for Western NIS and the Caucasus

Transcription

1 EuropeAid/126356/C/SER/Multi International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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3 REPORT COVER PAGE Project Title: Contract number: Countries: No2008/ Armenia, Azerbaijan, Georgia, Moldova and Ukraine Indirect beneficiaries: Bulgaria, Romania, Turkey EC Consultant Name: Project Office Address: Consortium of Dornier Consulting / NTU / Intros Lackner 8, Lysenko Street, office 39, Kiev 01034, Ukraine The general contacts are as follows: Tel/Fax: Tel/Fax: , Head Office Address: info@ilctraceca.org.ua Dornier Consulting GmbH Platz vor dem Neuen Tor Berlin Germany Tel: Fax: Contact Person: Ralf.behrens@dornier-consulting.com Ralf Behrens, Project Director Progress Report li Page 1 of 35

4 Recipient list: Name PS IGC TRACECA AZ 1005, 8/2, Aliyarbekov St. Address Baku, Azerbaijan AZ Tel. number Fax number Contact Person Mr Zhantoro Satybaldiev Signature Name Address Ministry of Transport and Communication of the Republic of Armenia P.O. Box 69 28, Nalbandyan str. Yerevan, 0010 Armenia Tel. number Fax number Contact Person Mr Gagik Grigoryan Signature Page 2 of 35 Progress Report li

5 Name Address Ministry of Transport and National Secretariat of IGC TRACECA in Azerbaijan 8/2, Aliyarbekov str. Baku, AZ 1005 Azerbaijan Tel. number Fax number Contact Person Signature Mr Akif Mustafayev Name Address Ministry of Regional Development and Infrastructure of Georgia 12, A. Kazbegi av. Tbilisi, 0160 Georgia Tel. number Fax number Contact Person Mr Mamuka Vatsadze Signature Name Address Ministry of Transport and Communication of Ukraine 14, Peremogy av. Kyiv, Ukraine Tel. number Fax number Contact Person Mr Hrigoryi Legenkyi Signature Progress Report li Page 3 of 35

6 Name Address Ministry of Transport and Road Infrastructure of the Republic of M o l d o va 12a, Bucuriei str., of.401 Chisinau, MD-2004 Republic of Moldova Tel. number Fax number biriucov@traceca.md Contact Person Mr Eduard Biriucov Signature Date of report: 26 January 2010 Reporting period: 26 August January 2010 Author of report: Consortium of Dornier Consulting / NTU / Intros Lackner Europe Aid Project Manager Ms Barbara Bernardi [name] [signature] [date] EU M & E team Mr Tornike Gotsiridze [name] [signature] [date] EU Delegation in Azerbaijan Mr Roland Kobia [name] [signature] [date] EU Delegation in Armenia Mr Uffe Holst Jensen [name] [signature] [date] EU Delegation in Georgia Mr Juan Echanove [name] [signature] [date] EU Delegation in Moldova Mr Gheorghe Stamate [name] [signature] [date] EU Delegation in Ukraine Mrs Jurate Yuodsnukyte [name] [signature] [date] Page 4 of 35 Progress Report li

7 TABLE OF CONTENTS PROJECT SYNOPSIS SUMMARY OF THE PROJECT PROGRESS SINCE THE START SUMMARY OF THE PROJECT PLANNING FOR THE REMAINDER OF THE PROJECT PROJECT PROGRESS IN REPORTING PERIOD PROJECT PLANNING FOR THE NEXT REPORTING PERIOD LIST OF TABLES Table 1: Project Progress Report Table 2: Overall Output Performance Plan Table 3: Resource Utilisation Report Table 4: Plan of Operations for the Next Reporting Period Progress Report li Page 5 of 35

8 LIST OF ABBREVIATIONS ADB Capex CIS EU EBRD EC EIB IFI IGC ILC JSTE KE LC LFM MCA MoS NIS PPP PS SSTE TEN-T TL ToR/TOR TRACECA UNDP Asian Development Bank Capital expenditure Commonwealth of Independent States (former republic of the USSR) also called NIS European Union European Bank for Reconstruction and Development European Commission European Investment Bank International Financing Institution Intergovernmental Commission TRACECA International Logistics Centre Junior Short Term Experts of the Project Key Expert(s) of the Project Logistic Centre Logframe Matrix Multi-Criteria Analysis (also known as Multi Variate Analysis, MVA) Motorways of the Sea Newly Independent States, also called CIS Public-Private Partnership Permanent Secretariat Senior Short Term Experts of the Project Trans-European Transport Network Team Leader of the Project Terms of Reference (of the present project, unless stated otherwise) Transport Corridor Europe Caucasus Asia United Nations Development Program Page 6 of 35 Progress Report li

9 PROJECT SYNOPSIS Overall Objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. Specific Project Objectives: To develop financial, technical, environmental and institutional conditions and studies for a network of logistical centres along the TRACECA corridor in direct beneficiary countries (Armenia, Azerbaijan, Georgia, Moldova, and Ukraine) in view of: Provision of sets of pre-feasibility and feasibility studies for selected sites with focus on PPP and efficient customs services; Analysis of the needs assessment and surveys of the current logistics capabilities; Elaboration of the master plans for selected locations Preparation of the business and organisational plans, financial and economic analysis considering the changed cargo volumes resulted from worldwide economic slowdown. To promote realistic, attractive and sustainable projects for further investment by financial institutions and/or public and private actors possible under conditions of the world economic crisis. Outputs: A - Logistics network and related infrastructures analysis 1. Report on actual logistics related freight flows and compilation of maps 2. Eight country reports on infrastructure conditions at main TRACECA transport links and nodes 3. Assessment of locations in five direct beneficiary countries for future international logistics centre (ILC) projects at macro level 4. Description of main issues of transport operators (initial stakeholder analysis) in eight countries B - Identification, ranking and promotion of logistics centres projects 1. Final stakeholder analysis and prioritised action programme 2. Final list of the priority projects using MCA for five beneficiary countries 3. Recommendations on financing schemes for beneficiary countries 4. Study tour to LCs in Europe and study tour documentation C - Preparation of the feasibility studies for the selected projects 1. Implementation programme favourable to investments in five direct beneficiary countries 2. Communication plan including promotion and dissemination aspects For each selected project: 3. Pre-feasibility/feasibility study including: assumptions on public support and investment promotion, capacity and institutional strategy action plan, administrative support and staff qualification assessment, services to be rendered, business plans and cost-benefit analysis and environmental impact assessment where relevant. 4. Masterplan covering functional area allocation schemes, layout for modern infrastructure and cargo handling facilities, description of adequate information system. Progress Report li Page 7 of 35

10 Activities: PI Project Inception (adaptations to the activities plan) Tasks PI: Project mobilisation and set up, coordination with the Client, beneficiaries, stakeholders and counterparts A - Logistics network and related infrastructures analysis Task A1: Traffic flow and operating infrastructures analysis Task A2: Description of the main issues of operators B - Identification, ranking and promotion of logistics centres projects Task B1 - Assistance in identifying and characterising priority projects of logistics centres Task B2 - Ranking the priority projects using multicriteria analysis Task B3 - visit to the relevant logistics centres C - Preparation of the feasibility studies for the selected projects Task C1: Global description of the objectives and functions of the logistics centre Task C2: Identification of the major stakeholders Task C3: Possible site location Task C4: Preliminary layout of the site Task C5: Preliminary layout of the logistics (functional) areas Task C6: Business Plan for the site Task C7: Environmental impact assessment Task C8: Assessment of key qualifications Task C9: Cost benefit analysis TaskC10: Recommendations for the adapted public support TaskC11: Communication and synergy within the networks of LC along TRACECA PM Project management (adaptations to the activities plan) Task PM1: Quality assurance, risk management and conflict resolution Task PM2: Updates of the Logframe Task PM3: Project planning Task PM4: Project reporting Target Groups: Ports, rail, road and airport operators, freight forwarders, logistics and transport companies, real estate companies, shippers and consignees etc. Beneficiaries: Ministries of Transport and authorities responsible for the transport sector policy in TRACECA member-states Inputs: Technical Assistance will include: Long-Term Key Experts: Team Leader: 450 MD / Senior Experts: 800 MD Short-Term Experts: Senior Experts: 1425 MD / Junior Experts: 1890 MD Regional project office in Kiev Communication and visibility actions Project starting date: 26 January 2009 Page 8 of 35 Progress Report li

11 1 SUMMARY OF THE PROJECT PROGRESS SINCE THE START The project was commenced on 26 January 2009, after the contract was signed and a briefing meeting in Brussels on 16 January 2009 took place. It was emphasised that the present project will propose pragmatic infrastructure projects of international logistics centres as priority projects to improve the TRACECA network operations. The mobilization a core team was completed in The expert teams started field missions in the region after approval of the EC Programme Manager. The project office in Kiev was fully operational by 6 March within the approved budget. The project registration process was completed by 17 April by the Ukrainian officials. The short-term experts were mobilised for specific tasks upon approval of the Client. The project started in a time of change. Positive economic growth rates over the last eight years are being replaced by negative figures in 2009 and by pessimistic forecasts for an uncertain number of coming years. On this background, facilitation of trade and transport in the region and the improved integration of the Caucasus & Black Sea region countries in the world's economy are even more necessary than before. According to the ToR, the project assignment is divided into three sequential parts that at the same time correspond to the main result areas: A Logistics network and related infrastructures analysis completed in the inception phase B Identification, ranking and promotion of logistics centre projects mostly completed in the second reporting period. Some additional inputs were requested by beneficiaries in Moldova and Armenia and were completed in the second progress reporting period as well. C Preparation of the feasibility studies for the selected projects under implementation since completion of the progress reporting period I. The project beneficiary countries are split into direct beneficiaries eligible to receive technical assistance under EU European Neighbourhood Policy Budgets Armenia, Azerbaijan, Georgia, Ukraine and Moldova; and indirect beneficiary countries Bulgaria, Romania and Turkey, which are either EU or EU accession countries. The local counterparts are the National Secretaries and TRACECA structures in each direct and indirect beneficiary country. Target groups refer to project beneficiaries who are major stakeholders of the logistics process on policy making and operational level. The project partners are the donor community, logistics platforms, promoters of similar initiatives in the regions, as well as other EU projects. Project communicates widely with the European logistics sector in the area of specific project promotion in TRACECA countries in close coordination with the beneficiaries. The detailed description of the project inception task (PI) and the Task A and B have been presented in the Inception report and the Progress report I. Below only summary aspects are pointed out. IP Project inception (adaptations to the work plan). Performance indicators for the project inception phase, i.e. Project office established, project mobilised, kick-off meetings organised and coordination established are completely fulfilled. A Logistics network and related infrastructures analysis. The performance indicators are completely fulfilled with the following outputs: Progress Report li Page 9 of 35

12 Report on actual logistics related freight flows and compilation of maps (Inception Report Annex 3, Part 1) performance indicator fulfilled Eight country reports on infrastructure conditions at main TRACECA transport links and nodes (Inception Report, Annex 3, Part 2) - performance indicator fulfilled Assessment of locations in five direct beneficiary for future international logistics centre (ILC) projects at macro level (Inception Report, Annex 3, Part 2) - performance indicator fulfilled Description of main issues of transport operators in eight countries (Inception Report, Annex 4). The prioritized action programme has been finalized during the Phase B (Progress Report I, Annex 5). - Performance indicator fulfilled in the Phase B. B Identification, ranking and promotion of logistics centres projects This task consists of 3 domains of activities entailing: - B1 Identification and characterising of priority projects of logistics centres - B2 Ranking the identified projects using the multicriteria analysis - B3 Organisation of the visit to the relevant logistics hubs Upon completion of the macro level MCA and determination of regions for future logistics centres along the TRACECA corridor, the consultant proceeded with micro-site assessments. For this purpose a detailed MCA-micro assessment matrix has been developed to rank the specific sites. The analysis started with applying eligibility criteria for the proposed sites. The micro-level assessment was run for sites that qualify the basic necessary criteria. The objective of this exercise was to determine most promising projects in each direct beneficiary country bearing in mind TRACECA network integrity. This has been implemented in the interactive partnership with the local counterparts and beneficiaries. The teams of experts have implemented field missions in direct beneficiary countries and investigated the sites in the progress reporting period I. The Consultant has encouraged stakeholder participation by involving them into the site identification. The Team Leader has conducted round table discussions in all direct beneficiary countries in progress reporting period I. The National Secretaries have supported the organization of the round tables and hosted their arrangements to promote the image of TRACECA corridor. The participants of the round tables included the ministerial representatives, policy makers, municipalities, land developers, transport companies, freight forwarders, customs, IFIs or logistics operators/cargo owners. The EC Delegations are being regularly informed on the project progress and were invited to participate in the round tables. The round tables have encompassed: Presentations of logistics centres in Europe and project objectives Project status and objectives of the phase B Identification of the Logistics Centres priority projects in beneficiary countries Presentation of the MCA Macro results in countries Identification of the specific sites to be analysed in each micro locations Information verification and requests on specific sites Upon completion of the round table discussions in all direct beneficiary countries, the final feedback meeting was held on July 2009 in Kiev with all National Secretaries or their representatives (except Georgia and Bulgaria, due to other obligations). The results of the final evaluation of initially selected site were distributed in the progress report I. The template statement of endorsement has been proposed. Currently, all the beneficiary countries have endorsed the macro locations for network. Page 10 of 35 Progress Report li

13 The following sites have already been approved by the beneficiaries: - Azerbaijan: New Sea Trade Port of Baku at Alyat (approval ) - Ukraine: Boryspil Airport Commerce Park in Kiev region (approval ) Dry Port Euroterminal in Odessa region (approval ) - Moldova: Marculesti Free International Airport (approval ) The approvals of Armenia and Georgia are pending and expected to be received in the beginning of the next reporting period. It should be pointed out that during a round table in Georgia, it was agreed that to confirm the project to be proposed for the feasibility study the governmental procedure required some more time. During later contacts, the National secretary informed, that the Government of Georgia supported the proposed idea to establish an ILC in the area close to Tbilisi airport. The Consultant has proceeded with the evaluation of the identified micro sites in this area. Following the submission of the progress report I, the beneficiary in Georgia has requested not to concentrate on any specific site, but to consider the whole area around Tbilisi airport in the feasibility study. This request was communicated at the meeting in Brussels on 24 September to the Programme Manager and the Consultant s team. The Delegation in Tbilisi was informed on this alteration in the project implementation accordingly, and conducted discussions with the beneficiary. The Consultant has prepared a revised methodology for preparation a feasibility study for the Logistics Centre in the area around Tbilisi airport on 6 November 2009, upon agreement with the Programme Management in AidCo. The absence of an identified specific site with its natural borders, road, rail and air connection and land specificity has the following repercussions on investigations. 1. The layout of the site will be presented on the unit level based on the demand for logistics centre services. Unit configuration of various modules will be presented. 2. Infrastructure integration on the micro level, could not be presented, macro level corridor integration will be considered instead. 3. The business plan provisions and CAPEX per module will be incorporated into cost benefit analysis and economic impact assessment tasks. The classical presentation of the business plan and CAPEX estimation needs a greater level of details about the site - borders, infrastructure, utilities, land acquisitions, etc. The module based CAPEX may have to be applied within various infrastructure scenarios. This constitutes additional inputs of the Consultant that were not envisaged in the existing terms of reference. Additional inputs and budget estimation to fulfil this task will be discussed with the Programme Manager in Brussels. It was stated to the beneficiary that if an official approval of a specific site out of the on the proposed sites will be provided by March 30, 2010 the accomplishment of Phase C as envisaged in the ToR would still be possible. During the study tour organized in Germany on November 2009, the beneficiary in Georgia and the consultant have agreed that it is important to carry out one more round table in Tbilisi. The situation has to be discussed with potential stakeholders. In Azerbaijan, where the location was determined within the territory of the new port of Alyat, coordinated actions of the beneficiary are necessary for efficient integration of the ILC. The official approval of the site in Alyat for further feasibility studies was received An expert mission took place in January Progress Report li Page 11 of 35

14 The master plan of the new Baku port in Alyat is prepared by Royal Haskoning on behalf of the Azerbaijani Government. The draft master plan handed over to the Consultant by the National Secretary on 22 November 2009, envisages an option area of 50 hectares indicated for development of the logistics centre. However, upon approval of site, further coordination with MoT will be needed. This entails investigations on infrastructure access (rail and road), specification for the operational model for the infrastructure used commonly by the port and the logistics centre (i.e. financing, building, maintenance) and railway operations (i.e. time schedule, safety and security, none discriminatory access, etc.) will be needed. In addition, the competences for the soil preparation for the logistics centre site should be decided upon. The macro location at Alyat is currently the most preferred solution since it matches all requirements best, taking into account its positioning within Baku area, to Baku, and on the TRACECA (East/West) and North-South corridor reallocation of the present port to Aylat provided. In Armenia, a specially called inter-ministerial commission has considered to provide a railway access to the Yerevan airport. This would change the basis site attributes in Armenia in favour of the Yerevan airport. Upon confirmation of the government, the consultant will proceed with further evaluation of the site at the Yerevan airport. In Moldova, the initial approval of the site at Chisinau has been cancelled, because of change in management of the Moldovan railways and consequent decision making. The beneficiary asked to evaluate an additional site at State enterprise Marculesti International Airport (free economic zone). The MCA for the new site has been submitted for the approval of the beneficiary at the end of November The results are slightly less competitive as the ones of Chisinau. The official approval of the site in Markulesti for further feasibility studies was received An expert mission took place in January As the activities concerning the additional request from Moldova had to be accomplished this year, the consultant has used the resources envisaged for the phase C to conclude the additional activities within the tasks B in Moldova. The possibility of compensation of these additional inputs related to the nomination of the new site in Moldova was discussed with the task manager in Brussels and will be finalised in the next reporting period. The project is also assigned to recommend PPP and public granting schemes for the financing of the logistics infrastructure in the TRACECA countries. The two-fold approach will be pursued here. First, the macro level conditions and approaches will be determined at the country-wise level. Second, once the specific sites are identified and stakeholders are defined for implementation of the logistics centres projects the concrete financing schemes will be presented. The study tour was organised in Germany on November The Consultant s team has strived to envisage the following topics in study tour programme: - Promotion and dissemination of TRACECA activities in the European logistics market - Increase awareness of the TRACECA corridor capabilities among possible stakeholders in Europe - Promotion of the network of international logistics centres along the TRACECA corridor by generating informal partnership between logistics developers from the regions and their European counterparts - Bridging European networks of the Logistics centres to the TRACECA in terms of networking, creating cooperation possibilities and receiving information on applicable European experience. Page 12 of 35 Progress Report li

15 - Introduction and presentation of ILC concepts, purposes and functioning principles for involved stakeholders for the TRACECA region - Demonstration of approach to ILC networks in Europe in major German cities - Visit to the relevant logistics centres in order to familiarize the stakeholders with operation concepts, investment appraisal and techniques of similar European logistics projects, and financing schemes appropriate for TRACECA region - European know-how transfer in terms of international logistics projects - Interactive sessions and feedback possibilities The study tour was organised as a 5 day intensive logistics training with visits to the logistics hubs in Logistics Centre Grossbeeren (Berlin), Leipzig logistics centre /freight village Leipzig (GVZ Leipzig), Leipzig Cargo Airport, Bremen GVZ, Altenwerder Container Terminal and Logistics Center (Hamburg), Airbus Industries (EADS) and Rostock port. Several global logistics companies and associations of the Logistics villages in Europe have presented their realised concepts at the study tour. Consultant has proposed to include 2 persons from each beneficiary country, including the TRACECA National Secretary, regional development specialists or promoters of the ILC in each country. Upon the initiative of the Consultant two representatives of the PS IGC TRACECA were invited to the study tour to add to capacity building measure of the PS staff. The EC-approved participants (altogether 17 persons) of the all beneficiary countries have taken part in the study tour. The participants have provided generally a positive feedback regarding the contents and organisation of the study tour programme. The organisation of the study tour took place within the approved budget, programme and time frame. C Preparation of the feasibility studies for the selected projects The implementation of this phase has started in August The implementation programme relates to the corresponding approvals of specific sites. So the progress of implementation varies country wise. Some tasks were implemented during the present reporting period. C1 Global descriptions of the objectives and functions of the logistics centre initial activities started. Methodology has been prepared for Azerbaijan, Armenia, Moldova, and Ukraine, as well as the separate approach to Georgia derived from the request of the beneficiary. C2 Identification of major stakeholders initial activities continued. C3 Possible site location - initial activities continued, discussions carried out by the team of key experts in all direct beneficiary countries. C4 Preliminary layout of the site initial activities started in Ukraine, since this task directly depends on the approval. C5 Preliminary layout of the logistics areas initial activities started in Ukraine, since this task directly depends on the approval. C6 Business plan for the site methodology is being developed to fit the crisis conditions and is presented to the beneficiaries within the present report. C7 Environmental impact assessment relevant in the next reporting period. C8 Assessment for key qualification required initial activities have started C9 Cost benefit analysis EC methodology is being adjusted to fit the crisis conditions and is presented to the beneficiaries within the present report. C10 Recommendations for adapted public support - initial activities started Progress Report li Page 13 of 35

16 C11- Communication and the synergies within the networks of the logistical centres. The Task C11 has started already in the inception phase. The cooperation with the team leader of the parallel project has been established. Coordination meetings with other EC sponsored projects took place both locally and in Brussels. The communication and exchange of information with the most advanced regional and national projects will be pursued. The close liaison with the International Financing Institutions was organised; regular information exchange and coordination will be followed up. The PR and dissemination team, consisting of a PR expert and web-designer/developer was approved by the EC programme manager. The newsletters were sent to the PS. The information about the project was provided to the PS based project webpage. The webpage was developed and presented to the beneficiaries during the study tour. The webpage will be launched within the next reporting period in two languages. The contents and the structure of the webpage are being agreed with the Programme Manager and are in full compliance with the EC visibility guidelines. The webpage will serve as a knowledge base on logistics sector in the region and will be connected to the new TRACECA website. PM Project management (adaptations to the work plan). The Project management component was proposed by the Consultant given the complexity of the project and necessity to coordinate the multifunctional teams. This work package includes the following tasks. PM1: Quality assurance, risk management and conflict resolution PM2: Updates of the Logframe The Logframe was updated on the basis of the information received during the inception phase. PM3: Project planning: The planning results are presented in the tables of the current report. PM4: Project reporting Project reporting has been done on a monthly basis. The Inception Report was prepared upon completion of the Phase A after 3 months of project implementation. The progress report I and II were prepared after 6 and 12 months of the project implementation respectively. Page 14 of 35 Progress Report li

17 2 SUMMARY OF THE PROJECT PLANNING FOR THE REMAINDER OF THE PROJECT The project planning outlined below covers the period from the month 13 (February 2010) through the month 24 (January 2011) of the project implementation. The summary is in compliance with the Overall Plan of Operations, Overall Output Performance Plan, Work Programme and Logframe Matrix (see Annex 1). Activities of the task A: Performance indicators for the task A were completely fulfilled. A1: Traffic flow analysis and characterization of the nature and the condition of operating infrastructures and facilities within the network has been finalized during the Phase A. No further actions on this are envisaged. A2: Description of the main issues encountered by operators the prioritized action programme has been delivered. No further action is envisaged. Activities of the task B: No major action is envisaged for tasks B1 and B2 as performance indicators are fulfilled. B1: Assistance in identifying and characterising priority projects of logistics centres - the Consultant provided assistance to the beneficiary countries in identification of the promising projects at selected macro locations. No further actions on this are envisaged, as performance indicators are fulfilled. B2: Ranking the priority projects using multicriteria analysis - this activity has been mainly finalized. The country-wise follow up may be organized in case of need. The proposed priority projects were listed in the Annex 4 of the Progress report 1, selection of the site for those the studies will be prepared. As for recommendations on optimization of the degree and nature of the most relevant public granting scheme to be applicable for the financing of the logistics centres a benchmarking report on this has been delivered (Annex 6, Progress report 1). B3: visit to the relevant logistics centres The study tour was organised on November It focused on the following objectives - visit Logistics Centres in Europe and demonstrate the PPP in practice and applied in order to visualise and demonstrate best practice solutions. The performance indicator is completely fulfilled. Activities of the task C C1: Global description of the objectives and functions of the logistics centre. The Consultant will continue elaborating the drafts for each selected site, once the priority projects are approved. Fine tuning for the approved sites in Ukraine is possible. C2: Identification of the major stakeholders. The main stakeholders of each specific project will be determined. C3: Possible site location will be defined and relevant technical description will be provided upon approval of the beneficiaries. C4: Preliminary layout of the site will be prepared. The deviations for Georgia will be considered, and prepared in accordance to the requirements of the beneficiary. Progress Report li Page 15 of 35

18 C5: Preliminary layout of the logistics (functional) areas will be prepared. The deviations for Georgia will be considered, and prepared in accordance to the requirements of the beneficiary as far as possible. C6: Business Plan for the site. Business plans will be elaborated and country-wise implementation programme (legal and financial aspects related to each site) will be elaborated. The deviations for Georgia will be considered, and prepared in accordance to the requirements of the beneficiary as far as possible. C7: Environmental impact assessment will be prepared. C8: Assessment of key qualifications required. This task correlates to the task C1. The assessment will be implemented and the key qualifications required will be identified, C9: Cost benefit analysis will be prepared. The deviations for Georgia will be considered, and prepared in accordance to the requirements of the beneficiary. C10: Recommendations for the adapted public support. This task correlates to the task B2, B3 and C6. The recommendations will be elaborated. The deviations for Georgia will be considered, and prepared in accordance to the requirements of the beneficiary as far as possible. C11: Communication and synergy within the networks of logistical centres along the TRACECA corridor. The work on this has started from the beginning of the project. The activities will be followed up. The project PR task force will continue its work. The webpage will become operational in two languages of procedure. Other necessary dissemination activities will be agreed with the EC and implemented. The promotion materials will be issued as required. Activities of the task PM (adaptations to the work plan) These are the regular activities embarked into the daily work of the key expert team. PM01: Quality assurance, risk management and conflict resolution will be implemented PM02: Updates of the Logframe no specific activity is envisaged. PM03: Project planning will be detailed further and fine-tuned PM04: Project reporting monthly reports will be submitted, administrative reports and technical papers will be submitted. Page 16 of 35 Progress Report li

19 3 PROJECT PROGRESS IN REPORTING PERIOD The reporting period encompasses the time span between 26 August 2009 and 26 January The project progress since its start is summarized in the chapter 1 of the present document, and covers the main activities of this reporting period. This chapter will point out the highlights as per main tasks assigned, and point out the activities implemented as adaptations to the work plan and implemented at the beginning of the phase C. From August on, the project has entered the phase of preparatory works needed for the phase C preparation of the feasibility study. It should be pointed out that the Consultant has concentrated on four major domains within this reporting period: 1. Preparation of the study tour to the relevant centres in Germany. 2. Coordination with stakeholders on approval obtaining for the proposed sites. This issue is critical since an approval is an absolute precondition to precede with the phase C activities. 3. Work on methodology adjustment to the current situation in the beneficiary countries, new requests of the beneficiaries and relevant adjustments. 4. Data collection on the country level for feasibility studies at the phase C. Some aspects related to resource allocation, approval process and further reallocation of the resources have to be mentioned. In terms of resource allocation, the Consultant has basically matched the planned number of resource utilisation. Still, the distribution of resource utilisation among tasks differed from the plan, responding to the additional requests of the beneficiaries. This entails additional requests of beneficiaries from Moldova and Georgia, as well as the changes in the position of Armenia. The Consultant had to pull the resources envisaged for other tasks within this reporting period and for the future phases to cover the requests of the beneficiaries, In addition, the other reason for a moderate deviation from the utilisation plan and keeping in budget at the point of the progress reporting was absence of the approvals from some countries. So, it was not possible to continue with implementation on tasks evenly among the countries. The free resources were shifted to the newly emerged needs of the beneficiaries in order to secure level of flexibility and responsiveness of the EU technical assistance to the beneficiary needs. The need for reallocation of the resources, as well as the additional tasks implemented was coordinated with the Programme Manager. IP Project inception (adaptations to the work plan) by April Performance indicators for the project inception phase are completely fulfilled. No action was undertaken in this reporting period. A Logistics network and related infrastructures analysis. Performance indicators for task A are completely fulfilled by April No action was undertaken in this reporting period. B Identification, ranking and promotion of logistics centres projects The results for the task B1 Identification and characterising of priority projects of logistics centres and B2 Ranking the existing projects using the multicriteria analysis were presented in project report I. These consequently are pointing out identification and ranking of the ILC sites, specifying action plan and providing recommendation on financing schemes. Performance indicators as Final stakeholder analysis and prioritised action programme Progress Report li Page 17 of 35

20 Final list of the priority projects using MCA for five beneficiary countries Recommendations on financing schemes for beneficiary countries were completely fulfilled. As indicated in the Chapter 2 of the present report, following the submission of the progress report I, some changes took place affecting the resource allocated within this reporting phase. The completion of the phase B is indicated by an approval letter of the beneficiaries to start with investigations of the sites within the task C Feasibility Studies. The current project situation could be summarised in the figure below: Figure 1: Project situation on transfer to the phase C Beneficiary Phase A Phase B APPROVAL Phase C Armenia + + Change in site attributes in favour of initially 2nd best option? Decision pending Azerbaijan Under implementation Georgia + + Request for concept FS? Desicion pending Moldova + + Request to check a new site + Under implementation Ukraine Under implementation As it is depicted the figure above only the beneficiary in Ukraine, has approved the sites to be investigated in the phase C in early September, Azerbaijan and Moldova provided the final approval letters for network endorsement and agreement in December The final approval letters for network endorsement and agreement of the specific sites in the respective countries distributed together with the progress report I were not returned by Armenia and Georgia. The details of the situation could be summarised as follows. 1. The beneficiary in Georgia has requested not to concentrate on any specific site. Instead the Ministry of Economic Development has proposed to consider the whole area around Tbilisi airport for the feasibility study. This request was communicated at the meeting in Brussels on 24 September to the Programme Manager and the Consultant s team. The Delegation in Tbilisi was informed on this alteration in the project implementation accordingly, and conducted discussions with the beneficiary. The Consultant has prepared a revised methodology for preparation a feasibility study for the Logistics Centre in the area around Tbilisi airport on 6 November 2009, upon agreement with the Programme Management in AidCo. The absence of specific site with its natural borders and site specific has the following repercussions on investigations. Page 18 of 35 Progress Report li

21 - The layout of the site will be presented on the unit level based on the demand for logistics centre services. Unit configuration of various modules will be presented. - Infrastructure integration on the micro level, could not be presented, macro level corridor integration will be considered instead. - The business plan provisions and CAPEX per module will be incorporated into cost benefit analysis and economic impact assessment tasks. The classical presentation of the business plan and CAPEX estimation needs a greater level of details about the site - borders, infrastructure, utilities, land acquisitions, etc. The module based CAPEX may have to be applied within various infrastructure scenarios. This constitutes addition inputs of the Consultant that were not envisaged in the existing terms of reference. Additional inputs and budget estimation to fulfil this task will be discussed with the Programme Manager in Brussels within the next reporting period. During the study tour organized in Germany on November 2009, the beneficiary in Georgia and the consultant have agreed that it is important to carry out one more round table in Tbilisi. The situation has to be discussed with potential stakeholders. It was stated to the beneficiary that if an official approval of a specific site out of the on the proposed sites will be provided by March 30, 2010 the accomplishment of Phase C as envisaged in the ToR would still be possible. 2. In Azerbaijan, where the location was determined within the territory of the new port of Alyat, coordinated action of the beneficiary is necessary for efficient integration of the ILC. Official approval of the site in Alyat for further feasibility studies within the current project was provided The master plan of the new Baku port in Alyat is prepared by Royal Haskoning on behalf of the Azerbaijani Government. The draft master plan handed over to the Consultant by the National Secretary on 22 November 2009, envisages an optional area of 50 hectares indicated for development of the logistics centre. However, upon approval of site, further coordination with MoT will be needed. This entails investigations on infrastructure access (rail and road), specification for the operational model for the infrastructure (e.g. financing, building, maintenance) and railway operations (e.g. time schedule, none discriminatory access, etc.) to be commonly used by the port and the logistics centre will be needed. In addition, the competences for the soil preparation for the logistics centre site should be provided. The macro location at Alyat is currently the most preferred solution since it matches all requirements best, taking into account its position within Baku area, to Baku, and on the TRACECA and North-South corridor reallocation of the present port to Aylat provided. 3. In Armenia, a specially called inter-ministerial commission has considered to provide a railway access to the Yerevan airport. This would change the basis site attributes in Armenia in favour of the Yerevan airport. Upon confirmation of the government, the consultant will proceed with further evaluation of the site at the Yerevan airport. 4. In Moldova, the initial approval of the site at Chisinau has been cancelled, because of lack of support from the Moldovan railways and consequent decision making. The beneficiary asked to evaluate an additional site at State enterprise Marculesti International Airport (free economic zone). The MCA for the new site has been submitted for the approval of the beneficiary at the end of November The results are slightly less competitive as the ones of Chisinau. The official approval of the site in Markulesti for further feasibility studies was received An expert mission took place in January As the activities concerning the additional request from Moldova have to be accomplished this year, the consultant has used the resources envisaged for the phase C to conclude the Progress Report li Page 19 of 35

22 additional activities within the tasks B in Moldova. The possibility of compensation of these additional inputs related to the nomination of the new site in Moldova were discussed with the task manager in Brussels and fill be finalised in the next reporting period. In conclusion, the consultant will need the approval letters as soon as possible to be able to start with feasibility investigations. The Consultant will work actively on this issue with the beneficiaries and the programme management. However, sometimes the decision making processes in TRACECA countries require longer times once these are connected with the governmental resolutions or authorisations. The project team will plan the missions in the next reporting period to follow up the subject and to facilitate the decision making. One of the subtasks includes recommendations on PPP and public granting schemes for the financing of the logistics infrastructure in the TRACECA countries. The two-fold approach is pursued here. First, the macro level conditions and approaches were determined at the countrywise level. Second, once the specific sites are approved and stakeholders are defined for implementation of the logistics centres projects the concrete financing schemes will be presented for each site. The general models and recommendations were highlighted during the study tour to Germany and provided in writing as part of the hand out materials. The part of the task B also included the organisation of the study tour to Europe. The study tour was organised in Germany on November The Consultant s team has strived to envisage the following topics in study tour programme: - Promotion and dissemination of TRACECA activities in the European logistics market - Increase awareness of the TRACECA corridor capabilities among possible stakeholders in Europe - Promotion of the network of international logistics centres along the TRACECA corridor by generating informal partnership between logistics developers from the regions and their European counterparts - Bridging European networks of the Logistics centres to the TRACECA in terms of networking, creating cooperation possibilities and receiving information on applicable European experience. - Introduction and presentation of ILC concepts, purposes and functioning principles for involved stakeholders for the TRACECA region - Demonstration of approach to ILC networks in Europe in major German cities - Visit to the relevant logistics centres in order to familiarize the stakeholders with operation concepts, investment appraisal and techniques of similar European logistics projects, and financing schemes appropriate for TRACECA region - European know-how transfer in terms of international logistics projects - Interactive sessions and feedback possibilities The study tour was organised as a 5 day intensive logistics training with visits to the logistics hubs in Logistics Centre Grossbeeren (Berlin), Leipzig logistics centre /freight village Leipzig (GVZ Leipzig), Leipzig Cargo Airport, Bremen GVZ, Altenwerder Container Terminal and HHLA Logistics Center (Hamburg), Airbus Industries (EADS Hamburg) and Rostock port. Several global logistics companies and associations of the Logistics villages in Europe have presented their concepts at the study tour. Consultant has proposed to include 2 persons from each beneficiary country, including the TRACECA National Secretary, regional development specialists or promoters of the ILC in each country. The approved participants (altogether 17 persons) of the all beneficiary countries have taken part in the study tour. Upon the initiative of the Consultant two representatives of the PS Page 20 of 35 Progress Report li

23 IGC TRACECA were invited to the study tour to add to capacity building measure of the PS staff. The participants have provided generally a positive feedback regarding the contents and organisation of the study tour programme. The organisation of the study tour took place within the approved budget, programme and time frame. Performance indicator for the phase B are completely fulfilled. C Preparation of the feasibility studies for the selected projects C1 Global descriptions of the objectives and functions of the logistics centre preliminary activities were implemented. This topic was widely covered in the previous progress reporting period.. C2 Identification of major stakeholders initial work has started, the stakeholders were interviewed (see Annex 2) and invited to the round tables. Further work related to business case development has been implemented in coordination with the beneficiary. C3 Possible site location - activities were implemented, and coordination work started, The activities are fully completed for Ukraine, since the two proposed sites are approved. C4 Preliminary layout of the site not relevant to this phase. C5 Preliminary layout of the logistics areas activities were implemented, and coordination work started, The activities are fully completed for Ukraine, since the two proposed sites are approved. C6 Business plan for the site site basis presentation is not relevant to this phase. The methodology has been developed and presented in the current report. Data collection on business plan level was implemented. C7 Environmental impact assessment not relevant to this phase. C8 Assessment for key qualification required initial work has started, discussion with stakeholders. C9 Cost benefit analysis not relevant to this phase on the site basis. The methodology has been developed and presented in the current report. Data collection on CBA level was implemented. C10 Recommendations for adapted public support on the site level not relevant to this phase. General recommendations were presented during the study tour to Germany/ C11- Communication and the synergies within the networks of the logistical centres. The cooperation with the team leader of the parallel project has been arranged. Coordination meetings with other EC sponsored projects took place both locally and in Brussels. The communication and exchange of information with the most advanced regional and national projects has been pursued. TL took part at the logistics conference in Ukraine in December The close liaison with the International Financing Institutions has been established and regular information exchange is organised. The communication and coordination activities were organised in accordance with the proposed communication plan. These activities are delegated to the professional PR and dissemination team established to support communication actions in the project. The web page of the project is developed in English and Russian, and will be launched in the next reporting period. Progress Report li Page 21 of 35

