fact that there is no open access in the region. During the visits to BCPs beside the analysis of the Border crossing agreements, the following information was collected: Border processes (pre-border process, transport documents process, vehicle operating (technical and commercial checks) process, customs/authorities process) National and international electronic data exchange between the border agencies, companies, and freight forwarders Border facilities

30 As a result, the ACTION PLAN proposes activities to implement the SEETO BCA model at all BCAs of the region. This also applies to the BCAs with the EU MS which are most of them not in compliance with the Directive 2012/34/EU. Most of the existing bilateral agreements have been concluded before 1990 or, if newer, their concept still relies on pre-1990 rules. Only the functioning BCAs between Serbia and Bulgaria and between Serbia and Montenegro come close to be in compliance with the EU legislation but stop short when it comes to opening the Serbian rail network although the Serbian railway legislation renders it possible. The most challenging part is the joint border control of the border authorities, in particular, the border police, when they are obliged to execute their duties on the territory of the neighbouring state. However, first attempts already exist that prove that it is possible and feasible in the SEETO Participants as can be seen on the Serbia-Montenegro, Kosovo*-former Yugoslav Republic of Macedonia and Montenegro-Albania. In the following, some more detailed information on the BCAs. BCA Serbia Bulgaria New bilateral agreement that is in force since 2006 is not in total use at the Bulgarian side which unilaterally modified, claiming that the EU membership was the reason for it. BCA is not in full conformity with EU legislation, in particular with Art. 5 and 13 of 34/2012/EU. Since the last visits of the same TEAM in 2009 the only change was the unilateral stop of joint border police control on running trains. Bulgarian border police does not enter in the Serbian territory any longer. This leads to new delays which were intended to be reduced in 2005 with the new BCA. Bulgarian customs also stopped joint controls at Dimitrovgrad. It remains the joint dispatching of the trains by the railway companies. Bulgarian RUs are allowed to enter Dimitrovgrad based on agreements signed with ZS. BCA Serbia- Macedonia The Railway Directorate and the competent Ministry for Railways in Serbia asked the TEAM in first meetings to assist them on specific questions with the following results: Article 1 Definitions: The definition of "one-stop shop" was clarified with slight improvements; The infrastructure managers shall publish complete information on documents and procedures on their website available for any railway undertaking. The major reason is that the infrastructure managers are in charge of the Network Statement and of the access conditions to the network.

31 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 9 Observatory (SEETO) - TA Article 2 - Hinterland.The TEAM insisted on the fact that in the future border-crossing dispatching shall be carried out in the hinterland terminals to avoid further delays at the border stations due to commercial, administrative and technical inspections. Article 3, Paragraphs 2 and 5: The wording was slightly changed. In Paragraph 2, "comprises" was replaced by "defined" ; In Paragraph 5 "comprises" remains. Other small corrections were undertaken. The major challenge seems to be a linguistic one. The Serbian and Macedonian languages are more precise in their terminology than the English language. BCA Kosovo*- former Yugoslav Republic of Macedonia In discussing the first draft of the subsequent agreement between the two rail infrastructure manager, INFRAKOS, the IM of Kosovo* wished to have some clarification on Art. 1 of the BCA Definition. In fact, the questions were almost identical with those asked by the Serbian ministry. Again, the Macedonian and Albanian languages are more precise in their terminology than the English language. Phyto-sanitary problems with the EU At the Serbian-Bulgarian and Serbian- Croatian borders, the phyto-sanitary inspection seems to be a problem since phyto-sanitary inspections should be carried out on the territory of EU member-states only. Therefore, it is a challenge for joint border-crossing stations that are on Serbian territory. The TEAM proposed a solution based on the mutual acceptance of phyto-sanitary documents between the EU member-states Croatia and Bulgaria and the Republic of Serbia. In this way, no inspection would be obligatory at the border crossings for goods under phyto-sanitary regulation. Nevertheless, the proposal does not imply that there will be no inspection possible at the border. Authorised persons, the infrastructure manager or from another border authority, could have the right to make inspections on the spot, if the inspector understands that there is a justified reason for it. Other activities The Team assisted the SEETO Participants in formulating such an Agreement on mutual recognition of phyto-sanitary documents. Maintenance of tracks on BCPs are reported, however the infrastructure available on the BCP for rail is much higher than used for the actual international traffic. For the volumes running

32 through the BCPs the rail infrastructure is over-dimensioned where as for the road there are many cases where infrastructure is under -dimensioned, in particular lack of parking lanes leading to long waiting hours. Maintenance of rail is not as good as maintenance of road. Recommendations The only and most important - recommendation is to use the SEETO model BCP at all rail BCPs and to adjust it to their situation. More details can be found in the ACTION PLAN. Road Border Crossing Agreements (BCAs) Concerning the roads, the SEETO Participants already adhere to international conventions such as TIR and CMR reaching far beyond the EU and its neighbours. Trade facilitation is far more advanced than for rail. Road formalities at SEETO BCPs for international goods transport are subject to wellfunctioning international border procedures (TIR/CMR) where mostly customs are involved. With respect to transport operation by lorry, the movement of lorries, there are no major obstacles/restrictions from a legal and institutional point of view since the technical aspects of the lorry are harmonised, at least European-wide and lorry drivers have freer access to vehicles and roads than train drivers. Some minor discriminatory actions have been found and their remedy has been proposed in the ACTION PLAN. The service quality is impeded since controlled areas at the border have limited parking facility for truck while the documentation is processed, and trucks are either queuing on the access road to the controlled area, making it difficult to separate flows for priority trucks (for instance tanker trucks), or are directed to a waiting area until the time they can be admitted to the controlled areas (when the documentation is ready, or when it is their turn). Two-stops border One stop border Sequential border crossing point Parallel (Joint) border crossing point

