QUARTERLY NEWSLETTER INAUGURATION OF DANUBE LOGISTICS LIQUID BULK CARGO RAILWAY TERMINAL

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1 1 QUARTERLY NEWSLETTER INAUGURATION OF DANUBE LOGISTICS LIQUID BULK CARGO RAILWAY TERMINAL Port Operation Shipping INTERVIEW. PETROM MOLDOVA DANUBE LOGISTIC S FIRST LIQUID BULK RAILWAY TERMINAL CLIENT Inland Transportation Business Park DANUBE LOGISTICS IN LOCAL NEWS: MINISTRY OF ECONOMY DANUBE LOGISTICS IN LOCAL NEWS: MINISTRY OF TRANSPORT AND ROAD INFRASTRUCTURE DANUBE LOGISTICS IN LOCAL NEWS: INFOMARKET INTERNATIONAL NEWS: 2M ALLIANCE; OCEAN THREE; 2M vs OCEAN THREE INAUGURATION OF DANUBE LOGISTICS LIQUID BULK CARGO RAILWAY TERMINAL 4th of September 2014, was the day that marked the inauguration of the Mixed Gauge Railway Terminal for oil products at Giurgiulesti International Free Port. At this important event the administration of Danube Logistics see full story on p. 2 RICH HARVEST HIGH EXPORT VOLUMES THE HIGHEST GROWTH RATES TITLE FOR 2013 CONTAINER IMPORT & EXPORT RATES

2 2 INAUGURATION OF THE LIQUID BULK CARGO RAILWAY TERMINAL IN GIFP 4th of September 2014, was the day that marked the inauguration of the Mixed Gauge Railway Terminal for oil products at Giurgiulesti International Free Port. At this important event the administration of Danube Logistics was joined by government officials, representatives from the banking sector, business partners and clients of the company. Headed by Deputy Prime Minister, Minister of Economy Andrian Candu, a delegation of about people among which Minister of Transport Valise Botnari, interim Minister of Railway State Company Sergiu Tomsa, the mayor of Giurgiulesti village Tatiana Galateanu, representatives of EBRD and Moldova Agroindbank, the administration of Petrom Moldova, with the new general director Constantin Ivas, and other high ranking guests witnessed the first delivery of light oil products by rail directly from Romania. Over 1600 tons of diesel and gasoline, transported in 33 railway wagons were delivered from Petrobrazi refinery in Ploesti to Giurgiulesti Port for Petrom Moldova. From the railway terminal the oil products are being discharged into the port s storage tanks and from there loaded into trucks or broad-gauge railway wagons for deliveries to the rest of Moldova. With the new mixed-gauge railway terminal the Moldovan importers of oil products are able to reduce their transportation expenses. The delivery of oil products from the refineries in Ploesti, Constanta and Burgas via Giurgiulesti is now the most economic transportation route to the Moldovan market stated Thomas Moser, general director of Danube Logistics SRL, at the event.

3 3 INTERVIEW WITH CONSTANTIN IVAS, GENERAL DIRECTOR OF PETROM MOLDOVA Danube Logistics first client for the railway liquid bulk cargo terminal was Petrom Moldova. Recently appointed General Director Constantin Ivas, paid his first visit to the Port, on the occasion of inauguration of the new terminal, and witnessed the delivery himself. We addressed a few questions and asked for impressions about the Port. It was the first visit which I made to Giurgiulesti International Port, and was quite impressed. Despite being small compared to other ports, it has a very good set-up and highly functional for its purpose said Mr. Constantin. Of course I liked very much the oil products unloading ramp, which reminded me about the refinery ones. Relatively small, but looks very good. I liked as well the grain terminal he continued and then added, Petrom Moldova has a very good cooperation with Danube Logistics, and the impressions about the port are just reflecting the good and fruitful partnership which the two companies have. For me the visit was one more confirmation that we can trust the professionalism of Danube Logistics and can fully rely on them petroleum products in Moldova, thus contributing to supply security and reliance. Yes, supply of petroleum products through Giurgiulesti port has a certain economical advantage, but I see the biggest gain in terms of HSE advantage. The delivery of product through railway line is much safer than delivering it, for example, by trucks. Both in terms of product security, as well as people safety. It is clearly a win-win situation In conclusion we asked to evaluate the collaboration with Danube Logistics. We are looking forward to have Danube Logistics next to us in doing business in Moldova. It s very important to have a trustful partner next to you in a challenging business environment like in our country. In the future we intend to increase the throughput through Giurgiulesti in order to be able to offer to Petrom clients the best product faster and with best prices Asked about the advantages of the liquid bulk cargo railway terminal, Mr. Ivas replied: The new railway line is of the very high importance for us, as beside the fact that it is much more convenient, it offers a reliable alternative to existing ways of bringing