24 PM Project management (adaptations to the work plan). PM1: Quality assurance, risk management and conflict resolution organised PM2: Updates of the Logframe organised in the inception report PM3: Project planning: The planning results are presented in the tables of the current report. PM4: Project reporting: Project reporting has been done on a monthly basis. The Inception Report was prepared upon completion of the Phase A after 3 months of project implementation. The progress report I was prepared after 6 months of the project implementation. The progress report II was prepared after 12 months of the project implementation. Page 22 of 35 Progress Report li

25 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period: 26 July January 2010 Table 1: Project Progress Report Project number : EuropeAid/126356/C/SER/MULTI Prepared on: 26 January 2010 Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey EC Consultant : DCo / Inros Lackner / NTU Number of Pages: 4 Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. TIME FRAME INPUTS No ACTIVITIES IMPLEMENTED Months PERSONNEL in Man-Da ys 1 SENIOR JUNIOR EQUIPMENT A N D MATERIAL OTHER 1. 01: Inception (adaptation to the work plan) 2. A1: Traffic flow analysis and characterisation of the nature and the condition of operating infrastructures and facilities within the network 3. A2: Description of the main issues encountered by operators 4. B1:Assistance in identifying and characterising priority projects of logistics centres 5. B2: Ranking the priority projects using multicriteria analysis 6. B3: visit to the relevant logistics centres Planned Utilised Planned Utilised Planned Utilised Planned Utilised NA NA NA NA NA NA NA NA NA NA NA NA NA NA x x x TL: 18 KEII+III: 17 TL: 33 KEII+III: 36 JSTE: 58 JSTE: 76 x x SSTE: 54 SSTE: 72 NA NA x x x 1 TL-Team Leader, KE II+III Key Experts II and III, SSTE Senior Short-term Experts, JSTE Junior Short-term experts Progress Report II Page 23 of 35

26 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period: 26 July January 2010 Project number : EuropeAid/126356/C/SER/MULTI Prepared on: 26 January 2010 Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey EC Consultant : DCo / Inros Lackner / NTU Number of Pages: 4 Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. TIME FRAME INPUTS No ACTIVITIES IMPLEMENTED Months PERSONNEL in Man-Da ys 1 SENIOR JUNIOR EQUIPMENT A N D MATERIAL OTHER 7. C1: Global description of the objectives and functions of the logistics centre Planned Utilised Planned Utilised Planned Utilised Planned Utilised x x x x x x 8. C2: Identification of the major stakeholders x x x x x x 9. C3: Possible site location x x x x x x 10. C4: Preliminary layout of the site x x x x x C5: Preliminary layout of the logistics (functional) areas C6: Business Plan for the site and country-bycountry legal programme 13. C7: Environmental impact assessment x x x x x x x x x x 14. C8: Assessment of key qualifications required x x x x 15. C9: Cost benefit analysis x x x 16. C10: Recommendations for the adapted public support x x x TL: 89 KEII+III: 184 SSTE: 286 TL: 66 KEII+III: 134 SSTE: 238 JSTE: 493 JSTE: 326 Page 24 of 35 Progress Report II

27 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period: 26 July January 2010 Project number : EuropeAid/126356/C/SER/MULTI Prepared on: 26 January 2010 Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey EC Consultant : DCo / Inros Lackner / NTU Number of Pages: 4 Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. TIME FRAME INPUTS No ACTIVITIES IMPLEMENTED Months PERSONNEL in Man-Da ys 1 SENIOR JUNIOR EQUIPMENT A N D MATERIAL OTHER C11: Communication and synergy within the networks of logistical centres along the TRACECA corridor PM 1: Quality assurance, risk management and conflict resolution (Adaptation to the work plan) PM 2: Updates of the Logframe (Adaptation to the work plan) PM 3: Project Planning (Adaptation to the work plan) PM 4: Project Reporting (Adaptation to the work plan) Planned Utilised Planned Utilised Planned Utilised Planned Utilised x x x x x x TL: 12 TL: 12 JSTE: 29 JSTE: 22 x x x x x x KEII+III: 11 KEII+III: 11 SSTE: 18 SSTE: 17,5 x x x x x x x x x x x x x x x x T O T A L TL: 119 KEII+III: 211 SSTE: 358 TL: 111 KEII+III: 181 SSTE: 327,5 JSTE: 580 JSTE: 424 Progress Report II Page 25 of 35

28 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period : Project number : EuropeAid/126356/C/SE R/MULTI Table 2: Overall Output Performance Plan Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey Number of Pages: 5 Prepared on: 26 January EC Consultant : DCo / Inros Lackner / NTU 26 January January Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. Outputs Agreed Objective Verifiable Indicators Assumptions Component project inception IP (adaptations to the work plan) Project mobilised Kick-off meeting took place Key expert team within 2 weeks after the project commencement Project office established and is fully operational within 6 weeks after the project commencement Project registered at the basis of operations country by the end of inception phase Kick-off meetings in all eight direct and indirect beneficiary countries are conducted Component A: Logistics network and related infrastructures analysis 1. Report on actual logistics related freight flows and compilation of maps The report on logistic related traffic flows is delivered by the end of the inception phase. Availability of counterpart staff to engage in meetings, project steering and working panels Timely response on Consultant s requests Availability of counterpart staff to engage in meetings, project steering and working panels Free access to necessary information and data within the project implementation Access of project team to all countries within region, and to all project relevant areas (e.g. ports, border crossing points, airports, terminals, etc.) Page 26 of 35 Progress Report II

29 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period : Project number : EuropeAid/126356/C/SE R/MULTI Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey Number of Pages: 5 Prepared on: 26 January EC Consultant : DCo / Inros Lackner / NTU 26 January January Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. Outputs Agreed Objective Verifiable Indicators Assumptions 2. Eight country reports on infrastructure conditions at main TRACECA transport links and nodes 3. Assessment of locations in five direct beneficiary for future international logistics centre (ILC) projects at macro level 4. Description of main issues of transport operators (initial stakeholder analysis) in eight countries Field missions of expert teams took place in eight beneficiary countries (both direct and indirect) Structured interviews were conducted with relevant stakeholders Eight reports on infrastructure conditions, current situation in logistics sector and main hub are prepared Multicriteria analysis matrix is prepared The locations at macro level are analysed and evaluated in five direct beneficiary countries Structured interviews are conducted with the stakeholders in all eight beneficiary countries Report summarising findings is prepared and contains information on all eight beneficiary countries Preliminary action programme is proposed Free access to necessary information and data within the project implementation Access of project team to all countries within region, and to all project relevant areas (e.g. ports, border crossing points, airports, terminals, etc.) Willingness of stakeholders and authorities to cooperate under coherent, integrated logistics centre network solution Beneficiary support and continuity in decision making Access of project team to all countries within region, and to all project relevant areas (e.g. ports, border crossing points, airports, terminals, etc.) Market conditions remain attractive to the potential investors despite the current financial and economic crisis Approval process for promotion of project activities takes place in time Willingness of stakeholders and authorities to cooperate to develop a coherent, integrated logistics centre network solution Favourable political and economic situation Relevant legislation and regulatory framework exist Progress Report II Page 27 of 35

30 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period : Project number : EuropeAid/126356/C/SE R/MULTI Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey Number of Pages: 5 Prepared on: 26 January EC Consultant : DCo / Inros Lackner / NTU 26 January January Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. Outputs Agreed Objective Verifiable Indicators Assumptions Component B - Identification, ranking and promotion of logistics centres projects 1. Final stakeholder analysis and prioritised action programme 2. Final list of the priority projects using MCA for five beneficiary countries 3. Recommendations on financing schemes for beneficiary countries 4. Study tour to LCs in Europe and study tour documentation Stakeholder analysis is prepared for each country and prioritised action programme is proposed (report) List of the priority project resulting in selection of one project per direct beneficiary country Relevant European experience presented (in the report) Problems identified in each direct beneficiary countries and recommendation provided (in the report) Study tour to Europe organised upon completion of the Phase B with participants approved by the EC Capacity building actions / stakeholder MCA workshop are organised for beneficiary countries Study tour documentations is available Full support and commitment from project partners The stakeholders will participate actively in round tables on identification and appraisal of priority sites Willingness and cooperation between various counterparts Commitment from stakeholders to regional interests, respect to transport demand and network principle, rather than to local preferences Commitment to development of the selection criteria and acceptance of the indicators (including public support) by all involved counterparts Co-operation with neighbouring countries Measures to improve efficiency of the sector performance will be implemented Availability of the counterparts and stakeholder Page 28 of 35 Progress Report II

31 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period : Project number : EuropeAid/126356/C/SE R/MULTI Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey Number of Pages: 5 Prepared on: 26 January EC Consultant : DCo / Inros Lackner / NTU 26 January January Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. Outputs Agreed Objective Verifiable Indicators Assumptions Component C - Preparation of the feasibility studies for the selected projects 5. Implementation programme favourable to investments in five direct beneficiary countries 6. Communication plan including promotion and dissemination aspects Country-by-country implementation programme for five direct beneficiary countries Communication plan is prepared in the inception period Regular meetings with project partners and IFIs held For each selected project: The data are available and counterparts provide strong input for the package implementation on the sustainable basis Relevant data and supporting documents are made available to the project team Means and forms of possible public support to the projects is clearly formulated by the beneficiary countries Market conditions remain attractive to the potential investors despite the current financial and economic crisis No constraints Progress Report II Page 29 of 35

32 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period : Project number : EuropeAid/126356/C/SE R/MULTI Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey Number of Pages: 5 Prepared on: 26 January EC Consultant : DCo / Inros Lackner / NTU 26 January January Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. Outputs Agreed Objective Verifiable Indicators Assumptions 7. Pre-feasibility/feasibility study including: assumptions on public support and investment promotion, capacity and institutional strategy action plan, administrative support and staff qualification assessment, services to be rendered, business plans and cost-benefit analysis and environmental impact assessment where relevant. 8. Masterplan (preliminary layout) covering functional area layout, layout for modern infrastructure and cargo handling facilities, adequate information system. Feasibility / Prefeasibility studies are prepared by the end of the project and contain the required components The data are available and counterparts provide strong input for the package implementation on the sustainable basis Access of project team to all countries within region, and to all project relevant areas (e.g. ports, border crossing points, airports, terminals, etc.) Relevant data and supporting documents are made available to the project team Means and forms of possible public support to the projects is clearly formulated by the beneficiary countries Master plans are prepared The data are available and counterparts provide strong input for the package implementation on the sustainable basis Relevant data and supporting documents are made available to the project team Means and forms of possible public support to the projects is clearly formulated by the beneficiary countries Component PM Successful project implementation (adaptations to the work plan) 9. Updated Logframe Updated Logframe attached to the inception report 10. Project plans Project plans are available in the reports 11. Project reporting Administrative and technical reports as per TOR are published Project status report on monthly basis Standard project planning tools are applicable Page 30 of 35 Progress Report II

33 Table 3: Resource Utilisation Report Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Planning period: 26 July January 2009 Project number : EuropeAid/126356/C/SER/MULTI Prepared on: 26 January 2009 Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Mol d o va, Ukraine Indirect Bulgaria, Romania, Turkey EC Consultant : DCo / Inros Lackner / NTU Number of Pages: 1 Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. RESOURCES/INPUTS T O T A L P L A N N E D PERIOD PLANNED PERIOD REALISED T O T A L R E A L I S E D AV AI L AB L E F O R R E M AI N D E R PERSONNEL Team Leader 450 MD Key Experts II and III 800 MD Senior Short Term Experts 1425 MD ,5 808,5 616,5 Junior Short Term Experts 1890 MD OTHER INPUTS % NA NA NA NA NA NA Progress Report II Page 31 of 35

34 Page 32 of 35 Progress Report II

35 4 PROJECT PLANNING FOR THE NEXT REPORTING PERIOD The reporting period encompasses the time span from 26 January to 26 July This reporting phase entails results for the task C. IP Project inception (adaptations to the work plan) - performance indicators are fulfilled. A Logistics network and related infrastructures analysis - performance indicators realised. B Identification, ranking and promotion of logistics centres projects performance indicators realised The approval of direct beneficiaries is essential to proceed with implementation of the task C upon completion of the next reporting period Consultant intends to prepare the Draft version of the final report for each site. C Preparation of the feasibility studies for the selected projects entails the following: C1 Global descriptions of the objectives and functions of the logistics centre will be given for each selected site. Performance indicator for C1 will be delivered, provided the approval is obtained. C2 Identification of major stakeholders performance indicator for C2 will be delivered, provided the approval for sites is obtained. C3 Possible site location performance indicator will be delivered for C3. C4 Preliminary layout of the site work will be implemented. C5 Preliminary layout of the logistics areas work will be implemented. C6 Business plan for the site The business plan will be elaborated, C7 Environmental impact assessment work will be implemented. C8 Assessment for key qualification required work will be implemented. C9 Cost benefit analysis work will be implemented. C10 Recommendations for adapted public support work will be implemented. C11- Communication and the synergies within the networks of the logistical centres. Coordination and information exchange will continue following the proposed communication plan. The project website will be launched and promotional items will be prepared. The beneficiaries requested to conduct stakeholder meetings and round tables on the ad hoc basis. PM Project management (adaptations to the work plan) - will continue and entails: PM1: Quality assurance, risk management and conflict resolution will be implemented. PM2: Updates of the Logframe - Logframe is elaborated and no further activity is envisaged. PM3: Project planning fine tuning will continue. PM4: Project reporting - will be done on a monthly basis. The progress report III will be issued in July Progress Report II Page 33 of 35

36 Table 4: Plan of Operations for the Next Reporting Period Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Project number : EuropeAid/126356/C/SE R/MULTI Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey Number of Pages: 2 Planning period : 26 January July 2010 Prepared on: 26January 2010 EC Consultant : DCo / Inros Lackner / NTU Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. No MAIN ACTIVITIES TIME FRAME INPUTS year PERSONNEL (MD) EQUIPMENT & month Senior Junior FURNITURE 1. 01: Inception (adaptations to the work plan) - - N / A 25% 2. A1: Traffic flow analysis and characterisation of the nature and the condition of operating infrastructures and facilities within the network 3. A2: Description of the main issues encountered by operators B1:Assistance in identifying and characterising priority projects of logistics centres B2: Ranking the priority projects using multicriteria analysis 6. B3: visit to the relevant logistics centres 7. C1: Global description of the objectives and functions of the logistics centre x x x x x TL: C2: Identification of the major stakeholders x x x x x x KEII+ III: C3: Possible site location x x x x x x SSTE: C4: Preliminary layout of the site x x x x x x 11. C5: Preliminary layout of the logistics (functional) areas x x x x x x 12. Task C6: Business Plan for the site and country-by-country legal programme x x x x x x 13. C7: Environmental impact assessment x x x 14. C8: Assessment of key qualifications required x x x x x x JSTE: 350 OTHER Incidental expenditure Page 34 of 35 Progress Report II

37 Project title: International Logistical Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Project number : EuropeAid/126356/C/SE R/MULTI Beneficiary countries: Direct Armenia, Azerbaijan, Georgia, Moldova, Ukraine Indirect Bulgaria, Romania, Turkey Number of Pages: 2 Planning period : 26 January July 2010 Prepared on: 26January 2010 EC Consultant : DCo / Inros Lackner / NTU Project objective: To support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. No MAIN ACTIVITIES TIME FRAME INPUTS year PERSONNEL (MD) EQUIPMENT & month Senior Junior FURNITURE 15. C9: Cost benefit analysis x x x x x x 16. C10: Recommendations for the adapted public support x x x x x x 17. C11: Communication and synergy within the networks of LC along the TRACECA x x x x x x 18. PM01: Quality assurance, risk management and conflict resolution (WPadaptation ) x x x x x x TL: 12 KEII+III: PM02: Updates of the Logframe (adaptation to the work plan) SSTE: PM03: Project planning (adaptation to the work plan) x x x x x x 21. PM04: Project reporting (adaptation to the work plan) x x x x x x JSTE: 20 OTHER Incidental expenditure TOTAL 25% Team leader 116 MD na Key Experts I + II 249 MD na Short-term experts 405 MD 390 MD na Progress Report II Page 35 of 35

38 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 1 Project Logical Framework January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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40 LOGFRAME Overall objectives Project purpose Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions The overall objective of the project is to support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport. To develop financial, technical, environmental and institutional conditions and studies for a network of logistical centres along the TRACECA corridor in direct beneficiary countries (Armenia, Azerbaijan, Georgia, Moldova, Ukraine) in view of: Provision of sets of prefeasibility and feasibility studies for selected sites with focus on PPP and efficient customs services; Analysis of the needs assessment and surveys Increased volumes of cargo transport due to increase in export and import of goods after implementation of the proposed projects Increased share of logistics value added services in GDP after implementation of the proposed projects Higher share of multimodal operations in national and international supply chains Increase in level of investment in logistics centres and logistics service in case of project realisation Increase funding of logistics and freight transport sector projects by IFIs or PPP Priority on intermodal transport and logistics in national transport strategies National statistics Export and import statistics of national and international organisations Reports and relevant Statistics of the international organisations TRACECA database National and international statistics IFI funding reports and programming documents and action plans Publications of professional investment promoters, e.g. chambers of commerce Official governmental Political continuity and stability in the beneficiary countries exists Successful measures to mitigate the consequences of the world s financial crisis Continuation of governments in pursuing policy of regional integration and establishment of viable links with the Trans-European Transport Networks Acceptance of international customs and freight documents and procedures by beneficiary countries Free access to necessary information and data Progress Report II Annex 1 - Logframe Page 1 of 8

41 Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions publications Transport strategies and programming documents of TRACECA countries Project reports Project feasibility studies of the current logistics capabilities; Elaboration of the master plans for selected locations Preparation of the business and organisational plans, financial and economic analysis considering the changed cargo volumes resulted from worldwide economic slowdown. To promote realistic, attractive and sustainable projects for further investment by financial institutions and/or public and private actors possible under conditions of the world economic crisis. Continued or increased financial support demonstrated by the IFIs in the region in the transport and real estate sector Continued commitment of responsible national authorities to establish a legal basis for the development of logistics centres Clear legal regulations for land acquisitions Readiness of transport operators to cooperate with their current competitors within a regional logistics centre benefiting from synergy effects Progress Report II Annex 1 - Logframe Page 2 of 8

42 Results Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions Result 0 (Adaptation to the Work Plan) Project Inception Result A Analysis of TRACECA logistics network and of the related operation of transport and logistics within the existing network delivered Kick-off meetings held Main project office established in Kiev Project team mobilised Regional field missions took place in each beneficiary country Country reports providing information on infrastructure conditions of the main TRACECA transport links and nodes and capabilities of existing entities / stakeholder to perform logistics operations Traffic flowsreport analysis on TRACECA traffic flows and network capacities is provided in the inception report Description of the main issues encountered by operators (first stakeholder analysis) Prioritised action programme to be discussed with beneficiary countries Preliminary list of assessed locations for logistics centre projects Project reports Project documentation Official communications of beneficiaries TRACECA GIS traffic Database Government reports and decisions Documentation of professional associations for transport or trade IFI reports Publications and information reports in mass media Free access to necessary information and data within the project implementation Beneficiary support and continuity in decision making Favourable political and economic situation Willingness of stakeholders and authorities to cooperate under coherent, integrated logistics centre network solution Relevant legislation and regulatory framework exist Market conditions remain attractive to the potential investors despite the current financial and economic crisis Access of project team to all countries within region, and to all project relevant areas (e.g. ports, border crossing points, airports, terminals, etc.) Approval process for promotion of project activities takes place in time Progress Report II Annex 1 - Logframe Page 3 of 8

43 Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions Minutes of Stakeholder seminars Result B Logistics centres projects are identified, ranked and promoted Result C Feasibility studies for the selected projects Stakeholders seminar on multicriteria analysis Multi-criteria analysis (MCA) is prepared A set of priority projects in each country is identified, ranked using MCA and submitted for approval Coordination missions and meetings with sector stakeholders, investors and IFIs are held Recommendation are provided for optimizing the degree of most relevant public granting scheme and necessary regulatory changes Study tour to relevant logistics centres in Europe is organised For each selected project: Pre-feasibility / feasibility study including: - assumptions concerning public support and finetuned recommendations for promotion of investments - capacity and institutional strategy (action plan) - associated administrative Minutes of meetings and Round Table discussions Progress Report II Annex 1 - Logframe Page 4 of 8

44 Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions support needed - staff qualifications defined - services to be rendered - business plans and costbenefit analysis - Environmental impact assessment is prepared if relevant Masterplan (preliminary design) including - functional area description and layout concept - dimensioning for infrastructure and cargo handling equipment - adequate IT technologies Country by country implementation programme favourable to investments Communication plan is prepared including promotion of project activities (website, leaflets, press conferences, etc.) and coordination meetings with parallel Central Asia project are held Result PM (Adaptation to Final project dissemination is the Work Plan ) Successful held project implementation Progress Report II Annex 1 - Logframe Page 5 of 8

45 Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions Activities 01: Inception (adaptation to the work plan) A1: Traffic flow analysis and characterization of the nature and the condition of operating infrastructures and facilities within the network A2: Description of the main issues encountered by operators B1: Assistance in identifying and characterizing priority projects of logistics centres B2: Ranking the priority projects using multi-criteria analysis B3: Visit to the relevant logistics centres Inputs: Key experts: Team leader: 450 man days Other key experts: 800 man days Short-term experts: International experts: 1425 man days Local experts: 1890 man days Costs Fee budget on key experts and short-term experts Incidental expenditures verifications Inception activities level: Offices established Availability of counterpart staff to engage in meetings, project steering and working panels Timely response on Consultant s reports / requests by the beneficiaries Participation from the counterpart staff Activities A level Relevant data and supporting documents are made available to the project team Support and commitment from project partners Activities B level Full support and commitment from project partners Commitment to development of the selection criteria and acceptance of the indicators (including public support) by all involved counterparts Willingness and cooperation between various counterparts Commitment from stakeholders to regional interests, respect to transport demand and network principle, rather than to local preferences The stakeholders will participate Progress Report II Annex 1 - Logframe Page 6 of 8

46 Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions C1: Global description of the objectives and functions of the logistics centre C2: Identification of the major stakeholders C3: Possible site location C4: Preliminary design of the site C5: Preliminary design of the logistics (functional) areas C6: Business Plan for the site C7: Environmental impact assessment C8: Assessment of key qualifications required C9: Cost benefit analysis C10: Recommendations for the adapted public support C11: Communication and synergy within the networks of logistical centres along the actively in round tables on identification and appraisal of priority sites Measures to improve efficiency of the sector performance will be implemented Co-operation with neighbouring countries Activities C level The data is available and counterparts provide strong input for the package implementation on the sustainable basis Relevant data and supporting documents are made available to the project team Means and forms of possible public support to the projects is clearly formulated by the beneficiary countries Progress Report II Annex 1 - Logframe Page 7 of 8

47 Intervention logic Objectively Verifiable Indicators Sources of Verification Assumptions TRACECA corridor PM 01 (Adaptation to the work plan): Quality assurance, risk management and conflict resolution PM 02: Updates of the Logframe PM 03: Project planning PM 04: Project reporting Activities PM level *This area of activities is not directly related to delivery of the technical results (A, B and C), so the Consultant will apply standard Project Management tools throughout project implementation. Pre-conditions: Relations between countries are not undergoing difficulties Common goals and priorities in the transport sector of the countries prevail Contradicting interests between the transport legal entities in the countries can be regulated Appropriate legal framework will be adapted or is in place National transport legislation is on the way to adaptation to international standards No delays in implementation of the parallel project in Central Asia to assure implementation of interdependent results of the on task C11 Communication and synergy within the network of the logistics centres along the TRACECA corridor Promotion by beneficiaries of logistics projects with commercial attractiveness for further investment, limited lobbying of unbankable projects Progress Report II Annex 1 - Logframe Page 8 of 8

48 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 2 List of meetings January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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50 Schedule of the Missions / Events in August January 2010 Institutions / Events / Persons Met Participants Issues Discussed / Investigated August 2009 United Kingdom Royal Haskoning, Peterborough Mr Peter Wright, Business Development Director October 2009 Ukraine EU Delegation to Ukraine, Kiev Mrs Svitlana Didkivska, Transport Sector Manager, Delegation of the European Union to Ukraine German Embassy to Ukraine, Kiev Mrs Catalina Cullas, Counsellor of Embassy, Head of Economic Department, German Embassy to Ukraine Mr Bodo Roessig Mr Andreas Schoen Mr Hannes Rueger Mr Andreas Schoen Mr Hannes Rueger Master plan for the new Port in Alyat/Azerbaijan Road and rail connection of the port Cargo to be handled Geographical survey Infrastructure development Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Management of EU transport projects in Ukraine Offered support and general information from EU Delegation about on-going Ukrainian transport projects Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects ILC project related activities in Ukraine Progress Report Il Annex 2 List of meetings Page 1 of 11

51 Institutions / Events / Persons Met Participants Issues Discussed / Investigated Boryspil Airport Commercial Park, Kiev region Ms Svetlana Besarab, CFO, BFgroup Ms Yanina Prokhorenko, Project Coordinator, BFgroup Euroterminal, Odessa Dr Armin Gewiese Dr Michael Lampe Mr Hannes Rueger Mr Andreas Schoen Mr John Standingford Mrs Ulrike Doemeland Mrs Svetlana Margolit Mrs Olena Nevmerzhytska Established contacts between German Railways and Ukrainian government-owned company Ukrzaliznytsia Takeaway materials Overview of the ILC project status quo Overview of BACP project development Exchange of information General plan of the current BACP site situation to be prepared by the Consultant Ms Ludmila Varavva, Director, Euroterminal Mr Mikhail Kozyrev, Deputy Director, Euroterminal Mr Mikhail Vanenkov, Deputy Director on Commerce and Development, Euroterminal Mr Sergey Vanenkov, Deputy Director on Capital Construction, Euroterminal Mr Andrej Serov, General Director, Black Sea Lines Dr Armin Gewiese Dr Michael Lampe Mr Hannes Rueger Mr Andreas Schoen Mrs Ulrike Doemeland Mrs Svetlana Margolit Overview of the ILC project status quo Overview of Euroterminal project development Information request General plan of the current Euroterminal site situation to be prepared by the Consultant Progress Report Il Annex 2 List of meetings Page 2 of 11

52 Institutions / Events / Persons Met Participants Issues Discussed / Investigated Boryspil Airport Commercial Park, Kiev region Mr Olexiy Tkachenko, Head of Marketing Department, S. E. Boryspil International Airport Moldova Dr Armin Gewiese Dr Michael Lampe Mr Hannes Rueger Mr Andreas Schoen Mrs Ulrike Doemeland Mrs Svetlana Margolit Site visit of BACP area Current Situation S.E. International Airport Marculesti (IAM), Marculesti Mr Eduard Biriucov, National Secretary IGC TRACECA Mr Boris Muntean, Vice Director, IAM Mr Sergei Chobanu, General Manager, IAM Germany POLZUG Intermodal GmbH, Container Terminal Burchardkai, Hamburg Walter Schulze-Freyberg, Managing Director, POLZUG Marcel Sames, POLZUG Mr Andreas Schoen Mr Sergey Diakov Mr Bodo Roessig Brief overview of the project Overview of IAM Current situation Development plans Project situation in Georgia An Intermodal operator (Block train operator) in Georgia Study tour Further steps to be taken Progress Report Il Annex 2 List of meetings Page 3 of 11

53 November 2009 Ukraine Institutions / Events / Persons Met Participants Issues Discussed / Investigated South-West Railways, Kiev Mr Vladimir Tyagulskyi, Chief Engineer, South- West Railways Mr Vladimir Pashchenko, Deputy Chief Engineer, South-West Railways Euroterminal, Odessa Mr Hannes Rueger Mrs Olena Nevmerzhytska Ms Yulia Akhtonska Overview of the ILC project status quo Status quo of planned railway link to BACP Development plans Information request Ms Ludmila Varavva, Director, Euroterminal Mr Mikhail Kozyrev, Deputy Director, Euroterminal Mr Mikhail Vanenkov, Deputy Director on Commerce and Development, Euroterminal Panalpina World Transport Ltd., Kiev Mr Levan Merkviladze, Head of Business Development Ukraine, Panalpina Mr Hannes Rueger Ms Yulia Akhtonska Mr Andreas Schoen Mr Hannes Rueger Ms Inna Pokydko CAPEX and OPEX Specification of warehousing categories Exchange of information and further steps to be taken Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Overview and core activities of Panalpina Development plans Main bottlenecks of business development in Ukraine Exchange of information and further steps to be taken Progress Report Il Annex 2 List of meetings Page 4 of 11

54 Institutions / Events / Persons Met Participants Issues Discussed / Investigated Transco Ukraine GmbH., Kiev Mr Viktor Nesterov, Director, Transco Ukraine GmbH. Kuehne & Nagel, Gostomel, Kiev region Mr Victor Shkarban, National Manager, Kuehne & Nagel Rhenus Revival Ltd., Obukhiv, Kiev region Mr Gleb Akchurin, Managing Director, Rhenus Revival Ltd. Mr Boris Bondarev, Head of Freight-Forwarding Department, Rhenus Revival Ltd. Railway Department Odessa Region, Odessa Mr Gregory Boyko, Deputy Chief Engineer of Odessa Railway Mr Ivan Kaniniev, Deputy Chief of Technical Services of Odessa Railway Mr Andreas Schoen Mr Hannes Rueger Mr John Standingford Mr Hannes Rueger Ms Yulia Akhtonska Mr Hannes Rueger Mr Hannes Rueger Ms Yulia Akhtonska Overview of the ILC project status quo Overview and core activities of the Company Development plans Silk Road Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Impact of crisis on transport volumes Interest and specific needs of the company in the future ILC at BACP and Euroterminal site Development plans Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Overview and core activities of Rhenus Revival Exchange of information and further steps to be taken Introduction and brief overview of Railway Institute Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Status quo of planned future railway link to Euroterminal Exchange of information and further steps to be taken Progress Report Il Annex 2 List of meetings Page 5 of 11

55 Institutions / Events / Persons Met Participants Issues Discussed / Investigated Mr Vladimir Jasinski, Chief Assistant on Safety of Odessa Railway Mr Vitali Hahalin, Deputy Head of Commercial Operations and Marketing of Odessa Railway Mrs Tatiana Bison, Head of Technical Department of Odessa Railway Transport Directorate Mr Mikhail Kozyrev, Deputy Director, Euroterminal Mr Mikhail Vanenkov, Deputy Director on Commerce and Development, Euroterminal December 2009 Ukraine Kimberly-Clark Ukraine, Kiev Ms Alla Provotorova, Logistics and Customer Service Manager, Kimberly-Clark Ukraine Mr Hannes Rueger Mr John Standingford Ms Yulia Akhtonska Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Overview and core activities of Kimberly-Clark Ukraine Development plans Interest and specific needs of the company in the future ILC at BACP and Euroterminal site Progress Report Il Annex 2 List of meetings Page 6 of 11

56 Institutions / Events / Persons Met Participants Issues Discussed / Investigated IFC (International Finance Corporation) World Bank Group, Kiev Ms Alona Ponomareva, CFA, Principal Investment Officer, IFC Ms Ielizaveta Zhuravska, Investment Analyst, IFC State Customs Service of Ukraine, Kiev Mr Andreas Schoen Mrs Olena Nevmerzhytska Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects IFC activities Priority subjects for IFC financing Future cooperation Mr Oleg Bratashov, Deputy Head of the Control for Cargo Moving Department, State Customs Service of Ukraine Ms Yulia Davydenko, Chief Inspector of the Department of Customs Control Organisation, State Customs Service of Ukraine Ms Viktoria Voznyuk, Chief Inspector of the Department of Customs Control Organisation, State Customs Service of Ukraine Mr Evgen Boiko, Chief Inspector of the International Activities Department, State Customs Service of Ukraine Mr Andreas Schoen Mr John Standingford Mrs Olena Nevmerzhytska Ms Yulia Akhtonskaya Introduction and project overview Required number of staff, technical characteristics and equipment for ILC State Customs Service and Regional Customs Responsibility Legislative documents Future cooperation Progress Report Il Annex 2 List of meetings Page 7 of 11

57 January 2010 Ukraine Institutions / Events / Persons Met Participants Issues Discussed / Investigated Auchan Group, Kiev Mr Christian Guegan, Logistic Director, Auchan Group Ms Irina Kolomiets, Deputy General Manager, Smart Logistic Group Ukraine Mr Uwe Sorge, General Director, Smart Logistic Group Ukraine Association of exporters and importers «ZED» Ltd, Kiev Mr Sergey Swistil, Head of the Council, «ZED» Ltd. Ms Irina Kolomiets, Deputy General Manager, Smart Logistic Group Ukraine Mr Uwe Sorge, General Director, Smart Logistic Group Ukraine Mr Hannes Rueger Mr Hannes Rueger Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Impact of crisis on transport volumes Interest and specific needs of the company in the future ILC at BACP and Euroterminal site Development plans Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Remarks for the future ILC at BACP and Euroterminal site Further support and cooperation Progress Report Il Annex 2 List of meetings Page 8 of 11

58 Institutions / Events / Persons Met Participants Issues Discussed / Investigated BILLA-Ukraine, Kiev Mr Wojciech Czernek, CEO, BILLA-Ukraine Ms Irina Kolomiets, Deputy General Manager, Smart Logistic Group Ukraine Mr Uwe Sorge, General Director, Smart Logistic Group Ukraine CMA CGM Odessa Shipping Agencies Ukraine, Mr Alexander Shechkin, General Manager Mr Valentin Zhuchenko, Commercial Manager Mr Ivan Khandus, Assistent Commerce and Development, Euroterminal Express Ltd, Odessa Mr Alexander Opanchuk, Director Mr Ivan Khandus, Assistent Commerce and Development, Euroterminal Euroterminal, Odessa Mr Mikhail Vanenkov, Deputy Director on Mr Hannes Rueger Dr Armin Gewiese Mr Hannes Rueger Mrs Ulrike Doemeland Dr Armin Gewiese Mr Hannes Rueger Mrs Ulrike Doemeland Dr Armin Gewiese Mr Hannes Rueger Mrs Ulrike Doemeland Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Interest and specific needs of the company in the future ILC at BACP and Euroterminal site Development plans Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Impact of crisis on transport volumes Interest and specific needs of the company in the future ILC at BACP and Euroterminal site Development plans Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects Impact of crisis on transport volumes General interest of the company in the future ILC at BACP and Euroterminal site Overview of the ILC project status quo Further approach coordination Information request Progress Report Il Annex 2 List of meetings Page 9 of 11

59 Institutions / Events / Persons Met Participants Issues Discussed / Investigated Commerce and Development Mr Ivan Khandus, Assistent Commerce and Development HPC Ukraine, Odessa Mr Dirk Battermann, General Director Mr Mikhail Vanenkov, Deputy Director on Commerce and Development, Euroterminal Boryspil Airport Commercial Park, Kiev region Mr Mykhailo Blyznyuk, Commercial Director, BFgroup Moldova TRACECA National Secretariat in Moldova, Chisinau Mr Eduard Biriucov, TRACECA National Secretary Mr Boris Muntean, Deputy Director, International Airport Marculesti Mrs Ulrike Doemeland Dr Armin Gewiese Mr Hannes Rueger Dr Armin Gewiese Mr Hannes Rueger Mr Andreas Schoen Mrs Ulrike Doemeland Mr Andreas Schoen Mr Sergey Diakov Overview of the ILC project status quo Further approach coordination Overview of the ILC project status quo Coordination of technical planning Further approach coordination Expert mission to Moldova Data collection for business planning The position of the Government of Moldova about the project Future development of Free Economic Zone Progress Report Il Annex 2 List of meetings Page 10 of 11

60 Institutions / Events / Persons Met Participants Issues Discussed / Investigated S.E. International Airport Marculesti (IAM), Marculesti Mr Sergiu Ciobanu, General Manager, IAM Mr Boris Muntean, Vice Director, IAM Mr Veaceslav Frunce, OPS Manager, IAM Russian Federation Dr Armin Gewiese Mr Hannes Rueger Mrs Ulrike Doemeland Ms Yulia Akhtonska Status quo IAM situation and development Overview of the ILC project status quo Site visit Further approach coordination IFC (International Finance Corporation) World Bank Group, Moscow Mr Sergey Mytarev, Senior Investment Officer, IFC Mr Andreas Schoen Project status and objectives of the phase C - preparation of the feasibility studies for the selected projects IFC activities Future cooperation Progress Report Il Annex 2 List of meetings Page 11 of 11

61 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report ІI Annex 3 Introduction and Methodology January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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63 TABLE OF CONTENTS 1 INTRODUCTION AND OVERVIEW TRACECA NETWORK EFFECTS AND SYNERGIES SYNERGIES AND POSITIVE EFFECTS OF THE ILC NETWORK INTERCONNECTIONS WITH THE TRANS-EUROPEAN TRANSPORT NETWORK (TEN-T) PAN-EUROPEAN TRANSPORT CORRIDORS AND THE TEN-T: SYNERGIES WITH LOGISTICS HUBS IN ROMANIA, BULGARIA AND TURKEY LINKS WITH THE ASIAN TRACECA COUNTRIES METHODOLOGY AND APPROACH IDENTIFICATION OF MAJOR STAKEHOLDERS AND DEMANDS FUNCTIONAL DESCRIPTION AND CONCEPT SOCIO-ECONOMIC IMPACT OVERVIEW MASTER PLAN DESCRIPTION AND PRELIMINARY LAYOUT ENVIRONMENTAL IMPACT ASSESSMENT BUSINESS PLANS AND COST-BENEFIT ANALYSES Cargo Operating Expenditures (Opex) Revenue Financing Plans Economic Benefits Output: Business Plans Output: Cost-Benefit Analyses LIST OF FIGURES Figure 1: Overview of ILC locations and related TRACECA routes... 4 Figure 2: The transnational transport priority axes... 6 Figure 3: Cross Section Example Container Transhipment Module Figure 4: Master Plan Layout Example (extract) LIST OF TABLES Table 1: Socio-Economic Impacts and Their Relative Signifance at Varous Levels Progress Report ІI Annex 3 Introduction and Methodology Page 1 of 22