33 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 11 Observatory (SEETO) - TA Apart from questions of security, no major access restrictions to the roads could be observed at the border crossing points visited. The only relevant physical restriction is the parking/waiting space for lorries and busses which is rarely due to administrative (non-physical) barriers. The lack of parking space and the waiting time at the borders is rather the result of the success of international road transport in the SEETO region to the detriment of international rail transport that has not managed yet to efficiently organise its border crossing. To show the relative facility of international road transport, below an example applicable in the region: TIR Transport starting from a third country and involving a non-community (SEETO) country during the journey Example: Turkey Bulgaria (EU) Serbia (SEETO) Poland (EU) The Turkish Holder of a TIR carnet is responsible for lodging the TIR carnet data at the customs office of the EU entry in Svelingrad (Bulgaria EU -). The Bulgarian customs office of exit from the EU at the border with Serbia at Dimitrovgrad road border point terminates the TIR operation and sends messages in an agreed form to the customs office of entry in Svelingrad (Bulgaria EU -). The Serbian Customs office at Dimitrovgrad enters the TIR data into the Serbian data system and sends it to Customs office at Horgos (Serbia). When the TIR operation re-enters to the EU at Röszke (Hungary EU -), the Holder is again responsible for lodging the TIR carnet data at the customs office of entry. The customs enters the data into the NCTS/TIR movement system with a Movement Reference Number (MRN) sending it digitally to the customs office of destination (Krakow, Poland EU -) The customs office of destination terminates the TIR operation by sending the messages, stored in the NCTS system, digitally to Svelingrad and annotating the TIR carnet counterfoil. As soon as the NCTS functions at the Bulgarian/Serbian border and at the Serbian/Hungarian border, the Serbian customs simply take notice of the movement, the information of which they receive from Svelingrad, store the data in their system, transfer it to the Hungarian customs office at Röszke, thus facilitating the internal procedures. The lorry stops for some minutes at the Serbian borders of entry and exit. The field missions have shown that waiting times on the road BCPs are mainly subject to lack of road infrastructure while waiting times at rail BCPs are subject to cumbersome

34 procedures and lack of coordination among the railway organisations on both side of the border. The road is already much more integrated regionally and with EU than railways! Table 3: Road and rail BCPs and implementation of NCTS and SEED on them No. BCPs NCTS (yes/no) SEED(yes/no) 1 SRB-CRO: Šid (rail) no no 2 SRB-CRO: Batrovci (road) yes no 3 SRB-HU: Subotica (rail) no no 4 SRB-HU: Horgos (road) yes no 5 MKD-GRE: Gevgelia (rail) no no 6 MKD-GRE: Bogorodica (road) yes yes 7 GRE-MKD: Idomeni (rail) no no 8 MKD-GRE: Medjitlia (road) yes no 9 MKD-GRE: Kremenica (rail) Not in - - function 10 MKD-SRB: Tabanovce (rail) no no 11 MKD-SRB: Tabanovce (road) yes yes 12 SRB-MKD: Presevo (road) yes yes 13 SRB-MKD: Presevo (rail) no no 14 SRB-BG: Dimitrovgrad (rail) no no 15 SRB-BG:Gradina (road) yes no 16 SRB-ROM: Vatin (road) yes no 17 SRB-ROM: Vrsac (rail) no no 18 BIH-CRO: Brod (road) yes no 19 BIH: Samac (port) no no 20 BIH-CRO: Samac (rail) no no 21 BIH-CRO: Samac (road) yes no 22 BIH-CRO: Samac (rail) no no 23 BIH-CRO:Capljina (rail) no no 24 BIH-CRO: Biaca (road) yes no 25 CRO - BIH: Biaca (road) yes no 26 BIH: Ploce (port) no no 27 SLO: Koper (port) yes no 28 ITA: Trieste (port) yes no 29 CRO: Rijeka (port) yes no 30 ALB: Vlora (port) no yes 31 ALB: Durres (port) no yes 32 ALB-KOS: Morine (road) no yes 33 KOS-MKD: Hani Elezit (road) no yes 34 KOS-MKD: Hani Elezit (rail) no no 35 SRB-KOS: Jarinje (road) no yes 36 SRB-KOS: Jarinje, Lesak, Zvecan no no (rail) 37 SRB-KOS: Merdare (road) no no 38 MNE: Bar (port) no yes 39 MNE-SRB: Bijelo Polje (rail) no no 40 MNE-SRB: Dobrakovo (road) no yes 41 SRB-MNE: Brodarevo (road) no yes 42 SRB-MNE: Prijepolje (rail) no no Source:BCPs data collected during the field missions NCTS is used only on road BCPs connecting the SEETO region with EU MS. SEED-is used on road BCPs inside the SEETO region.