4 4 DANUBE LOGISTICS IN LOCAL NEWS: MINISTRY OF ECONOMY GIURGIULESTI NTERNATIONAL [FREE] PORT BECOMES AN IMPORTANT REGIONAL TRADE HUB 5th of September 2014, Chisinau The first mixed gauge railway terminal, which will connect Moldova and countries from the European Union was inaugurated in Giurgiulesti International Free Port on 4th of September this year. Deputy Prime Minister, Minister of Economy Andrian Candu, together with Minister of Transport Valise Botnari, administration of Giurgiulesti International Free Port, representatives of European Bank for Reconstruction and Development, and local public administration attended the opening. The event was part of the agenda of the common working visit in the south of the country of ministers of Economy and Transport. The first event that the officials took part in was the inauguration of the first railway terminal for liquid cargo, that will serve for transshipment of mineral oil. The investment in the project constituted about $2mln and was allocated by the EBRD in partnership with a commercial bank from Moldova. During the visit, minister of Economy made an informative tour of more terminals on the territory of the Port, and learned about their activity, difficulties but also the achievements of the company. In the same day, Minister of Economy met with the students of the State University of Cahul.... full article on the website of Ministry of Economy. source: mec.gov.md DANUBE LOGISTICS IN LOCAL NEWS: MINISTRY OF TRANSPORT AND ROAD INFRASTRUCTURE DEVELOPMENT OF GIURGIULESTI [FREE ECONOMIC] ZONE LEADS TO JOB CREATIONS IN THE SOUTH OF MOLDOVA First mixed gauge railway terminal for liquid cargo that will assure the connection between our country and the European community, was inaugurated today in the presence of the ministers responsible for the development of Giurgiulesti zone, Vasile Botnari, Minister of Transport and Road Infrastructure and Andrian Candu, Minister of Economy. Today [4 Sep 2014], in Giurgiulesti International Free Port, was witnessed a first delivery of 16 wagons with mineral oil from Romania, delivery directly on the European standard railway line. About $2mln were invested for the construction of the terminal. The project was financed by EBRD together with a commercial bank from Moldova. (Continued on page 5)