64 LIST OF ABBREVIATIONS BACP BP BISTP Boryspil Airport Commerce Park (Kiev, Ukraine) Business Plan Baku International Sea Trading Port (Azerbaijan) BSEC Black Sea Economic Cooperation (a grouping of 11 countries: this project s 8 beneficiary countries plus Albania, Greece and Russia) Capex CBA CCS EIA EIRR FEMI FIAM FIRR GDP GFC IFI ILC IT MIRR MOS NPV Opex PPP SME TEN-T TRACECA Capital expenditure Cost-Benefit Analysis Communication and Control Systems Environmental Impact Assessment Economic Internal rate of Return Financial and Economic Model for ILCs Free International Airport Marculesti (Moldova) Financial Internal Rate of Return Gross Domestic Product (aggregate value-added within a national or regional economy, usually expressed on an annual basis in terms of the local currency or an international currency such as US dollars or Euros; valued at either current or constant prices; with or without adjustment to purchasing power parity which takes account of the general price level compared to that in the USA) Global Financial Crisis International Financial Institution International Logistics Centre Information Technology Modified Internal Rate of Return Motorway(s) Of the Sea Net Present Value Operating expenditure Public-Private Partnership. (The same abbreviation is used for Purchasing Power Parity, but not in this document.) Small or Medium-sized Enterprise Trans-European Network - Transport TRAnsport Corridor: Europe Caucasus Asia Page 2 of 22 Annex 3 Introduction and Methodology Progress Report IІ

65 1 INTRODUCTION AND OVERVIEW As a result of the Phase A and B of the project, six sites have been proposed in the previous Progress Report I in the five direct beneficiary countries for possible development of international logistics centres (ILCs). Each ILC constitutes a proposed project, which will be elaborated and appraised during the remainder of Phase C of this study. The purpose of this annex is to act as a general preface to each of the site-specific annexes, chiefly with regard to: The network-wide context that all the proposed projects share. Methodology and approach. A separate annex is being prepared for each selected ILC site: Annexes 4 9. They will comprise the following components: Description of the current situation in the national and regional economy, and in the logistics market. Identification of major stakeholders and their interests. Status and legal framework for site development. TRACECA network effects and synergies. Functional description of the proposed project. Socio-economic overview. Master plan and preliminary layout. Assessment of skill requirements and the local labour market. Environmental impact assessment (EIA). Business plan (BP). Cost-benefit analysis (CBA). Recommendations for public support. Supporting materials: site layout, maps, tables, lists. The first components are presented in Annexes 4 9 to this report, depending on if and when approval of a specific site has been obtained and subject to progressive addition and refinement. For the sites in Ukraine, where approval has been obtained in September 2009, work is under way on further components. During this reporting period, approval has been obtained from the beneficiary countries for the following sites: Azerbaijan: An area within the re-located Baku International Sea Trading Port (BISTP) at Alyat, some 70km south of Baku city. Moldova: Marculesti Free International Airport Ukraine (Kiev): Boryspil Airport Commerce Park (BACP). Ukraine (Odessa): Dry Port Euroterminal. In Armenia a site in Yerevan has yet to be selected by the Government from the shortlist of two sites that were subjected to multi-criteria analysis in Phase B of this study. Progress Report ІI Annex 3 Introduction and Methodology Page 3 of 22

66 At the request of the Government of Moldova an additional site has been subjected to multicriteria analysis, as a further step towards possible selection: Moldova: Free International Airport Marculesti (FIAM) - located near Floresti city, 28km east of Balti city and 150km north of Chisinau. 1 The Government of Georgia indicated that a site in the vicinity of Tbilisi airport would be supported by the Government, but no specific site has been selected so far. 2 TRACECA NETWORK EFFECTS AND SYNERGIES Introduction The location of the six sites proposed for development of international logistics centres (ILCs) and their integration into major TRACECA road, rail and maritime network is shown in the overview map below (Figure 1). Figure 1: Overview of ILC locations and related TRACECA routes Figure 1 illustrates the particular importance of the Black Sea and Caspian Sea maritime routes for the transport links between Caucasus and Europe and between Caucasus and Central Asia, respectively. 1 Annex 10 is prepared for Moldova to present the MCA-micro findings for the newly nominated site at Free International Airport Marculesti Page 4 of 22 Annex 3 Introduction and Methodology Progress Report IІ

67 2.1 Synergies and Positive Effects of the ILC Network On the macroeconomic level, establishing an ILC in each of the beneficiary countries (two ILCs in Ukraine) would enhance trade connections between these countries. In addition, transit cargo flows to/from the Central Asian TRACECA countries (Turkmenistan, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan), to/from Turkey, Romania and Bulgaria, and to/from other EU countries has a potential to improve. On the microeconomic level, in opposite to developing individual logistics solutions on a company level and spreading its activities between several competing terminals, a settlement at ILC or using its services will be able to offer better and more cost-efficient logistic solutions, thus providing added value to the individual companies and industry sector as a whole. Each ILC deems to function as a local and regional distribution centre for commodities. The ILC will also include bonded warehouse facilities and customs clearance. It will offer the consolidation of goods, notably carried in unit loads such as containers and semi-trailers, intermodality in the form of interchange between road, rail, inland waterway and sea, and a range of commercial synergies. In addition the network synergies are expected. As an example, a relatively small ILC (e.g. in Yerevan) could benefit from an improved access to a larger ILC such as the one in Tbilisi for further distribution to the east and to the west in the TRACECA corridor. The ILC will also be able to offer advice to the individual users (import-export trading companies, forwarders, shipping companies, commercial transport operators etc.), and to provide a cost-effective common database and information system for individual companies. Basic preconditions for exploiting the synergies and potential benefits are being promoted by TRACECA countries. A number of infrastructure investments and policy measures are being prioritised or implemented as part of the transport strategy for each country, in order to ensure a multimodal network of high quality road, rail and maritime links. To this extent it is important that the logistics centre development is envisaged in transport strategies and policies as infrastructure improvement measure facilitating the multimodality. 2.2 Interconnections with the Trans-European Transport Network (TEN-T) In 2007, the European Commission proposed developing the following five transnational and multimodal transport priority axes with a view to the extension of the TEN-T to neighbouring countries: - Motorways of the Seas - Northern axis - Central axis - South-eastern axis - South-western axis. The five corridors can be seen on the following map (Figure 2). Progress Report ІI Annex 3 Introduction and Methodology Page 5 of 22

68 Figure 2: The transnational transport priority axes The Motorways of the Seas (MOS) and the central and south-eastern axes are of particular relevance to the connection between EU and the TRACECA countries. The Motorways of the Seas are envisaged to be extended to the Black Sea and the Caspian Sea. At the Caspian Sea the most important ports are Baku/Alyat, Turkmenbashi and Aktau, and the access to the Volgograd-Astrakhan inland waterway. Along the Black Sea coast, the ports serving freight flows in the TRACECA corridor are: Poti/Batumi in Georgia; Odessa/IIyichevsk in Ukraine; the Danube outlet and Constanta in Romania; Varna and Burgas in Bulgaria; Istanbul, Zonguldak and Samsun in Turkey; and Novorossiysk and the Volga/Don inland waterway outlet in the Russian Federation. As to the central axis, it is linking the central part of the EU to Ukraine and the Black Sea, and through the inland waterway connection via Russia (Don/Volga) to the Caspian Sea. This axis also includes several road and railway routes linking Ukraine with ports, such as between Kiev and Odessa/IIyichevsk, and with neighbouring countries and the EU. Chisinau in Moldova is located close to the central axis as well, and has got access to the Danube River (at Giurgiulesti). The south-eastern axis connects via Balkan and Bulgaria with Turkey including its major Black Sea ports. This axis is further extended to Poti/Batumi and Tbilisi in Georgia, to Yerevan in Armenia, and to Baku in Azerbaijan. A joint declaration in January 2005 of the Black Sea Economic Cooperation (BSEC), which includes all the European and Caucasian TRACECA countries together with Albania, Greece, Russia and Serbia, stressed the importance of the Euro-Asian transport routes, including the maritime routes across the Black Sea and the Caspian Sea, in order to make transport flows Page 6 of 22 Annex 3 Introduction and Methodology Progress Report IІ

69 more efficient through intermodality and interoperability, and facilitating border crossing procedures. 2.3 Pan-European transport corridors and the TEN-T: A second Pan-European transport conference in Crete (March 1994) defined ten Pan-European transport corridors as routes in Central and Eastern Europe that required major investments in the medium term. A third conference in Helsinki (in 1997) elaborated on these corridors. Of particular interest to the ILC sites in Ukraine are the Corridor No 3, No 5 and No 9 (including a connection to Odessa). Romania and Bulgaria are connected with Corridor No 4, No 7 (which consists of the Danube River inland waterway), and No 8 (leading to Varna and Burgas). Corridor No 4 is extended to Turkey (Istanbul). The Pan-European transport corridors have been redefined in the form of the above mentioned five transport priority axes. Being EU Member States, Romania and Bulgaria are now covered by the TEN-T. The axes and projects of the trans-european transport network (TEN-T), which goes via Romania and Bulgaria are: The Rhine/Meuse-Main-Danube inland waterway (TEN-T project No 18) which connects with Constanta at the Black Sea coast of Romania and flows into the Black Sea at the border between Ukraine and Romania (at Sulina). The railway axis Athens-Sofia-Budapest-Wien-Prag-Nuernberg/Dresden (project No 22), which connects Budapest with Sofia and Burgas in Bulgaria and with Bucharest and Constanta in Romania. An improved railway link between Bulgaria and Istanbul/Derince at the Bosporus is planned. The motorway axis Igoumenitsa/Patras-Athens-Sofia-Budapest (project No 7), which connects Budapest with Bucharest and Constanta in Romania, and with Sofia in Bulgaria. The part of the Motorways of the Sea (project No 21) in the eastern Mediterranean could conveniently be extended to Istanbul and through the Bosporus Strait to the Black Sea. Some of the Black Sea ports and the Turkish TRACECA ports at Marmara (Bandirma and Tekirdag) could offer maritime links with Mediterranean EU countries. 2.4 Synergies with Logistics Hubs in Romania, Bulgaria and Turkey The ILCs located in Ukraine and Moldova will be able to exploit the geographical proximity to the logistics hubs and TEN-T links in Romania and Bulgaria. As to Georgia, Armenia and Azerbaijan, the Black Sea ports of Constanta, Varna and Burgas are of particular importance for access to the European market, and being served by ferry routes via Poti/Batumi. The road and rail connections through Turkey to Istanbul and/or via the Turkish Black Sea ports of Samsun and Zonguldak could serve as alternative routes for Azerbaijan and Armenia via Georgia, and eventually via direct connections between Armenia and Turkey. 2.5 Links with the Asian TRACECA Countries The five Central Asia TRACECA countries are Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan. In 2009, the Iran has officially joined the TRACECA corridor with ratification of the basic multilateral agreement. The deep sea ports of Iran, and its integration into the North-South corridor bid opportunities for regional cooperation and attract additional traffic. With Iran s accession the corridor logistics possibilities will be expanded. There will be an additional Progress Report ІI Annex 3 Introduction and Methodology Page 7 of 22

70 competitive route complementing the Black Sea maritime link, i.e. Bulgaria-Turkey-Iran land corridor which offers an access from Europe's to Asia. The freight flows to and from the Asian part of TRACECA are presently served via the Ro-Ro and rail ferry routes across the Caspian Sea between the port of Baku (expected to be moved to the new port at Alyat) and the ports of Turkmenbashi in Turkmenistan and Aktau in Kazakhstan. As already mentioned, the road and railway routes between Tbilisi and Baku that are serving this traffic is a section in the south-eastern axis of the five priority transport axes proposed by the European Commission. Kazakhstan represents the cornerstone for regional cooperation in Central Asia, as it is estimated to account for two-thirds of the GDP for the whole central Asian region. The transport strategy of the Government of Kazakhstan envisages including the development of the main maritime ports at the Caspian Sea coast. The Aktau port has become increasingly important node of transport, and the transport strategy of Kazakhstan also includes planning of a future development of Kuryk and Bautino ports. In Turkmenistan, the port of Turkmenbashi is considered a potential transport hub within the TRACECA Corridor. It is closely linked to economic growth, not only in Turkmenistan, but also in a wider region. Except for oil and gas products, the growing Gross Domestic Product (GDP) in the region is envisaged to boost the demand for general cargo transport. 3 METHODOLOGY AND APPROACH The project team s methodology and approach for the Tasks C1 C7 and C9 of Phase C: Task C1 Global description of the objectives and functions of the logistics centre Task C2 Identification of major stakeholders Task C3 Possible site location Task C4 Preliminary design of the site Task C5 Preliminary design of the logistics areas Task C6 Business plan of the site Task C7 Environmental impact assessment Task C9 Cost benefit analysis is generally described in the following Chapters Identification of Major Stakeholders and Demands The further preparation of the task related studies for each selected site in Phase C is based on a sound stakeholder analysis involving representatives and decision makers from the public sector as well as the private sector. The main objective is to measure the likely degree of involvement of each potential partner and investor. This includes the further identification and specification of types of services which the stakeholders expect to be present at the logistic centre. By involving major stakeholders in the process from the beginning of the project, a high degree of local participation is secured and the risk of future discrepancies can be kept at a lower level than without local participation. So far applicable for each selected site a stakeholder group is formed in order to obtain the best achievable results. These stakeholder groups include land owners, responsible contact persons from the public sector (e.g. local administration and municipality, government agencies and ministries, banks and financing institutions, railways, customs) as well as from the national and international private sector (e.g. freight forwarding associations, logistics service providers, Page 8 of 22 Annex 3 Introduction and Methodology Progress Report IІ

71 terminal operators, transport companies, industrial and commercial companies, potential investors). The identification of major stakeholders and demands in Task C2 is closely related to the stakeholder analysis and interviews undertaken in Tasks B1 and B2 of Phase B. The following documents are used for coordination, update and completion with respect to each selected site: List with initial overview of local and international major stakeholders and potential partners Interview guidelines for Logistics Service Providers and Freight Forwarders and Industrial and Commercial Enterprises Checklists for required information and data for Land Owner, Public Sector and Private Sector The Consultant has used the following site-related approach to the identification of major stakeholders and their demands: Review of records of earlier site visits and meetings to identify stakeholders for more detailed consultations. Arrangement and organisation of site visits and meetings with potential stakeholders and contact persons of the public and private sector Preparation for data collection by involved local experts Site visits and meetings with potential stakeholders and contact persons of the public and private sector Follow up and further completion of data collection Analysis, aggregation and evaluation of collected data Discussion and final coordination of the evaluation results with potential stakeholders The Consultant is using structured interview guidelines and checklists to evaluate the degree of involvement of a stakeholder and to assess the possible impact for the establishment of the logistics centre. The main deliverables and results of this exercise will be: Overview of major stakeholders and potential partners Overview of level of interest in a future ILC by the private sector, e.g. No interest in the project, At present no interest, but this may change in future. Interest in co-operation and utilisation of the future ILC services. Interest in settlement or investment in the future ILC. Overview of potential degree of involvement of each major stakeholder and potential partner; conclusions for framework and opportunities for PPP. Overview of public and private sector demand and expectations (range of provided facilities, functions and logistics or non-logistics services, leasing of parcels etc.) Estimation of potential ILC market share for main commodity groups in terms of cargo volumes (inbound, outbound, transit) Identification of site-related value-added logistics and non-logistics activities In summary the intention is to specify and confirm stakeholder interest in the individual selected sites, based on a sound analysis, so as to facilitate the further steps for implementing the findings of the study. Progress Report ІI Annex 3 Introduction and Methodology Page 9 of 22

72 3.2 Functional Description and Concept The functional description and concept (Activity C1a and Task C3) for each envisaged logistics centre is based on a stakeholder analysis prepared in Task C2. The intention and general benefits of each future logistics centre and the related logistics facilities are described. The functional description and concept forms the base for the further master plan elaboration and project steps. In general the functional description and concept comprise the following main topics and subchapters for each selected site: General Objectives Logistics Trends and Development Vision Cargo Volumes Planning Guidelines and Potential Synergies Functional Areas and Main Transport Infrastructure Functional Concept and Intermodal Operations The General Objectives present the future development opportunities and potential of the site to be developed as a part of the TRACECA network. The overall development concept is briefly described. Furthermore, the stakeholders interests and potential synergy effects with other regional logistics centres are outlined. The subchapter Logistics Trends and Development Vision includes the description of relevant international and regional logistics trends. Their main impacts and outcomes with respect to a future ILC have been identified. Based on these results the overall logistics potentials have been derived and specified. Sufficient cargo volumes of ILC-suitable goods are a fundamental precondition for the establishment of a future ILC. The subchapter Cargo Volumes provides an estimation of potential volume and market share. The analysis of cargo potential presented in Progress Report I has shown which the share of internationally traded goods would be appropriate for logistics centres on the country level and on the level of the macro region concerned. Official national trade and transport statistics (base year 2007), disaggregated by commodity group, formed the basis for estimating cargo potential for each metropolitan region and hence for determining the scale each future ILC, within the limits of available land plot. Based on the overall cargo potential analysis and stakeholder interviews an estimation of potential and projected share of cargo volumes in in- and outbound for each future ILC has been prepared. The main commodities in export, import and transit traffic are identified. Furthermore domestic cargo volumes in the ILC catchment area and between main economic regions are outlined, subject to data availability. A further basis for the estimation of a preliminary quantity structure and cargo projection is the current available area potential for the future development of the ILC. To enable a conclusion and projection about area productivity in terms of throughput capacity (t/ha per day) for the final stage of development empirical data of representative logistics facilities and industries from European ILCs are to be considered. The results of both approaches for the first estimation of cargo volumes are compared as a reality check. Page 10 of 22 Annex 3 Introduction and Methodology Progress Report IІ

73 The preparation of the functional concept requires the specification of Planning Guidelines and Potential Synergies. Thereby the main site requirements and planning guidelines for the future ILC have been considered, such as: Site requirements Provision of adequate land plots for small, medium and large logistics companies Easily accessible road and rail connection to the site and individual plots Unobstructed development potential of the site, with no special construction requirements Unlimited accessibility (24h operation, 7 days a week) Possibility for land plots to be made accessible and construction to commence in a shortterm (1-3 years) and mid-term (3-5 years) perspective Planning guidelines Settlement of logistics-orientated companies of different size categories Integration of existing suitable transport infrastructure and facilities Realization of a functional, urban planning and ecologically compatible overall concept Development of feasible functional modules/components and their integration into further expansion stages The subchapter Functional Areas and Main Transport Infrastructure includes the definition of functional areas based on a qualitative assessment of development potential as well as the identified needs and interests of major stakeholders and partners. Based on the status quo of the general logistics and transport framework, infrastructure and logistics market a qualitative assessment of the future development potentials is made. Further definition of functional areas and concept will consider and focus on the development potentials that are identified as the most promising. Accordingly the identified needs and interests of the major stakeholders and partners in the public and private sectors are included, such as: Transport, handling, storage and warehousing facilities Logistics and value-added logistics services Non-logistics services Other service facilities Based on this assessment, and considering future logistics trends in general, the following three functional areas and categories with their specific area ratio have been defined for each future ILC (so far applicable): Logistics Services Container Terminal Logistics intensive Industrial and Trade The preparation of the Functional Concept and Intermodal Operations includes all results of the previously described exercises. The basis for the development of the functional concept is the scaled general site plan, verified with the land owner or operator. This general site plan includes the land plot boundaries, adjacent land plots for optional expansion, existing infrastructure and facilities as well as projected transport connections. The available areas for future ILC development are marked. According to the defined area ratio the two functional areas logistics services and logistics intensive industrial and trade are marked. Furthermore the development axes of the internal transport infrastructure, access roads as well as road and rail Progress Report ІI Annex 3 Introduction and Methodology Page 11 of 22

74 connections to the overall transport network are defined and drawn. In addition the following main development requirements are outlined for each envisaged ILC: Need for new or expansion of existing access roads and junctions to the main roads Connections to the main railway network, The final stage of preparing the functional concept is the definition of extension phases as the base for the further master plan elaboration. In order to promote and attract intermodal transport of goods along the TRACECA network the possibilities for providing multimodal access have been outlined for each envisaged logistics centre. The functional description also is focused on the need to provide a high degree of interoperability, which should be consistent with European standards and quality performance. The main deliverables and results of the functional description and concept are: Summary of general objectives for the future site development Estimation of potential and projected share of cargo types and transport volumes Assessment of the site development potentials Specification of potential value added logistics and non-logistics activities Overview of site development possibilities and efforts Overview of potentials of site connectivity regarding TRACECA transport infrastructure and logistics network Overview of development and integration opportunities for intermodal operations and hubs to the benefit of the main stakeholders and potential partners Site layout with functional areas and main internal transport infrastructure and external access The further specification of functional modules and elaboration of the master plan are based on the described functional concept. 3.3 Socio-Economic Impact Overview The TOR requires that socio-economic impacts of the project should be underlined, at local level and at the level of the whole network. We interpret this to mean that the various socioeconomic impacts expected from each proposed project should be identified and discussed, but without any attempt to quantify them. From data collected and analysis performed, it is possible to identify several impacts. These are presented in Table 1 together with an indication of their relative significance at local, national and network levels. In some cases there is uncertainty about whether the net impact will be positive or negative, shown by +/. Page 12 of 22 Annex 3 Introduction and Methodology Progress Report IІ

75 Table 1: Socio-Economic Impacts and Their Relative Significance at Various Levels ILC Effect More efficient transport and logistics operations Strengthened and harmonized international network Socio-Economic Impact Savings for producers, consumers and others in the supply chain. Induced economic activity and consequent employment. Skills development higher-paid local jobs, increased consumption, reduced emigration. Enhanced competitiveness of nodes within the network vis-à-vis those outside. Increased competition leading to economic specialization within the network. Significance at Various Levels (positive or negative) Local National N e tw or k / +/ + Improved local tax base. ++ +/ Agglomeration of economic activity and population Net change in road construction and maintenance costs. Promotion of small/medium-sized enterprises through sharing of overheads. Clustering critical mass for higher-order economic activities, social services etc. +/ +/ Reduced congestion. + Reduced urban road traffic Modal shift away from road Environmental improvement. + Reduced incidence and severity of urban road accidents. + Net change in non-road transport infrastructure construction and maintenance costs Reduced emissions Reduced incidence and severity of highway accidents. + + The first column of the table shows the main expected effects of an ILC project: More efficient transport and logistics operations. This is the primary intent of all the proposed projects, to be achieved through a combination of scale, location, synergy and modal shift. In reality the other effects are dependent on this one. Cost savings will promote economic activity and employment. Strengthened and harmonized network. Reduced transport/logistics costs will force economic units within the network into closer competition with one another. So at local and national level there are likely to be both winners and losers. But collectively they will be more competitive vis-à-vis units outside the network. Progress Report ІI Annex 3 Introduction and Methodology Page 13 of 22

76 Agglomeration. The establishment of a large logistics centre, offering a range of high-level services, is expected to attract other businesses, workers and residents to the same area. This will mean reduction of economic activity, employment and population elsewhere or at least a slower growth rate elsewhere. However, it is likely that there will be an absolute gain from (a) a supportive environment in which SMEs can flourish; and (b) economies of scale allowing higher-order activities. Reduced urban road traffic. Typically, an ILC will be established at a peri-urban site. So it is expected that the volume of heavy vehicle traffic on urban streets will be reduced. Goods coming to the urban area will be transferred from large trucks or railcars to smaller delivery vehicles for urban distribution, resulting in time savings to other road users, reduced air pollution and better road safety. Modal shift. It is clear from the TOR and from EU policy statements that there is a strong desire to shift freight traffic off the roads. Intermodal facilities are an essential component of an ILC, and it is expected that many consignors will take the opportunity to use modes that are inherently cheaper than road for long-distance transport. Environmental and highway safety benefits will be partly offset by increased costs to provide alternative nonroad infrastructure which should be fully or partially recovered from users. Site-specific impacts are identified and their scale and incidence assessed. 3.4 Master Plan Description and Preliminary Layout The master plan description and preliminary design (Tasks C4 Preliminary Layout of the Site and C5 Preliminary Layout of the logistics areas ) for each envisaged logistics centre is based on a sound stakeholder analysis prepared in Task C2 as well as functional description and concept elaborated in Task C3. Due to the various degrees of maturity of the selected sites they have to be differentiated in so called Brownfield and Greenfield projects. Brownfield projects have some existing infrastructure and facilities, are still under construction or are partially in operation. For these projects optimal development plans for upgrading, modernisation and further expansion have been prepared considering the existing situation, efforts undertaken or investments planned. In the case of a Greenfield project (hence undeveloped area) the most optimal scenario has been prepared, based on European best practice and adapted to local conditions for the future development of a logistics centre. The preliminary design and development plan of the logistics centre also takes into account the regional planning framework conditions and technical standards in each of the beneficiary countries. The master plan description and preliminary design are prepared in parallel and in close coordination with the preparation of the business plan for each envisaged logistics centre. The master plan description and preliminary design comprises the following main topics and subchapters for each selected site: Land acquisition External and internal transport infrastructure Access to utility networks Overview of envisaged logistics and non-logistics services Specification and dimensioning of the functional modules Soil investigation programme Development stages and implementation plan Estimation of capital investment needs (Capex) Description of main logistics procedures and operations Organisational structure and operator model Page 14 of 22 Annex 3 Introduction and Methodology Progress Report IІ

77 Identification and calculation of required staff and workstations The Land Acquisition subchapter includes the identification of land owners of potential further extension areas or land plots crossed or otherwise affected by projected new external road or railway links. Where applicable in general the conditions and requirements for this land acquisition have been briefly described. The subchapter External and Internal Transport Infrastructure contains the specification, dimensioning and preliminary design of on- and off-site transport infrastructure. The elaboration has been done based on a projected traffic volume scenario and identified needs for the modernisation, upgrading or required new construction of transport infrastructure. This topic includes: External road and railway site access to the urban, regional and international transport network. External maritime link to the regional and international transport network. Internal road transport infrastructure with main axes and roads, traffic nodes, parking and other traffic areas and circulation plan. Internal railway transport infrastructure with main railway yards or facilities, tracks and switches. Configuration of entrance / exit gate system. General description of road and railway safety issues. Specification of required civil works (like bridges and ramps). The results are graphically presented in the Master Plan layout. The Access to Utility Networks subchapter includes an overview and analysis of the existing utility network and facilities (current installations) based on available documents and surveys. It also addresses the specification, dimensioning and preliminary design of the utility networks based on identified demands and needed capacities: Connection and interface points to water, energy and telecommunication networks Sewage water treatment facilities Current capacities as well as upgrade and development needs These results are also graphically presented in the Master Plan layout. The preparation of the master plan description and preliminary design is based on further specification of the future market demands and logistics and corresponding non-logistics services to be provided. To this end the identified market demands and needs of major private and public stakeholders are considered and presented. The Overview of Envisaged Logistics and Non- Logistics Services subchapter includes the following brief description, such as: Logistics services, such as intermodal transport and freight forwarding, transhipment rail-road, handling of intermodal loading units (container, semi-trailer, swap bodies), handling of oversized cargo (project cargo), container depot and service centre, open storage and warehousing services, bonded warehousing, picking and packing, labelling, customs clearance. Progress Report ІI Annex 3 Introduction and Methodology Page 15 of 22

78 Non-logistics services, such as general administration and management, real estate development and - facility management, acquisition and marketing, repair and maintenance of transport and handling equipment. The subchapter Specification and Dimensioning of the Functional Modules is prepared based on the defined functional areas in the functional description and concept (see also Chapter 3.2), the overview of envisaged logistics and non-logistics services and expected transport volumes and modal split for the main commodity groups. Based on identified demands and capacities the specification, dimensioning and alignment of the functional modules and required land plots comprise: Traffic infrastructure, such as parking and traffic areas for trucks, cars and handling equipment. Handling and transhipment facilities, such as rail-road container terminal and container depot, Roll-on/Roll-off. Stationary and mobile handling and transport equipment (types and amount). Storage and warehousing facilities, such as open and covered storage areas, general warehousing buildings, special warehousing buildings for temperature-controlled and hazardous goods, bonded warehousing. Administration and customs facilities. Other service facilities and areas, such as truck port with service station and restaurant. Information and communication systems network, such as management information system, communication and control systems (CCS) for truck guidance, gate process, combined transhipment module process. For each functional module the relevant key figures, main technical parameters, dimension and capacities as well as interfaces with each are described. In addition for selected functional modules specific layouts are prepared in the form of schemes, cross sections or top views so far applicable (see Figure 3). Page 16 of 22 Annex 3 Introduction and Methodology Progress Report IІ

79 Figure 3: Cross Section Example Container Transhipment Module Furthermore the results of the preliminary design also are graphically presented in the Master Plan layout. This Master Plan layout includes a graphical presentation of the external and internal transport infrastructure, the interface points and upgraded access to the utility network, the specific functional modules as well as stages of development and future expansion. Figure 4: Master Plan Layout Example (extract) The maps for the Master Plan layout are prepared in AutoCAD and mostly to scale 1:2,000. The description of the Soil Investigation Programme is based on the analysis of available soil and field survey data. This subchapter includes the following topics and results: Identification and specification of required soil properties for the envisaged infrastructure and superstructure. Progress Report ІI Annex 3 Introduction and Methodology Page 17 of 22

80 Specification of a subsequently soil investigation programme so far required. In the subchapter Development Stages and Implementation Plan implementation plan with development or expansion stages, an indicative time schedule and milestones considering local conditions and framework is determined for each envisaged logistics centre an. Furthermore a recommendation for the further approach and next steps including main measures and responsibilities is prepared. The stages of development are graphically presented in the Master Plan layout. The Estimation of Capital Investment Needs (Capex) subchapter is based on the specification and preliminary design of the external and internal transport infrastructure, the utility network, the specific functional modules and stages of development as presented in the Master Plan layout. Capex estimates are based on market orientated unit prices for the main required construction measures as well as defined facilities and equipment. The list of investment needs is structured in stages of development or future expansion with the main focus on: Construction site preparation. Transport infrastructure and utility network. Superstructure (buildings, storage and warehousing facilities, transhipment facilities). Handling and transport equipment. Miscellaneous (service facilities such as petrol station, fence). Engineering (surveying, planning and project management). The subchapter Description of Main Logistics Procedures and Operations includes: Terminal management and communication process including gate procedures (entrance / exit). Management and information process of internal transport, logistics processes and interfaces. Cargo management and control The Organisational Structure and Operator Model includes: Organisational structure with ownership and stakeholder relationships. Specification of suitable PPP-models The subchapter Identification and Calculation of Required Staff and Workplaces includes: Needed staff qualifications and skills. Time of operation. Calculation of required staff for administration and operation. Calculation of required workplaces for staff. The main deliverables and results of the master plan description and preliminary design are in general: General description of land acquisition conditions and requirements so far applicable. Description of required soil properties and specification of soil investigation programme so far required. Overview of future provided logistics and non-logistics services. Update of estimated future cargo volumes for inbound, outbound and transit traffic. Description of main logistics operations, procedures and internal interfaces. Page 18 of 22 Annex 3 Introduction and Methodology Progress Report IІ

81 Overview and specification of internal and external transport infrastructure. Overview and specification of required integration and interfaces to the utility network. Specification of storage, warehousing and transhipment facilities. Specification of administration and customs facilities. Overview and specification of commercial, industrial and other non-logistics facilities. Specification of required stationary and mobile equipment. Overview and identification of main Information system network. Overview, specification and dimensioning of functional modules. Layout Master Plan with expansion stages. Overview and specification of the organizational structure. Calculation of required staff for administration, management and operation. Preparation of implementation plan with time schedule and milestones. Overview and estimation of investment needs (capex) for infrastructure, superstructure and equipment The deliverables and results of the master plan description and preliminary design have been closely coordinated with the business plan and the cost-benefit analysis. Furthermore the master plan description and preliminary design will form the basis for the future detailed engineering and construction planning for each envisaged logistics centre. These subsequent detailed engineering and construction planning phases as well as the preparation of required tender documents will not be part of project. 3.5 Environmental Impact Assessment Methodology will be provided in the next Progress report. 3.6 Business Plans and Cost-Benefit Analyses Business plans (BPs) and cost-benefit analyses (CBAs) are prepared in parallel, using common input data and a common financial/economic model (FEMI = Financial and Economic Model for ILCs). Therefore the methodology for both is described in this section. The following broad approach has been adopted: For each site a BP is prepared showing the commercial performance of the project, disregarding the sources of capital or the ownership of profits; and also its profitability to the primary stakeholder (the ILC owner and/or operator) taking into account the likely conditions of external financing in the form of grants, soft loans and commercial loans. The BPs has a 10-year horizon. For each site a CBA is prepared. Project costs are the same as for the BP, subject to adjustment from financial to economic costs. Economic benefits will be quite different from BP revenues, however. The aim is to identify and quantify, as far as possible, the most significant cost and time savings accruing to all stakeholders and the community at large, together with an evaluation of social and environmental impacts. CBAs has a 20-year horizon Cargo The starting point is a projection of cargo throughput. An estimate is done for 2007 as the base year, just before the global financial crisis (GFC) dramatically reduced economic activity and trade throughout the region. The following procedure is being adopted: Progress Report ІI Annex 3 Introduction and Methodology Page 19 of 22

82 From international trade statistics, freight flows are identified that are likely candidates for ILC handling: mainly goods that are or have the potential to be containerised. An assessment is made of the proportion of such freight flows that originate in, are destined for or pass through the proposed ILC s catchment area. This is based on the catchment area s share of national GDP or income, adjusted to allow for the location s status as a transport/distribution hub for a wider region or for the country as a whole and cross-checked against whatever relevant data are available on actual cargo movements. Interviews are conducted with local stakeholders to identify domestic freight flows (so far available) and transit traffic. For projection purposes, cargo is categorized according to the following criteria: Facilities that will be required to handle and store it. Determinants of future growth. Regarding determinants of future growth, the main distinction is between: Consumer goods for which demand depends on income within the catchment areas. The Consultant terms these endogenous demand goods. Other goods for which demand is exogenous, depending on economic activity, export markets and inter-corridor competition for transit cargoes. For endogenous demand goods the FEMI model contains an algorithm that combines projected GDP growth; catchment share of national income (which may change over time); and income elasticity of demand (which may trend towards a mature market level over time). For exogenous demand goods there is heavy reliance on the opinions of stakeholders. To a large extent these opinions are reflecting expectations about recovery from the GFC, which is a matter for surmise and depends on global rather than national or local situations. In some cases there are specific projects or markets which generate demand for logistics services. FEMI provides for input in the form of growth rates at 5-yearly intervals, however derived. There are estimates of achievable market share, taking account of existing and potential competition; and capacity constraints will be applied between phased additions to ILC territory and facilities. The same cargo projections are used to prepare BPs and CBAs, and also as a basis for master planning Operating Expenditures (Opex) A total of 38 individual opex items have been identified, and each has been costed on the basis of operation of the ILC at its ultimate capacity. An estimate has been made of the proportion of each item that: Is fixed. Varies with the scale of investment (capex to date). Varies with cargo throughput. Consequently operating expenses can be modelled for each year of the appraisal period. As for capital expenditures, conversion factors will be applied to produce economic costs Revenue Revenue is expected to accrue to the ILC owner/operator in three forms: Rent from leasing space: open storage areas, warehousing, office premises etc. Page 20 of 22 Annex 3 Introduction and Methodology Progress Report IІ

83 Fees from core services: transhipment, open storage of containers, warehousing, picking/packing/labelling, container stripping/stuffing, customs clearance, etc. Ancillary services: facility management, IT services, equipment leasing, vehicle repair, marketing, logistics management, training etc. Through discussion with stakeholders and industry sources, and drawing on prior project experience, the Consultant estimates the proportions of space that should be leased or operated directly by the ILC owner/operator; and the achievable rentals per square metre. Similarly, estimates are made of the proportions of cargo for which various services will be required and the average fees per tonne. A simplified algorithm projects revenue from ancillary services on the basis of the ILC s overall activity Financing Plans Consultations are conducted with land-owners, potential investors, national and local governments, donors and lending agencies to formulate a realistic financing plan for each ILC. The model provides for: Equity contributions from shareholders in the company that will own/operate the ILC. Grants from governments and/or donor agencies (including the EU). Long-term loans, both soft loans from international financial institutions (IFIs) and commercial loans. It is expected that the first phase of development will be financed partially by grants and soft loans. Later phases may have larger contributions from shareholders, paid from profits. The FEMI model allows for up to six separate loans, each with distinct conditions (interest rate, up-front fee, commitment fee, grace period, repayment period) Economic Benefits It is easier to define and describe likely economic benefits than to quantify them. FEMI provides for the following benefits to be quantified: Transport cost savings: average per tonne of cargo throughput. Handling cost savings: average per tonne of cargo throughput. Transit time savings: average hours cargo value financial cost of working capital. Storage time savings: average days cargo value financial cost of working capital. Reduced cost of loss, damage and wastage: average percentage cargo value. Reduced external logistics costs resulting from modal shift: accidents, noise pollution, air pollution, climate change (CO 2 emissions valued as recommended in the EC Guide to CBA of Investment Projects), infrastructure investment/maintenance and congestion. The first five of these are straightforward in principle, although it may not be easy to find a reliable basis for quantification in all cases. There will be heavy reliance on information from the identified stakeholders, based on their practical experience. The TRACECA database provides a starting point for estimating average cargo values by commodity class. The sixth benefit (reduced external logistics costs) is potentially the most significant, but assigning monetary values to the various external cost components is problematic for the following reasons: Most of the research material on external costs has been produced by railway lobbyists. There is no reason to suspect bias, the case for favouring rail over road for environmental and other reasons being robust anyway. But it would be preferable to have results from entirely objective sources. Progress Report ІI Annex 3 Introduction and Methodology Page 21 of 22