35 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 13 Observatory (SEETO) - TA Recommendations Improve road parking space Introduce NCTS and/or SEED at all BCPs to speed up even more the border procedure. For more details, see ACTION PLAN. 2.4 Missions to BCPs, terminals and ports in the SEETO Region The activities were carried out through the set of missions (please see Annex 2: Mission trips to BCPs, ports, terminals and Annex 10: Missions Report (Fact-finding mission report) to ministries, BCPs, ports and terminals in the SEETO Participants. These missions took place from the beginning of April to the end of August as well as in March Each mission was 2-3 day long. The Project TEAM: Track expert b) and Track Expert c) carried out the missions together. The organisations visited differed sometimes due to the availability of the competent persons but in general, they were: Border police, Customs authorities, Authorities handling phyto-sanitary, sanitary, health and radioactivity issues Railway station managers and/or any of the above organisations in both sides of the BCP(s), mostly belonging to the infrastructure managers unless horizontally integrated. Representatives of railway operators (freight forwarders, railway undertakings). Ports authorities and port terminal operators depending on the structure of the ports mostly landlord ports. Terminal managers and operators The competent ministries for transport, finance (customs), home affairs (Border Police) All meetings were organised beforehand with the assistance of the SEETO SC members, the respective National Coordinator and/or DG MOVE. Every meeting comprised a brief presentation of the project and, an in depth discussion on the relevant agreements. The allavailable railway related agreements were received from SEETO in advance. Concerning road agreements all RPs with exception of Kosovo* are members of TIR and CMR. In the case of Kosovo* the BC procedures apply the procedures of TIR and CMR.

36 For the interviews and data collection, the experts used standardised questionnaires for Railway BC issues, for Road BC issues and for Terminals. All three questionnaires are given in Annex 5: Questionnaires for rail and road BCPs and terminals. Concerning activities in Point A2, it was agreed that the questionnaire shall not be disseminated, as returns are usually non-existent due to an immense number of questionnaires sent out by other projects. The questionnaires were used as a guideline for a so-called narrative interview. The fact that the TEAM already visited the organisations and facilities in 2008/2009 and 2012/13 in the realm of various projects, TAIEX or Twinning facilitated the fact-finding. It is interesting to note that most of the persons interviewed already had already known the experts for years. It rendered information gathering easier and more realistic. Moreover, the experts could see with their own eyes the progress if at all in the past years. Furthermore, they could rely on indicators and indications already developed for cross-border agreements and subsequent agreements in the SEETO study of Data collection on BCA, ports and terminals terminated end of August (see visit program in Annex 2: Mission trips to BCPs, ports, terminals, participation to SEETO RWWG and SC). The findings of the fact-finding missions are the basis for the ACTION PLAN. Their major objective was to find out what is really happening on the BCPs, terminals and ports far away from the capitals. In this way, the project wanted to avoid the famous fallacy of what is reported is reality, what is not reported does not exist. The TEAM undertook visits to almost all important BCPs, logistics terminal what was said to be terminals and ports, even some ports outside the region but responsible for feeding the SEETO flagship axis corridors. During the missions, the TEAM found out that the above-mentioned fallacy applied to the whole region, too. Many so-called facts simply did not exist although they had a long almost everlasting life span in the many official reports prepared or mostly copy-pasted from previous reports. The most striking examples are: Some ports continued to officially have cranes that had been dismantled or simply out of order due to lack of spare parts or traffic volumes (Samac). Border buildings funded or financed by the EU and their funding institutions were found unused (road border SRB MAK, rail border MAK-KOS) New border crossing points newly built on each side of the border could have been built together (road border MNE-SRB), causing border delays due to their separation. Logistics centres did not give the impression of being heavily used. (KOS, BIH) Border authorities had to work in offices which were installed in containers (road SRB- MNE).

37 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 15 Observatory (SEETO) - TA Outdated communication equipment had not been modernised since the TEAM s last visits in 2008/2009. When the TEAM raised the findings at the competent levels it was clear that many explanations were given why it was so, in some cases, they did not even knew that it was so. The following is a summary of the activities carried out during the field missions. Missions to rail and road border crossings The checks on rail border crossing points were carried out on the basis of: Article 14 of the Directive 2012/34/EU (General principles for rail border crossings), components of the future implementation act prepared by the DG MOVE (to be discussed beforehand with DG MOVE in Brussels since the act has not been put into force), the questionnaire prepared by DG MOVE see Annex 3: Checklist DG MOVE, the criteria presented in the SEETO Report 2009 see Annex 4: Criteria of evaluation of existing and for the preparation of new BC Agreements, the model Agreement for border-crossing Agreements and their subsequent Agreements with the non-rail authorities see SEETO Report Conclusions Legislative (need for BCA according to EU legislation, Protocols ) Technical improvements of some BCPs needed (missing parking space for trucks on BCP, new lane for trucks, fences for railway border stations, lightning of control area, ) Organizational (inspections not on BCP or only during day time, not enough staff for checking of trains ) No joint controls, no mobile terminals for passport control No electronic transmission of data between Customs and Railways, among border authorities SEEDS Systematic Electronic Exchange of Data (only for Customs on road BCPs and only between regional countries not with EU countries). Proposal of Flagship border-crossings (road and rail) In the Inception period, it was agreed between SEETO and the Consultant that the Consultant shall also propose some flagship border-crossings after the fact-finding missions. They will be important for two reasons: 1 to form a part of the flagship corridors; 2 to become eventually a proposal for the World Bank project concerning the digitalisation of one or two border-crossings. The BCP Dimitrovgrad was proposed to be a pilot project. It was later adopted as pilot project by WB and SEETO. The selection process was as follows:

38 Table 4 Evaluation of BCPs according to WB questionnaire Group Question CRO/SER SER/MKD MKD/GRE HU/SER SER/BUL SER/MNE CRO/BIH (Capljina) BIH/CRO (Samac) MKD/KOS ALB/MNE Notes Potential Current Volume (rail) Passenger and freight trains (1) Average number of 30 trains/month Current Volume (Road) (1) Average number of n.a. lorries/month Main cause of delay (rail) (2) List 1st, 2nd, 3rd Average Border Crossing Time (rail) (2) 3) Minutes Feasibility Technical readiness to evolve into an electronic environment (4) L L L L M L L L L L Existing BCA agreement in operation and functioning (including subagreements) Y (but not for border police) Y Y Y Y (not fully functioni ng) (A) Y (not fully functioni ng) (A) Y Y Y Y Joint border zone established and operational (5) N N N N Y N N N N N Y/N Rail monopoly (6) Y Y Y Y Y Y Y Y Y Y Y/N Private rail operators active at BCP (7) N N N Y Y N N N N N Y/N Number of stakeholders involved at the BCP (number of institutions: IM, RU, border police, customs, inspections, other side railways, border police, customs) (8) around 10 around 10 around 10 around 10 around 10 around around 10 around around 10 Subjective ranking Willingness or political readiness to participate in AED pilot (9) L L L L H M L L M M Based on previous studies, please rank selected BCPs for suitability for AED around 10 # piloting (10) # Comments Text High(H)/Medium(M)/ Low(L) Y/N (A) = in full compliance with EU legislation High(H)/Medium(M)/ Low(L) Note (1): Data received during field visits April to July 2014 from border police and customs Note (2): 1st: No electronic exchange of data among railways; 2nd: no timely availability of locomotives; 3rd: Delays in the hinterland; 4th: Incomplete documentation; For more detailed information see SEETO report and the WB report. The results of 2009 and 2011 have not significantly changed, even for the availability of traction and despite significant decreases in the number of trains. Note (3): Depends on the "Technologia" at each BCP for each type of train. On the average between min for freight trains (unit trains, mixed trains, container trains) and 30 min for passenger trains. Note (4): It is the technical availability of the Infrastructure Manager (IM) at the BCPs. Customs and border Police Note (5(: Zone is a legal term in the BCAs of a newer type (see SEETO and WB reports). At present, the zone at BG/SRB is the only zone functioning. Not to be confused with joint technical inspection at so-called joint stations where technical inspectors of the respective Ru or the respective IM carry out the technical dispatching. Note (6): Rail monopoly is meant to be the monopoly within the SEETO area. There does not exist any practical market opening yet Note (7): This is to say that a private RU is allowed to enter the joint BCP or the zone (in BG/SRB). It is based on an agreement with the SEETO rail monopolist and NOT on the market opening principles as mentioned in respective EU legislation. Note (8): It is understood to be the number of institutions involved and no the number of people Note (9): It is the result of our talks, official and unofficial at BCPs and in the competent ministries in 2008/2009, 2011 and Of course, nobody would dare to say "not interested" at all levels. But if we compare the willingness of with the results of the field trips in 2014, this is the result. to make it clear, SEETO organised high level seminars in 2009 to introduce the concept of AED in some detail and not much has happened with the exception of BG/SRB.

39 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 17 Observatory (SEETO) - TA Note (10): The minutes of meetings and the reports 2009 and 2011 as well as the field trips are taken into account. An important factor is the importance of the BCP for the existing trade by rail and its potential under the assumption that the EU transport policy of "road to rail" would be implemented. The Consultant accompanied WB experts for electronic data transmission during the meetings with MoT, Serbian Railways, Custom Authority and Ministry of Interior Affairs in Belgrade and Sofia and introduced them to the border procedures at Dimitrovgrad joint border station. It can already be said that the first findings agree with the findings of the Team: All rail BCPs need a completely renewed electronic data transmission system to be on an equal level playing field with the road and the customs. The proposals and estimated costs of the WB project have already been incorporated in the ACTION PLAN. Missions to ports related to the Flagship Corridors Based on the visits to the North-Adriatic ports (Koper, Rijeka, Trieste and the Danube/Sava ports), the conclusion for all ports is the same: High interest to expand business with the SEETO Participants Problems with the logistics chains, which are not seamless, in particular, when it comes to rail transport. The logistic costs, in particular the rates, are too high and therefore not competitive in general and in particular for rail transport. Major handicap is the inability of the of railway operators mostly state owned monopolist that do not fulfil the logistics requirements of the shipping lines and the terminal operators, in particular concerning reliability. This observation was again confirmed during the WS No. 2 in Belgrade where the attending port operators complained about weak and non-customer oriented performance of the incumbent state-owned railways see also chapter 2: Results of the Workshops Rates for containers by lorry between Rijeka and Belgrade vary between 500 and 700 Euros from Ploce and Bar, rates are about 800 Euros. Rail prices are up to 25 50% more expensive. Example: Cereal transport from Budapest to Koper is around 8 Euros/tonne, mostly with railways that are in competition (private and state: SZ, Adria Transport, RSM). Prices via Croatia with the incumbent state-owned railway (HZ Cargo) t is 23 Euros/tonne, which is 3 times as expensive. For Rijeka, the major obstacle for transport with the SEETO Participants, in particular with the major economy Serbia (50% of Serbian exports and imports go via Rijeka) is the railway problem. One reason is the lack of market-oriented services for hinterland transport of the incumbent railways in the region. In comparison to the port of Koper there is no railway competition since the HZ Cargo supported by the Croatian Government is successful in rendering market entrance difficult.