5 5 (Continued from page 4) According to the minister Vasile Botnari, the south of Moldova became a multimodal transportation hub. About one year ago, I was present here in Giurgiulesti for the inauguration of the European standard railway line. This year, it is already possible to conduct import and export of goods with all types of transportation, whether it is by road, maritime/river or railway, directly from European Union. Companies have the possibility to transport goods in favorable conditions that suit them best mentioned Vasile Botnari. Another advantage of the development of the south of the country, according to the Vice prime minister Andrian Candu, is the creation of new jobs. The construction project of the mixed gauge railway terminal is part of the Development Plan of Giurgiulesti International Free Port and represents an extremely important step, that will certainly contribute to a more dynamic development of the South of Moldova. A big advantage is also creation of new working places, an important objective in the activity of Ministry of Economy, mentioned Andrian Candu. Also, during the meeting with the local public authorities from Giurgiulesti, Minister of Transport Vasile Botnari announced that this year the access road from the Port region will be repaired and that 3mln MDL were allocated for this from the Road Development fund. DANUBE LOGISTICS IN LOCAL NEWS: INFOMARKET VASILE BOTNARI: CONSTRUCTION WORKS OF THE M3 ROAD CHISINAU-GIURGIULESTI MUST BE COMPLETED BY THE END OF THIS YEAR. Minister of Transport and Road Infrastructure issued the statement during a visit of the construction site. The official pointed out that he gave a notice to the construction company, saying that it is unacceptable to extend the deadline and specified that for each day over the deadline, penalty charges will be calculated. Vasile Botnari underlined the importance of assuring fast traffic on the road between Chisinau and Giurgiulesti because of constantly increasing volumes that are transshipped via Giurgiulesti Port year after year. When we are developing roads, port infrastructure, we are developing business in Moldova and increase exports, added Botnari. Road rehabilitation project of a 86 km segment between Chisinau and Giurgiulesti also includes restauration of sidewalks and borders, water evacuation channels, electricity poles in the villages situated on the road segment. The rehabilitation of the road segment Chisinau- Giurgiulesti commenced in march First 55 km on the segment Comrat-Ciumai, with an investment of EUR 25 mln. is to be commissioned already in Another 31km segment, the road between Ciumai and Slobozia Mare, with a total cost of EUR 18 mln. will be completed in // InfoMarket

6 6 INTERNATIONAL NEWS: 2M ALLIANCE Maersk Line together with MSC have announced on 10th of July 2014 a 10-year collaboration agreement - 2M Alliance. This alliance is a pure vessel sharing agreement, each line will continue to have its own sales, pricing, marketing and customer functions. The agreement is planned to take effect in Please see below some facts in infographics.

7 7 INTERNATIONAL NEWS: OCEAN THREE - O3 It is expected that the new service will be launched before the end of the year, although the partnership is still pending for approval from the respective regulating authorities. On 9th of September 2014, the creation of The Ocean Three or O3, was announced - a partnership between CMA CGM, China Shipping Container Lines (CSCL) and Middle East shipping major United Arab Shipping Co. (UASC). Just like with the 2M partnership the Ocean Three partnership covers the most important East - West trades: Asia - Europe, Asia - Mediterranean, Transpacific, and Asia - United States East Coast.

8 8 INTERNATIONAL NEWS: THE OCEAN THREE VS 2M

9 9 RICH HARVERST HIGH EXPORT VOLUMES Favorable weather conditions in the past couple of years led to rich grain harvest. As per preliminary results announced by the Minister of Agriculture in the beginning of August, this year wheat harvest reached 1.1mln tons, corn is expected to reach 1.4mln tons, and sunflower seed about 0.5mln tons. Out of last year s harvested volumes, via GIFP alone, from July 2013 until June 2014, were exported about 300,000 tons of grains; of which over 100,000 tons was corn, about 80,000 tons was wheat and 50,000 tons sun flower seeds. The remaining about 70,000 tons was barley, rapeseed, sunflower mill and malt. Also, over 80,000 tons of vegetable oil was exported via GIFP in the same period of time. This export season seems to have started at full capacity: trucks filled with grain waiting in line every day at Trans Oil elevators; vessels are being regularly loaded at the grain jetty; containers are being stuffed with grain, ready for export to the Far East markets. Danube Logistics, in order to cope with the increased demand, chartered a barge for transportation of grain in containers that serves as an extension to the regular feeder service between Giurgiulesti and Constanta. MV Georgi Mamarchev pusher barge, has a capacity of 88 TEU and is traveling on the Danube river route, via Cernavoda channel. Since the beginning of export season this year, from July to September, via GIFP were already transshipped about 90,000 tons of grain in bulk. In addition, about 1200 containers, filled with Moldovan grain were exported since July 2014 to countries like Malaysia, Taiwan, and other countries in the Far and Middle East. Together with the opening of Container and General Cargo terminal within GIFP in 2012, Danube Logistics started offering its clients transportation of grain in containers, thus opening new markets and facilitating export. We are glad to see this line of business grow continuously, and we are ensuring necessary conditions for our clients to keep up with the growing demand said Thomas Moser on this occasion.