84 By the same token, one must be wary of research material on congestion costs produced by the road construction lobby. Most studies present results as a range of values, in some cases a very wide range. This applies to the published results of research by the European Environment Agency for example. Over the appraisal period (to 2032) it is possible that changes in technology will significantly narrow the gap between road and rail with respect to CO 2 emissions per tonne-kilometre, but this cannot be predicted confidently. FEMI makes provision for emission parameters to change over time. Especially with respect to accidents, noise pollution, congestion and infrastructure costs it is difficult to estimate the benefit of small marginal changes in traffic volume. The search for relevant, reliable data continues. All data sources, estimates and assumptions will be stated clearly together with the results of the economic analysis Output: Business Plans Each BP is a comprehensive document designed to enable a potential investor or financier to decide whether to commit funds. The following structure is proposed: General description of the location, site and commercial rationale. Technical details of the site with a conceptual drawing of the proposed development. Discussion of legal, regulatory and procedural matters including land tenure, land use and site access. Assumptions about market size and share; costs; revenues; etc. Marketing strategy and plan. Operational plan, including a business model that defines relationships between stakeholders; management arrangements; equipment etc. Financial projections, including the financing plan, profit and loss statement, cash flow forecast, balance sheet and key performance indicators (FIRRs and NPVs). The model will be run for three economic growth scenarios; and sensitivity tests will be applied to show the effect of higher costs, lower benefits and slower growth on the key performance indicators Output: Cost-Benefit Analyses It is recognised that the CBAs will not have an identical readership. Therefore the basic description and rationale of each proposed project will have to be repeated. The cost estimates will be repeated too, with factoring to convert them to economic value. But the main focus will be the formulation of the without-project (or business-as-usual) case; and the consequent definition and quantification of benefits, leading to computation of standard performance indicators (EIRR, MIRR, NPV, switching values). It is expected that some donors/ifis may require a poverty impact analysis, so this is built into the FEMI model. Also built in is a risk analysis that produces a frequency distribution of NPVs, generated from 1,000 iterations in which costs and benefits are randomly varied within defined limits. The results will be presented in graphic form and as a set of percentile values. Page 22 of 22 Annex 3 Introduction and Methodology Progress Report IІ

85 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 4 Armenia Introduction and Current Situation January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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87 TABLE OF CONTENTS 1 INTRODUCTION AND CURRENT SITUATION TRACECA NETWORK EFFECTS AND SYNERGIES INTRODUCTION SYNERGY WITH OTHER ILCS IN THE EUROPEAN AND CAUCASIAN PARTS OF TRACECA INTERCONNECTIONS WITH EU COUNTRIES AND THE TEN-T LINKS WITH THE ASIAN TRACECA COUNTRIES SOCIO-ECONOMIC IMPACT OVERVIEW... 7 LIST OF FIGURES Figure 1: Road and railway routes connecting the Yerevan ILC with neighbouring countries... 4 Progress Report II Annex 4 Armenia: Introduction and Current Situation Page 1 of 8

88 LIST OF ABBREVIATIONS 3PL CSR CT ETF GDP HDI HPI IATA IDP IGR ILC ILO LFPR PID PPP SME TEU WD 3 rd Party Logistics Corporate Social Responsibility Container Terminal European Training Foundation Gross Domestic Product (aggregate value-added within a national or regional economy, usually expressed on an annual basis in terms of the local currency or an international currency such as US dollars or Euros; valued at either current or constant prices; with or without adjustment to purchasing power parity which takes account of the general price level compared to that in the USA) Human Development Index Human Poverty Index International Air Transport Association Internally Displaced Person Income Gap Ratio (a measure of poverty severity) International Logistics Centre International Labour Organisation (a United Nations agency) Labour Force Participation Ratio Project Information Document (a standard World Bank document) Purchasing Power Parity (ie adjusted for price differentials between the country in question and the USA) Small and Medium-sized Enterprise Twenty-foot Equivalent Unit (a 20-foot long container being the standard unit for measuring containerised traffic) Working Day Page 2 of 8 Annex 4 Armenia: Introduction and Current Situation Progress Report II

89 1 INTRODUCTION AND CURRENT SITUATION As a result of Phase B, the Apaven container terminal had been proposed as the most favourable site in Yerevan, the sites at Yerevan airport cargo terminal being assessed with a slightly lower score due to the missing railway access. Following the Progress Report 1, a specially called inter-ministerial commission has considered to provide a railway access to the Yerevan airport. This would change the basis site attributes in Armenia in favour of Yerevan airport. As no official confirmation has been obtained during the reporting period, only preliminary investigation (data collection concerning regional traffic flows, CAPEX, OPEX and revenue data) and analysis concerning the possible interaction of the site with other logistics centres in the region has been conducted. Upon confirmation of the government, the consultant will proceed with further evaluation of the site at the Yerevan airport. Additionally, first projections of the awaited benefits of the proposed ILC in Yerevan are presented in this report. 2 TRACECA NETWORK EFFECTS AND SYNERGIES 2.1 Introduction The urban, regional and national setting of the Yerevan ILC site, and its transport connections with neighbouring countries, is described in the Inception Report (ref. country report for Armenia) and Progress Report I (ref. Annexes 3 and 4). The location of the ILC (either Apaven Terminal or Yerevan airport) is close to the Yerevan International Airport in the south-western outskirts of Yerevan metropolitan area. The map below indicates the major existing and planned transport routes between the ILC in Yerevan and the neighbouring countries. Progress Report II Annex 4 Armenia: Introduction and Current Situation Page 3 of 8

90 Figure 1: Road and railway routes connecting the Yerevan ILC with neighbouring countries Both sites are well located for access to the national road network, but the eventual alignment of the planned bypass road will have to be considered. While the Apaven site has direct railway access, the direct distance of the Airport site to the trunk railway is approximately 2 km and an efficient railway link to the plot will need to be established. The government of Armenia considers to revival measures for the airport railway access. For the ILC in Yerevan to exploit the full potentials there is an urgent need to reduce the freight transport costs, which are currently very high in Armenia in comparison with neighbouring countries. The intention is also to include a free industrial zone on the territory of the airport site. This measure is under implementation by the Ministry of Economy. 2.2 Synergy with other ILCs in the European and Caucasian parts of TRACECA Existing international transport routes: The existing routes by road and railway between Yerevan and Georgia involve: the road route Yerevan-M3-Spitak-M6-Georgian border at Sadakhlo, and from there via E117 passing Marneuli to Tbilisi; the road route Yerevan-M3-Spitak, and from Spitak via M7 and M1 to the Georgian border at Bavra, and leading further on to Poti/Batumi via Akhalkalaki and to Tbilisi via Page 4 of 8 Annex 4 Armenia: Introduction and Current Situation Progress Report II

91 Akhalkalaki/Ninotsminda; an alternative western route between Yerevan and this Georgian border station follows M1 passing Gyumri; the existing rail route Yerevan-Armavir-Gyumri-Spitak-Vanadzor-Alaverdi-Georgian border; it follows the M6 road alignment from Spitak to the Georgian border and represents a considerable detour between Yerevan and the border crossing. The existing routes between Armenia and Azerbaijan are closed due to the conflict about Nagorno-Karabakh. The road and rail infrastructure consists of: the road route Yerevan-M2-Nakhichevan; the road route from Yerevan via M2 and M12 to Karabakh/Azerbaijan border, and from here via M1 in Azerbaijan to Alyat/Baku; the road route Yerevan-Hrazdan-Ijevan via M4 to the Azerian border, and from here via M1 to Alyat/Baku; the rail route from Yerevan through Nakhichevan and southern Armenia to the Azerian border, and from here to Alyat/Baku; the rail route Yerevan-Hrazdan-Dilijan-Ijevan to the Azerian border, and from here straight on to Alyat/Baku; The existing routes by road and rail between Yerevan and Turkey are presently closed, but they are envisaged to be opened some time in the near future, including the railway connection to Kars in Turkey. They involve: the road route from Yerevan via M1 to the border crossing with Turkey located approx. 15 km south-west of Gyumri, and with connection to E691 and E80 in Turkey; the rail route from Yerevan via Armavir to the border crossing with Turkey located approx. 15 km south-west of Gyumri. Planned upgrading of international transport routes: The Transport Strategy indicates that the north-south corridor between Georgia and Iran is vital, and a new construction and upgrading programme is being implemented for this corridor. Preparatory work for the first sections (Yerevan-Gumri) is underway. This will improve the existing road route, and in the longer term it will offer a new connection from Yerevan and the Sevan area to Iran. Among the outstanding issues of the north-south corridor(s) pointed out in the Transport Strategy is that Yerevan can be bypassed to the west or the east. The following road sections are identified in the North-South corridor as priority project for upgrading/rehabilitation: Yerevan-Sevan-Dilijan (M4), in the direction of Georgia/Azerbaijan; Yerevan-Gyumri (M1), in the direction of Turkey/Georgia; Yerevan-70 km to south-east along M2, in the direction of Iran/Azerbaijan. Among railway projects for consideration are the new route between Armenia and Iran, and a new railway link between Dilijan and Vanadzor. For the railway line to the Iranian border at Meghri some alternative alignments are under assessment. A railway link between Dilijan and Vanadzor will provide a significant shortcut for the railway route between Yerevan and the Georgian border/tbilisi. Rehabilitation of the previous railway routes between Armenia and Azerbaijan is also considered among the priorities. Potential relations with other hubs in the Caucasus, Ukraine, Moldova: Because of a landlocked position of Armenia, the role of the ILC in Yerevan is mainly to serve the inbound and domestic market and to develop the export oriented industries. However with Progress Report II Annex 4 Armenia: Introduction and Current Situation Page 5 of 8

92 reopening of borders and improvement in regional relations the outbound orientation of the logistics centre is expected, together with improvement of its added value role in the network of the logistics centres. The main relations and potential synergies could be established with the ILC in Georgia/Tbilisi, although Georgia is presently not a main trading partner to Armenia, but it is an important transit country. The ILC in Tbilisi provides the opportunity of further consolidation, distribution and collection of goods via Baku/Alyat at the Caspian Sea and via Poti/Batumi at the Black Sea. The road route via Gyumri and the Georgian border at Bavra represents a direct and supplementary link to the ports in Batumi and Poti. This requires the planned upgrading of the road network in southern Georgia. Due to the geographical location of Yerevan, in combination with the closed border with Turkey and Azerbaijan, there are not any significant potentials for attracting and serving transit goods (e.g. between Turkey and Azerbaijan). The new road and railway links with Iran require huge investments to be implemented in the medium and longer term. The general potential for the ILC in Yerevan lies in the development of more diversified export products (including food processing based on domestic agriculture), and the development of foreign trade relations with Georgia, Turkey and Iran. Relations with hubs in Turkey, Bulgaria Romania and Ukraine: The relations with Romania and Bulgaria could be strengthened in cooperation with the ILC in Tbilisi, and by implemented direct and logistically efficient connections via Georgia to the ferry routes across the Black Sea. Armenian hauliers in transit through Georgia are presently using Poti port for the export and import of unitised goods (carried in containers and semi-trailers). In the short term the reopening of the border with Turkey will mainly benefit the north-western region of Armenia around Gyumri (Aragatsotn Marz, Shirak Marz, Lori Marz), as this will result in re-establishing the road and railway route across the border south-west of Gyumri. If the ILC in Yerevan is to exploit fully its potential benefits in relation to Turkey, alternative transport routes need to be considered, notably the railway connections. As an alternative to the detour route via Gumri, this could involve an upgraded or new road connection across the Araks River via M3 or M5 or M9 (near Bagaran) at the Armenian side. This will connect the Yerevan metro region directly with the road network in Turkey (e.g. E99 and E80 leading to Ankara and Istanbul). The railway route between the Yerevan metro region and Turkey could be shortened by construction of a new railway link between the existing railway line at the border west of Yerevan, and connecting with the Turkish railway network at Kars. However, an inclusion of these projects in the transport strategy for Armenia is pending a reopening of the border with Turkey. 2.3 Interconnections with EU countries and the TEN-T The transport links with the EU go via the Black Sea ports in Ukraine, Romania and Bulgaria, and overland via Istanbul in Turkey. Presently air cargo is insignificant. Due to the location of the ILC near the international airport in Yerevan, it could potentially serve an increasing volume of high-value air export and import products. Page 6 of 8 Annex 4 Armenia: Introduction and Current Situation Progress Report II

93 2.4 Links with the Asian TRACECA countries As long as the Nagorno-Karabakh conflict is sustained, all trade with the Asian TRACECA will flow via Tbilisi, potentially using the ILC there. In the medium-term perspective the transport route via Iran could provide an alternative outlet. The improved road and railway connection to Iran will open the import/export route to Asia as well as to the Persian Golf. 3 SOCIO-ECONOMIC IMPACT OVERVIEW Economically, Armenia has been one of the more successful former Soviet republics. It has followed a thorough-going reform programme and restructured its economy, favouring the agriculture sector and SMEs over large industrial units. Between 1989 and 1994 agriculture increased its share of GDP dramatically, from 16% to 49%. The sector s share of employment rose too, from 18% to 34%. If the border between Armenia and Azerbaijan is eventually being opened, the geographically more direct road and railway routes via Nakhichevan and Ijevan to Baku and Alyat could be reestablished. At 11%pa ( ) the average GDP growth rate has been second only to oil-rich Azerbaijan s among the five direct beneficiary countries. Moreover in 2007 Armenia ranked highest among the five in the UN Human Development Index (HDI) and Human Poverty Index (HPI). In both indices a high rank indicates good performance: Azerbaijan Armenia Georgia Moldova Ukraine HDI Rank (out of 182) Score (range ) HPI Rank (out of 135) Score (range 1.5%-59.8%) 3.7% 10.7% % Armenia also has the smallest population among the five (3.0 million 1, zero growth), the highest rate of investment (39% of GDP), the lowest trade dependency (exports + imports equivalent to 41% of GDP) and the lowest government revenue ratio (21% of GDP). More significantly in the present context, Armenia also has the most dominant capital city million people (42% of the total population) live in the Yerevan metropolitan area. It is not surprising, therefore, that according to official statistics Yerevan accounts for approximately: 50% of vehicle registrations and road accidents. 50% of industrial production. 60% of gross output of all goods and services. 60% of exports. 80% of imports. 90% of services. Armenia s Gini coefficient 2 of 0.34 places it one-quarter of the way down the ranked list of countries with respect to income equality, but this may hide wide regional disparities. Regional 1 2 In addition there is a world-wide Armenian diaspora totaling an estimated 8 million. A measure of income inequality, ranging between 0 (perfect equality) and 1 (perfect inequality). The Gini coefficients of the five direct beneficiary countries range from 0.28 to The median value for Progress Report II Annex 4 Armenia: Introduction and Current Situation Page 7 of 8

94 income statistics are not available, but using gross output as a proxy it appears that there is a wide difference between income in Yerevan and elsewhere. A crude calculation of per capita income produces a ratio of 3.3. Because of the primacy of Yerevan, it is inevitable that it should be the preferred location for an ILC. The project would reinforce that primacy. This is not to say that it would not have positive socio-economic impact, however. According to Onnik Krikorian 3 the incidence of poverty in 2004 was very high throughout Armenia, with 50% of people living in poverty 4 and 17% in extreme poverty 5, with urban poverty rising. It is intended that the proposed project would generate new or improved opportunities for the poor. It may do this in several ways: By making urban and export markets more accessible to rural producers. By enhancing the viability of industries that add value to rural products, providing a more reliable market for those products as well as jobs in the vicinity of the ILC. By providing a platform for increased transit traffic, with the possibility of providing services. By reducing living costs through improved transport/distribution efficiency. There is concern about traffic congestion in Yerevan. The World Bank has funded a number of projects including the Yerevan Urban Transport Project for Armenia, which aims to: improve urban mobility in Yerevan through: (i) increasing the traffic carrying capacity of the existing urban street network through traffic management measures and implementation of a comprehensive program of on-street and off-street paid parking; (ii) preparing for more comprehensive reforms aimed at integrated, efficient, and quality public transport services; and (iii) developing institutional capacity of Yerevan Municipality to better manage traffic and public transport in Yerevan. It is notable, however, that in the Bank s Project Information Document (PID) in 2008 there was no mention of heavy goods traffic as a contributor to congestion or as a target for amelioration efforts. The proposed project should have a positive impact because: Its location on the urban periphery allows transfer of loads from heavy mulit-axle trucks, suited to long-haul routes, to smaller vehicles for local distribution. Rationalisation of regional distribution/collection will improve vehicle utilisation and hence reduce the ratio of vehicle-kilometres to freight tonnage. With improved vehicle utilisation the average age of the fleet is likely to be reduced, with consequently improved fuel efficiency and emission standards. External costs born by the local community will be reduced, especially with regard to the provision and maintenance of infrastructure, accidents and and environmental damage. Being an inter-modal facility, the proposed ILC will promote the use of rail as a long-haul transport mode. But it is not certain that Yerevan s traffic problems would be significantly improved countries included in the UN s Human Development Report is 0.40, with an inter-quartile range of Armenian/British journalist and blogger whose writing is published internationally. Defined as living on less than US$21 per capita per month. Defined as living on less than US$12 per capita per month. Page 8 of 8 Annex 4 Armenia: Introduction and Current Situation Progress Report II

95 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 5 Azerbaijan: Baku International Sea Trade Port at Alyat Introduction and Current Situation January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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97 TABLE OF CONTENTS 1 INTRODUCTION AND CURRENT SITUATION TRACECA NETWORK EFFECTS AND SYNERGIES INTRODUCTION SYNERGY WITH OTHER ILCS IN THE EUROPEAN AND CAUCASIAN PARTS OF TRACECA INTERCONNECTIONS WITH EU COUNTRIES AND THE TEN-T LINKS WITH THE ASIAN TRACECA COUNTRIES SOCIO-ECONOMIC IMPACT OVERVIEW... 7 LIST OF FIGURES Figure 1: Road, railway and ferry routes connecting the Alyat ILC with neighbouring countries... 4 Progress Report II Annex 5 Azerbaijan: BISTP at Alyat Page 1 of 8

98 LIST OF ABBREVIATIONS 3PL BISTP CSR CT ETF FEZ GDP IATA IDP IGR ILC ILO LFPR PPP TEU WD 3 rd Party Logistics Baku International Sea Trade Port Corporate Social Responsibility Container Terminal European Training Foundation Free Economic Zone Gross Domestic Product (aggregate value-added within a national or regional economy, usually expressed on an annual basis in terms of the local currency or an international currency such as US dollars or Euros; valued at either current or constant prices; with or without adjustment to purchasing power parity which takes account of the general price level compared to that in the USA) International Air Transport Association Internally Displaced Person Income Gap Ratio (a measure of poverty severity) International Logistics Centre International Labour Office (a United Nations agency) Labour Force Participation Ratio Purchasing Power Parity (ie adjusted for price differentials between the country in question and the USA) Twenty-foot Equivalent Unit (a 20-foot long container being the standard unit for measuring containerised traffic) Working Day Page 2 of 8 Annex 5 Azerbaijan: BISTP at Alyat Progress Report II

99 1 INTRODUCTION AND CURRENT SITUATION In Azerbaijan the location for development of the logistics centre was determined in the region of Greater Baku, at Alyat settlement. This location was selected for development of the new Sea Trade Port of Baku. The establishment of the logistics centre is proposed within the territory of the new port. The official approval of ILC location in Alyat and for further feasibility study was received from the Ministry of Transport on 22 December An expert mission took place in January During this mission, additional consultations took place with the Ministry of Transport and Royal Haskoning. The master plan of the new Baku port in Alyat was prepared by Royal Haskoning on behalf of the Azerbaijani Government 1. It currently includes an optional area of 50 hectares indicated for the development of an ILC adjacent to the territory of the new port. Nevertheless, coordinated actions of the beneficiary are necessary for efficient integration of the ILC into the ports access road and rail connection. It is to be determined which ILC related infrastructure should be included in the overall planning (e.g. soil preparation and levelling of the land). Investigations are needed on infrastructure access (rail and road, capacity of planned connections and junctions), specification for the technical and operational model for the infrastructure within the ILC and commonly used access road and rail. The macro location at Alyat is currently the most preferred solution since it best matches major ILC establishment criteria, taking into account its position within the Baku metropolitan region. The future ILC will have perfect transport connections on the East West (Caspian and Black Sea) trunk way, and the North-South (Russia and Iran) corridor passing next to Alyat at a distance of less then 1 km. The projected network effects and synergies of the ILC at Alyat are proposed in this report. Additionally, first projections of the awaited benefits of the proposed ILC within the new port of Alyat will be presented. 1 The draft master plan wa s handed over to the Consultant by the National Secretary on 22 November The integration of the ILC in to the overall planning was based on first coordination efforts of the consultant with Royal Haskoning Progress Report II Annex 5 Azerbaijan: BISTP at Alyat Page 3 of 8

100 2 TRACECA NETWORK EFFECTS AND SYNERGIES 2.1 Introduction The urban, regional and national setting of the Baku International Sea Trade Port (BISTP) site at Alyat, and its transport connections with neighbouring countries and across the Caspian Sea, is described in the Inception Report (ref. country report for Azerbaijan) and Progress Report I (ref. Annexes 3 and 4). The map below indicates the major existing transport routes between the ILC in Alyat and the neighbouring countries. Figure 1: Road, railway and ferry routes connecting the Alyat ILC with neighbouring countries The new port at Alyat is located around 70km south of Baku. It is located very close to the existing railway lines Baku Tbilisi / Poti and Batumi and Russia Baku Lenkoran Astara - and Iran in the South. The reconstructed and enlarged highways M4 and further M1 (in old Soviet system M27 and A324) crossing the deeplands of Azerbaijan is the main transport route between West and East. It goes from Baku via Alyat, Kurdamir, and Yevlak as M4, and to Georgia passing by Ganja, the second largest city of Azerbaijan as M1. The M1 between Baku and Aran became after the reconstruction of the M4 route of less importance for the Page 4 of 8 Annex 5 Azerbaijan: BISTP at Alyat Progress Report II

101 transportation of cargo from or via Georgia on the TRACECA corridor. The M1 from Baku to Aran has to cross several mountain passes and has only 2 lanes on almost all parts. It is decided that the old port of Baku will be closed and the new port, serving the ferry services between Azerbaijan and Kazakhstan and Turkmenistan will be in Alyat. It is also considered to build facilities for containers and conventional cargoes. More detailed description of service respectively facilities to be build and operated in the new port were subject of the meetings in Baku in January Synergy with other ILCs in the European and Caucasian parts of TRACECA Existing International Transport Routes The port of Baku Alyat has an excellent connection by road and railway to the Georgia, Iran and the Russian Federation. - The M4 from Alyat via Yevlak and further on the M1 to Georgia with continuation to E60 in Georgia to Tbilisi and Poti-Batumi at the Black Sea and Turkey; - the road M3 from Alyat to Astara and to the Iranian border at the Caspian Sea at Astara south of Lankaran (part of the north-south highway ), and connecting at the Iranian side with road No 49 in the direction of Teheran, and with road No 16/14/27 in the direction of Tabriz; - an alternative road route to Iran goes via Mazrali near the Iranian border, and could be connected to road No 12 at the Iranian side, and in the direction of Tabriz; - the road route Alyat-Baku and further on via M2 along the Caspian Sea coast in northern direction to the Russian border at Samur (part of the north-south highway ); - the rail route between Alyat and Tbilisi in Georgia and onwards to Poti and Batumi at the Black Sea, and eventually also with connection to the railway network in Turkey; - the railway routes along the Caspian Sea to Russia (at Yalama) and Iran (at Astara), respectively. The road routes between Baku/Alyat and the Georgian border at the Red Bridge (the east-west highway ) are appointed as one of the TRACECA road corridors. The existing routes between Azerbaijan and Armenia are closed and partly removed due to the Nagorno-Karabakh conflict. The road and rail infrastructure for these routes consists of: - the road route from Yerevan via M2 and M12 to Karabakh/Azerbaijan border, and from here via M1/ M4 in Azerbaijan to Alyat/Baku; - the road route Yerevan-Hrazdan-Ijevan via M4 to the Azerian border, and from here via M1/ M4 to Alyat/Baku; - the rail route Yerevan-Hrazdan-Dilijan-Ijevan-Qaqzax in Azerbaijan, and from here straight on to Alyat/Baku. In addition, should be mentioned that in former Soviet times the road and rail routes between Baku/Alyat and Nakhichevan via Megri in Armenia near the Iranian border existed. The travel link between mainland Azerbaijan and Nakhichevan is currently by air and a road connection via Iran. However, Nakhichevan has a 33 km border with Turkey. Planned Upgrading of International Transport Routes As an important component of the overall Transport Sector Development Strategy, the Government of Azerbaijan has decided to construct the BISTP at Alyat, in order to replace the existing Baku Port which is no longer capable of expansion. The new port, is envisaged to be built within 5-6 years. Alyat has a favourable location and easy access both to the east-west and north-south transport routes. The new port will be connected via a new access road to the main highway (M4 and M1) and with a railway link to the main railway line. Progress Report II Annex 5 Azerbaijan: BISTP at Alyat Page 5 of 8

102 The railway connection to Turkey via Tbilisi will be improved by the new railway link between Akhalkalaki in Georgia and Kars in Turkey. Potential Relations with Other Hubs in Ukraine, Moldova and the Caucasus The ongoing transport development programme ( ) has started with upgrading of the east-west and north-south highways. A main relation could be established and potential synergies exploited with the ILC in Georgia/Tbilisi, as the latter provides the opportunity of further consolidation, distribution and collection of goods via the ferry routes between Poti/Batumi and Odessa/Ilyichevsk across the Black Sea and to/from Yerevan in Armenia. Potentially the Volga-Don canal could provide direct access from the Caspian Sea to the Black Sea, if licenses for transit through the Russian Federation can be obtained. There are general potentials for the ILC in Alyat on the development of more diversified export products, and the development of foreign trade relations with Georgia and Iran. Relations with Hubs in Romania, Bulgaria and Turkey The development of foreign trade relations with these countries could be enhanced by developing the cooperation with the ILC in Tbilisi and with selected logistics hubs in these countries. Several international freight forwarders are already established in Azerbaijan. The relations will be further strengthened by implementing direct and logistically efficient links by railway to Turkey and its ports as Samsun, Istanbul, Izmir and the Georgian ports in Poti to the ferry routes across the Black Sea to Constanta, Varna and Burgas. 2.3 Interconnections with EU Countries and the TEN-T The transport links with the EU go via the Black Sea ports in Ukraine, Romania and Bulgaria, and overland via Istanbul in Turkey. Trade relations with the EU countries could be enhanced by establishing direct contacts and cooperation between the ILC in Alyat and major logistics hubs and centres in selected EU countries. 2.4 Links with the Asian TRACECA Countries The ILC in Alyat will be in a key geographical position for the collection, consolidation and distribution of goods via the ferry routes crossing the Caspian Sea. Baku/Alyat is the only entry and exit point for trade flows in the TRACECA corridor between the Caucasian and European countries and the Asian TRACECA countries. The ferry routes across the Caspian Sea provide maritime links with Aktau in Kazakhstan and with Turkmenbashi in Turkmenistan. Both ports have road and railway routes with other Asian TRACECA countries. There are also potentials for the establishment of Caspian Sea ferry routes connecting Alyat with Astrakhan and other ports in the Russia Federation, and with Iranian ports, ref. the MOS concept. Page 6 of 8 Annex 5 Azerbaijan: BISTP at Alyat Progress Report II

103 3 SOCIO-ECONOMIC IMPACT OVERVIEW The present port at Baku is operating close to its capacity and cannot be expanded because of its position within the capital. A decision has already been taken to build an entirely new port at Alyat, 70km by road to the south. Consultants have been engaged by the Ministry of Transport to prepare a port master plan and have subsequently been asked to make provision for an ILC next to it. In several ways the socio-economic situation of Azerbaijan is very different from that of the other direct beneficiary countries: The petroleum industry dominates the Azerbaijani economy. It accounts for 94% of industry and 56% of GDP and was responsible for an average GDP growth rate of 23%pa during In 2008 Azerbaijan had the highest per capita GDP among the direct beneficiaries: US$5,600 (official exchange rate) or US$9,500 (PPP). However there is wide disparity between the oil-dominated urban/industrial sector and the rural economy. Labour productivity in the agricultural sector is only 10% of that in the industrial and service sectors. 24% of people are said to be living below the poverty line. Social services are generally inadequate and consequently some social indicators are surpisingly poor 2. Low performance in education, and in particular vocational training, is believed to be a serious constraint to developing a more balanced economy, less dependent on oil. Azerbaijan is alone among the direct beneficiary countries in having positive population growth, with a replacement-level fertility rate and minimal net migration. This contributes to the very low old-age dependency ratio of 9.5. There is a major internal refugee problem arising from the conflict with Armenia over Nagorno-Karabakh. There are an estimated 1 million internally displaced persons (IDPs), equivalent to 12% of the country s population. It is normal to find a significantly higher level of affluence in the capital city than elsewhere, but in Azerbaijan the differential is unusually wide. Baku accounts for 22% of Azerbaijan s population and 45% of consumption (expressed as turnover of goods and services). Therefore per capita consumption in Baku is 2.9 times the average in the rest of the country. In terms of reducing regional disparity, the likely impact of the planned new port at Alyat is ambiguous: On one hand its orientation is still towards Baku, as implied by its retention of the BISTP name, and it lies within the administrative district (rayon) of Baku City. On the other hand it will be 70km distant from the city proper, providing employment and commercial opportunities at what is now a small settlement (population: 13,000) in the southern part of Absheron Economic Region. Apart from Baku City, the closest districts are Absheron, Haligabul and Salyan. These have a combined population of 286,000 (57% urban) and per capita consumption 27% below the national average. The proposed ILC is expected to be associated with a free economic zone (FEZ). This, complemented by the ILC s state-of-the-art logistics facilities, is expected to attract new investment which will potentially benefit the whole country. 2 For example 7% of children under 5 years of age are underweight, and 22% of the population lack access to treated water (source: UNDP Human Development Index, 2007). Progress Report II Annex 5 Azerbaijan: BISTP at Alyat Page 7 of 8

104 A probable effect of the new port development will be to extend the influence of Baku, giving rise to a ribbon of development along the coast while relieving pressure on the existing city and allowing BISTP to continue its expansion. Regarding traffic congestion in Baku, the following text is extracted from the Oneworld Multimedia Blog: In March 2006, the president ordered the government to start a big building project aimed at unblocking the roads, removing traffic jams and creating a modern transport infrastructure. According to the presidential plan, a new highway will be built between the airport and central Baku and there will be nine bridges, 13 underpasses and dozens of car parks. The cost of the whole project is 300 millions mantas (more than 263 million). At the moment, the government is using only its own money, but it may seek to attract foreign capital for the project as well. Under plan, the Baku municipal authorities and the transport ministry must also implement a scheme to develop Baku s transport network up until According to the article, 317,000 vehicles are registered in Baku. In 2007 AzerRoadService began a project. It included 4km of bridges, 1.4km of tunnels and a variety of retaining walls, roadway approaches and auxiliary works. The total cost was over US$100 million. Road safety is also a growing concern in the capital. In the same year UN office in Azerbaijan reported that: Over the last year in Azerbaijan 53% of the 1,027 killed in more than 3,000 accidents were young road users and 109 of these were children. Road accidents caused 90 deaths and 422 injuries in Baku alone during the first quarter of 2007 and the number of road accidents and injuries compared to the same period last year increased by 12% and 37% respectively. It is not reported whether heavy goods vehicles contributed disproportionately to the number or severity of accidents. The port should also open up new commercial and employment opportunities within its hinterland. The extent to which these opportunities are taken up will depend on the enterprise of local farmers and businesspeople, and the ability of individuals to acquire the skills that the port and ILC will require. According to the European Training Foundation (ETF) Country Plan for Azerbaijan, vocational training is the most underdeveloped field in the whole state education system and the proportion of young people with qualifications of skilled worker and technician is insignificant. Consequently there is an increase in immigration of foreign labour to the country. At the same time the official unemployment rate is 6.5%, somewhat higher in urban areas than rural and higher for men than for women. The highest unemployment rates are among urban dwellers in the age group: 43% for males and 20% for females. In the age group the rates fall to 20% for males and 12% for females. Of the total number of unemployed persons, 33,200 have had tertiary education while only 8,700 have had vocational training. There is apparently a pool of surplus labour which may require a systematic training effort in order to take advantage of new opportunities. The main impact of the proposed project is expected to be felt far beyond Alyat municipality and surrounding districts. Alyat lies at the junction of the north-south and east-west rail and road corridors, affording access to Russia, Iran, Turkey and Georgia (and its Black Sea Ports). More efficient, cheaper, reliable transport and logistics services will potentially increase profits for producers and distributors and reduce prices for consumers throughout the TRACECA corridor. Page 8 of 8 Annex 5 Azerbaijan: BISTP at Alyat Progress Report II

105 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 6 Georgia Introduction and Current situation January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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107 TABLE OF CONTENTS 1 INTRODUCTION AND CURRENT SITUATION TRACECA NETWORK EFFECTS AND SYNERGIES INTRODUCTION SYNERGY WITH OTHER ILCS IN THE EUROPEAN AND CAUCASIAN PARTS OF TRACECA INTERCONNECTIONS WITH EU COUNTRIES AND THE TEN-T LINKS WITH THE ASIAN TRACECA COUNTRIES SOCIO-ECONOMIC IMPACT OVERVIEW... 7 LIST OF FIGURES Figure 1: Road and railway routes connecting the Tbilisi ILC with neighbouring countries... 4 Progress Report II Annex 6 Georgia: Introduction and Current Situation Page 1 of 8

108 LIST OF ABBREVIATIONS 3PL CSR CT ETF GDP GEL HDI HPI IATA IDP IGR ILC ILO LFPR PID PPP SASE SME TEU UNECE WD 3 rd Party Logistics Corporate Social Responsibility Container Terminal European Training Foundation Gross Domestic Product (aggregate value-added within a national or regional economy, usually expressed on an annual basis in terms of the local currency or an international currency such as US dollars or Euros; valued at either current or constant prices; with or without adjustment to purchasing power parity which takes account of the general price level compared to that in the USA) Georgian lari (currency unit) Human Development Index Human Poverty Index International Air Transport Association Internally Displaced Person Income Gap Ratio (a measure of poverty severity) International Logistics Centre International Labour Office (a United Nations agency) Labour Force Participation Ratio Project Information Document (a standard World Bank document) Purchasing Power Parity (ie adjusted for price differentials between the country in question and the USA) State Agency for Social assistance and Employment Small and Medium-sized Enterprise Twenty-foot Equivalent Unit (a 20-foot long container being the standard unit for measuring containerised traffic) United Nations Economic Commission for Europe Working Day Page 2 of 8 Annex 6 Georgia: Introduction and Current Situation Progress Report II

109 1 INTRODUCTION AND CURRENT SITUATION Following the submission of the progress report I, the beneficiary in Georgia has requested not to concentrate on any specific site, but to consider the whole area around Tbilisi airport in the feasibility study. This request was communicated at the meeting in Brussels on 24 September 2009 to the Programme Manager and the Consultant s team. The Delegation in Tbilisi was informed on this alteration in the project implementation accordingly, and conducted discussions with the beneficiary. The Consultant has prepared a revised methodology for preparation a feasibility study for the Logistics Centre in the area around Tbilisi airport on 6 November 2009, upon agreement with the Programme Management in AidCo. The Consultant did not receive a response concerning the proposed methodology and scope of work within this reporting period. The absence of specific site with its natural borders and site specific attributes would lead to the following adjustments in feasibility investigations. 1. The layout of the site will be presented on the unit level based on general demand for logistics centre services. Unit configuration of various modules will be presented. 2. Infrastructure integration on the micro level could not be presented, macro level corridor integration will be considered instead. 3. The business plan provisions and CAPEX per module will be incorporated into cost benefit analysis and economic impact assessment tasks. The classical presentation of the business plan and CAPEX estimation needs a greater level of detail about the site - borders, infrastructure, utilities, land acquisitions, etc. The module based CAPEX may have to be applied within various infrastructure scenarios. This constitutes additional inputs of the Consultant that were not envisaged in the existing terms of reference. Additional inputs and budget estimation to fulfil this task will be discussed with the Programme Manager in Brussels. It was stated to the beneficiary that if an official approval of a specific site out of the proposed sites will be provided by 30 March 2010 the accomplishment of Phase C as envisaged in the ToR would still be possible. During the study tour organized in Germany on November 2009, the beneficiary in Georgia and the consultant have agreed that it is important to carry out one more round table in Tbilisi and to introduce the project to the Ministry of Regional development that has taken over the responsibility for the transport sector since fall The situation has to be discussed with potential stakeholders. Progress Report II Annex 6 Georgia: Introduction and Current Situation Page 3 of 8

110 2 TRACECA NETWORK EFFECTS AND SYNERGIES 2.1 Introduction The urban, regional and national setting of the various land plots around Tbilisi airport, and its transport connections with neighbouring countries, is described in the Inception Report (ref. country report for Georgia) and Progress Report I (ref. Annexes 3 and 4). None of the land plots presented has been approved by the beneficiary, and only an area around the Tbilisi Airport has been proposed in general as location for an ILC. The map below indicates the major existing and planned transport routes between the airport area ILC in Tbilisi and the neighbouring countries and Black Sea ports. Figure 1: Road and railway routes connecting the Tbilisi ILC with neighbouring countries Located in the eastern outskirts of Tbilisi metropolitan area, the ILC will gain an adequate access to the existing railway line, and to the major road network, including the road links to the Black Sea ports and Turkey, Azerbaijan and Armenia. However, the detailed setting of the ILC plot will have to consider also the alignment of the planned bypass railway line to be constructed in the northern part of Tbilisi. The ILC in Tbilisi has potentials through the further development of export and import relations in cooperation with the range of international logistics companies and forwarders which are Page 4 of 8 Annex 6 Georgia: Introduction and Current Situation Progress Report II