40 HZ Cargo is too expensive and in comparison with transport between Hungary and port of Koper their transit time from A to B is between 24 and 48 hours) whereas the port of Koper and Budapest will be done by rail in a day (24h). The lorry takes 6-8h. It is very difficult to transport for example cereals from Budapest to Rijeka with HZ Cargo due to lengthy railway border procedures within two EU Member States, such as change of locomotives and train drivers etc. Port of Rijeka (Port Authority) presented projects of several hundred billions of Euro for extension of the container terminal of the island of Krk that will increase the present capacity from TEU to 3 Million TEU. At the moment, they have about TEU in The question is what they will do with such capacity and where do the transport will come from since the port of Rijeka is not the only port offering services to Serbia and other SEETO Participants. It is in plain competition with Koper, Trieste, Ploce and Bar. Moreover, the legal situation of the rail infrastructure in the port is not transparent between the port authority and the port operators. Who owns, manages, maintains and operates the rail infrastructure? In the concession agreement, these tasks are not clearly defined leading to the do-nothing action of the stakeholders. Furthermore, there seems to be a conflict between the Croatian rail and Croatian maritime legislations. The Croatian maritime law does not clearly define the role of the port authority or the port operators as railway operators, be they rail infrastructure managers or railway undertakings. This question is on the agenda in the competent ministry in Zagreb. Challenges for the SEETO ports Bar, Durres and Ploce are: The port of Ploce faces similar challenges after having invested in port infrastructure. Its newly built container terminal, designed for TEU /annum currently handles TEU (2014). Who will pay for the unused capacity (fixed costs)? Rail tariffs are high due to the monopolistic market in the rail sector. Its major catchment area around Sarajevo, Tuzla and Ceniza are heavily competed by Rijeka and Koper with a growing tendency towards the Danube and the Black Sea port of Konstantza. It is quite astonishing that transport rates, mostly road, do not significantly differ between Ploce and Rijeka. One reason is the cheaper maritime rates. Ploce is a feeder port requiring more handling than Rijeka. The total maritime costs from major Meditarranean ports such as Valetta or Giao Tauro are 400 higher for Ploce than for Rijeka. Someone has to reduce the rates to equalise the costs on land transport. The railways do not reduce their rates due to their monopolistic situation, the share of the port is too low to compensate it. Remains the trucker on the Bosnian side that is able to offer services, which cannot be offered any longer in EU MS. The situation of rail infrastructure is similar to that of Rijeka. Although the two Croatian ports already have a network statement (which had to be published by the ), it has not yet been implemented with track access agreements. It is one more document without any implementation.

41 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 19 Observatory (SEETO) - TA The situation at the ports of Bar and Durres is similar. Although the (Turkish) port operator in the port of Bar is contemplating a multimodal service with Serbia, including a container train service, the two state-owned railway companies do not seem to have any interest. At least, all attempts have so far been futile. Ownership, management, maintenance and operation of rail infrastructure is not clear, leading to the classical do-nothing attitude. At least, Bar is benefitting from the new EU legislation imposed on the Corridor Vc with respect to customs and border police procedures. Certain goods cannot any longer be imported-exported via Ploce due to EU restrictions such as meat and other sanitary goods. Instead of using container reefer rail services on the Corridor Vc, they are transported by lorry between Bar and BiH at higher prices. The port of Durres cannot really rely on rail services due to the limited availability of rail services. Inside the port, the ownership question of rail infrastructure has not yet been solved, awaiting new rail legislation. For ALL PORTS, visibility actions, marketing and hard selling can be considered insufficient. Comparing them with the port of Koper or the North-sea ports, they have no sales representative network or active selling campaigns apart from the odd presentation of their activities at conferences or fairs. This gives the freight forwarders and maritime agents enough flexibility to freely select their ports, not fearing any intervention from active salespersons of the ports. The SEETO ports can be described as sit-and-wait ports, a definite disadvantage in a highly competitive port environment in the Adriatic Sea! Lack of Visibility and hard selling is seen through: The visits to the ports and interviews with participants in the transport sector have clearly shown that the three ports have no sales activities (hard selling) in the hinterland alongside the corridors. Contrary to the competitors in the North Sea range, they are not present in the industrial centres and big logistic centres of the area, in particular in the land locked countries of Bosnia and Herzegovina, Hungary, the Former Yugoslav Republic of Macedonia and Serbia. Presentations of the ports in the occasional seminar or workshop do not help to actively acquire new customers. The ports in question do not have and do not participate in logistic centres in their catchment areas. They leave hinterland logistics centres to freight forwarders that can decide on the selection of the ports freely.

42 The more successful ports, in particular in the North Sea range, have already established a network of logistic centres or participate in logistic centres of land locked countries such as Austria, Czech Republic, Hungary, Serbia and Slovakia, thus ensuring that goods are attracted to their ports. The fact finding missions have shown that the only stakeholders that could really be interested in an attractive and competitive corridor are the ports, which are the feeder institutions for the corridors. Their competiveness depends on an attractive hinterland corridor. The state owned railway companies do seem to have an interest in thinking corridor-wise. Moreover, they lack any marketing and sales organisation. Lastly: The SEETO corridors cannot simple stop on the borders. They need other ending points and among them there is Koper, Rijeka but also Constanta, Piraeus and Thessaloniki. They have to start from the real industrial centres in Central Europe (around Prague, Budapest, Vienna/Bratislava and Munich, Bavaria area). This is a major drawback in the conception of the SEETO corridors. Conclusions The visits to the ports Bar, Durres, Ploce and the Danube/Sava ports have shown that clarification is needed on the legal and institutional role of the railways, resulting from historical developments. In some cases, the respective railway laws are not very explicit when dealing with ports as rail infrastructure managers and/ or rail operators. There seems to exist conflicts between national port/ maritime and railway laws. It remains unclear whether the rail infrastructure in the port belongs to the port authority, the concessioned port operator or the state-owned infrastructure manager. Rail network statements do not exist, neither do clear agreements on private sidings. The result is that in many cases nobody responsible to improve infrastructure and rail operations, although port operators have expressed interest to establish their own operations inside and outside the ports and consider it as a market opportunity to attract more volumes to their ports. Even if open access is legally possible, a new entrant could not enter the port or be active in the port due to the above mentioned legal and institutional uncertainties. Port authorities and port operators do not seem to have the necessary exchange of information, railways, port operators and shipping companies do not have process oriented electronic communication to ensure an efficient transfer of goods between the two modes.