10 10 THE HIGHEST GROWTH RATES TITLE FOR 2013 Danube Logistics was awarded The Highest Growth Rates title, during the 8th International Black Sea Container Summit that took place in Odessa, Ukraine, on September 10-12, Back in 2012, when the Container and General Cargo Terminal within Giurgiulesti International Free Port (GIFP) became operational, it was placed on the map of the Container Terminals of the Black and Azov Sea Region. Since then, it is followed with curiosity by many, and this year GIFP received this respectful recognition, in the game of such big ports as Constanta (Romania) and Novorossiysk (Russia). Please see below the graph, showing container turnover in the Black Sea Ports (Bulgaria, Georgia, Moldova, Romania, Russia, Turkey, Ukraine) in , TEU* No. Port Growth, TEU Growth, % 1 NOVOROSSIYSK (RU) 722, ,140 71,576 11,0 2 CONSTANTZA (RO) 661, ,360-19,236-2,8 3 ODESSA (UA) 505, ,933 42,707 9,2 4 РОТІ (GE) 331, ,600 46,724 16,4 5 ILYICHEVSK MSP (UA) 227, ,915 7,432 3,4 6 VARNA (BG) 132, ,390 3,676 2,9 7 BATUMI (GE) 72,123 73,126-1,003-1,4 8 BURGAS (BG) 48,380 41,532 6,848 16,5 9 YUZHNIY (UA) 46,305 30,660 15,645 51,0 10 SAMSUN (TR) 36,671 27,734 8,937 32,2 11 TRABZON (TR) 22,105 26,032-3,927-15,1 12 ROSTOV (ZAPADNIY PORT) (RU) 10,500 5,504 4,996 90,8 13 TAGANROG (RU) 7, ,000-9,800-57,6 14 MARIUPOL (UA) 8, ,006-1,416-14,2 15 GIURGIULESTI (MD) 6,840 2,100 4, ,7 16 ILYICHEVSK SFP (UA) 0 12, ,0 TOTAL 2,838,931 2,673, ,807 6,2 *lncluding empties and transshipment. Data of ports & terminals, BlackSeaTrans

11 11 MAIN EXPORT RATES AND DESTINATIONS FOR OCTOBER - NOVEMBER 2014 USD 20ft Container 40ft Container Asia China 1,065 1,115 Vietnam 1,475 1,610 Philippines 1,550 1,700 Indonesia 1,360 1,625 Thailand 1,360 1,625 India 1,640 1,875 Please note, the rates below are indicated from Giurgiulesti North America USA 2,500 2,850 Canada 2,400 3,090 Europe Germany 1,050 1,460 Holland 1,050 1,460 England 1,200 1,460 France (Med) 900 1,000 Italy 1,665 2,300 Turkey 1,050 1,050 Russia (Black Sea) 1,400 2,000 Russia (Baltic Sea) 1,600 2,300 Middle East Jebel Ali 1,430 1,730 Africa Northern Africa 1,450 1,810 Western Africa 1,850 2,950

12 12 MAIN IMPORT RATES AND PORTS OF ORIGIN FOR OCTOBER - NOVEMBER 2014 Please note, the rates below are indicated up to Giurgiulesti, FOB port of loading USD 20ft Container 40ft Container China Shanghai 2,095 3,100 Ningbo 2,095 3,100 Shenzhen 2,095 3,100 Qingdao 2,120 3,100 Tianjin 2,120 3,100 India Mundra 2,195 3,145 Japan Kobe 1,920 2,895 Pakistan Karachi 1,995 3,045 Turkey Istanbul 900 1,135 U.A.E Jebel Ali 1,975 2,945 U.S.A. New York 2,500 3,500 Spain Castelon 1,615 2,500

13 13 CONTACTS ICS Danube Logistics SRL 66 A. Bernardazzi Str. 4th Floor, Office A Chisinau MD 2009 Republic of Moldova Tel: Fax: info@danlog.md

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