111 already operating in Georgia. The links with the Black Sea ports in this context should be reviewed to facilitate container handling and efficient modal shift. 2.2 Synergy with Other ILCs in the European and Caucasian parts of TRACECA Existing International Transport Routes The existing main routes by road and railway between Georgia and Armenia involve at the Georgian side of the border: the road route between Tbilisi and Yerevan via E-117 passing Marneuli to the Armenian border at Sadakhlo; the road route between Tbilisi and the Armenian border at Zhdanovi/Bavra via E-001 and Akhalkalaki /Ninotsminda; the road route between Poti/Batumi and the Armenian border at Zhdanovi/Bavra via Akhalkalaki; the existing rail route between Tbilisi and the Armenian border at Sadakhlo, and from there further on to Yerevan. The existing routes between Georgia and Azerbaijan involve mainly the E60 highway route between Tbilisi and the Azeri border at the Red Bridge, and from there directly to Baku/Alyat along M1 and A324. The road route between Tbilisi and the Azeri border at Lagodekhi is considered secondary in this relation but could have an impact for transit cargo from and to the agricultural region of Аgstafa/Sheki in Azerbaijan. The existing routes by road and rail between Tbilisi and the Georgian Black Sea ports and between Tbilisi and Turkey involve: the road route between Tbilisi and the Turkish border at Sarpi, via E60, E692 (Samtredia- Supsa) and E70, this route connects with the Black Sea ports in Poti and Batumi; the road route between Tbilisi and the Turkish border near Vale, via E117 and E001 to Ninotsminda/Akhalkalaki, and from here via Akhaltsikhe to the Turkish border; however, part of this route is presently only seasonal; the railway routes between Tbilisi and Poti via Samtredia, and from Samtredia to Batumi via Supsa. The rail route from Tbilisi to Batumi is not connected with the Turkish railway network. Planned Upgrading of International Transport Routes A comprehensive programme for upgrading and modernisation of the E60 road route (between the Red Bridge and Poti) into a high-speed highway and of the E70 road route (between Poti, Batumi and the Turkish border) has been under implementation since This includes establishing four lanes and a design speed of 120 km/h. The new Investment Programme for Roads Development in Georgia started in It includes, besides the modernisation of the E60 and E70 highways, the following road sections of relevance to the ILC in Tbilisi: upgrading of E117 (in direction of Armenia) to a four lane highway between Tbilisi and Marneuli; a new road between Samtredia and Grigoletti replacing the existing E692 alignment between Samtredia and Supsa; upgrading of the road route starting at E117 between Tbilisi and Marneuli and passing via Akhalkalaki/Ninotsminda to the Armenian border at Zhdanovi; it will also facilitate some transit between Tbilisi via Akhalkalaki/ Akhaltsikhe and the Turkish border at Vale; Progress Report II Annex 6 Georgia: Introduction and Current Situation Page 5 of 8

112 upgrading of the road route form Akhaltsikhe via Khulo to E70 between Batumi and the Turkish border at Sarpi; some transit between Turkey and Armenia could also be diverted to this road. The planned new railway section between Akhalkalaki/Ninotsminda and the Turkish railway network at Kars will establish a direct railway route between Tbilisi and Turkey. A bogie change facility is to be established at Kars to provide exchange between the standard gauge of the Turkish railway network and the CIS gauge of the Georgian network. Potential Relations with Other Hubs in Ukraine, Moldova and the Caucasus The ferry routes between Poti and Ilyichevsk in Ukraine constitute the main link between Georgia and Ukraine and Moldova. Therefore cooperation between the planned ILCs in Tbilisi, Odessa and Moldova could enhance trade flows using this ferry connection. A relation should be established also with the planned ILC in Yerevan, because Georgia is the only transit country on land transportation for foreign trade flows to/from Armenia on the TRACECA corridor. The transportation of containers to the future ILC in Tbilisi could be included in the regular block train operations between Alyat / Baku in Azerbaijan and Poti port. Relations with Hubs in Romania, Bulgaria and Turkey The ferry routes serving Ro-Ro and rail wagons connect Poti/Batumi directly with logistic hubs in Bulgaria, Romania via the ports in Burgas, Varna, and Constanta. The E70 on the Georgian side crosses the border with Turkey in Sarpi around 15 km south of Batumi, and is connected from there to the E70 of the Turkish road network leading to Ankara and Istanbul. Upgrading of the road network in southern Georgia will improve the connectivity with the Turkish road network. The border crossing facilities have been already reconstructed and a one window system is established. Furthermore, as already mentioned, the planned new railway connection between Akhalkalaki/Ninotsminda and the Turkish railway network at Kars will establish a direct and improved railway route between Tbilisi and Turkey. 2.3 Interconnections with EU Countries and the TEN-T The transport links with the EU go via the Black Sea ports in Ukraine, Romania and Bulgaria, and overland via Istanbul in Turkey. A direct maritime link between Poti and the countries bordering the Mediterranean Sea could also be considered for the future (ref. the MOS concept). Due to the location of the ILC near the international airport in Tbilisi, it could serve an increasing volume of high-value foreign trade products. 2.4 Links with the Asian TRACECA Countries The future ILC in Tbilisi could handle transit goods between the Black Sea ports, Turkey and Armenia to the Central Asian countries. The E60 route is connecting the Azerian border (at the Red bridge) with Tbilisi and Poti port. E60 is appointed as a High-Speed Highway together with E70 that connects Batumi port with E60 at Poti and at Samtredia via E692. Relations with the ILC in Alyat could enhance the exploitation of the potentials of the key position that the ILC in Tbilisi will have a as a vital link for serving unitised freight flows between the western and eastern part of TRACECA. Page 6 of 8 Annex 6 Georgia: Introduction and Current Situation Progress Report II

113 The ferry routes across the Caspian Sea will be established via the Alyat ILC site in Azerbaijan. These ferry routes provide maritime links with Aktau in Kazakhstan and with Turkmenbashi in Turkmenistan. Both ports have road and railway connections to other Central Asian countries. 3 SOCIO-ECONOMIC IMPACT OVERVIEW Having been the most prosperous of the Soviet republics, Georgia is now the poorest of the three countries of the south Caucasus. Even after three years of economic growth averaging 8%pa, Georgia s per capita GDP in 2008 was only US$2,700 (at the official exchange rate) or US$4,600 (PPP). Since the dissolution of the Soviet Union industrial production has practically shut down in Georgia. The region of Kakheti has been particularly affected, which is home to 12% of the population and the largest agricultural region. Consequently there has been a greatly increased dependence on agriculture. Alone among the five direct beneficiary countries, Georgia has a majority of its labour force in agriculture, which produces only 13% of GDP. According to official statistics average agricultural labour productivity is 11% of that in the industrial and services sectors. This implies a high degree of rural underemployment. It also implies serious rural poverty. Official figures show 31% of the population living below the poverty line. In 2003 UNECE reported that more than half the population was living below subsistence level. In 2006 Transparency International put the proportion of poor at 50%-55%. By another measure, in ,000 families had applied to the State Agency for Social Assistance and Security (SASE) for help, of whom 33,000 were in Tbilisi. Factoring by average household size 1, this suggests that 9% of people in Tbilisi were in need of help, and 24% of people elsewhere. Internally displaced persons (IDPs) are disproportionately represented among the poor. It is estimated that there are between 252,000 and 279,000 IDPs in Georgia: at least 5.5% of the population 2. Most have been IDPs since the original conflicts in Abkhazia and South Ossetia in An additional 129,000 were displaced by the conflict in South Ossetia in 2008, a proportion of whom have now returned. A high proportion of IDPs are living in Tbilisi: the number of registered IDPs was 94,000 in 2007, of whom 13% were registered on SASE s database of socially vulnerable families. The number of IDPs is certainly more now. Tbilisi has a population of 1.1 million 3, which is 24% of the national total, and it produces 33% of national GDP. Using GDP as a proxy for income, this implies a per capita income in Tbilisi that is 1.6 times that in the rest of the country 4. This is a modest premium for a capital city. It is consistent with 2007 household income statistics that show a remarkably narrow differential between urban and rural incomes: Transparency International reports a bias towards small households among applicants, with an average of less than three people. An average of 2.9 is used here. Sources of data on IDPs: Internal Displacement Monitoring Centre (IDMC), Tbilisi Municipality (Tbilisi Millennium Development Report, 2007) and the United Nations. This figure is given by Tbilisi Municipality as the population of the city in Other sources (EBRD and Wikipedia) mention a figure of 1.5 million. Here it is assumed that the responsible local government is the most authoritative source. If the higher population figure were used, Tbilisi s premium would fall to an unlikely 3%. Progress Report II Annex 6 Georgia: Introduction and Current Situation Page 7 of 8

114 GEL/month Index National average per capita income Urban Rural Income from wages, salaries and self-employment is much lower in the rural sector, but income from subsistence activities and sale of farm produce fills 84% of that gap. Georgia s agricultural sector is believed to have good potential for expansion, particularly in the eco-friendly cultivation of export-quality products. But the country s underdeveloped logistics infrastructure is a major obstacle to developing export markets It may be concluded that socially disadvantaged people would have access to the benefits that are expected to flow from the proposed project, wherever it is sited. These benefits are likely to take the following forms: Enhancing accessibility of urban and export markets to rural producers. Enhancing the viability of industries that add value to rural products, providing a more reliable market for those products as well as jobs in the vicinity of the ILC. Attracting foreign investment with concomitant technology transfer and access to export markets. Creating an environment in which SMEs can establish and flourish, buying common services from the ILC operator and exploiting niche market opportunities. Tbilisi Municipality s Millennium Development Report states that: One of the most important factors for the economic development and eradication of extreme poverty in Tbilisi is the development of small and medium businesses, which stimulates growth of the employment level. By reducing living costs through improved transport/distribution efficiency. With good coldchain facilities, it is likely that food costs will be disproportionately effected. Official statistics show that poor households in Tbilisi devote 58% of their total expenditure to food, compared with 44% for the non-poor, and may be the main beneficiaries. Strengthening Tbilisi s competitive position as a transit hub, with the possibility of adding value and providing services en route. This last point merits some elaboration. Georgia has benefitted from cold relations between Armenia and its neighbours Azerbaijan and Turkey, resulting in closed borders and the need to route cargo via Tbilisi and Georgia s Black Sea ports. Relations now seem to be improving, which will have a negative impact on Georgia s income from transit traffic. One way to meet this challenge is to become more competitive. As in other urban centres in the region, traffic congestion is a growing problem. It is one that the proposed project may ameliorate by: Encouraging modal shift from road to rail. Allowing heavy vehicles to bypass the city and deliver goods to the ILC s peripheral site, where they would be transferred to smaller vehicles for local distribution. A recent survey of travellers in Tbilisi found that congestion was the most commonly cited problem (82% of respondents). The main reason appears to be a strong preference for private cars over public transport. 87% of public transport users do not own a car, and 43% said that they would use cars if they could. No mention was made of heavy goods vehicles as a cause of congestion, which suggests that the positive impact of the project in this regard may be minor. Page 8 of 8 Annex 6 Georgia: Introduction and Current Situation Progress Report II

115 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II - Annex 7 Moldova Introduction and Current Situation January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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117 TABLE OF CONTENTS 1 INTRODUCTION AND CURRENT SITUATION... 2 LIST OF ABBREVIATIONS FIAM MCA Free International Airport Marculesti (also referred to as IAM ) Multi-Criteria Analysis. Progress Report II Annex 7 Moldova: Introduction and Current Situation Page 1 of 2

118 1 INTRODUCTION AND CURRENT SITUATION A micro-level multi-criteria analysis (MCA) was performed for the Railway Freight Station at Chisinau and the Free port of Giurgulesti during Phase B of the present study. The findings were presented in the consultant s Progress Report I. In summary, they were assessed with 78 and 70 points, respectively. Initially, the Railway freight station of Chisinau had been approved for further investigation by the Transport Agency of the Republic Moldova. Due to political and structural changes, the support of Moldovan railways, owner of the proposed site, could not be secured for Phase C of the project. During the Coordination meeting in Brussels on September, the National Secretary requested to carry out a MCA for an additional site, the International Airport Marculesti. After approval by the Client, the MCA for the new site has been conducted in November. A team leader mission was organised to the site and a representative of the International Airport Marculesti took part in the Study tour to Germany. The findings of the MCA were submitted for the approval of the beneficiary at the end of November The results are slightly less competitive as the ones of the Railway Freight Station at Chisinau. The initial scoring for the Railway freight station Chisinau was reduced, considering the lack of support. The findings are presented in Annex 10. The Government of Moldova has provided an official approval for the site of the Free International Airport Marculesti December 17, Therefore only preliminary work (data collection for business plan development, identification of possible stakeholders) has been accomplished so far. Both team leader and expert missions took place to Moldova in January The results will be presented in the next progress report. The same concerns the assessment of TRACECA network effects and synergies. The new location is outside the Chisinau region and additional investigation is required in this regard. Page 2 of 2 Annex 7 Moldova: Introduction and Current Situation Progress Report II

119 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 8 Feasibility studies for the selected projects Ukraine: Boryspil Airport Commerce Park (BACP) Identification of Stakeholder Needs and Functional Description January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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121 TABLE OF CONTENTS 1 EXECUTIVE SUMMARY INTRODUCTION AND CURRENT SITUATION IDENTIFICATION OF MAJOR STAKEHOLDERS AND NEEDS STATUS AND LEGAL FRAMEWORK FOR SITE DEVELOPER LOCAL TRANSPORT AND LOGISTICS MARKET OVERVIEW AND DEMANDS OF MAJOR STAKEHOLDERS Potential Stakeholders Public Sector Stakeholders Private Sector Stakeholders Investors and Financiers TRACECA NETWORK EFFECTS AND SYNERGIES Introduction Synergy with Other ILCs in the European and Caucasian Parts of TRACECA Interconnections with EU Countries and the TEN-T Links with the Asian TRACECA Countries FUNCTIONAL DESCRIPTION FUNCTIONAL DESCRIPTION AND CONCEPT General Objectives Logistics Trends and Development Vision Cargo Volumes Planning Guidelines and Potential Synergies Functional Areas and Main Transport Infrastructure Functional Concept and Intermodal Operations SOCIO-ECONOMIC IMPACT OVERVIEW LIST OF FIGURES Figure 1: Road and Railway Routes Connecting Kiev with Neighbouring Countries...9 Figure 2: Overview of Available Land Plot Boundary...12 Figure 3: Relevant Logistics Trends and Impacts...13 Figure 4: Confirmed Available Area Size Plot Boundary...15 Figure 5: Status Quo and Development Potentials...19 Figure 6: Specification of the Functional Areas and Categories...20 Figure 7: Overview of Potential Functional Areas...21 Figure 8: General Alignment of the Functional Areas...23 Figure 9: Overview of Future Development Stages...24 LIST OF TABLES Table 1: Potential Stakeholders for BACP, Kiev...6 Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 1 of 26

122 LIST OF ABBREVIATIONS BACP CSR EBRD GDP GFC IATA IFC ILC LFPR LISKI TEU TRACECA WD Boryspil Airport Commerce Park Corporate Social Responsibility European Bank for Reconstruction and Development Gross Domestic Product (aggregate value-added within a national or regional economy, usually expressed on an annual basis in terms of the local currency or an international currency such as US dollars or Euros; valued at either current or constant prices; with or without adjustment to purchasing power parity which takes account of the general price level compared to that in the USA) Global Financial Crisis International Air Transport Association International Finance Corporation (a member of the World Bank Group that provides loans, equity investment and advisory services to private enterprises) International Logistics Centre Labour Force Participation Ratio Ukrainian State Centre of Transport Service (a division of Ukrainian Railways that operates several intermodal freight terminals) Twenty-foot Equivalent Unit (a 20-foot long container being the standard unit for measuring containerised traffic) Transport Corridor: Europe Caucasus Asia Working Day Page 2 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

123 1 EXECUTIVE SUMMARY The site at Boryspil Airport Commerce Park (BACP) occupies a large area to establish an international logistics centre. The site is well located to serve the Kiev consumer market with logistics services. The site is well integrated into the road transport networks and has promising prospective for the railway corridor integration. On the 120 hectares provisionally allocated for logistics activities the construction of warehousing facilities and a customs terminal has started. Some space of the available area is already occupied and in operation. Around 75 hectares are still available for the development of future ILC. The main issue is the need for a direct railway link to the future ILC at BACP area. A feasibility study on behalf of the Ministry of Transport and Communications of Ukraine (MoTC) confirming a need for a passenger link from the main railway line Kiev Kharkov to the Boryspil International Airport was completed in Currently a new project approach initiated by the MoTC is under preparation and coordination. As Ukraine s major metropolitan area Kiev produces 21% of Ukraine s GDP. It is therefore the major centre of demand and consequently has attracted significant investment in logistics facilities. The conurbation is served by about 50 warehouse/distribution centres, mostly located close to the route of the planned Kiev Ring Road on previously agricultural land. The total area of warehousing is estimated at 1 million m 2, of which at least about 25% is surplus to demand at present because of the GFC. However, there is relatively little warehousing that could be described as A-Class. It is widely expected that future demand will shift towards higher quality storage and higher-level logistics services. There is only one inter-modal facility in Kiev: the LISKI freight terminal on the east side of the city. There is strong stakeholder interest in the proposed project. In the public sector, Boryspil International Airport and South-Western Railways are both supportive. In the private sector the Consultant has so far identified and interviewed: Three transport/logistics service providers with an interest in using, leasing or owning facilities within the proposed ILC. Two more which have no immediate interest, but do not rule out future involvement. One commercial enterprise, interested in reserving storage capacity to be managed by a logistics service provider. The network effects and synergies in relation to Boryspil Airport Commerce Park (BACP) are explained via an overview of the existing international transport routes. For Boryspil Airport Commerce Park (BACP) there are many important routes oriented for international transports. Some of the more important international routes are the road route M07 from Kiev towards the Polish border and from here further on to Warsaw. Furthermore the route M01 from Kiev going in northern and north-western direction towards the borders with Belarus and the Russian Federation is of vital importance. Finally the Kiev-Odessa highway M05 in southern direction from Kiev, which also connects to the important Ilyichevsk port around km south of Odessa is of high importance. Synergies with other ILCs in the European and Caucasian Parts of TRACECA can be obtained by an enhanced cooperation with the Logistics Centres in Odessa, Chisinau and in EU. The envisaged ILC will be further developed and upgraded to a highly productive and competitive logistics site as a part of the TRACECA network. The existing new infrastructure, warehousing buildings (A-Class) and customs terminal at BACP area will be integrated in the Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 3 of 26

124 overall development concept. The future ILC at BACP area forms the base for an improved distribution of imports to consumers in the Kiev region as well as new options for marketing of national goods and products in international markets. In Kiev conurbation a base-year potential market of 6Mt of LC-suitable cargo has been estimated. Based on the base-year estimate of 6Mt, the Consultant has adopted a potential ILC market share of 5%. Therefore BACP could expect in the base-year to attract 300,000t. The future annual cargo throughput capacity for the final development stage of the site has been estimated to be about 1,670,000 t per year. In addition the preliminary cargo projection for the envisaged container terminal potential throughput capacity has been estimated to be about 1,125,000 t per year. Future logistics trends have been Identified and the site s development potential has been considered, consequently, the and following three functional areas have been defined: Logistics Services: transport, handling and storage facilities for logistics providers and operators (land allocation: about 60%). Container Terminal: combined transhipment module rail-road, container service centre with container depot, container packing, container repair and cleaning (land allocation: about 10%). Logistics-Intensive Industries and Trade: manufacturing and commercial enterprises with high-level or specialized needs for logistics services (land allocation: about 30%). The functional concept is the basis for the further master plan elaboration. In the next step the functional modules will be specified From a socio-economic viewpoint, the proposed ILC would efficiently serve the Kiev conurbation, including satellite urban centres at Boryspil and Brovary, while reinforcing the trend towards dispersal of development away from the city centre and reducing traffic congestion. It would also reinforce regional disparity by promoting the economic dominance of Kiev and the already wide income gap between rural areas and urban centres, Kiev especially. Kiev produces mainly services, therefore consumers (and the suppliers of consumer goods) are likely to benefit more than producers. This applies especially to consumers of imported goods, which tend to be high-value with long supply routes. Therefore one cannot expect the project to have a large impact on poverty alleviation. Potential contributions include: Improving small farmers market access. Providing training to disadvantaged groups for new job opportunities. 2 INTRODUCTION AND CURRENT SITUATION The BACP site is located 35km from Kiev city centre. The plot is adjacent to Boryspil International Airport. It is located in a vicinity of a planned Kiev Ring Road to east of Boryspil. The site is 5km away from Kiev-Kharkov main road and about 7km away from trunk railway line. Currently, the BACP site has one existing road access to its western boundary. This is a 5,2km route directly connecting the site to the highway M06/E40 Kiev Kharkov. This road is crossing the village of Gora. This fact and its technical conditions do not allow significant additional road traffic. As mentioned above the total site size constitutes 350ha. There are reserved areas for future BACP planning with main focus on an air cargo centre, exhibition and congress centre and retail mall. However it is not intended to devote the entire site to logistics activities: the owner has Page 4 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

125 provisionally allocated 120ha, thereof 75ha are still available land plot for the future ILC development. Some warehouse and customs terminal construction started in Two A- Classes general warehouses (each with about 18,000m 2 building area) are already partially occupied and operational. The current tenants are Ukrainian logistics companies, which are providing warehousing and distribution services with main focus on foodstuff and automotive spare parts. At present there is no railway access, which is considered essential for a successful ILC. But a feasibility study for a passenger link Boryspil International Airport, completed in 2008, indicated that: The project would cost a total of US$285M ( 190M) including upgrading existing track and building 5.5km of new single-track link from the main railway line to the airport. The length of the envisaged tunnel crossing under the main highway Kiev-Kharkov is projected with 3.8km. Full implementation could be achieved by early Traffic of at least 20,000 passengers per day could be expected by The Consultant has been advised that a combined passenger/freight line would also be technically feasible with an optional connection to the envisaged ILC. 3 IDENTIFICATION OF MAJOR STAKEHOLDERS AND NEEDS 3.1 Status and Legal Framework for Site Developer BF Group is a privately owned company and is the outright owner of the site. The land is already zoned for industrial development (which includes logistics activities) and significant such development has already taken place in the form of warehousing. Public approval would be required for off-site infrastructure works (access road upgrading and provision of a railway spur). 3.2 Local Transport and Logistics Market Kiev is Ukraine s pre-eminent political, commercial and industrial centre, with a population in excess of 3 million. According to official statistics it produces 21% of national GDP. Therefore one can estimate that there is annual purchasing power of around 20 billion within the immediate catchment area of any Kiev-based logistics centre. Consequently, Kiev has attracted keen interest on the part of producers and distributors, and vigorous development of warehouse/distribution centres on the periphery. It is estimated that about 50 such centres exist as present, with a total of 1 million square metres of warehouse space. A typical warehouse/distribution centre would occupy 5-10ha of land, half of which under warehousing located on previously agricultural land with easy access to a radial highway and close to the planned route of the Kiev Ring Road. The initial impetus for such development came from speculative land developers but their interest and capacity has waned with the onset of the GFC. There is currently a surplus of warehouse capacity, estimated at about 25%, but the market expects this to be absorbed quickly when economic growth and consumer confidence are restored. Some warehouse/distribution centres mainly foreign-owned offer Class A warehousing, special storage for temperature-controlled and hazardous goods, customs clearance and a range of added-value services (picking-and-packing, labelling etc). However the norm is a middle-level standard and narrow range of facilities and services. It is expected that customers will increasingly be more demanding and be willing to pay a premium to have their demands met. Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 5 of 26

126 The most significant deficit at present is in inter-modal facilities. None of the warehouse/distribution centres have on-site railway access, container-handling capability or container storage facilities. The only inter-modal facility is the LISKI terminal between Kiev and Brovary. As reported in Progress Report I, LISKI-Kiev is equipped for container transshipment, storage, customs clearance and local distribution. However as a state-owned corporation LISKI is constrained with respect to investment and its relations with private commercial organisations, which are reluctant to engage closely with LISKI. 3.3 Overview and Demands of Major Stakeholders Potential Stakeholders To date the consultant has identified and met eleven potential stakeholders with a variety of interests. They are listed in Table 1 together with an assessment of the nature and degree of their interest and whether they should be considered as candidates for membership of the Stakeholder Group. Table 1: Potential Stakeholders for BACP, Kiev Nature of interest Organisation Description None None at present but this may change Potential user of services Potential settler or investor/financier Overall degree of interest [a] Interest in Stakeholder Group BF Group Owner of BACP site 5 Boryspil International Airport South-West Railways State Customs Service of Ukraine Adjacent landowner and operator of complementary logistics node Potential provider of rail link and transport services 4 3 Customs authority 3 M & S Logistics Transport/logistics service provider 3 Panalpina Transport/logistics service provider 4 Transco Transport/logistics service provider 1 Rhenus Revival Transport/logistics service provider 2 Kuehne & Nagel Transport/logistics service provider 4 Kimberly-Clark Ukraine Large-scale user of logistics services, mainly for imports to Ukraine 3 EBRD International finance institution 3 International Finance Corporation (IFC) International finance institution 4 [a] On a scale of 0 5, 5 denoting the highest level of interest. Page 6 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

127 3.3.2 Public Sector Stakeholders Airport Boryspil International Airport is operated by a state-owned enterprise. The management of this enterprise has expressed strong interest in the development of adjacent BACP as an ILC, foreseeing a significant increase in air cargo traffic and some increase in associated passenger traffic. The ILC would also enhance the economic case for a railway link to the airport. Railway South-West Railways has confirmed the technical feasibility of such a link, for which a prefeasibility study was prepared earlier in 2008 with the intention of attracting private investors. In addition the South-West Railways also supported the possibility of operating both passenger and freight services on it. The development of a major inter-modal logistics hub adjacent to the airport would strengthen investor interest and generate additional railway freight transport volumes. On the other hand the ILC might be considered a competitor to South-West Railways sisterorganisation LISKI. Customs The State Customs Service is interested to establish customs posts where there is a concentration of imported cargo, to achieve enhanced cost-effectiveness of revenue collection and to provide a more convenient service to clients. This contributes to an ongoing programme to relocate customs activities, introduce new technology and collaborate with other agencies to create a single office for border control. At Boryspil it would be necessary to agree responsibilities among three branches of the Customs Service: Kiev Oblast. Kiev Region. Aviation Customs Service (which already operates at Boryspil International Airport). Other agencies Meetings are yet to be held with local and oblast administrations Private Sector Stakeholders Logistics service providers The consultant has met five transport/logistics service providers. Of these one is already leasing warehouse space at BACP; and two have expressed strong interest in the proposed project as owners or lessees of warehousing and other facilities. They expressed particular interest in: Railway access and inter-modal transhipment facilities Enhanced road access. High security storage. Air-conditioned and temperature-controlled storage, including specialised warehousing for pharmaceutical products. Bonded warehousing available for long-term and temporary storage. On-site customs services. The other two have no interest at present but do not rule out the possibility of future involvement. This would depend on: Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 7 of 26

128 Recovery from the GFC. Development of new business with customers in Russia, China and Central Asia (because of BACP s situation on the east side of Kiev). Industrial and commercial companies The consultant has so far held discussions with only one client of transport/logistics service providers. Its requirements may be characterised generally as follows: Inter-modal transport potential. A stable outsourcing arrangement with a reliable logistics service. Reserved storage space to ensure an adequate safety stock level and capacity to service an expanding market. Careful handling to minimise damage to products. Auxiliary services, eg arrangements for re-cycling or re-packaging damaged goods. Flexibility to satisfy downstream customers requirements, changing arrangements for product sourcing etc Investors and Financiers BF Group has its own financial resources and established commercial credit sources. The Ukraine office of the International Finance Corporation (IFC) has expressed interest in opportunities to gain exposure to the transport and logistics sector, and had been unaware of the BACP development. Its initial reaction to the project was favourable and the consultant put the Corporation in direct contact with the site owner to explore options. EBRD expressed its interest in being informed about the development at BACP and the wish to take part in the stakeholder group. 3.4 TRACECA Network Effects and Synergies Introduction The urban, regional and national setting of the Boryspil Airport Commerce Park (BACP) site, and its transport connections with neighbouring countries, is described in the Inception Report (Country Report for Ukraine) and Progress Report I (Annexes 3 and 4). The ILC is situated adjacent to the Boryspil International Airport located around 35km east of the centre of Kiev. An air cargo centre is being projected and has been agreed upon with the airport, and synergies for future railway cargo have to be considered. Thus the BACP site has a tri-modal potential. The potentials are supported by good access to the road networks (especially following completion of the Second Ring Road), the strong ties to the industrial east of Ukraine, and current development progress of the ILC site. There are also potentials for cooperation with existing container terminals in the Kiev area, as well as international freight forwarders, terminal operators and logistics service provider companies are established in Ukraine. In addition the ILC could exploit that several combined container-trailer trains are passing through Ukraine and Kiev. The map below indicates the major existing and planned transport routes connecting the ILC with other hubs in Ukraine and with the neighbouring countries. Page 8 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

129 Figure 1: Road and Railway Routes Connecting Kiev with Neighbouring Countries Synergy with Other ILCs in the European and Caucasian Parts of TRACECA Existing International Transport Routes The existing main road routes connecting the BACP and Kiev with other hubs in Ukraine, with Black Sea ports and with neighbouring countries are as follows. They are all part of the Central axis formulated by the European Commission (ref. Annex 3, Ch. 2). The Central transport axis connects with the Northern axis in Brest, Minsk and Moscow: the E40/M06 highway between Kiev and the Polish border via Lvov, and in the direction of Krakow; this route is part of the Pan-European Corridor III; the E373/M07 road route between Kiev and Kovel via Korosten; from Kovel it passes the Polish border or Belarus via Brest, in both cases in the direction of Warsaw; the E95/E101/M01 highway from Kiev in northern and north-western direction towards the borders with Belarus and the Russian Federation (including connection with Moscow via Bryansk); the Kharkov highway (E40/M03) in eastern direction from Kiev; from Kharkov it passes the Russian border in the direction of Kursk and Moscow; the Dnepropetrovsk highway in south-eastern direction from Kiev; it leads further on to Donetsk and to Rostov-on-Don (in Russia); Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 9 of 26

130 the Kiev-Odessa highway (E95/M05) in southern direction from Kiev; it also connects with the important Ilyichevsk port around km south of Odessa; the road route from E95/M05 to Moldova/Chisinau via Uman/Nemirov. There is also a road route from E95/M05 via E577/M13 to the Moldovan border and from there to Chisinau via M21, but it passes through Transnistria. The above listed routes include direct road connections to the following Pan-European corridors: Corridor III - Berlin - Wroclaw - Krakow - Lvov - (M06/E40) Kiev, Corridor V - Trieste - Ljubljana - Budapest - Lvov, Corridor IX - Helsinki - Kiev - Odessa (M05/E95) - Chisinau - Bucharest. Road routes between Kiev and Minsk in Belarus could connect with the Baltic States. The existing railway routes from Kiev are: the railway corridor between Kiev and the Polish border (at Yagodin) via Korosten and Kovel, in the direction of Warsaw; the railway routes through Belarus (via Minsk or Baranavichy) in the direction of Vilnius in Lithuania; the railway routes between Kiev and the Russian border via Konotop, in the direction of Bryansk and Kursk and Moscow; the railway line between Kiev and Kharkov, with connection to the border with southern Russia, the domestic railway lines between Kiev and Odessa/Ilyichevsk. Some of these routes provide direct railway accesses to the Pan-European corridors as follows: Corridor III - Berlin - Wroclaw - Krakow - Lvov - Kiev, Corridor V - Trieste - Ljubljana - Budapest - Lvov, Corridor IX - Helsinki - Kiev - Odessa - Chisinau - Bucharest. In Kovel there is a bogie exchange facility for change between the broad CIS gauge of the Ukrainian railways and the European standard gauge, in order to serve rail traffic e.g. with Poland. Planned Upgrading of International Transport Routes The Second Ring Road around the Kiev region will provide convenient access to all of the major roads which connect Kiev with the rest of the country and with neighbouring countries. Elaboration of the National Transport System Strategy is under preparation. An ongoing EUfunded project is providing support to the Integration of the Transport System of Ukraine into the Trans-European Transport Network TEN-T. This project could indentify some priorities on upgrading of railway and road routes. Potential Relations with Other Hubs in Ukraine, Moldova and the Caucasus There are potentials for synergies with other freight terminals and distribution centres in the western region of Kiev. There would be advantage in establishing close relations and cooperation with the ILC in Odessa (Dry Port Euroterminal) and with the Ilyichevsk Commercial Sea Port, both with regard to logistics and ferry route services across the Black Sea. The Ro-Ro and rail ferry routes between Ilyichevsk and Poti/Batumi in Georgia constitute the only direct link with the ILCs and other hubs in Georgia, Armenia and Azerbaijan. Page 10 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

131 Inland water shipping could be assumed on Dnepr and thus provide an alternative outlet from Kiev to the Baltic Sea. Relations with Hubs in Romania, Bulgaria and Turkey Relations could be cultivated with the ILC in Moldova, if a decision is made to develop it, and with the ILC in Odessa, both with a view to enhancing trade relations between the Kiev region and Moldova, and as regards trade links with Romania and Bulgaria. The already existing ferry routes between Ilyichevsk and Turkish Black Sea ports could be serving increasing trade flows between Ukraine and Turkey Interconnections with EU Countries and the TEN-T As described above there are several road and railway routes linking the Kiev region and the rest of Ukraine with the TEN-T, notably via the EU countries bordering Ukraine: Poland, Slovakia, Hungary and Romania. In order for BACP to exploit these transport links, cooperation could be established with selected logistics centres in EU countries, considering the present and potential future foreign trade pattern between Ukraine and the EU Links with the Asian TRACECA Countries The maritime routes across the Black Sea between Ilyichevsk and Poti/Batumi combined with transit through Georgia and Azerbaijan, and the Caspian Sea routes via Baku/Alyat, are essential for linking with the Asian TRACECA countries. To make the trade links more efficient, cooperation on logistics and transport services could be established with the ILCs in Tbilisi and Alyat. A supplementary future route between Ukraine and the Asian TRACECA countries through the Caucasus could be established via Samsun port in Turkey, and from here by road or rail connections (via Kars in Turkey and through Georgia) to Alyat in Azerbaijan. The viability of this corridor would be improved if the borders between Armenia and Turkey/Azerbaijan are reopened. 4 FUNCTIONAL DESCRIPTION 4.1 Functional Description and Concept General Objectives The location, infrastructure network connectivity and site attributes offer good conditions and development potential for the future establishment of an ILC in the Boryspil Airport Commerce Park (BACP). The available land plot has in total a rectangular size of about 75ha (about 1,350-1,800m x 500m). This land plot is directly located on the southern and western boundary of the BACP area with a total size of about 350ha. There are additional expansion possibilities (to be specified with the land owner based on market demand) for the development of an ILC on land reserved for further BACP planning in the north. Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 11 of 26

132 Figure 2: Overview of Available Land Plot Boundary x x Border BACP Borderline Airport Road Railway Area for future ILC development Existing development Area for BACP planning Future BACP development opportunities and advantages of the site could be based on a reorientation and bundling of freight traffic flows from and to Russia, Central Asia (in particular Kazakhstan) and China, as well as on its proximity to producers and end-costumers in the Kiev region. In addition the envisaged air cargo centre at BACP and the projected future railway link to the Airport offer an option for a trimodal transport access option. There are also potential benefits from synergy effects and cooperation with the LISKI-Kiev Freight Terminal and the envisaged ILC at Dry Port Euroterminal in Odessa. The proposed ILC at BACP will be further developed and upgraded to a highly productive and competitive logistics site as a part of the TRACECA network. Regional and international stakeholders from the transport, cargo handling, warehousing and service sectors will have an opportunity to settle at the future ILC and to use the services offered there. The existing infrastructure, warehousing buildings (A-Class) and customs terminal (under construction) will be integrated in the overall concept. Page 12 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

133 4.1.2 Logistics Trends and Development Vision From the point of view of the short-term, mid-term and long-term developments in the field of logistics certain global, European and regional logistics trends can be identified (see Figure 3): Figure 3: Relevant Logistics Trends and Impacts Global European Regional Trends Impacts Logistics potential Intercontinental trade Increasing product complexity Need for cooperation and integration Consistent trend towards direct sales TRACECA corridor strengthening and networking Liberalisation of competition Promotion of intermodality Enterprise mobility Qualification scheme Networking of enterprises Development of training capabilities Expansion of logistics and after-sales activities Focus on supra-regional markets Large-scale production structures and supply chains Shortened market supply times Development of transnational approaches to marketing, eg commercial logistics Cooperative structures Qualifications requirements Demand for premium and innovative logistics solutions Emergence of new delivery chains for trade and distribution Increased demand for logistics services and products Supply chain management by networking transport modes (intermodality) Increased demand for qualified logistics stuff In Kiev region commercial enterprises and chain stores (like supermarkets or shopping malls) are increasingly demanding efficient, modern and reliable logistics services. The market is responding to this demand and currently about one million sqm of general warehousing facilities are available in Kiev region. But the majority of sites are small and don t have a railway access for intermodal transport. The establishment of a logistics hub in the form of an international logistics centre integrated into an international network along the TRACECA corridor enables the further strengthening of the regional logistics sector and intermodal transport. The future ILC at BACP, with its logistics facilities and services as well as transport connectivity, forms the base for an improved distribution of cargo import to consumers in Kiev region as well as more efficient marketing of national goods and products at international markets. The development potential for the future ILC at BACP area also can be determined by the preliminary economic data specified in the Chapter Cargo Volumes Cargo Volumes According to official trade statistics, Ukraine exported 137Mt and imported 94Mt in 2007 (the base year for cargo estimation and projection purposes). Of these volumes, 21Mt of export cargo (15%) and 9Mt of import cargo (10%) is estimated to be capable of containerisation and is therefore considered LC-suitable. The total of 30Mt is taken to be the minimum market that logistics centres of all kinds in Ukraine compete for. These low percentages are explained by the high share of bulk cargoes in Ukraine s trade. Mineral products (including fuels), chemicals and base metals accounted for 88% of all export/ import/transit freight tonnage carried by road and rail in 2006, and 87% in Bulk cargo is generally not LC-suitable. Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 13 of 26