43 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 21 Observatory (SEETO) - TA 2.5 Meetings held with main project stakeholders: SEETO RW WG ; SEETO SC The Consultant participated in the RW WG meetings, chaired by the DG MOVE, and presented the project objectives and the first results of the Action Plan. The Project received a very positive response; in fact certain activities proposed in the ACTION PLAN have been discussed in four RWWG meetings of 2014, taking place in Belgrade, Skopje, Podgorica and Belgrade again. The first results of the ACTION PLAN were discussed in the SC SEETO meeting in Pristina (July 2014) with the participation of the TEAM. The same happened in the December 2014 meeting in Skopje. As a result, the SC decided to install a Trade Facilitation Working Group (TFWG) the task of which is to implement the ACTION PLAN. In March 2015, the ACTION PLAN in its final version was discussed in SC SEETO meeting in Brussels where it was agreed to have the comments in one month time. It was agreed that the Ministers of the SEETO Region will acknowledge Action Plan and its implementation on the next Ministerial meeting. 2.6 Organisation of SEETO Workshops Two workshops have been carried out, one in Brussels to show visibility on a European level and one in Belgrade to do it on a regional level and to enter into direct contact with the transport sector players 6. Objective was to find out what are the requirements of the shippers, the transport industry including the terminals and ports to use the SEETO transport networks. The two basic questions for the discussions were: Why do you/don't you/intend to use the SEETO transport network for your supply chains and under which conditions would you use/use it more intensively? Which are the biggest (most costly, time-consuming etc.) obstacles you are experiencing in your operations in the SEETO transport network? The relevant transport and trade-related organisations, project initiatives, operators, freight forwarders/logistic service providers, custom authorities and trade unions already exist and their names have been put into a GLOBAL EUROPEAN-WIDE DIRECTORY and a REGIONAL DIRECTORY, developed by the TEAM. The directories were used for the organisation of the 6 NOTE: The below workshops carried out and planned differ from those four workshops originally planned and mentioned in the Inception Report. The modifications were influenced by the findings of the fact-finding missions and agreed with DG MOVE and SEETO.

44 Brussels WS 1 (held on ) and WS 2 (held on in Belgrade), respectively. The addresses were based on the market knowledge of the TEAM. SEETO disposes of the two DIRECTORIES and they will be responsible to update them regularly to build up a contact network for further workshops or direct contacts as part of its market observation. With help of the directories, participants for the two workshops (see later in the same chapter) have been selected by writing and by telephone contact. The directories contained about 50 addresses each, with the names of the presidents, CEOs or other persons involved in transport in the SEETO region. The responsiveness was relatively weak. The participation in the two workshops amounted to 20 respectively 30 persons. This underlines the assumption that the interest of the predominantly private sector and the major container shipping lines in the SEETO region is relatively limited. Either, there are too many similar activities almost every project in the area has a visibility component with questionnaires, seminars and workshops or the SEETO organisation is not considered to be a driving force to be considered for the improvement of the transport sector in the region. Below a more detailed information on the two workshops already carried out. Workshop no. 1 held in Brussels on Target group and aim of the workshop The target group are major maritime operators, freight forwarders and port operators. Participation of SEETO, DG MOVE and the TEAM. The aim is to find out the requirements to establish multimodal supply chains using the transport Corridors/Routes in the region, in particular the flagship Corridor. For programme and list of participants see Annex 7: Programme and list of participants of WS 1. Target audience: Strategy decision-makers Strategy policy advisors of Maritime and port players that have their representations in Brussels Lobbying organisations of maritime and port players Port and maritime associations Freight forwarding associations The summary of the results as formulated by the participants are (including bolted letters) after intensive discussions:

45 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 23 Observatory (SEETO) - TA Main obstacles defined: Customs procedures. Absence of IT based document handling at regional customs offices. Rail sector does not provide performance data (T&T). N.B.EU rail freight corridors do it. Infrastructure (road + rail) is a major bottleneck. Public sector is not challenged: State owned enterprises do not learn from past mistakes. Such mistakes do not lead to pressure to correct. Lack of trust hampers cooperation. Forwarders have a bias to a particular mode. Attractive by-passes are: Ports of Hamburg, Koper, Piraeus, Truck transport via Italy (with ferry boat between Brindisi and Igoumenitsa) and the motorway to Istanbul. Opportunities: Transit traffic provides opportunities for regional logistics operators. O/D traffic provides opportunities for both regional logistics operators and shippers of freight (= senders and receivers of consignments). Cosco: safety by rail, in particular when it comes to the carriage of dangerous goods, and security of shipments matter. Rail should shift from supply driven approach ("this is what I can offer take it or leave it") to a demand driven service. ( I will do my best to offer a customer-oriented solution ). Develop cooperation between shippers, carriers and forwarders to generate the critical transport mass necessary for international train services. Low carbon is an issue playing in favour of maritime and rail transport Workshop No 2 Belgrade on Target group and aim of the workshop The target group are major maritime operators, freight forwarders and port operators. Participation of SEETO, DG MOVE and the TEAM For list of participants and agenda see Annex 8: Agenda and list of participants of WS 2in Belgrade.