134 The consultant has made the basic assumption that demand for goods and hence for logistics services is proportional to consumption, which depends on income, which depends on production. Therefore one may expect a location s share of the national logistics market to be approximately proportional to its share of GDP. The capital city, Kiev is Ukraine s dominant political, commercial, industrial and demographic centre. According to official statistics Kiev oblast produces 21% of national GDP. The city itself contains 60% of the oblast s population. Redefining the city to include the whole conurbation, including the cities of Brovary and Boryspil, that proportion raises to at least 70%. In terms of production, income and expenditure the Kiev conurbation would account for at least 80% of the oblast. It is reasonable, therefore, to assign 17% of GDP to the catchment area of the logistics sector located within the Kiev conurbation. For some products the effective catchment area would extend well beyond the conurbation. It is also common for goods to be handled and transshipped in Kiev, which is an important transport hub nationally. For these reasons the consultant has rounded the share up to 20%. This implies a base-year potential market of 30Mt 20% = 6Mt of LC-suitable cargo in Kiev conurbation. Several approaches were taken to testing the reasonableness of this estimate, in the absence of comprehensive data: There are reportedly about 1 million m 2 of warehouse space in Kiev, of which 25% is currently unused. Very broadly, it is estimated that the throughput capacity of a warehouse is 2t/m 2 /year. Therefore the current annual throughput of Kiev s warehouses is about 1Mm 2 75% 2t/m 2 = 1.5Mt. Adjusting for the pre-gfc situation, this is equivalent to between 2.0 and 2.5Mt. Given that the logistics market is still developing, and much LC-suitable cargo is simply delivered to customers own premises without intermediation by logistics service providers, this seems compatible with a potential market of 6Mt. An examination was made of Customs Service statistics on goods carried by road across the western borders of Ukraine. In 2007 a total of 31.2Mt were recorded, comprising 12.8Mt of exports, 7.4Mt of imports and 11.0Mt in transit. Of the imports, 2.7Mt crossed into Ukraine at Yagodin, two-thirds of which is believed to have been destined for Kiev. If 10% of all other export/import flows had Kiev as an origin, a destination or a transshipment point, the total Kiev traffic would have been 2.8Mt. Again, this seems compatible with a total potential market of 6Mt. The only intermodal transshipment facility in Kiev is the LISKI-Kiev Container Terminal. In 2007 it handled a total of 208,000 TEUs, 40% of which were empty. The estimated total throughput tonnage was almost 1Mt. As to market share, there is no empirical basis for estimation. The proposed ILC would occupy a market niche at the premium end, extending 3PL services into new areas and consequently attracting some customers who see no advantage in using the logistics service sector as it is now constituted. As a working assumption, subject to refinement as the study progresses, the consultant has adopted a market share of 5%. This percentage is applied to the estimated total potential market, recognising that in the medium term much of the potential will be unrealised by any logistics service provider. That is to say, using the base-year estimate of 6Mt, the proposed project could expect to attract 0.3Mt. To refine these estimates, and to make them more relevant to the master planning exercise, there has been an initial identification of sectors for further data collection and consultation: Main industries in Kiev region: steel industry, machine building, aircraft industry, chemical industry, construction materials, food processing, textiles, pharmaceuticals Page 14 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

135 Export main commodities (Ukraine): metallurgical products, chemical goods, machines, food and textiles1. Import main commodities (Ukraine): equipment, machinery, vehicles and chemical products which account for two-thirds of the total volume2 The basis for the further preparation of a preliminary cargo projection is the current available area potential of about 75ha for the future development of the ILC (see Figure 4). Regarding a preliminary cargo projection for the final stage of development in terms of area productivity (throughput capacity in t/ha per day) empirical data of representative logistics facilities and industries from European ILC s have been considered. Figure 4: Confirmed Available Area Size Plot Boundary x x Border BACP Borderline Airport Existing Road Projected Railway Area for future ILC development Area for BACP planning Projected Road 1 Federal Foreign Office of Germany 2 Transport & Logistics Report 2006, Logistics Platform LLC Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 15 of 26

136 Based on the available area as well as in accordance with the demands of the major stakeholders, three potentials functional areas have been defined (see Figure 7). For each functional area the potential brutto area size has been determined, which also includes green and traffic areas, administration and service facilities (see Figure 8). Therefore the relevant data input for the further estimation of area productivity is the netto area size (hence marketable area) of the functional areas. Due to empirical data and experience from comparable logistics locations and area size a netto area share from about 70% has been assumed. The preliminary cargo projection in terms of potential throughput capacity has been calculated based on the following data and assumptions for each functional area. 1. Functional area Logistics Services brutto area size: 45 ha netto area size (70%): 31,5 ha The following development structure of representative logistics facilities with their accordingly standard characteristics has been applied. No. logistics services facilities: by type plot area - standard - [ha] building area - standard - [m 2 ] troughput capacity [t/d] troughput capacity [t/pa] troughput capacity [t/ha] per d 1 Distribution warehousing (large size) 1, Distribution warehousing (large size) 1, Distribution warehousing (large size) 1, Distribution warehousing (large size) 1, Distribution warehousing (large size) 1, Distribution warehousing (mid size) 1, Distribution warehousing (mid size) 1, Distribution warehousing (mid size) 1, Refrigerated warehousing 1, Refrigerated warehousing 1, Forwarding with warehousing (large 11 size) 4, Forwarding with warehousing (large 12 size) 4, Forwarding with warehousing (large 13 size) 4, Forwarding with warehousing (mid 14 size) 3, Forwarding with warehousing (mid 15 size) 3, total 31, In result the potential throughput capacity of the functional area Logistics Services has been estimated to be about 837,500 t per year (final stage of development). It further equates to: throughput capacity per day: 3,350 t/d throughput capacity per ha and day: 106 t/ha per d 2. Functional area Logistics intensive Industries and Trade brutto area size: 22 ha netto area size (70%): 15 ha The following development structure of representative logistics facilities with their accordingly standard characteristics has been applied. Page 16 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

137 No. logistics intensive industries and trade: by type plot area - standard - [ha] building area - standard - [m 2 ] troughput capacity [t/d] troughput capacity [t/pa] troughput capacity [t/ha] per d 1 Food processing 1, Food processing 1, Automotive - CKD 1, Automotive - CKD 1, Machine building 1, Whole sale paper 1, Regional trade warehousing 3, Regional trade warehousing 3, total 15, In result the potential throughput capacity of the functional area Logistics intensive Industries and Trade has been estimated to be about 832,500 t per year (final stage of development). It further equates to: throughput capacity per day: 3,330 t/d throughput capacity per ha and day: 222 t/ha per d 3. Functional area Container Terminal In addition the potential throughput capacity of the functional area Container Terminal (plot area of about 8 ha including one standard combined transhipment module) has been estimated to be about 125,000 LU equivalent to 1,125,000 t per year (final stage of development). It further equates to: throughput capacity per day: 500 LU/d equivalent to 5,000 t/d No. container terminal plot area - standard - [ha] troughput capacity [t/d] troughput capacity [t/pa] troughput capacity [LU/d] troughput capacity [LU/pa] 1 combined transshipment module (4-loading tracks a 700m, two gantry cranes) 8, In total the preliminary cargo projection in terms of potential throughput capacity for the final stage of development of the future ILC including the two functional areas Logistics Services and Logistics intensive Industries and Trade has been estimated to be about 1,670,000 t per year. In summary it further equates for both functional areas to: throughput capacity per day: 6,680 t/d throughput capacity per ha and day: 144 t/ha per d In addition the preliminary cargo projection for functional area Container Terminal potential throughput capacity has been estimated to be about 1,125,000 t per year. Due to the specific intermodal function, operation and logistics services for the further two functional areas, this potential throughput capacity of the envisaged container terminal has been considered separately. An estimation of future modal split will be prepared in a next step based on further results of interviews with stakeholders and potential partners and regional statistics so far available Planning Guidelines and Potential Synergies In the process of developing a design concept a number of key site requirements and planning guidelines for the future ILC at BACP are to be considered, such as: Site requirements Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 17 of 26

138 Provision of adequate land supply for small, medium and large logistics companies Well accessible and capable road and future rail connection of the site and the individual land plots Unobstructed development potential of the site, no special construction requirements Time unlimited accessibility (24h operation, 7 days a week) Land plots are made accessible and construction is possible in a short-term (1-3 years) and mid-term (3-5 years) perspective Planning guidelines Realisation of a flexible, economically viable and realtime logistics concept Settling of logistics intensive industrial and trade companies of different size categories Integration of existing transport infrastructure, warehousing facilities and equipment Realisation of a functional, urban planning and ecologically sustainable overall concept Planning of common service and administration facilities for ILC-settlers and third parties Development of realtime construction modules and their integration for the implementation of the planning concept in development or expansion stages Coordination meetings with the land owner revealed that these essential requirements could be realised. Future site development will take place in expansion stages. This enables a flexible, demandoriented adjustment to market developments and reduces development costs. The site development concept is modular, allowing a flexible response to the needs of investors and customers. Innovation, employment security and creation of synergy potentials are important objectives of modern logistics centres. Synergies can be achieved through a future road-rail interface, creation of future-oriented logistics products and services, as well as modernisation of facilities and equipment and continuous standardization and optimization of operational processes Functional Areas and Main Transport Infrastructure For the definition of the Functional Areas and the subsequent functional concept a qualitative assessment of the development potential has to be made, based on the status quo. As the assessment of development potential shows, the future ILC at BACP offers favourable basic conditions (road network connectivity with future access to the projected Second Ring Road, advanced maturity of site development), good infrastructure potentials (land availability, on-site transport infrastructure) and in particular potentials for the implementation of efficient logistics and transport services. Page 18 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

139 Figure 5: Status Quo and Development Potentials Status quo Potential Basic conditions Road network connectivity Maturity of site development Strengthening logistics location Enhancement of competitiveness Infrastructure Available land area Internal transport infrastructure Intermodality Access to railway infrastructure Enterprise Logistics and transport services Logistics intensive Industries and Trade Railway operator Development potential: High Medium Low In summary the initial identified needs and site requirements of potential private sector stakeholder and partners are: Transport infrastructure - new capable and well accessible road access from/to highway Kiev Kharkov, - future direct railway access Facilities and logistics services - general warehousing facilities (A-class) enabling air-conditioned and temperaturecontrolled storage (e.g. pharmaceutical products), - distribution centre, - bonded warehousing available for long-term and temporary storage, - open and closed high security storage areas, - customs terminal and services, - container terminal and service centre (container depot), - handling facilities and storage area for project cargo Management and operation - cooperation with international experienced operators and partners, - professional ILC administration, management and marketing Based on these conditions as well as in accordance with the demands of the major stakeholders and potential partners for the future ILC site the following three functional areas and categories will be defined: Logistics Services (land allocation: about 60%) Container Terminal (land allocation: about 10%) Logistics Intensive Industries and Trade (land allocation: about 30%) Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 19 of 26

140 Figure 6: Specification of the Functional Areas and Categories Logistics of value chains Enterprise development Modular planning concept Logistics-Intensive Industries and Trade Advancement of manufactured products for the food industry Spare part logistics for automotive and aviation sector, agricultural machinery Settlement of industries of high creation of value: - Food processing, - White/brown goods, - Automotive industry, - Aviation industry. Land allocation: approximately 30% Consolidation point for trade and distribution of consumer goods Distribution centres for the food sector Specialized trading ventures for pharmaceutical products Entertainment electronics Logistics Services Location for cooperative logistics products Supply chain management (SCM) and contract logistics General and refrigerated warehousing Distribution logistics Forwarding and transportation Service centre: Administration, office, bank, agencies etc. Truck service centre: truck port for repair, maintenance, fuelling, tyre sales and repair etc. Restaurant, cafeteria, kiosk, social facilities Land allocation: approximately 60% The functional area of the Container Terminal includes a combined transhipment module railroad, container service centre with container depot, customs clearance and brokerage, container packing, container repair and cleaning (land allocation: about 10%). Further development of the ILC site requires a target-orientated selection of complementary enterprises and logistics services. The identified future logistics trends and development potentials have been considered and applied to the three functional areas (Logistics Services, Container Terminal, Logistics intensive Industries and Trade) of the site (see Figure 7). Page 20 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

141 Figure 7: Overview of Potential Functional Areas Container Terminal 10 % Logistics Services 60 % Logistics intensive Industries and Trade 30 % Functional Concept and Intermodal Operations The basis for developing the functional concept is the basic layout (confirmed available area size, see Figure 4) with the marked area boundaries and external transport connections. The available areas are clearly marked. They represent the future development potential for the proposed ILC at BACP. The future ILC area will have two road accesses which are directly connected to the highway M06/E40 Kiev Kharkov. A new access road is planned to be located on the eastern boundary. This route distance will be about 6,800m, bypassing the village of Gora. The second access road already exists on the western boundary and will be linked to the planned new road in the north by a new road section. The railway main line Kiev Kharkov lies at a distance of about 7km from the future ILC area. There are plans and a pre-feasibility study (2008) for the implementation of a future railway link for passenger transport to Boryspil International Airport. Direct railway access to the ILC is also envisaged for freight transport (container, general cargo and project cargo) with a 5,600m line branching off the projected airport railway link. In a meeting with the Consultant, the South-West Railways has confirmed in principle the technical feasibility of such railway access. The suitable Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 21 of 26

142 connection point, truck alignment and technical parameters have to be further discussed and coordinated with the responsible planning or engineering institutions. The site s location directly adjacent to the airport favours the development of further airport and aircargo related services and the intermodality of the future ILC. Air cargo facilities and other airport related investment is planned by BF Group. Modern technologies and operating procedures for container handling, storage and services as well as rail-road transshipment could also offer interesting development prospects. The future parcelling of individual functional modules due to different customers demands (size categories of the envisaged companies and facilities) enables a flexible adaptation to the space requirements. According to the estimated requirements (see Chapter 4.1.5) three functional areas for logistics services, container terminal and logistics-intensive industries and trade have been delineated. The functional area logistics services will be developed with its main focus on transport, handling and storage facilities for logistics providers and operators (like warehousing, distribution centres, truck port etc.). The functional area container terminal will include a combined transhipment module for the rail-road handling of container, semi-trailers and swap bodies. Furthermore a container service centre with container depot, customs clearance and brokerage, container packing, container repair and cleaning will be implemented. The functional area logistics intensive industries and trade will be developed with its main focus on the settlement of logistics-intensive industrial companies (like food processing companies or automotive industries) and commercial enterprises (distribution centres for retailers). The figure below shows the functional areas, on which the functional concept is based, the development axes and envisaged road and rail connections to the overall transport network. Page 22 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

143 Figure 8: General Alignment of the Functional Areas x x Border BACP Borderline Airport Existing Road Projected Railway Projected Road Area for BACP planning Area for Logistics Services Area for logistics intensive Industries and Trade Area for Container Terminal Based on the functional concept, in the next step the functional modules for the preparation of the master plan are worked out in detail. With the definition of development stages, which are planned in the further processing as fully functional units, the base for the further master plan elaboration is created and the functional concept is completed. Figure 9 depicts the main important, site-specific planning guidelines such as e.g. development axes, development stages, internal transport routes like main roads and envisaged container terminal, external road and envisaged rail connections. Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 23 of 26

144 Figure 9: Overview of Future Development Stages x x Border BACP Borderline Airport Existing Road Projected Railway Projected Road Area for BACP planning Area for Logistics Services Area for logistics intensive Industries and Trade Area for Container Terminal 4.2 Socio-Economic Impact Overview Kiev is served by three airports: Boryspil the main international airport in Ukraine (IATA code KBP) located 29km east of Kiev city. It is primarily a passenger airport but handles cargo too. It is currently being expanded to increase passenger capacity with the addition of two terminals. Gostomel an international cargo airport north-west of the city. Zhulyany a domestic passenger airport to the south. Boryspil is clearly predominant in terms of scale and service level, and adjacent land is already being developed for logistics and related services. Moreover the city of Boryspil is a substantial settlement in its own right and centre of Boryspil region, with a population of about 60, km to the north-west lies the fast-growing city of Page 24 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

145 Brovary, with a population of 90,000. Both are served by trunk railway lines converging on Kiev; and both lie close to the route of the planned Kiev Ring Road. Therefore a logistics hub at Boryspil would have the following positive socio-economic impacts: It would serve the Kiev conurbation, with a typical 1-hour delivery time to a destination in the city centre, and two significant satellite urban centres. It would reinforce the existing trend for development to the east of Kiev city, relieving population pressure, congestion and environmental stress in the capital. Its peripheral, well-connected location would allow deliveries by rail and road without adding heavy goods vehicles to the urban road network. The issue of urban road congestion deserves special mention. Recently introduced parking restrictions attest to the recognition by city authorities that congestion is a growing problem. Soviet-era city planning did not allow for large areas of off-street parking. Congestion is chiefly a result of the post-soviet explosion in private car ownership. However, heavy goods vehicles are an additional cause of traffic congestion in some parts of the city. There are negative factors too. Setting a major logistics hub in or near the existing political and commercial capital is likely to exacerbate regional disparity. According to official statistics Kiev city, with 6% of Ukraine s population, has a per capita income level that is 2.4 times that of the rest of the country. Kiev s population has been growing even while that of the country as a whole has been in decline. It is a reasonable assumption that improved efficiency in any sector of an economy will lead, directly and indirectly, to increased production, income and employment. This is undoubtedly true if the improved efficiency entails reduced costs to domestic producers, especially producers of exports or import substitutes. It is likely to be true if improved efficiency exerts downward pressure on consumer prices, since consumers will be able to consumer more goods with an unchanged income. Kiev is primarily a producer of services and a consumer of physical goods, so the impact on consumer prices is likely to exceed the impact on producer costs. It is also likely that imported goods will be affected more than those of domestic origin, for the following reasons: In 2008 exports were equivalent to 38% of GDP and imports were equivalent to 47%. Other things being equal, therefore, imported goods may be expected to attract a high proportion of project benefits. Being home to the most affluent households, Kiev is the centre of demand for high-quality and luxury goods, a high proportion of which are imported. Being of higher-value (on average) than domestic goods, imported goods are more likely to benefit from the improved logistics reliability and high-order services to be offered by the proposed ILC. Imported goods are transported over longer distances than domestic goods. Therefore they will be more affected by the proposed ILC s expanded inter-modal possibilities. Thus the project s main impact may be to make imports relatively cheaper, in which case the net effect could be to reduce domestic production, income and employment at least in the shortto-medium term while domestic producers respond to stronger external competition. Among the five direct beneficiary countries, Ukraine has the highest proportion of people living below the official poverty line: 37.7%. While there is significant poverty and homelessness in Progress Report II Annex 8 Ukraine: Boryspil (BACP) Page 25 of 26

146 Kiev, as well as extreme wealth, studies 3 show that poverty is more widespread and severe among the rural population. The following indicative statistics, cited by the World Bank in 2005, support this view: Labour force participation rate (LFPR): Kiev City 77%, Rural 64%. Core unemployment: Kiev City 3-4%, Rural 10%. Average agricultural wage < half the average industrial wage. It is not to be expected, therefore, that a project located at Kiev would have a major impact on poverty reduction. Its net impact may be negative, if it replaces low-skilled jobs in the existing transport/logistics sector with a smaller number of high-skilled jobs which are less accessible to the poor. Positive impacts would arise mainly from: Improving small farmers access to domestic and export markets, by bringing a reliable cold chain closer to the farm-gate. Providing training for the new job opportunities specifically targeted at disadvantaged groups in the vicinity. This may require a deliberate effort by the ILC operator in the context of corporate social responsibility (CSR), with support from government and/or external agencies. 3 For example: World Bank, Ukraine Poverty Assessment: Poverty and Inequality in a Growing Economy, Page 26 of 26 Annex 8 Ukraine: Boryspil (BACP) Progress Report II

147 x x Border BACP Borderline Airport Road Railway Area for future ILC development Existing development Area for BACP planning

148 x x Border BACP Borderline Airport Existing Road Projected Railway Projected Road Area for BACP planning Area for Logistics Services Area for logistics intensive Industries and Trade Area for a Container Terminal

149 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 9 Feasibility studies for the selected projects Ukraine: Dry Port Euroterminal Identification of Stakeholder Needs and Functional Description January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

150

151 TABLE OF CONTENTS 1 EXECUTIVE SUMMARY INTRODUCTION AND CURRENT SITUATION IDENTIFICATION OF MAJOR STAKEHOLDERS AND DEMANDS STATUS AND LEGAL FRAMEWORK FOR SITE DEVELOPER LOCAL TRANSPORT AND LOGISTICS MARKET OVERVIEW AND DEMANDS OF MAJOR STAKEHOLDERS Potential Stakeholders Public Sector Stakeholders Private Sector Stakeholders Investors and Financiers TRACECA NETWORK EFFECTS AND SYNERGIES Introduction Synergy with other ILCs in the European and Caucasian Parts of TRACECA Interconnections with EU Countries and the TEN-T Links with the Asian TRACECA countries FUNCTIONAL DESCRIPTION FUNCTIONAL DESCRIPTION AND CONCEPT General Objectives Logistics Trends and Development Vision Cargo Volumes Planning Guidelines and Potential Synergies Functional Areas and Main Transport Infrastructure Functional Concept and Intermodal Operations SOCIO-ECONOMIC IMPACT OVERVIEW LIST OF FIGURES Figure 1: Road, Rail and Sea Routes Connecting Odessa with Neighbouring Countries...8 Figure 2: Overview of EUROTERMINAL Dry Port Boundary and Potential Expansion Areas...12 Figure 3: Relevant Logistics Trends and Impacts...13 Figure 4: Confirmed Available Area Size Plot Boundary plus Expansion Areas...16 Figure 5: Status Quo and Development Potentials...19 Figure 6: Specification of the functional areas and categories...20 Figure 7: Overview of Potential Functional Areas...21 Figure 8: General Alignment of the Functional Areas...23 Figure 9: Overview of Future Expansion Stages...24 Figure 10: Overview of Future Completion Stage...25 LIST OF TABLES Table 1: Potential Stakeholders for Euroterminal, Odessa...6 Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 1 of 27

152 LIST OF ABBREVIATIONS BSEC Black Sea Economic Cooperation (a grouping of 11 countries: this project s 8 beneficiary countries plus Albania, Greece and Russia) EBRD European Bank for Reconstruction and Development (a bank owned and financed by European and other governments, the European Community and the EIB, headquartered in London. It provides loans and equity investment to private enterprises, especially those whose needs are not fully met by the market; and assists publicly owned enterprises in support of privatisation) EIB European Investment Bank (the European Union s long-term lending bank, providing capital on favourable terms for infrastructural and other projects in EU member-states and elsewhere in support of EU policy objectives) GDP Gross Domestic Product (aggregate value-added within a national or regional economy, usually expressed on an annual basis in terms of the local currency or an international currency such as US dollars or Euros; valued at either current or constant prices; with or without adjustment to purchasing power parity which takes account of the general price level compared to that in the USA) GFC Global Financial Crisis HHLA Hamburg Hafen und Logistik AG HPC Hamburg Port Consulting (a subsidiary of HHLA) ICSP Ilychevsk Commercial Sea Port IFC International Finance Corporation (a member of the World Bank Group that provides loans, equity investment and advisory services to private enterprises) IGR Income Gap Ratio (a measure of poverty severity) ILC International Logistics Centr ILO International Labour Office (a United Nations agency) LFPR Labour Force Participation Ratio LISKI Ukrainian State Centre of Transport Service (a division of Ukrainian Railways that operates several intermodal freight terminals) LLC Limited Liability Company TEU Twenty-foot Equivalent Unit (a 20-foot long container being the standard unit for measuring containerised traffic) TIR Transports Internationaux Routiers (usually pronounced Teer in all languages) TRACECA TRAnsport Corridor: Europe Caucasus Asia Page 2 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

153 1 EXECUTIVE SUMMARY The following positive changes have taken place since the Consultant s Progress Report I (August 2009) with respect to the status of this proposed and approved site: The estacada is complete and already in operation since October 2009, giving direct, dedicated and secure road access to the port. The construction works for the new 5.5ha customs terminal have been started. Important public sector stakeholders have given their explicit support; in particular the state-owned enterprise Odessa Commercial Sea Port (port operator) and the Railway Department Odessa Region. The logistics market in Odessa city and oblast is small relative to Kiev, and much less developed. For example, there is no significant demand for A-Class warehousing. But Odessa is a major gateway to Ukraine, therefore its hinterland can be said to extend to all parts of the country and, with regard to transit traffic, beyond. The process of identifying and interviewing potential private sector stakeholders is at an early stage. So far three private companies have expressed varying degrees of interest in the envisaged ILC: An Odessa Port container terminal operator, already operating as a container storage area on site and interested in further cooperation. A logistics service provider, interested in owning or leasing land plots at the site. A commercial enterprise, interested in reserving storage capacity to be managed by a logistics service provider. The Dry Port Euroterminal will be developed and upgraded to a competitive logistics site as integrative part of the TRACECA network. The site offers several logistic functions and well developed plots with an excellent infrastructure for logistics and industrial location. The existing new infrastructure, truck port, empty container storage and new customs terminal (still under construction) will be integrated in the overall development concept of the site. The main objective of the planned logistics centre is to support an integrated extension of the existing container handling and other logistics facilities in the Odessa Sea Port. Furthermore, the future ILC area forms the base for an improved distribution of cargo import to consumers in Odessa region as well as Ukraine and Moldova. In Odessa region a base-year potential market of 4.3Mt of LC-suitable cargo has been estimated. Based on this base-year estimate, the Consultant has adopted a potential ILC market share of 10%. Therefore Dry Port Euroterminal could expect in the base-year to attract 430,000t. The future annual cargo throughput capacity for the final development stage of the site has been estimated to be about 850,000 t per year. In addition the preliminary cargo projection for the envisaged container terminal potential throughput capacity has been estimated to be about 800,000 t per year. Future logistics trends have been identified and the site s development potential has been considered, and following three functional areas have been defined: Logistics Services: transport, handling and storage facilities for logistics providers and operators (land allocation: about 55%). Container Terminal: combined transhipment module rail-road, container service centre with container depot and empty container storage, container packing, container repair and cleaning (land allocation: about 25%). Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 3 of 27

154 Logistics-Intensive Industries and Trade: manufacturing and commercial enterprises with high-level or specialized needs for logistics services (land allocation: about 20%). The functional concept is the base for the further master plan elaboration and in the next step the functional modules for will be specified. Most industry is port-related, and much is also based on processing the products of Odessa s agricultural hinterland: 35% of jobs in Odessa oblast are agricultural. It is to be expected that the project would promote industrial development and diversification, expanding the market for agricultural products and also the demand for labour. This would have an immediate positive impact on poverty, the incidence of which is close to the national average (39% living on less than US$1/day). To achieve the full potential impact it may be necessary to implement training programmes to match labour supply and demand. 2 INTRODUCTION AND CURRENT SITUATION Dry Port Euroterminal is a functioning facility on a 50ha inland site located 2km west of the northern extremity of Odessa Commercial Sea Port and partially already in operation. The site preparation works are almost complete. The site is still being used for empty container storage (1.5 ha), under an arrangement with the port container terminal operator HPC, and as truck parking area (5.5 ha). Apart from the projected implementation of the new customs terminal in 2010, this will not change in the immediate future because of reduced traffic and uncertainty caused by the GFC. But the site owner, Euroterminal LLC, has made a commitment to developing the site as an ILC in collaboration with and supported by the present TRACECA project. The estacada is in operation and runs from the east side of the Dry Port Euroterminal site across the main railway line and into the port territory, where it provides access to all parts of the port. It is a dedicated road to which other traffic has no access, allowing the Dry Port Euroterminal site to be considered integral to the port itself for future customs clearance services under the Import-40 regime. Access to the public road network is limited to the 2-lane Khadzybeivska Road, which connects Odessa City to the trunk road E-58/M-05 at a T-junction 4km to the north-west of the Euroterminal Dry Port site. While there is no direct railway access to the nearby railway main line, the railway freight station Peresip is only 1km away to the north-east and the main marshalling yard Odessa-Sort is 5km to the north of Peresip. A future direct railway link to the Dry Port Euroterminal site in connection with an already existing branch line to the adjacent industrial area is possible. 3 IDENTIFICATION OF MAJOR STAKEHOLDERS AND DEMANDS 3.1 Status and Legal Framework for Site Developer Euroterminal LLC is a privately-owned company registered in Ukraine. It is the outright owner of the site. The land is already zoned for industrial development (which includes logistics activities) and the site is currently used for empty container storage and truck parking. Euroterminal LLC has already built access roads and the Odessa Commercial Sea Port has built an estacada (overpass) giving the site direct dedicated access to the port. Public approval would be required for additional off-site infrastructure works, in particular provision of a railway Page 4 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

155 spur. Adjacent land, that might be required for future ILC expansion, is owned by Odessa municipality. 3.2 Local Transport and Logistics Market Odessa is a city with a population of 1.2 million, and capital of Odessa Oblast with a total population of 2.7 million. The oblast is reported to produce 4.6% of Ukraine s GDP. The Port of Odessa is the largest in the country with a throughput of 31Mt in 2007 (before the GFC) including container traffic of 524,000 TEUs. Local demand for goods and services (considering only Odessa Oblast) is estimated at about 6 billion. A proportion of the demand for consumer goods is met by the so-called 7km market outside the Odessa City, to which goods are taken direct from the port in their shipping containers without the need for intervening logistics services. Consequently the warehousing/distribution sector in Odessa is much smaller and less developed than in Kiev. Moreover current demand is predominantly for B-Class warehousing and only somewhat for A-Class facilities. But the port s hinterland extends to the whole country, and indeed beyond since it handles a proportion of transit traffic. Moreover the proposed project would be designed mainly to facilitate inter-modal transhipment between road, rail and sea, with opportunities for added-value services. In this regard there are few competitors at present. Chief among them is the LISKI- Odessa container terminal at Usatova Station, 10km west of the port. However, Odessa also is seen by some logistics customers as a feasible distribution point for the Moldovan market, which for most products is too small to justify an independent distribution operation. 3.3 Overview and Demands of Major Stakeholders Potential Stakeholders To date the consultant has identified and met seven potential stakeholders with a variety of interests. They are listed in Table 1 together with an assessment of the nature and degree of their interest and whether they should be considered as candidates for membership of the Stakeholder Group. Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 5 of 27

156 Table 1: Potential Stakeholders for Euroterminal, Odessa Nature of interest Organisation Description None None at present but this may change Potential user of services Potential settler or investor Overall degree of interest [a] Interest in Stakeholder Group Euroterminal LLC Owner of site 5 Odessa Commercial Sea Port Railway Department, Odessa Region Adjacent landowner and operator of complementary logistics node Potential provider of rail link and transport services 3 4 Odessa Regional Council Local administration 4 State Customs Service of Ukraine Customs authority 3 EBRD [b] International finance institution 5 International Finance Corporation (IFC) Hamburg Port Consulting (HPC) Ukraine International finance institution 4 Container terminal operator 5 Kuehne & Nagel Transport/logistics service provider 4 Kimberly-Clark Ukraine Large-scale user of logistics services, mainly for imports to Ukraine 3 [a] On a scale of 0 5, 5 denoting the highest level of interest. [b] EBRD is already providing a co-financed US$27M ( 19M) loan for site construction works Public Sector Stakeholders Port The Port of Odessa is integral to the city and therefore cannot expand further. The operator (State Enterprise Odessa Commercial Sea Port ) supports the idea of a nearby facility that allows customs and logistics services to take place outside the port boundary. To this end the operator constructed the estacada that links Euroterminal to the port. Railway Dry-Port Euroterminal is close to Peresip railway freight station and the Odessa-Sort marshalling yard. There is a privately-owned branch line to the Empils paint factory close to the Euroterminal site, but its specifications do not meet those of the State Administration for Railway Transport for freight trains: in particular a minimum curve radius of 180m. Euroterminal LLC wants to have its own railway link and has commissioned a design by a private engineering firm. Construction of such a link is supported by the Railway Department, Odessa Region, which has declared itself willing to expedite necessary approval procedures. Page 6 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

157 Customs The State Customs Service is interested to establish customs posts where there is a concentration of imported cargo, to achieve enhanced cost-effectiveness of revenue collection and to provide a more convenient service to clients. This contributes to an ongoing programme to relocate customs activities, introduce new technology and collaborate with other agencies to create a single office for border control. The planned customs terminal on the territory of Dry Port Euroterminal is part documents the interest of the customs authorities in the development of the dry port. Other agencies The Odessa Regional Council has expressed strong support for the project; and nationally the State Agency for Investments and Innovations has identified Odessa as the principal target for investment in logistics facilities Private Sector Stakeholders Logistics service providers The consultant has met only one provider of warehouse/distribution services who has expressed interest in operating from Dry-Port Euroterminal. But the process of identifying and interviewing potential stakeholders is not yet complete. It appears that the following features are essential to attracting leading logistics companies to Euroterminal: Railway access and inter-modal transhipment facilities. Handling and road-rail transhipment facilities for containers, general cargo and project cargo. Bonded warehousing available for long-term and temporary storage. On-site customs services. Hamburg Port Consulting Ukraine (HPC), a member of the HHLA 1 Group, operates a container terminal at the Port of Odessa and has an informal joint venture agreement with Euroterminal for container stuffing at the site. It is intended to formalise this agreement and create a joint venture company. HPC has a strong interest in the development of an ILC that would allow it to expand its activities free from the physical constraints of the port. Industrial and commercial companies Several potential logistics customers have been identified but so far only one has been met. At present this company is conducting a review of its production/distribution strategy and it is not certain whether a logistics operation at Odessa will be required. If so it will be small-scale and characterised by: Inter-modal transport potential. A stable outsourcing arrangement with a reliable logistics service. Reserved storage space to ensure an adequate safety stock level and capacity to service an expanding market. Careful handling to minimise damage to products. Auxiliary services, e.g. arrangements for re-cycling or re-packaging damaged goods. Flexibility to satisfy downstream customers requirements, changing arrangements for product sourcing etc. 1 Hamburg Hafen und Logistik AG. Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 7 of 27

158 3.3.4 Investors and Financiers Euroterminal LLC has its own financial resources and access to capital. It is cooperating with HPC (and therefore with HHLA, which is a publicly listed company with a market capitalisation of 1.8 billion). As mentioned above, this cooperation is intended to be formalised as a joint venture. Moreover Euroterminal LLC has successfully negotiated a US$27M ( 19M) loan financed by the EBRD. This was approved on 22 September and announced on 24 September The amount of the loan is equivalent to 71% of the total project cost as originally conceived, comprising construction and equipment of a customs terminal, TIR parking lot, container depot and internal roads. The Ukraine office of the International Finance Corporation (IFC) is already familiar with the site. Privately owned infrastructure and superstructure are the priority subjects for IFC financing. IFC is interested to participate in the envisaged project stakeholder group. 3.4 TRACECA Network Effects and Synergies Introduction The map below indicates the major existing and planned transport routes connecting the ILC in Odessa with other hubs in Ukraine and with the neighbouring countries. Figure 1: Road, Rail and Sea Routes Connecting Odessa with Neighbouring Countries Page 8 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

159 Relations with the Ports in Odessa and IIyichevsk: Dry Port Euroterminal is envisaged mainly to serve as an extension and hinterland dry port to the existing container handling facilities within the Odessa Commercial Sea Port. Therefore its throughput is expected to be strongly correlated with that of the port. However, IIyichevsk Commercial Sea Port lies only 25km to the south. IIyichevsk is the largest Ukrainian port in terms of annual container throughput with 670,600 TEU in 2008 compared to 572,000 TEU for Odessa. Some of this container traffic is in transit through Ukraine. In addition, IIyichevsk Port serves several Ro-Ro and rail ferry routes to Poti/Batumi in Georgia, to Varna in Bulgaria, and to Derince (near Istanbul), Zonguldak and Samsun in Turkey Synergy with other ILCs in the European and Caucasian Parts of TRACECA Establishing relations and cooperation with IIyichevsk Commercial Sea Port would be essential (although there are also competitive aspects between the ports in Odessa and IIyichevsk), due to the container feeder routes and the ferry routes with ports in Georgia, Turkey and Bulgaria. Existing International Transport Routes: The Odessa region is one the main hubs of TRACECA, and it is directly linked by the road and railway network to the TRACECA-Corridor. The following main road routes connect the ILC plot in Odessa and the ports in Odessa and IIyichevsk with other hubs in Ukraine, other Black Sea ports and neighbouring countries: The Kiev-Odessa highway (E95/M05); The Nikolayev highway (E58/M14) between Odessa via Nikolayev and Crimea to the Russian border, and from here to the major Russian Black Sea port at Novorossiysk; the road route between Odessa/IIyichevsk and the Moldavian border via E95/M5 and M16/M14, and in Moldova leading to Chisinau via E581 or via R31-R30 (Tiraspol); from Chisinau there is road connection to the Romanian border; the road route between Odessa/IIyichevsk via E87/M15 (or via M22 to M05) to Giurgiulesti at the Danube River in Moldova; and from there further on to Bucharest and Constanta port in Romania; the road corridor between IIyichevsk/Odessa and the Polish border via M22 - E95/M05 - Uman - Nemirov - Vinnitsa - Ternopol - Kovel; and from there connections with the Polish border at Yagodin (via E373/M07) and the Belorussian border. These routes involve direct road connection to the TRACECA corridor via Odessa - E87/M15 - Ukrainian Border (Palanka) - R30- R31 - Chisinau, and via Odessa - E95/M05 - Kiev. The M05 joins the E87/M15 highway in southern direction with good access westward via M22 towards Giurgiulesti International Free Port (Moldavian river port on the Danube), and into Romania towards Bucharest and Constanta. The existing railway routes from Odessa/IIyichevsk are: the railway corridor to the Polish border (at Yagodin) via Klimentovo - Vinnitsa - Kovel; the railway route to the Moldavian border and Chisinau, and from here railway connections to Romania; the railway routes between Odessa/IIyichevsk and Kiev (principally the western route via Vinnitsa, which is the more direct route and is double-tracked the whole way); the eastward railway route between Odessa and the Russian border via Kherson; it further connects with the Crimea (Sevastopol) and with Novorossiysk. Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 9 of 27

160 Planned Upgrading of International Transport Routes: The Black Sea ring road project initiated by the Black Sea Economic Cooperation (BSEC) consists of about 7,500km of road around the Black Sea planned to be aligned about 4km from IIyichevsk in a westerly direction. However, realisation of the Ukrainian sector of this road project in the Odessa/IIyichevsk region is pending due to outstanding investment. There are plans to develop IIyichevsk Commercial Sea Port (ICSP), in particular to double its annual container handling capacity to 1.7M TEU by 2018 and further increasing it to 5M TEU. Potential Relations with Other Hubs in Ukraine, Moldova and the Caucasus: Synergies could be further enhanced by establishing cooperation with the ILC in Kiev, and with ILCs in the three TRACECA countries in Caucasus. It could also be mentioned that IIyichevsk port is the southern terminal of the Viking block train carrying containers and trailers that links the Black Sea to the Baltic Sea. Relations with Hubs in Romania, Bulgaria and Turkey: As in the case of the ILC in Kiev, relations could be cultivated with the ILC in Moldova, with a view to enhancing trade relations between the Odessa region and Moldova and to promote trade links with Romania and Bulgaria. Cooperation with Black Sea ports in Turkey could be considered as well, by establishing Ro-Roservices Interconnections with EU Countries and the TEN-T Synergies could be further enhanced by establishing cooperation with the ILC in Kiev, and with logistics centres in selected European countries. Alternative freight transport routes linking with EU countries are represented by river-going vessels connecting the Danube with the ports in Odessa or IIyichevsk, and the container feeder lines operating between Odessa/IIyichevsk and European ports located in the Mediterranean Links with the Asian TRACECA countries The maritime routes across the Black Sea between IIyichevsk and Poti/Batumi transit through Georgia and Azerbaijan, and the Caspian Sea routes via Baku/Alyat are essential for linking with the Asian TRACECA countries. To make the trade links more efficient, cooperation on logistics and transport services could be established with the ILCs in Tbilisi and Alyat. A supplementary future route between Ukraine and the Asian TRACECA countries through the Caucasus could be established from Odessa via Samsun port in Turkey, and from here by road or rail connections to Alyat in Azerbaijan. An ILC in the Odessa/IIyichevsk region would be ideally located geographically to exploit the transport links with the Asian TRACECA countries via the Black Sea routes, and via transit through Georgia and Azerbaijan. Page 10 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

161 4 FUNCTIONAL DESCRIPTION 4.1 Functional Description and Concept General Objectives The location of the Dry Port Euroterminal with its excellent infrastructure network connectivity offers good conditions and development potentialities for the establishment of an ILC in Odessa. The construction of the logistics centre is projected on a 50 ha land plot located in the north of Odessa in the industrial zone of the city. The land plot is owned by EUROTERMINAL LLC. It is envisaged to provide several logistic functions by development of the following main facilities: - customs Terminal - truck port TIR parking - warehouse complex - container terminal and container depot The main objective of the planned logistics centre is to support an integrated extension of the existing container handling and other logistics facilities in the Odessa Sea Port. It will be the first integrated logistics centre in the Ukraine, which has mainly been developed for on shore container processing. The Dry Port is characterised by large areas for a logistics centre development as well as the possibility of further extensions. The area of the Dry Port Euroterminal comprises 50 ha in total (about m x 500 m) and two additional extension areas of 40 ha and 300 ha. It is directly linked to the Odessa Sea Port by a new built flyover. Furthermore, there is nearby an existing branch line, which connects the direct adjacent industrial area with the port and a close marshalling yard. The first construction took place in 2007 and since 2008 the TIR Parking Lot and the Empty Container Depot have been operating for 24 hours 365 days a year. The next development stage is the already started construction of the customs terminal to be implemented in Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 11 of 27

162 Figure 2: Overview of Dry Port Euroterminal Boundary and Potential Expansion Areas Borderline Road Railway Area for future ILC development Existing development The Dry Port Euroterminal will be designed to concentrate special services concerning the customs clearance and the container handling. It represents a private sector involvement in developing the port infrastructure. Therewith, the efficiency and the competition in this market will increase and this tends to result in higher service quality. The future development opportunities and advantages of the site are based on the high capacity and additional land availability. The new built flyover and the current as well as the planned roads heading in all directions and the envisaged railway connection guarantee a high multimodal transport flexibility and reliability. Synergy effects are inherent to the system as the Dry Port Euroterminal is planned to provide several logistics functions, which will support an integrated extension of the existing container handling facilities in the Odessa Port. Further potential synergy effects with other ILC or regional LC sites, like cooperation and partnership with BACP in Kiev, are promising. The Dry Port Euroterminal will be developed as integrative part of the TRACECA network. It offers several logistic functions and well developed plots with an excellent infrastructure for logistics and industrial location. Page 12 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

163 4.1.2 Logistics Trends and Development Vision In regard to logistics developments - respecting short-/mid-/long-term trends certain tendencies such as global, European and regional trends can be defined (see Figure 3): Figure 3: Relevant Logistics Trends and Impacts Trends Impacts Logistics potential Global European Regional Intercontinental trade Increasing product complexity Need for cooperation and integration Consistent trend towards direct sales TRACECA corridor strengthening and networking Liberalisation of competition Promotion of intermodality Enterprise mobility Qualification scheme Networking of enterprises Development of training capabilities Expansion of logistics and after-sales activities Focus on supra-regional markets Large-scale production structures and supply chains Shortened market supply times Development of transnational approaches to marketing, e.g. commercial logistics Cooperative structures Qualifications requirements Demand for premium and innovative logistics solutions Emergence of new delivery chains for trade and distribution Increased demand for logistics services and products Supply chain management by networking transport modes (intermodality) Increased demand for qualified logistics stuff In Ukraine the development of competitive international logistics concepts is still in the beginning. The main logistics providers are international companies or their subsidiaries. The logistics market in Odessa city and oblast is small relative to Kiev, and much less developed. Currently there is no significant demand for A-Class warehousing. But Odessa is a major gateway to Ukraine, therefore its hinterland can be said to extend to all parts of the country and, with regard to transit traffic, beyond Cargo Volumes According to official trade statistics, Ukraine exported 137Mt and imported 94Mt in 2007 (the base year for cargo estimation and projection purposes). Of these volumes, 21Mt of export cargo (15%) and 9Mt of import cargo (10%) is estimated to be capable of containerisation and is therefore considered LC-suitable. The total of 30Mt is taken to be the minimum market that logistics centres of all kinds in Ukraine compete for. These low percentages are explained by the high share of bulk cargoes in Ukraine s trade. Mineral products (including fuels), chemicals and base metals accounted for 88% of all export/ import/transit freight tonnage carried by road and rail in 2006, and 87% in Bulk cargo is clearly not LC-suitable. Transit cargoes exceed exports and imports combined, representing 24% of international traffic carried by road, 46% by rail and 40% by sea. But bulk commodities predominate. For road and rail modes combined, mineral products, chemicals and base metals accounted for 88% of transit cargo in 2006 and 84% in At Odessa Port (export, import and transit cargo), bulk cargoes accounted for 84% of the tonnage in The main bulk commodities were petroleum products, liquefied gas, Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 13 of 27

164 agricultural products (vegetable oil, grain and sugar), ores, coal, metals and building materials. Almost 90% of non-bulk goods were containerised: 4.5Mt. The consultant has made the basic assumption that demand for goods and hence for logistics services is proportional to consumption, which depends on income, which depends on production. Therefore one may expect a location s share of the national logistics market to be approximately proportional to its share of GDP. Odessa Oblast has 5.2% of the country s population and produces 4.6% of national GDP. It may therefore be expected that the logistics sector in Odessa would handle 1.4Mt of the 30Mt base year tonnage of traded ILC-suitable goods. But Odessa is Ukraine s largest port, through which a quarter of the country s sea trade passes. If IIyichevsk is included, the proportion rises to 40%. The two ports handle container traffic equivalent to about one-third of the consultant s estimate of 30Mt for containerisable cargo. Therefore the potential market for logistics services in the vicinity of the two ports is far larger than the market that is dependent on the local (Odessa Oblast) economy. Indeed, a high proportion of goods for which logistics services are demanded elsewhere may also pass through logistics facilities at or close to the port of entry/exit. There is no empirical basis for estimating Odessa s share of the national market beyond Odessa Oblast. Based on the figures quoted above, a figure in the range 10-20% would seem reasonable. The consultant has conservatively adopted the lower end of this range, subject to further research and consultation within the logistics sector. This implies a total base-year market of 1.4Mt + [(30Mt 1.4Mt) 10%] = 4.3Mt. To test the reasonableness of this estimate, Customs Service data for 2008 were obtained and analysed. Reported tonnages exported and imported through the ports of the Odessa region were factored by commodity-specific estimates of the proportion likely to be LC-suitable. It was found that: Of 22.2Mt exported in 2008, only 2.4Mt (11%) was considered LC-suitable. The main LCsuitable commodities were, ranked by tonnage: Inorganic chemicals. Oil seeds and oleaginous fruits. Ferrous metals. Wood and articles of wood. Animal or vegetable fats and oils. Food industry residues and prepared animal fodder. Of 7.6Mt imported, 1.9Mt (25%) was considered LC-suitable. The main LC-suitable commodities were, ranked by tonnage: Vehicles. Nuclear reactors, boilers, machinery and parts thereof (for maintenance of Ukraine s nuclear power generating capacity). Polymers, plastics and products thereof. Electrical machinery and equipment. Wood and articles of wood. Fish, crustaceans, molluscs etc. Commodities such as grain and fertilizer are assumed to be shipped in bulk, with no potential for containerisation or handling at a logistics centre. Regional data from the Customs Service should be treated with caution, because it relates to where goods were cleared, not necessarily where they are to be handled or consumed. The Page 14 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

165 above figures are no more than indicative of the potential scale of the logistics market in Odessa, at a time when demand was suppressed by the GFC. One can only say that the figures do not contradict the estimated market size of 4.3Mt in the base year. As to market share for the proposed ILC, there is again no empirical basis for estimation. The proposed ILC would occupy a market niche at the premium end, extending 3PL services into new areas and consequently attracting some customers who see no advantage in using the logistics service sector as it is now constituted. As a working assumption, subject to refinement as the study progresses, the consultant has adopted a market share of 10%. This percentage takes into account the very competitive environment of the logistics sector in the Odessa region, and the likelihood that most customers will give their business on the basis of price rather than on the quality and range of services offered. On the other hand it also takes into account the Euroterminal site s unique access to Odessa Port via the estacada. The percentage is applied to the estimated total potential market, recognising that in the medium term much of the potential will be unrealised by any logistics service provider. That is to say, using the base-year estimate of 4.3Mt, the proposed project could expect to attract 0.4Mt To refine these estimates, and to make them more relevant to the master planning exercise, there has been an initial identification of sectors for further data collection and consultation: Main industries in Odessa region: mechanical engineering, chemical, petrochemicals, pharmaceuticals, food industry, metallurgical and metal-working industry, light industry Export main commodities (Ukraine): metallurgical products, chemical goods, machines, food and textiles 2. Import main commodities (Ukraine): equipment, machinery, vehicles and chemical products which account for two-thirds of the total volume 3 The basis for the further preparation of a preliminary cargo projection is the current available area potential of about 44ha for the future development of the ILC (see Figure 4). Regarding a preliminary cargo projection for the final stage of development in terms of area productivity (throughput capacity in t/ha per day) empirical data of representative logistics facilities and industries from European ILC s have been considered. 2 Federal Foreign Office of Germany 3 Transport & Logistics Report 2006, Logistics Platform LLC Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 15 of 27

166 Figure 4: Confirmed Available Area Size Plot Boundary plus Expansion Areas Borderline Existing Road Projected Road Existing Railway Projected Railway Area for future ILC development Area for customs terminal Extension Area I Based on the available area as well as in accordance with the demands of the major stakeholders, three potentials functional areas have been defined (see Figure 7). For each functional area the potential brutto area size has been determined, which also includes green and traffic areas, administration and service facilities (see Figure 8). Therefore the relevant data input for the further estimation of area productivity is the netto area size (hence marketable area) of the functional areas. Due to empirical data and experience from comparable logistics locations and area size a netto area share from about 80% has been assumed. The preliminary cargo projection in terms of potential throughput capacity has been calculated based on the following data and assumptions for each functional area. 1. Functional area Logistics Services with total brutto area size of 24ha brutto area size: 19 ha (without truck port of about 5ha) netto area size (80%): 15 ha Page 16 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

167 The following development structure of representative logistics facilities with their accordingly standard characteristics has been applied. No. logistics services facilities: by type plot area - standard - [ha] building area - standard - [m 2 ] troughput capacity [t/d] troughput capacity [t/pa] troughput capacity [t/ha] per d 1 Distribution warehousing (large size) 1, Distribution warehousing (large size) 1, Distribution warehousing (mid size) 1, Distribution warehousing (mid size) 1, Distribution warehousing (mid size) 1, Refrigerated warehousing 1, Forwarding with warehousing (large size) 4, Forwarding with warehousing (large size) 4, total 15, In result the potential throughput capacity of the functional area Logistics Services has been estimated to be about 415,000 t per year (final stage of development). It further equates to: throughput capacity per day: 1,660 t/d throughput capacity per ha and day: 111 t/ha per d 2. Functional area Logistics intensive Industries and Trade brutto area size: 9 ha netto area size (80%): 7 ha The following development structure of representative logistics facilities with their accordingly standard characteristics has been applied. logistics intensive industries and trade: No. by type plot area - standard - [ha] building area - standard - [m 2 ] troughput capacity [t/d] troughput capacity [t/pa] troughput capacity [t/ha] per d 1 Food processing 1, Food processing 1, Automotive - CKD 1, Machine building 1, Whole sale paper 1, total 7, In result the potential throughput capacity of the functional area Logistics intensive Industries and Trade has been estimated to be about 435,000 t per year (final stage of development). It further equates to: throughput capacity per day: 1,740 t/d throughput capacity per ha and day: 249 t/ha per d 3. Functional area Container Terminal In addition the potential throughput capacity of the functional area Container Terminal (plot area of about 11 ha including one adapted combined transhipment module of 8ha and additional empty container storage of about 3ha) has been estimated to be about 80,000 LU equivalent to 800,000 t per year (final stage of development). It further equates to: throughput capacity per day: 320 LU/d equivalent to 3,200 t/d Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 17 of 27

168 No. container terminal plot area - standard - [ha] troughput capacity [t/d] troughput capacity [t/pa] troughput capacity [LU/d] troughput capacity [LU/pa] 1 combined transshipment module (4-loading tracks a 450m, two gantry cranes) 8, In total the preliminary cargo projection in terms of potential throughput capacity for the final stage of development of the future ILC including the two functional areas Logistics Services and Logistics intensive Industries and Trade has been estimated to be about 850,000 t per year. In summary it further equates for both functional areas to: throughput capacity per day: 3,400 t/d throughput capacity per ha and day: 155 t/ha per d In addition the preliminary cargo projection for functional area Container Terminal potential throughput capacity has been estimated to be about 800,000 t per year. Due to the specific intermodal function, operation and logistics services for the further two functional areas, this potential throughput capacity of the envisaged container terminal has been considered separately. The new customs terminal will provide customs clearance services for almost all imported container from Odessa port under the Import-40 regime starting in Therefore in import from Odessa port further cargo volumes of about 100 up to 150 containers per day have to be expected. An estimation of future modal split will be prepared in a next step based on further results of interviews with stakeholders and potential partners and regional statistics so far available Planning Guidelines and Potential Synergies In the process of design concept development a number of key site requirements and planning guidelines for the future ILC at Dry Port Euroterminal are to be considered, such as: Site requirements Provision of adequate land supply for small, medium and large logistics companies Well accessible and capable road and future rail connection of the site and the individual land plots Unobstructed development potential of the site, no special construction requirements Time unlimited accessibility (24h operation, 7 days a week) Land plots are made accessible and construction is possible in a short-term (1-3 years) and mid-term (3-5 years) perspective Planning guidelines Realisation of a flexible, economically viable and real-time logistics concept Settling of logistics intensive industrial and trade companies of different size categories Integration of existing transport infrastructure and equipment, the projected customs terminal, TIR Parking and the empty container depot Realisation of a functional, urban planning and ecologically sustainable overall concept Planning of common service and administration facilities for ILC-settlers and third parties Development of real-time construction modules and their integration for the implementation of the planning concept in development or expansion stages Page 18 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

169 Coordination meetings with the land owner revealed that these essential requirements could be realised. The future site development will take place in expansion stages. This enables a flexible, demand-oriented adjustment to the market development and reduces development costs. The site development concept is modular, allowing a flexible response to the needs of future investors and customers. Innovation, employment security and creation of synergy potentials are important objectives of modern logistics centres. Important synergies can be achieved through future road-rail interfaces, creation of future-oriented logistics products and services, as well as modernisation of facilities and equipment and continuous standardization and optimization of operational processes Functional Areas and Main Transport Infrastructure For the definition of the Functional Areas and the subsequent functional concept a qualitative assessment of the development potential has to be made, based on the status quo. Figure 5: Status Quo and Development Potentials Status quo Potential Basic conditions Road network connectivity Maturity of site development Strengthening logistics location Enhancement of competitiveness Infrastructure Available land area Internal transport infrastructure Intermodality Access to railway infrastructure Enterprise Logistics and transport services Logistics intensive Industries and Trade Railway operator Development potential: High Medium Low As the assessment of the development potential shows, the future ILC at Dry Port Euroterminal offers favourable basic conditions (road network connectivity, advanced maturity of site development, projected customs terminal), good infrastructure potentials (land availability, existing on-site road and utility infrastructure, future access to the projected EUROTERMINAL private road, projected railway access) and, in particular, potentials for the implementation of efficient logistics services. In summary, the initial identified needs and site requirements of potential private sector stakeholder and partners in particular are: Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 19 of 27

170 Transport infrastructure - new capable and well accessible road access via the Port flyover to the Odessa Sea Port and the EUROTERMINAL Private Road to the E-road 95 Odessa Kiev, - direct capable railway access Facilities and logistics services - distribution centre, - bonded warehousing available for long-term and temporary storage, - open and closed high security storage areas, - customs terminal and services, - container terminal and service centre (container depot), - handling facilities and storage area for project cargo Management and operation - cooperation with international experienced operators and partners, - professional ILC administration, management and marketing Based on these conditions as well as in accordance with the demands of the major stakeholders and potential partners for the future ILC site, the following three functional areas and categories shall be defined: Logistics Services (land allocation: about 55%) Container Terminal (land allocation: about 25%) Logistics intensive Industries and Trade (land allocation: about 20%) Figure 6: Specification of the functional areas and categories Logistics of value chains Enterprise development Modular planning concept Logistics intensive Industries and Trade Advancement of manufactured products for the food industry Spare part logistics for automotive sector, agricultural machinery Settlement of industries of high creation of value: - Food processing, - White/brown goods, - Automotive industry. Land allocation: approximately 20% Consolidation point for trade & distribution of consumer goods Distribution centres for the food sector Entertainment electronics Logistics Services Location for cooperative logistics products Supply chain management (SCM) and contract logistics General and refrigerated warehousing Distribution logistics Forwarding and transportation Multipurpose rail-road transhipment area (e.g. grain) Service center: Administration, office, bank, agencies etc. Truck service center: truck port for repair, maintenance, fuelling, tyre sales and repair etc. Restaurant, cafeteria, kiosk, social facilities Land allocation: approximately 55% Page 20 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

171 The functional area of the Container Terminal includes a combined transhipment module railroad, container service centre with container depot and additional empty container storage, customs clearance and brokerage, container packing, container repair and cleaning (land allocation: about 25%). The further development of the ILC site requires a target-orientated selection of complementary enterprises and logistics services. The identified future logistics trends and development potentials have been considered and applied to the three functional areas (Logistics Services, Container Terminal, Logistics intensive Industries and Trade) of the site (see Figure 7). Figure 7: Overview of Potential Functional Areas EUROTERMINAL Dry Port Logistics intensive Industries and Trade 20 % Logistics Services 55 % Container Terminal 25 % Functional Concept and Intermodal Operations The development of the functional concept and the concept of use is grounded on the basic layout (confirmed available area size, see Figure 4) with the marked area boundaries, extension areas and external transport connections. The available areas are clearly marked. They represent the future development potential for the proposed ILC at Dry Port Euroterminal area. The future ILC area will have two road accesses - to the highway M05/E95 Odessa Kiev and via the Port Flyover to the Odessa Sea Port. The Port Flyover is in operation and links the Dry Port with the Sea Port in a distance up to 5km. The new projected private road access will be located on the south west corner of the area. Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 21 of 27

172 The railway freight station Peresip in the north of the Dry Terminal is the only option for train formation. As a result of a meeting held by the consultant, the Railway Department Odessa Region, Ukraine has confirmed to promote the envisaged future railway link and is willing to support the required approval procedures. There are first designs for a future railway link, prepared by a private engineering company in In general, this railway access is feasible in connection with an already existing branch line. The existing branch line to adjacent industrial area is owned by a private company. The envisaged railway link from the future ILC area to an access point of the branch line will have a length of about 700 m. The location of the Dry Port, directly connected to the Odessa Sea Port, favours the development of further logistics intensive services and the intermodality of the future ILC. A projected customs terminal and modern technologies for container handling, storage and services as well as envisaged rail-road transhipment offer interesting development perspectives. The existing TIR Parking and the empty container depot, located along the south borderline, will be relocated in the north direction. The future parcelling of the individual functional modules enables a flexible adaptation to the space requirements due to different customers demands (size categories of the envisaged companies and facilities). According to the defined surface functions (see Chapter 4.1.5) the three functional areas for logistics services, container terminal and logistics-intensive industries and trade have been made transparent. The functional area logistics services will be developed with main focus on transport, handling and storage facilities for logistics providers and operators (like warehousing, distribution centres, truck port with TIR parking etc.). The functional area container terminal will include a combined transhipment module for the rail-road handling of container, semi-trailers and swap bodies. Furthermore a container service centre with container depot and empty container storage, customs clearance and brokerage, container packing, container repair and cleaning will be implemented. The functional area logistics intensive industries and trade will be developed with main focus on the settlement of logistics intensive industrial companies (like food processing companies) and commercial enterprises (distribution centres for retailers). The figure below shows the functional areas, on which the functional concept is based, the development axes as well as future road and envisaged rail connections to the overall transport network. Page 22 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

173 Figure 8: General Alignment of the Functional Areas EUROTERMINAL Dry Port Area for Logistics Services Customs terminal Borderline Existing Road Projected Road Existing Railway Projected Railway Area for Logistics Services Area for logistics intensive Industries and Trade Area for Container Terminal Area for customs terminal Extension Area I Based on the functional concept the functional modules for preparation of the masterplan are worked out in detail in the next step. With the definition of development stages, which are planned in the further processing as fully functional units, the base for the further master plan elaboration is created and the functional concept is completed. Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 23 of 27

174 Figure 9: Overview of Future Expansion Stages EUROTERMINAL Dry Port Development Stage III Customs terminal Borderline Existing Road Projected Road Existing Railway Projected Railway Area for Logistics Services Area for logistics intensive Industries and Trade Area for Container Terminal Area for customs terminal Extension Area I Figure 9 depicts the main important, site-specific planning guidelines such as e.g. development axes, development stages, internal transport routes like main roads and envisaged railway sidings, external road and envisaged rail connections. Page 24 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

175 Figure 10: Overview of Future Completion Stage EUROTERMINAL Dry Port Warehousing Customs terminal Borderline Existing Road Projected Road Existing Railway Projected Railway Area for Logistics Services Area for logistics intensive Industries and Trade Area for Container Terminal Area for customs terminal Extension Area I Figure 10 shows the envisaged final development zones for the main logistics functions such as container terminal, container depot, TIR parking and warehousing. 4.2 Socio-Economic Impact Overview The population of Odessa city is 1.1 million. That of the more extensive metropolitan area is 1.25 million, which is about half the population of Odessa oblast. The oblast borders Moldova and extends south to the Danube, which constitutes the border of Ukraine with Romania. With 33,300km 2 it accounts for 5.5% of the country s total land area. Odessa is the focal point of the oblast s transport network. It is also Ukraine s leading port, with a total turnover of 34.6Mt in This was about 25% of all Ukrainian port turnover. Containers accounted for a significant proportion of this tonnage: 570,000 TEU. Odessa port is integral to the city, which constrains its expansion. Separate dry port facilities are therefore essential to its continuing development. Conversely, dry port facilities are necessary to relieve the city of traffic and environmental pressure arising from increased port activity. The Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 25 of 27

176 estacada (overpass) which links the port to the Euroterminal site is already responsible for reduced heavy goods traffic on urban streets. 70% of the oblast s land area is arable. Conditions are well suited to animal husbandry and the cultivation of oilseeds, grains, sugar beet and fruit (including wine grapes: half the country s vineyards are in Odessa oblast). The agriculture sector provides 35% of the jobs in Odessa oblast, compared with 24% nationally. The agricultural sector also provides a base for a substantial food processing industry, chiefly edible oil production and wine-making. The manufacturing sector also includes chemical, petrochemical, machine-building, vehicle assembly and consumer goods industries. Most industrial activity is located close to the ports of Odessa and IIyichevsk. Odessa is reputed to be among the richest cities in Ukraine, but official statistics for 2008 show the average per capita income in Odessa oblast to be 10% below the national average (or 2% below the national average excluding Kiev). This is probably attributable to the above-average share of agriculture in the regional economy. By two measures of poverty Odessa oblast is close to the national average 4 : Type 1 poverty: percentage of population living on <US$1/day Odessa oblast 37% Ukraine 39% Income gap ratio (IGR): the difference between the mean income of poor individuals and the poverty line, expressed as a percentage of the poverty line: Odessa oblast 31% Ukraine 28% Therefore an important question is, How far would the proposed project contribute to reducing poverty? The first point to make is that Odessa port s significance does not depend on its immediate hinterland: it serves the whole country as well as providing a gateway for transit cargoes. However, if the project would create new employment opportunities in Odessa, it has the potential to reduce poverty. It might realistically be expected to do this in the following ways: As a dry port with a direct connection to Odessa port, it would overcome existing physical constraints to allow continuing expansion of the port s turnover. In turn, this would promote the establishment of new and expanded manufacturing activity in the vicinity of the port, with a probable bias towards export-orientated industries. Given the agricultural strength of the hinterland, one would also expect a bias towards food processing and other agriculture-related industry. As it is envisaged, an ILC would incorporate a wider range of services and value-adding activities than exist at present. This is likely to generate more jobs than would be lost due to improved efficiency. According to sample surveys based on the ILO definition, the unemployment rate in Odessa oblast in the first half of 2009 was 7.7%, compared with 9.9% nationwide and 7.2% in Kiev city (the lowest rate). Throughout the economy there is believed to be a high level of underemployment. In 2005 the ILO 5 reported that the Ukrainian labour force participation rate (LFPR) 4 5 Source: Institute for Economic Research and Policy Consulting in Ukraine / German Advisory Group on Economic Reform, Poverty in Ukraine, Igor Chernyshev, ILO Working Paper 76, Socio-Economic Security and Decent Work in Ukraine: A Comparative View and Statistical Findings, October Page 26 of 27 Annex 9 Ukraine: Dry Port Euroterminal Progress Report II

177 was 62% (compared to a European median 6 of 68%); and 18% of Ukrainian workers were employed for fewer hours than they were able and willing to work. An earlier report 7 estimated the scale of underemployment at 14% of working time. The implication is that a sufficient pool of labour exists to support substantial expansion of productive capacity. Skills are another matter. The ILO report breaks down the incidence of underemployment by occupational group. Not surprisingly, the highest incidence is among elementary occupations. The same report also shows that only 10% of Ukrainian employees received job-related training in the past year, compared with a European median of 32%. There is little doubt that if new or enhanced skills are required, and the local labour force is to benefit from opportunities for better-paid and more secure employment, employers will have to commit themselves to training. 6 7 European comparisons involve slightly different sets of countries, sometimes including Canada and/or the USA. Simon Clarke, Poverty in Ukraine, Progress Report II Annex 9 Ukraine: Dry Port Euroterminal Page 27 of 27

178 Borderline Road Railway Area for future ILC development Existing development

179 x x Border BACP Area for BACP planning Borderline Airport Area for Logistics Services Existing Road Area for logistics intensive Industries and Trade Projected Railway Area for a Container Terminal Projected Road EUROTERMINAL Dry Port Area for Logistics Services Customs terminal

180 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Annex 10 Identification of Potential ILC sites in Moldova January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

181

182 TABLE OF CONTENTS 1 SELECTION AND MICRO ANALYSIS OF POTENTIAL ILC SITES MOLDOVA Introduction and Overview of potential ILC sites International Airport Marculesti (IAM) Land Plot... 5 LIST OF FIGURES Figure 1: Overview - Site Locations in Moldova... 3 Figure 2: Overview of estimated LC-cargo potential in Moldova... 4 Figure 3: IAM land plot - Macro Location... 5 Figure 4: IAM land plot - General View... 6 LIST OF TABLES Table 1: MCA factsheet International Airport Marculesti (IAM) Land Plot Progress Report II Annex 10 Page 1 of 12

183 LIST OF ABBREVIATIONS 3PL CT CTM EGW EBRD EGA EU 3 rd Party Logistics Container Terminal Container Transhipment Module Population Equivalent (to per capita) European Bank for Reconstruction and Development Economic Growth Area European Union EUR Euro (also abbreviated as ) FEZ FIAM GDP GIFP IAM ILC IT JSC JV LC MAM MCA PPP SEZ TEN TEU TIR TOR TRACECA USAID Free Economic Zone (where imports and internal transactions are free of taxes) Free International Airport Marculesti Gross Domestic Product Giurgiulesti International Free Port International Airport Marculesti International Logistics Centre Information Technology Joint Stock Company Joint Venture Logistics Centre Development company is real estate manager of the Free Economic Zone at IAM Multi-Criteria Analysis (also known as Multi-Variety Analysis, MVA) Public-Private Partnership Special Economic Zone Trans-Europe Network Twenty-foot Equivalent Unit Transport Internationaux Routiers (a system enabling specially licensed vehicles to carry freight across national borders with minimal customs procedures) Terms of Reference (of the present project, unless stated otherwise) Transport Corridor Europe Caucasus Asia United States Agency for International Development Page 2 of 12 Annex 10 Progress Report II

184 1 SELECTION AND MICRO ANALYSIS OF POTENTIAL ILC SITES 1.1 Moldova Introduction and Overview of potential ILC sites The macro-level multi-criteria analysis (MCA) as presented in the Inception Report identified Chisinau and Giurgiulesti as promising regions for location of the logistics centre, although the latter scored lower. Three specific sites have now been assessed using micro-level MCA: Chisinau Container Terminal. Giurgiulesti International Free Port. International Airport Marculesti (IAM) land plot. The first two of these were documented in Progress Report I in July The third site, the Moldovan state enterprise Aeroportul International Marculesti, was analysed subsequently at the request of the Beneficiary. This request was made in September 2009 and was endorsed by the EC. The sites locations are presented in the Figure 1 below. Figure 1: Overview - Site Locations in Moldova Progress Report II Annex 10 Page 3 of 12

185 Eight hundred thousand inhabitants or about 20 per cent of Moldova s 4.3 million population live in Chisinau. The capital is directly located on the road and railway network of the TRACECA Corridor, connecting it to Ukraine and Romania. Giurgiulesti is situated in the extreme southern tip of Moldova, 220 km from Chisinau, at the confluence of the Prut River and the Danube. It is Moldova s only port, affording it access to the Black Sea downstream and through the Danube system to Central Europe upstream. The port covers the area between the Romanian border mid-stream in the Prut and the Ukrainian border in the east. The location is linked to the road and railway network of the TRACECA corridor as well as directly to the Rhine-Main-Danube waterway corridor (TEN VII). The port has almost no hinterland, and the number of population residing in the area is low. The population of Giurgiulesti region is about 10,000. The nearest sizeable town is Galati, 15 km away in Romania, with a population in excess of 300,000. The International Airport Marculesti is located in the north-east of Moldova in the district of Floresti, near the city of Floresti and about 150 km from Chisinau. The distance to Balti is about 30 km. In the north of the country Balti is the major industrial, cultural and commercial centre and transportation hub. The site is directly located on the TRACECA railway line to Ukraine and Romania. The road distance to the Ukrainian border is about 50 km, and to the Romanian border about 100km. The overall cargo potential of freight suitable for a logistics centre is presented in Figure 2, based on the applied methodology. Figure 2: Overview of estimated LC-cargo potential in Moldova Moldova (2007) Category and potential of Goods for Logistics Centre Export Import to to Export + Import to Logistics Centre potential Goods A - Goods to B - Goods C - Goods to to Logistics Centre not potential Goods Moldova Potential of LC - Goods to Population LC-Goods / Inhabitant 0,568 to/ew Chisinau (Metroregion) 1. Potential of LC - Goods Population to LC-Goods / Inhabitant 0,568 to/ew Page 4 of 12 Annex 10 Progress Report II

186 1.1.2 International Airport Marculesti (IAM) Land Plot Site location in regard of national and international road and railway network The International Airport Marculesti (IAM) is located about 300 m south of the TRACECA railway line (not electrified) connecting Ukraine (Klimentovo) and Romania (Ungheni). The site is indirectly linked to the TRACECA road corridor via M2 (about 150 km): Chisinau - M21/E577 - Transdnistria - Ukrainian Border - M13/E577 - M05/E95 - Kiev, Chisinau - M1 - Leuseni (Romanian Border), Chisinau - M3 - Giurgiulesti. Figure 3: IAM land plot - Macro Location Site centrality and transport connection in the micro region The available IAM land plot is situated in the south-west part of the territory of the International Airport Marculesti, which is about 266 ha in total extent. The land plot is located between the villages Marculesti in the west, Lunga in the south, and Gura Cainarului and Prajila in the east. The distance to Floresti city in the east is about 6km. A country road (about 4km, poor condition and limited traffic capacity) connects the land plot with the main road R13 (Balti Rezina) and to highways M2 and M14 (Balti Chisinau). At the former part of the IAM territory (about 2 km in the north-east) is a branch line (about 240m, owned by MAM) enabling an optional direct railway access to TRACECA railway line. The nearby railway junction Marculesti is at a distance of about 1km in north-east direction of this branch line connection point. Site location and logistics surroundings The available land plot is multiangular in shape and comprises about 60 ha (maximum 1,300 m x 900 m). The owner is the Moldovan state enterprise Aeroportul International Marculesti. The territory for development has good bearing soil but is slightly sloping towards the south-east. The difference in level is about 5m, therefore some site levelling works would be required. Progress Report II Annex 10 Page 5 of 12

187 The land plot is for the most part a greenfield area and was already in use as part of the former military aerodrome. An underground fuel reservoir was removed because of a risk of soil contamination. There is existing water pollution due to aircraft operations. The existing infrastructure consists of some paved and unpaved roads as well as military facilities including a radar station and small hangars. Some of the hangars are already in use for the temperature guided storage of fruits (e.g. apples and other agriculture products), others are prepared for use as aircraft/helicopter repair hangars and production facilities. The main potential expansion area (also former IAM territory) consists of about 40 ha adjacent to the north of the IAM territory borderline, parallel to the railway main line. This expansion area would enable a direct link to the railway main line and access to the railway junction Marculesti via the existing branch line. An additional optional expansion area of about 60 ha is located adjacent to the south and south-eastern borderlines of the available land plot and limited by the river banks of the Raut. Figure 4: IAM land plot - General View Source: Aeroportul International Marculesti The closest urban centre is Floresti, capital of Floresti District, with a population of 17,000. It lies close to the M2/M3 motorway that runs from Giugiulesti in the south through Chisinau to Soroca on the northern border with Ukraine. Its main function is as an administrative and market centre for an agricultural hinterland. Furthermore the glassworks is located in Floresti. With a population of over 120,000 Balti is the second city of Moldova; one of five designated municipalities; and one of three territorial units. It has a diverse manufacturing sector including food processing, textiles, furniture, agricultural machinery, construction materials, chemicals and Page 6 of 12 Annex 10 Progress Report II

188 a range of light industries. Historically, a number of Soviet military production units were concentrated in this area. The urban economy supports several major retail outlets. Apart from Marculesti, the city has two airports of its own: Balti International Airport (with passenger and freight facilities but no regular passenger flights) and Balti City Airport (for light aircraft in connection with agricultural aviation, emergency services, other public service uses and pilot training). Balti is also the centre of a designated Economic Growth Area (EGA) extending over 3,980 km 2 with a population of almost 0.5 million. This hinterland supplies Balti City s manufacturing sector with agricultural raw materials: chiefly oilseeds, milk, sugar beet, grain, grapes and mineral water. The Consultant observed extensive apple cultivation around Marculesti. Foreign-registered trucks (TIR) waiting to load with apples, presumably for export. Some industries are also located in the vicinity of the IAM. A petroleum storage depot (capacity: 14,000 t) is about 1km to the north. The mineral water plant (well-known national brand) is situated about 1 km to the west. A refrigerated storage facility (capacity: 1,500 t) is situated about 2 km to the west of the IAM. Future development opportunities of the LC location site The International Airport Marculesti (IAM) received according to Law No.178 the status of Free International Airport Marculesti (FIAM) in The FIAM was created to promote and facilitate the development of air transportation, aviation services, export of industrial and agricultural products as well as foreign trade. In addition the development of an international logistics centre is envisaged, supporting further economic development and attracting international and national investors. The IAM has already registered 10 resident companies providing business activities associated with the aviation sector, infrastructure developing and services for the settled companies. The development company MAM is real estate manager of the Free Economic Zone at FIAM and administrate leasing receipts. A first research of the Consultant regarding the situation of the regional agricultural sector revealed that: Apples are the most commonly grown fruit in Moldova, accounting for 61% of the total orchard area and 73% of the country s 439 kt annual fruit crop. Most apples are grown in the north of the country, where climatic conditions are best. Apples are exported fresh, dried and as natural and concentrated juice. The main markets are Belarus, Kazakhstan, Russia, Ukraine, Romania, Germany and Poland. But even fresh fruit is exported as far as Libya and Jordan. A breakdown of trade statistics has not been found, but total Moldovan exports of fruit and fruit/vegetable preparations were worth US$137 million in Apples are believed to represent a significant proportion. Market analysis under the ongoing USAID-funded Agribusiness Development Project suggests that there is scope to increase the scale of Moldova s fruit processing industry. The main constraints are on the supply side: ageing orchards, high-cost cultivation technology, poor harvest and post-harvest handling, labour shortage. With government and donor support, the establishment of high-quality logistics facilities in the heart of an apple-growing region may catalyse efforts to overcome these problems, by offering cost-effective and reliable means to access profitable export markets. With USAID sponsorship an analysis was made of sectoral cost structures. It was found that distribution costs represented a high proportion of total costs in the food processing and textile Progress Report II Annex 10 Page 7 of 12