46 The objective was to address physical and nonphysical barriers on the SEETO Comprehensive Transport Network. The aim of the workshop was to discuss the market requirements to establish attractive and competitive multimodal supply chains using the transport corridors in the Western Balkan region. Group 1: Rail/road providers Group 2: Ports. Results The following results were obtained from the two groups, split up in land transport group and port/maritime group Obstacles rail/road service providers: Implementation of laws Lack of knowledge at institutional level (that implement the laws) Process improvement (no IT at border) Transport is not priority of governments Lack of information Bad management of infrastructure (e.g. not enough open lanes at border) Monopoly of rail sectors Nonsense projects from perspective of private operators (e.g. 160 km/h line rehabilitation for 160 km of line in Kosovo 80 km/h will be sufficient No corridor management (no flagship corridor management) No liberalisation (no market access to rail networks) Old infrastructure No investment observation by private sector (check of necessity or right periodization) Obstacles for ports: Limited dredging of Danube river and Sava Bad rail and road connections into the hinterland

47 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 25 Observatory (SEETO) - TA No improvement of administration No optimisation of cross border formalities No open market for railway operators No IT, No Tracking and tracing No Location real market for containers No infrastructure investment sources Observations of the Team The two workshops attained the objective to discuss the requirements of the operators to establish attractive and competitive multimodal supply chains using the transport corridors in the SEETO region. It showed the importance of involving the SEETO Secretariat more closely in market matters thus confirming the observations made on visibility and in the fact-finding missions. Moreover, it confirmed the findings, which the Team made during its fact-finding mission. In fact, almost identical observations were presented by the transport industry in 2008/2009 when the Team interviewed them! Nothing has changed to facilitate transport in the region. The funds put into the alignment of laws/institutions to EU rules and investment in transport infrastructure have not resulted in significant changes respectively increase in competitiveness of the corridors. At least, this seems to be perception of the participants Some final remarks are allowed: 1. Most of the obstacles mentioned in the two workshops are of a non-physical nature. Their removal is most inexpensive in monetary terms but seems to require strongest political authority from the EU and the member-candidates. 2. Investment in transport infrastructure will only be feasible if the non-physical barriers are removed beforehand. The fact-finding mission report Annex 10: Missions Report (Fact-finding mission report) will show examples and photos where new publically financed or granted infrastructure has not been used for years since the legal and institutional prerequisites have not been fulfilled or even disregarded.

48 The results of the workshop have been incorporated into the ACTION PLAN in various activities. 2.7 Establishment of an inter-institutional horizontal Working Group on Transport Facilitation. The fact-finding missions and the two workshops have clearly shown that there is no systematic cooperation among the SEETO Participants or, at least, the many meetings at all levels of Governments and with the EU have no impact on trade facilitation. SEETO itself has not been active enough, has no lobbying strength at national and international level or has no power to implement actions to facilitate trade. At least, it is a fact that all activities, be they the establishment of flagship axis or reports sound very interesting but have no short-term or medium-term impact on the transport sector. For this reason, the establishment of an inter-institutional horizontal Working Group on transport facilitation initiated by SEETO seems to be a practical way forward to contribute to the improvement of trade facilitation in the region. The Consultant has put it as the first priority on its ACTION PLAN and the SEETO SC has decided in favour of it at its meeting in December Based on the experience and successful best practice in other regions, for example the region on border crossing trade facilitation in the "Greater Mekong Subregion (GMS), the Consultant proposes to adapt the idea and organisation to the SEETO region and assuming that all SEETO Participant wish to eventually join the EU, the structure is proposed to be as follows: The members of the TF WG come from the relevant ministries in charge of trade, customs, border police, and border inspections matters in each SEETO Participant. The chairman is from DG MOVE thus guaranteeing the direct link between the SEETO Participants and EU. The TF WG directly reports to the SEETO Steering Committee and DG MOVE. The TFWG meets twice a year Since the SEETO Secretariat is a permanent member of the TF WG, mutual exchange of monitoring information between SEETO Secretariat and TF WG is ensured. The TFWG should establish and monitor SUBGROUPS which is organised according to the flagship corridors using as best practice the corridor management of the TEN-T corridors. The summary of a first proposal, of ToR for Transport Facilitation Working Group (TF WG) can be found in Annex 9: Terms of Reference / Mandate for Working Group for Transport Facilitation.

49 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 27 Observatory (SEETO) - TA 3 Impact on the transport market/competition On the basis of the Ministerial Conclusions released upon the 8th AMM held in Zagreb, in December 2012, a new approach to identify improvement on infrastructure and services on long distance and cross-border corridors was recommended, namely the Flagship initiative. The objective of this initiative is the identification of physical and non-physical barriers for selected multimodal axes (Corridors/Routes) from the SEETO Comprehensive Network, and the development and analysis of plausible remedial measures for reducing travel times and transport costs. From those measures, implementation should be sought for the ones with the highest costbenefit ratio. The main idea of the initiative is to provide a multimodal competitive analysis of selected axes for improving their attractiveness and decreasing administrative barriers. On the 38th SC meeting (3-4th October 2013) the following five flagship axes were selected for analysis: Corridor X (highest traffic flows + connectivity Port of Thessaloniki and Belgrade) Corridor Vc (connectivity Port of Ploce and Sava river) Corridor VIII + Route 7 (connectivity Port of Durres, Corridor X and Black Sea) Route 4 (connectivity Port of Bar, Corridor X, Danube and Corridor IV) Danube river (already European corridor)

50 Figure 1 Map of Flagship axes (Source: SEETO) Brief description and analysis of the Corridors/Routes on the flagship axes - assessment of the corridors. Market-relevant assessment Although most of the corridors follows the major transport flows in the region, the missions showed that some flows are not entirely considered in the flagship axis. Reconsideration might be needed (in detail): Since the ports are important feeder points for the corridors, the axes comprising the ports of Ploce, Bar and Durres are in conformity with the reality when it comes to real transport flows (for transport flows and port related data please see Annex 10: Missions Report (Fact-finding mission report). However, it is not appropriate to stop the corridors at national borders. Corridor Vc is constructed to be a LANDBRIDGE between the Adriatic sea, Sava river and Danube river (in competition with the inner Croatian corridor to-be-established between Rijeka and Vukovar). It furthermore links the Hungarian economic centre of Budapest with another Adriatic port (in competition with Rijeka and Koper) and the industrial centres of Northern Bosnia and Herzegovina. Route 4 is limited to Montenegro and Serbia although it is possible in competition with Ploce to link the route with the Corridor X in directon of Bulgaria and Bulgarian Black Sea ports. Corridor VIII see further down

51 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 29 Observatory (SEETO) - TA Corridor Xb (Subotica) is of major importance as a transit corridor for Turkey (Dimitrovgrad) and Greece (Gevgelia). Although the corridor X with Greece seems to have a priority, the section via Dimitrovgrad should also get more attention. The three BCP on Corridor X Subotica, Dimitrovgrad and Šid are the most frequented ones! Route 10 (Beograd Pristina-Skopje) does not seem to have the same priority as the other corridors. It is true that Route 10 does not have the same importance but it may in the future be important due to significant transport potentials of iron ore, copper and other minerals. Coastal Corridor (Route 1 between Tirana/Durres Podgorica Dubrovnik Rijeka along the Dalmatian coast is not part of the flagship axis although it is an important corridor for the commercial exchange in the region. It should be included. With more than 1000 lorry movements per day, at least between Montenegro and Croatia, it cannot be neglected. Corridor VIII (Durres Skopje- Bulgaria) is a corridor on paper only. It is doubtful whether it is ever feasible when considering the Southern corridor between the RO-RO ferry port Igoumenitsa and the Greek motorway linking Macedonia, Bulgaria and Turkey. Corridor (VIII) (Durres Skopje) seems to have priority as flagship corridor. The Albanian rail link to the Macedonian border has ceased to operate and the lacking 60 km on the Macedonian side as well as the lacking part to the Bulgarian border do not make it more attractive. The persons interviewed and the two workshops clearly prove that the market participants share the same perception as above, mirrored in the ACTION PLAN. The market, in particular the industry, expects these actions. They have so far reacted to the nonactivity of the competent bodies by looking for the most suitable transport alternatives and lower logistics cost (as defined of the totality of the cost of a supply chains). There various alternatives available are shown in the figure below outlining the alternative corridors (EC/SEETO or non- EC/SEETO ones. Figure 2 Competitive situation

52 The World Bank Logistic Performance Index published in 2014, presented in Table 6, also shows that the logistics cost in the region are high. Table 5 Logistics performance Index 2014 of 160 countries Logistics Performance Index 2014 (LPI) Country Code overall LPI rank Customs Infrastructure International shipments Logistics quality and competence Tracking and tracing Timeliness rank rank rank rank rank rank rank Germany (Benchmark) DEU Italy (Benchmark) ITA Austria (Benchmark) AUT Hungary (Neighbouring country) HUN Romania (Neighbouring country) ROM Greece (Neighbouring country) GRC Bulgaria (Neighbouring country) BGR Croatia (SEETO) HRV Serbia (SEETO) SRB Montenegro (SEETO) MNE Bosnia and Herzegovina (SEETO) BIH Macedonia, FYR (SEETO) MKD Source: Worldbank LPI 2014 In other words, the proposed activities are not new, no innovation by the TEAM, nothing revolutionary. They can be found as recommendations, proposals, etc. in many reports since at least 2003 when the TEAM started work for the first time in the region. In conclusion, the flagship axes are too concentrated on the ports or rail links with direction to Serbia, the most important SEETO Participant from an economic point of view. The flagship axes should take into consideration the competitive surrounding and not be limited to national borders within which the SEETO has a mandate. Quality-related assessment The quality of service of the corridors has been analysed in general by the REBIS project (Updating the Regional Balkan Infrastructure Study (REBIS), Technical Meeting in Skopje, ).

53 Final Report - Support to the implementation of the Strategic Work Programme of the South East Europe Transport 31 Observatory (SEETO) - TA Legend: Road network Current bottlenecks Future bottlenecks Figure 3 Road sections with bottlenecks (Source: REBIS study) Legend: Rail network Minor capacity constraints Significant capacity constraints Major capacity constraints Figure 4 Rail sections with current bottlenecks (Source: REBIS study)