189 sectors especially: between 9% and 18%. A general recommendation was made to improve companies distribution systems; and, more specifically, to create specialised distribution structures to access external markets. The Consultant has also researched the location of other FEZ/SEZs that might be considered competitors to the available land plot on FIAM: In Moldova itself there are seven, the closest of which are at Otaci and Ungheni. Others are located further south, at Chisinau, Tvardita, Taraclia, Vulkanesti and GIFP. Romania has a similar number, all but one being located on the River Danube. The exception is Arad-Curtici on the Hungarian border, 500 km from Marculesti. In Ukraine there is Zakarpattya ( Transcarpathia ) SEZ comprising an area of 738 ha but with a hinterland of 12,800 km 2 in Western Ukraine. This hinterland has a population of 1.3 mln and including the cities of Uzhgorod, Mukachevo, Khust and Beregovo. It also includes the border transport hubs of Uzhgorod and Chop, orientated towards Slovakia and Hungary. Slovakia has no FEZ/SEZs. In the context of the EU the whole country is deemed to have an attractive labour market and tax regime. The Consultant has identified the following preliminary future development and business opportunities, some of them based on the status of the Free Economic Zone: Food and fruit processing General warehousing and temperature guided storage of agricultural products. Distribution of agricultural products for international and local market. Storage and distribution of spare parts for agricultural machinery. High quality storage and distribution of spare parts for the local and regional aviation sector, assembling of vehicles. Value added logistics services for local and regional aviation sector as well as local industries. Attracting and settlement of logistics intensive producers or assembling companies Truck port Summary and Outlook IAM received the status of Free International Airport Marculesti (FIAM) in 2008 and now has 10 resident companies. A feasibility study for the development of the available land plot had already been prepared in The Moldovan Government provides legal support in terms of developing the available land plot as part of the free economic zone. Furthermore the Moldovan Ministries of Economy and Defense, local authorities and state enterprise Aeroportul International Marculesti are willing to facilitate and support the development of a future LC. Hence the further development of the FIAM has the official status of a National Project. The location and site attributes offer generally good conditions for the future establishment of logistics facilities and services. But the unfavourable site location in regard to the connectivity to the international transportation network enables only slight and limited integration possibilities for the future TRACECA network integration. Except for the neighbouring designated Economic Growth Area, with Balti as its centre, the site lacks a significant economic hinterland and population of end-consumers. Furthermore it must be expected that the site will face competition with the existing Balti-Leadoveni International Airport (about 45 km distance) and other FEZ/SEZs in the region. Page 8 of 12 Annex 10 Progress Report II

190 Therefore the site scored 60 as per MCA - fact sheet International Airport Marculesti (IAM) land plot. However the land plot does offer feasible opportunities for the potential development of a regional logistics node with its main focus on serving and supporting the local agricultural and aviation sector, with some potential for nation-wide distribution. The further development should also aim to maximise its future integration in the regional transportation network and to achieve synergies as a logistics node in particular with Chisinau economic region. Overview of initial identified requirements Review of the feasibility study for the land plot development prepared in Current strategy concept and master plan (so far available) should be discussed with the Moldovan state enterprise AIM and development company MAM. An assessment should be made of the capacitiy and condition of existing facilities, including infrastructure and utilities. Estimates should be made of the effort required to (a) construct the planned new water pipeline; (b) upgrade the existing access road; (c) construct the planned new direct access road bypassing the village; and (d) establish direct railway access via the existing branch line and railway junction Marculesti. Progress Report II Annex 10 Page 9 of 12

191 Table 1: MCA factsheet International Airport Marculesti (IAM) Land Plot International Airport Marculesti (IAM) Land Plot overall score = 60 Assessment function 1 Site attributes Units 1.1 Size ha Available land plot: about 60 ha Site layout 1.3 Land suitability (type of ground) classification / description classification / description Scale 1-5 Multiangular site layout, max. 1,300 m x 900 m 3 Area is slightly sloping in south-east direction (level difference of about 5 m), good bearing soil, but risk of polluted areas because land plot is part of the IAM territory (about 266 ha) and was formerly used as a military aerodrome Expansion possibilities % About 40 ha to the north of the IAM territory, parallel to railway main line. This expansion area would enable a direct link to the railway main line (not electrified) via branch line (length: about 240 m) and access to the railway junction Marculesti in northeast direction (about 1 km). About 60 ha to the south and south-east of the available land plot Connectivity to routes and networks (access routes) distance in km (linear) Direct access to the main road R13 (Balti Rezina) via country road (about 4 km) Connectivity infrastructure investment need classification / description Projected new direct access road via country road to main road R13 (about 4 km), crossing railway main line. Enabling of direct link to the railway main line (not electrified) via existing branch line (length: about 240 m) by reacquiring of about 40 ha to the north of the IAM territory. Construction of new water pipeline is under construction (currently two wells only provide water by the hour). 2 2 Site centrality 2.1 City and consignees vicinity / Distance linear km and catchment area About 6 km to Floresti city in east and 28 km to Balti city in west-south direction In vicinity of industrial area (mainly producers) distance in km (linear) Petroleum storage depot (capacity: about 14,000 t) about 1 km in the north. Mineral water production (well-known national brand) about 1 km in the west. Glassworks located in Floresti Vicinity of ports / airports distance in km (linear) Directly located at IAM territory. About 45 km to Balti- Leadoveni International Airport and about 160 km to International Airport Chisinau. 5 Page 10 of 12 Annex 10 Progress Report II

192 Assessment function Units Scale Vicinity to existing freight forwarding areas and logistics facilities distance in km (linear) Refrigerated storage facility (capacity: about 1,500 t) about 2 km in the west. Using of former hangars on the IAM territory for temperature guided storage of fruits (e.g. apples). 1 3 Network connectivity 3.1 Road connections distance in km (linear) or plans Indirect road connection to the TRACECA corridor via M2 (about 150 km): Chisinau - M21/E577 - Transnistria - Ukrainian Border - M13/E577 - M05/E95 - Kiev, Chisinau - M1 Leuseni (Romanian Border), Chisinau - M3 - Giurgiulesti Rail connections distance in km (linear) or plans Optional railway access to TRACECA railway line Ungheni (Romanian Border) - Balti - Klimentovo (Ukrainian Border) about 2 km in the north-east via branch line (owned by MAM) on former IAM territory Logistics Centre integration into transport network classification / description Slight and limited integration possibilities for connectivity and network integration. 2 4 Site and surroundings 4.1 Region / District impact factors (conflicts with other land users) classification / description So far no evident problems expected (possibly from small residential areas in the east) Site-specific impact factors classification / description So far no specific development plans of the adjacent land plots are specified. Limits for height of construction so far unpredictable (due to IAM territory). Additional construction works for site levelling required (see 1.3) Traffic impact factors classification / description Poor condition and limited traffic capacity of existing access road (about 400 m) and country road crossing the village to main road R13 (about 4 km). New direct access road bypassing the village is planned Environmental impact factors classification / description Area is part of the IAM territory and was already as former military aerodrome in use. An underground fuel reservoir was removed (risk of contaminated soils). Already existing water and noise pollution (due to air operation). 2 5 Planning reliability 5.1 Maturity of project classification / description Area is part of the IAM territory and was already as former military aerodrome in use. Feasibility study was prepared in IAM received status of Free International Airport in Development company MAM is real estate manager of the Free Economic Zone and administrate leasing receipts. 3 Progress Report II Annex 10 Page 11 of 12

193 Assessment function Units Scale Funding possibility classification / description Legal support of the Moldovan Government in terms of developing the available land plot to a free economic zone and logistics centre, but no budget support Right of property classification / description The land plot is owned by the Moldovan state enterprise Aeroportul International Marculesti Conflict risks or restrictions classification / description Competition with Balti-Leadoveni International Airport (about 45 km distance). Capacity and condition of railway junction Marculesti has to be further checked Public support classification / description Moldovan Government, Ministries of Economy and Defense, local authorities and state enterprise Aeroportul International Marculesti are willing to facilitate and support the development of a future LC. Official status as National Project. 5 Page 12 of 12 Annex 10 Progress Report II

194 MCA Micro Level Assessment: Overview Scoring Results Benificiary Macro Site 1 Site attributes 2 Site centrality 3 Network 4 Site and 5 Planning reliability Country Region connectivity surroundings Overall Score I Score II Score I Score II Score I Score II Score I Score II Score I Score II Score Weight 25% 20% 10% 15% 15% 15% 0,25 30% 30% 10% 30% 0,15 40% 40% 20% 0,20 30% 30% 20% 20% 0,20 30% 20% 20% 15% 15% 0,20 Assessment function Armenia Yerevan Apaven CT ,6 0,4 0,75 0,6 0,6 0,74 0,9 1,5 0,4 1,2 0,60 1,2 2 0,6 0,76 0,9 1,2 0,6 0,8 0,70 1,2 0,6 0,8 0,6 0,6 0,76 0,71 Yerevan-Airport ,5 0,8 0,4 0,75 0,6 0,3 0,84 0,6 1,2 0,5 1,2 0,53 1,2 1,2 0,6 0,60 0,9 1,2 0,6 0,6 0,66 1,2 0,6 0,6 0,45 0,45 0,66 0,66 Azerbaijan Baku BISTP - Alyat ,25 1 0,3 0,75 0,75 0,75 1,20 0,9 0,9 0,5 0,3 0, ,6 0,92 1,5 1,5 1 0,6 0,92 1, ,75 0,75 1,00 0,89 Georgia Tbilisi TAM Tbilisi ,25 1 0,5 0,75 0,75 0,6 1,21 1,5 1,5 0,5 1,5 0,75 2 1,2 1 0,84 1,5 1, ,00 1, ,6 0,45 0,85 0,93 GRDC ,25 0,2 0,3 0,45 0,45 0,45 0,53 1,5 1,5 0,5 1,5 0,75 2 0,4 0,8 0,64 1,5 1,5 1 0,8 0,96 1, ,75 0,45 0,88 0,75 Railway CT-Veli ,3 0,6 0,45 0,3 0,41 0,3 1,5 0,5 1,5 0,57 1,2 2 0,2 0,68 0,9 0,9 0,6 0,6 0,60 1,2 0,6 1 0,45 0,45 0,74 0,60 Moldova Chisinau Railway CT Chisinau ,6 0,3 0,6 0,75 0,6 0,71 1,2 1,5 0,3 1,2 0, ,00 0,9 0,9 0,8 1 0,72 0,9 0,4 0,6 0,45 0,3 0,53 0,72 Balti International Airport Marculesti (IAM) 1 0,6 0,3 0,6 0,45 0,3 0,81 0,6 0,9 0,5 0,3 0,35 1,2 1,2 0,4 0,56 1,2 0,9 0,4 0,4 0,58 0,9 0,4 0,8 0,6 0,75 0,69 0,60 Giurgiulesti GIFP ,25 0,4 0,2 0,15 0,75 0,45 0,80 0,3 0,3 0,1 0,3 0,15 1, ,92 1,2 0,9 0,6 0,8 0,70 1, ,75 0,75 0,94 0,70 Ukraine Kiev LISKI-Kiev Terminal ,25 1 0,3 0,15 0,6 0,45 0,69 0,6 1,5 0,1 1,2 0,51 1,6 1,6 0,6 0,76 1,2 1,2 0,6 0,8 0,76 1, ,75 0,75 1,00 0,74 Kiev BACP ,25 1 0,5 0,75 0,6 0,45 1,14 0,6 0,6 0,5 1,2 0,44 2 0,4 0,8 0,64 1,5 0,9 0,6 1 0,80 1,2 0,8 1 0,6 0,75 0,87 0,78 Kiev Krushinka Logistics Park ,25 0,4 0,5 0,3 0,45 0,3 0,55 0,3 0,9 0,1 1,2 0,38 2 0,8 1 0,76 1,5 1, ,00 1, ,45 0,6 0,91 0,72 Kiev Fossy-UVK Brovary ,5 0,4 0,5 0,6 0,3 0,3 0,65 0,9 0,9 0,1 1,2 0,47 1,2 0,4 0,8 0,48 0,9 1,2 0,6 0,8 0,70 1,2 0,8 1 0,6 0,75 0,87 0,63 Odessa Dry Port Euroterminal ,75 1 0,4 0,75 0,6 0,6 1,03 1,5 1,5 0,4 1,5 0,74 1,6 1,6 1 0,84 1,5 1,5 0,8 0,6 0,88 1, ,6 0,75 0,97 0,89 Odessa LISKI-Odessa Terminal ,5 0,6 0,5 0,6 0,75 0,6 0,89 0,6 1,2 0,4 1,2 0, ,00 1,2 1,2 0,8 1 0,84 1,5 0,8 0,8 0,45 0,6 0,83 0,81 Ilyichevsk IlyichevskVneshTrans ,5 0,6 0,4 0,3 0,6 0,6 0,75 0,3 1,5 0,5 1,5 0,57 1,2 1,6 1 0,76 1,5 0,9 0,8 1 0,84 1,5 0,8 1 0,15 0,6 0,81 0,75 Ilyichevsk Ilyichevsk "Dry Port" ,5 0,45 0,45 0,45 0,96 1,2 0,3 0,1 0,9 0,38 1,2 1,6 0,8 0,72 0,6 0,9 0,4 0,6 0,50 0,6 0,6 0,8 0,15 0,45 0,52 0,62 Odessa Ilichovka ,6 0,5 0,15 0,6 0,3 0,79 0,3 0,3 0,1 0,9 0,24 1,6 1,2 0,8 0,72 0,9 0,3 0,8 0,4 0,48 0,3 0,6 0,4 0,15 0,15 0,32 0,51 Progress Report II Additional materials

195 International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine Progress Report II Additional materials January 2010 This project is funded by the European Union A project implemented by Dornier Consulting GmbH / NTU / Inros Lackner AG 1

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197 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 PROGRAMME Participants as per list attached Purpose of the Study Tour and Stakeholder Seminar: Promotion and dissemination of TRACECA activities Increase awareness of the TRACECA corridor capabilities Promotion of the network of international logistics centres along the TRACECA corridor Bridging European networks of the Logistics centres to the TRACECA Introduction and presentation of ILC concepts, purposes and functioning principles for involved stakeholders for the TRACECA region Demonstration of approach to ILC networks in Europe Visit to the relevant logistics centres in order to familiarize the stakeholders with operation concepts, investment appraisal and techniques of similar European logistics projects, and financing schemes appropriate for TRACECA region European know-how transfer in terms of international logistics projects Interactive sessions Dates: November 2009 Progress Report ll Additional materials Page 1 of 26

198 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 Location: Berlin, Germany ARRIVAL DAY 22 NOVEMBER 2009 SUNDAY Coordinator on duty: Fatima Atakishiyeva, PR Expert, ILC Project Cell: / Venue: Hotel Ramada Plaza, Prager Strasse 12, 10779, Berlin Arrival of participants to Berlin Pick at the airport transfer to the hotel by cab From 19:30 onwards -Welcome event at Restaurant PLAZA, the Hotel Ramada Plaza hosted by the EU Project Page 2 of 26 Additional materials Progress Report ll

199 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 FIRST DAY 23 NOVEMBER 2009 MONDAY 9:00 10:00 Seminar opening and introductory session Location: Berlin, Germany Coordinator on duty: Yulia Usatova, Transport Economist, ILC Project Cell: / Venue: Hotel Ramada Plaza, Conference Room Salon 8/9, 7 th floor Chairman: Ralf Behrens, Project Director, ILC Project 9:00 9:15 Opening speeches: Welcome speech on behalf of Dornier Consulting GmbH - Dr. Martin Both, Vice President Welcome speech on behalf of the Consortium Ralf Behrens, Project Director Presentation of the Agenda Ralf Behrens, Project Director 9:15 9:30 Presentation of Europlatforms European Networks of Logistics Centres Michael Stie Laugesen Senior Expert, ILC Project Progress Report ll Additional materials Page 3 of 26

200 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :30-10:00 Presentation of the project status Andreas Schoen, Team Leader Discussion and feedback 10:00 Pick up from the hotel and transfer to the Logistics Centre Grossbeeren, Berlin South 11:00 Arrival to Grossbeeren GVZ 11:00-12:30 Session on logistics centre and concepts Location: Grossbeeren, Germany Venue: Rhenus AG & Co. KG, Märkische Allee 1-11, Großbeeren, Deutschland Coordinator on duty: Yulia Usatova, Transport Economist, ILC Project Cell: / Welcome speech on behalf of LogistikNetz Berlin-Brandenburg e.v. (LogisticsNet Berlin- Brandenburg) - Dr. Norbert Wagener, Coordinator of LogistikNetz and CEO Wagener & Herbst Management Consultants GmbH - Welcome speech on behalf management of Rhenus Logistics - Carsten Schmidt, Operations Manager and Ulrike Adam, Regional Marketing - Presentation "Logistics Centre Model Planning, Implementation and Financing - Dr. Norbert Wagener - Statement "User Concept and Marketing for Logistics Centre Großbeeren - Joachim Gollnick, Manager Marketing und Development, IPG Infrastruktur- und Projektentwicklungsgesellschaft mbh (Company for the Development of Infrastructure and Related Projects) - Presentation "Modern Rhenus Contract Logistics in the Logistics Centrum" (Focus: scope of services, why the company is settled in a logistics centre, what advantages the logistics centre is offering) - Carsten Schmidt, Managing Director, Rhenus AG & Co.KG - Feedback and Discussion - Short Excursion on site to the Rhenus Logistics Centrum Page 4 of 26 Additional materials Progress Report ll

201 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :30-13:30 Site visit of the logistics center with explanations to the Operation and Marketing concept - Joachim Gollnick, IPG 13:30-15:00 Lunch at restaurant "Trattoria Toscana", Dorfaue 12, Großbeeren 15:00 Departure by bus the hotel Ramada Plaza 16:00 Arrival to the hotel Ramada Plaza 16:00 18:30 Afternoon session Location: Berlin, Germany Coordinator on duty: Yulia Usatova, Transport Economist, ILC Project Cell: / Venue: Hotel Ramada Plaza, Conference Room Salon 8/9, 7 th floor Chairman: Andreas Schoen, Team Leader Progress Report ll Additional materials Page 5 of 26

202 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :00-16:30 Presentation of the project webpage Fatima Atakishiyeva, PR Coordinator, ILC Project Interactive feedback and discussion 16:30-17:00 Presentation of financial schemes applied for the development of international logistics centres in Europe, peculiarities and models - Yulia Usatova, Transport Economist, ILC Project Interactive feedback and discussion 17:00 17:15 Coffee Break 17:15 17:45 Presentation of the German Logistics Master Plan Norbert Tiedemann, Deputy Head of Division A 32 Freight Transport and Logistics Ministry of Transport, Building and Urban Affairs of Germany Interactive feedback and discussion Page 6 of 26 Additional materials Progress Report ll

203 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :45 18:30 Wrap up of the session Andreas Schoen, TL ILC project 19:30 Gathering at the lobby of the hotel and cab transfer for a project event at Brecht-Keller, Chausseestr. 125, 10115, Berlin, Tel.: Progress Report ll Additional materials Page 7 of 26

204 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 SECOND DAY 24 NOVEMBER 2009 TUESDAY Coordinator on duty: Ralf Behrens, CBA Senior Expert / Project Director, ILC Project Cell: / LOCATION: Start of the day in Berlin, trip to Leipzig ILC and Leipzig airport, transfer back to Berlin in the evening 8:00 Pick up at the hotel and bus transfer to Leipzig, snack on board Detailed explanation of the site visit programme in Leipzig 11:00 Arrival by bus to the City of Leipzig Reception, transfer and guided tour to the Leipzig logistics centre /freight village Leipzig (GVZ Leipzig) by Mrs Katrin Weller, Marketing / Development of the Leipzig GVZ, and her team Focal points: - Logistics Centre Development in Leipzig - Trimodal road/rail/air cargo and interlinked industrial and logistics development (pick up with the representatives of the Leipzig GVZ in front of Hotel Westin, opposite to the Sachsen Bank, Gerberstr. Leipzig) 11:00 13:20 Bus travel over the Leipzig Ring Road route "Leipzig in der Westentasche" -> via Bundesstrasse -> new exhibition area of Leipzig -> via A 14 two access to GVZ. 12:00 12:15 Start of the site visit by bus at Quartier Nord (GVZ Leipzig North) 12:15 13:00 Continuation of visit at DHL Briefpostzentrum (DHL Post Distribution Centre) Page 8 of 26 Additional materials Progress Report ll

205 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :00 13:20 Site visit by bus at Quartier Süd (GVZ Leipzig South) and site visit to KV-Terminal of the DB AG (KV-Terminal of the German Railway) Transfer to the Airport Leipzig-Halle for lunch 13:30 14:30 Lunch at Porsche Customer Centrum Leipzig, Telephone: +49(0)341/ Coordinator on duty: Yulia Usatova, Transport Economist Cell: / LOCATION: Leipzig / Halle Airport and DHL Hub, Leipzig 14:30 15:00 Transfer of the Delegation to the Leipzig / Halle Airport (VIP parking place P6, Terminal A) 15:00 17:00 Site visit to the Leipzig Cargo Airport - Welcome and Company s Introduction by Dierk Naether, CEO - Site visit, operation concepts, interactive discussion Focal points: general airport and air cargo hub operation Progress Report ll Additional materials Page 9 of 26

206 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :00 Departure to Berlin 19:40 Arrival at the Ramada Plaza Hotel in Berlin 20:00 Facultative: Visit of Christmas Markets in Central Berlin (Gendarmenmarkt) Page 10 of 26 Additional materials Progress Report ll

207 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 THIRD DAY 25 NOVEMBER 2009 WEDNESDAY Coordinator on duty: Yulia Usatova, Transport Economist, ILC Project Cell: / LOCATION: Start of the day in Berlin, trip to Bremen, overnight stay in Bremen 8:00 Pick up at the Ramada Plaza hotel and travelling by bus to Bremen Short refreshment break and detailed presentation of the programme in Bremen on the way 13:00 14:00 Welcome Lunch in Bremen GVZ (to be re- confirmed) 14:00 14:30 Introduction to the Bremen GVZ by Mr Micheal Möhlmann, Managing Director of GVZ Bremen 14:30 16:30 GVZ Bremen site visit, operations and management and development concepts, interactive discussion Focal points: financing, operational model, development phases, value added services 16:30 17:00 Bus transfer to the Überseehotel, Wachtstraße Mitte, Bremen, Tel Progress Report ll Additional materials Page 11 of 26

208 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :30 Pick up in the Überseehotel hotel lobby, visit of the historic quarter of Bremen incl. dinner at Becks-im-Schnoor, Hall Schinken Deele, Schnoor Mitte, Bremen, tel: Page 12 of 26 Additional materials Progress Report ll

209 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 FOURTH DAY 26 NOVEMBER 2009 THURSDAY Coordinator on duty: Fatima Atakishiyeva, PR Expert, ILC Project Cell: / ROUTING / LOCATION: Bremen - Hamburg, overnight stay in Hamburg 8:00 Pick up at the Überseehotel and travelling by bus to Hamburg 11:00 Arrival to Hamburg, to the HHLA Truck Gate, meeting Mr Uwe Köhler, Manager of HHLA Communication Manager 11:00 12:00 Guided bus tour in the terminal by Mr Uwe Köhler, HHLA Communication Manager. Leaving the terminal at the truck gate. 12:00 12:45 Further transportation to HHLA Logistics (blue warehouses), meeting Mr Jörg Sabellek, Manager of HHLA Logistics Guided site visit to the logistics centre Focal points: Site visit, operation and management concepts, interactive discussion Progress Report ll Additional materials Page 13 of 26

210 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ :45 13:30 Transfer to Airbus Industries, Weg Beim Jäger 150, Hamburg 13:30 14:30 Lunch at the the premises of Airbus at Hamburg Airport, 14:30 16:00 Airbus Industries, an EADS company: Presentation of the enterprise and of material flow and logistics requirements and solutions, site visit of spare parts distribution centre Focal points: Logistics for special and oversized cargo, SCM and for global spare part delivery management 16:30 17:30 at the premises of Airbus Presentation of the Hamburg Logistics initiative, the public-private facilitator network for logistics development and site exploitation facility 17:30 Transfer to the hotel Baseler Hof, Esplanade 11, Hamburg, :30 Project Dinner at Baseler Hof Hotel, Hall "Bern" Page 14 of 26 Additional materials Progress Report ll

211 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 FIFTH DAY 27 NOVEMBER 2009 FRIDAY Coordinator on duty: Fatima Atakishiyeva, PR Expert, ILC Project Cell: / LOCATION: Start of the day in Hamburg, trip to Rostock, and travel back to Berlin in the evening Location: Hamburg Rostock 9:30 Pick up at the hotel Baseler Hof and transfer to Rostock 12:00 Arrival in Rostock-Warnemünde 12:00 14:30 Lunch in Hotel Neptun, Seestraße 19, Rostock-Warnemünde, :00 16:00 Rostock port visit (by bus) Focal point: visit of the port from West to East Ferry terminals to Scandinavia and Russia Ro-Ro-Terminal Coal Power Station Large sized crane and pipe production Warehousing and loading to special carriers, oil terminal, presentation 16:00 19:00 Transfer by bus to Berlin, rolling wrap up of the seminar, handover of the certificates on seminar participation and transfer to the hotel Ramada Plaza in Berlin 20:00 Farewell dinner at Brauhaus GEORGBRAEU, Spreeufer 4, 10178, Berlin ( Progress Report ll Additional materials Page 15 of 26

212 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 SIXTH DAY 28 NOVEMBER 2009 SATURDAY Coordinator on duty: Yulia Usatova, Transport Economist, ILC Project Cell: / LOCATION: Berlin Departure of participants based on the flight schedule Page 16 of 26 Additional materials Progress Report ll

213 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 List of Participants # Institutions Contact details Beneficiaries: Azerbaijan 1 Mr Akif Mustafayev National Secretary of IGC TRACECA of Azerbaijan 2 Mr Ali Gasimov Head of the Sector at the Transport Policy Department, Ministry of Transport of Azerbaijan Armenia 3 Mr Gagik Grigoryan National Secretary of IGC TRACECA of Armenia 4 Mr Varos Simonyan Head of the EU and International Economic Affairs Department, Ministry of Economy of Armenia Ministry of Transport of Azerbaijan Republic and PS IGC TRACECA 8/2 General Aliyarbekov str. AZ-1005, Baku, Azerbaijan Tel.: Fax: ; akif.m@ps.traceca-org.org Ministry of Transport of Azerbaijan Republic Tbilisi Ave 1054 АZ -1122Baku, Azerbaijan Tel.: Fax: Web site: Ministry of Transport and Communication of the Republic of Armenia 28, Nalbandyan str. Yerevan 0010, Armenia, P.O. Box 69 Tel.: Fax: Mob.: g.grigoryan@mtc.am Ministry of Economy of the Republic of Armenia 5 M. Mkrtchian str. Yerevan , Armenia Tel.: Mob.: vsimonyan@mineconomy.am Progress Report ll Additional materials Page 17 of 26

214 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 # Institutions Contact details Georgia 5 Mr Mamuka Vatsadze National Secretary of PS ICG TRACECA of Georgia Moldova 6 Mr Eduard Biriucov National Secretary of PS IGC TRACECA of Moldova 7 Mr Boris Muntean Vice director of International Airport Marculesti (FIAM) Ukraine 8 Mr Grygorii Legenkyi National Secretary of PS IGC TRACECA in Ukraine 9 Mr Vasyl Gaba Acting Rector, State University of Economics and Technology of Transport Ministry of Regional Development and Infrastructure 12, A. Kazbegi Avenue Tbilisi 0160, Georgia Tel.: Mob.: mvatsadze@economy.ge Agency of Transport of the Republic of Moldova 12a, Bucuriei str., of.401 Chisinau, MD-2004, Republic of Moldova Tel.: Fax: Mob.: Biriucov@traceca.md International Airport Marculesti Vasile Alecsandri str. 100A Chisinau, Republic of Moldova Tel./Fax: b.muntean@airportmarculesti.com Ministry of Transport and Communications of Ukraine 14, Peremogy av., Kyiv 01135, Ukraine Tel.: Fax.: Mob.: legenky@mintrans.gov.ua State University of Economics and Technology of Transport 19, Lukashevycha str., Kiev 03049, Ukraine Tel.: Fax.: Mobile: gaba@kuett.org Page 18 of 26 Additional materials Progress Report ll

215 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 # Institutions Contact details Bulgaria 10 Mrs Ivanka Gueorguieva State Expert in European Coordination and International Cooperation Directorate, Bulgaria Romania 11 Mr Ionut Dezideriu Iordache National Secretary of PS IGC TRACECA Romania 12 Mr Catalin Ibanescu General Manager of IA Logistics Turkey 13 Mrs Nesrin Ercan Chief of the Section in Operation Department, Turkish Railways Ministry of Transport, Information Technology and Communications 9, Diakon Ignaty str., 1000 Sofia, Republic of Bulgaria Tel: Fax: IGeorgieva@mtitc.government.bg Ministry of Transports of Romania 38, Blvd. Dinicu Golescu, sector 1 room 89, floor 2, Bucharest, Romania Tel./Fax: Mob.: ionut.d.iordache@gmail.com catalin@intexagency.ro Turkish Railways Tel.: / 1408 Fax: Mrs Secil Ozyanik Expert, National Secretariat of IGC TRACECA in Turkey PS IGC TRACECA 15 Mr Anar Ismayil Transport Expert Ministry of Transport and Communication TRACECA National Secretary Hakkı Turayliç Caddesi No:5 Pk: Emek / Ankara - TÜRKİYE Tel.: Fax: sozyanik@ubak.gov.tr 8/2 General Aliyarbekov str. AZ-1005, Baku, Azerbaijan Tel.: Fax: anar.ismayil@ps.traceca-org.org Progress Report ll Additional materials Page 19 of 26

216 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 # Institutions Contact details 16 Mr Nazim Mammadov Maritime Expert EC TRACECA ILC in Western NIS and the Caucasus (*accompanying at various locations) 1 Dr Martin Both Vice President, Dornier Consulting GmbH (*Berlin ) 2 Mr Ralf Behrens Project Director, CBA Specialist (*Berlin, Hamburg) 3 Mr Andreas Schoen Team Leader 4 Mr Hannes Rueger Key Expert Il, Transport Logistics / Intermodal Engineering Specialist (*Berlin, Leipzig) 5 Mr John Standingford Key Expert III, Transport Economist (*Bremen, Hamburg) 8/2 General Aliyarbekov str. AZ-1005, Baku, Azerbaijan Tel.: Fax: nazim.mamedov@ps.traceca-org.org Dornier Consulting GmbH Bürogebäude 10 Graf-von-Soden-Straße D Immenstaad Tel.: + 49 (0) / Fax: + 49 (0) / transportation.infrastructure@dornierconsulting.com Dornier Consulting GmbH BTI Transportation / Infrastructure Platz vor dem Neuen Tor Berlin Tel.: / Fax: / ralf.behrens@dornier-consulting.com 8, Lysenko str., of. 39, Kiev 01034, Ukraine Tel./Fax: andreas.schoen@dornier-consulting.com andreas.schoen@ilctraceca.org.ua 8, Lysenko str., of. 39, Kiev 01034, Ukraine Tel./Fax: hannes.rueger@dornier-consulting.com hannes.rueger@ilctraceca.org.ua 8, Lysenko str., of. 39, Kiev 01034, Ukraine Tel./Fax: johnstandingford@hotmail.com john.standingford@ilctraceca.org.ua Page 20 of 26 Additional materials Progress Report ll

217 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 # Institutions Contact details 6 Mrs Olena Nevmerzhytska Project Regional Coordinator 7 Ms Inna Pokydko Project Assistant 8 Ms Yulia Usatova Transport Economist 10 Ms Fatima Atakishiyeva PR Expert (*Berlin ) 11 Mr Michael Stie Laugesen Senior Expert (*Berlin, Leipzig) 12 Dr Michael Lampe Ecologist 8, Lysenko str., of. 39, Kiev 01034, Ukraine Tel./Fax: olviya@inbox.ru olena.nevmerzhytska@ilctraceca.org 8, Lysenko str., of. 39, Kiev 01034, Ukraine Tel./Fax: inna.pokydko@ilctraceca.org.ua Dornier Consulting GmbH BTI Transportation / Infrastructure Platz vor dem Neuen Tor Berlin Tel.: / Fax: / yuliya.usatova@dornier-consulting.com Dornier Consulting GmbH Freight Transport and Logistics Platz vor dem Neuen Tor Berlin Tel.: / Fax: / fatima.atakishiyeva@dornierconsulting.com NTU Roerdalsvej 201 P.O. Box 8410 DK-9220 Aalborg Denmark Tel.: Fax: msl@ntu.eu INROS LACKNER AG Rosa-Luxemburg str. 16 D Rostock Tel.: Fax: michael.lampe@inros-lackner.de Progress Report ll Additional materials Page 21 of 26

218 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 # Institutions Contact details (*Rostock) 13 Dr Armin Gewiese Logistics Expert (*Berlin, Leipzig) INROS LACKNER AG Zeppelinstr. 48 A Potsdam Tel.: Fax: armin.gewiese@inros-lackner.de Page 22 of 26 Additional materials Progress Report ll

219 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 Dear Participant, Evaluation Form We hope to have given you an opportunity to obtain some useful information on logistics topics and to have provided you networking opportunities for promotion of the TRACECA corridor. We shall be thankful if you share with us your opinion by answering a few questions. Thank you for your time! Analysis of the filled evaluation forms I. Content of the study tour and stakeholder seminar (5 excellent, 4 good, 3 neutral, 2 not satisfying, 1 poor) Total 1. Choice of study tour topics presented 11 (68.75 %) 4 (25%) 1 (6.25 %) Structure / programme 10 (62.5 %) 2 (12.5 %) 4 (25%) Choice of site visits and applicability of concepts presented 9 (75%) 3 (25%) 12 a) Berlin/Brandenburg 12 (75%) 2 (12.5 %) 1 (6.25 %) 1 (6.25%) 16 b) Bremen 10 (62.5 %) 3 (18.7 5%) 2 (12.5 %) 1 (6.25%) 16 c) Leipzig 11 (68.75 %) 3 (18.7 5%) 1 (6.25 %) 1 (6.25%) 16 d) Hamburg 10 (62.5 %) 3 (18.7 5%) 2 (12.5 %) 1 (6.25%) 16 e) Rostock 13 (81.25 %) 2 (12.5 %) 1 (6.25 %) New information and concepts 9 (56.25 %) 3 (18.7 5%) 3 (18.7 5%) 1 (6.25%) 16 Progress Report ll Additional materials Page 23 of 26

220 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ Response to questions /ambiguities by project experts 10 (66.6 %) 4 (26.6 %) 1 (6.6% ) 15 II. Study tour and seminar organization (5 excellent, 4 good, 3 neutral, 2 not satisfying, 1 poor) Total 1. Overall opinion on organization 11 (68.75 %) 3 (18.75% ) 2 (12.5%) Invitation and preliminary information 11 (68.75 %) 4 (25%) 1 (6.25%) Time management and schedule of presentations 10 (62.5 %) 3 (18.75% ) 3 (18.75%) Assistance/facilitation of the project team 13 (86.6 %) 2 (13.3%) Possibility to share your experience 6 (40%) 7 (46.6%) 2 (13.3%) Quality and the organisation of translation III. Overall evaluation (5 excellent, 4 good, 3 neutral, 2 not satisfying, 1 poor) 13 (81.25 %) 3 (18.75% ) Total 1. Impact of the event for TRACECA networking 9 (56.25 %) 3 (18.75 %) 4 (25%) Efficiency and applicability for practice 7 (43.75 %) 4 (25%) 5 (31.25 %) Quality of 3 rd party presentation 6 (40%) 8 (53.33 %) 1 (6.66%) Overall impression of the event 4 (44. 4 (44. 1 (11.1%) 9 4%) 4%) Page 24 of 26 Additional materials Progress Report ll

221 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУНАРОДНЫЕ ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н Ы Х С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ 2009 IV. Additional conclusions/ remarks /suggestions regarding study tour and stakeholder seminar: What did you like/ what could you highlight as a special benefit for you within the seminar and study tour? 1. Everything is Ok, no remarks 5 answers 2. Model for freight villages, port management systems 3. Team spirit, qualification of people involved in project 4. Interesting sites, a lot of new information, opportunity to see a lot of achievements in logistics 5. Everything, especial Hamburg and Leipzig, cooperation of logistics experts from State Railway 7. Broadening of experience in logistics application 8. Complex approach 9. Level of transport logistics 10. Study tour met expectations completely, was very interesting and useful What did you not like during the study tour what should be adjusted? 1. Too much time for travel - 2 answer 2. Too many advertising presentations, their study network solutions, many uninteresting problems 3. Too much food 4. Everything presented in LC was not something new; less time should be spent on presentation of loading/unloading procedures Do you have any additional remarks and suggestions? 1. Congratulations to the project team, wish of luck for future TRACECA projects, wish of success 2 answers 2. Meetings, not the travelling should be the main issue for the study tour 3. Cancel dinners 4. Do not worry, go ahead Progress Report ll Additional materials Page 25 of 26

222 INTERNATIONAL LOGISTICS CENTRES FOR WESTERN NIS AND THE CAUCASUS МЕЖДУН А Р О Д Н Ы Е ЦЕНТРЫ ЛОГИСТИКИ ДЛЯ З А П А Д Н ЫХ С Т Р А Н ННГ И КАВКАЗА STUDY TOUR AND SEMINAR: MODERN ILC PRACTICES AND LESSONS LEARNED CHALLENGES FOR TRACECA G E R M A N Y NOVEMBER 2009 УЧЕБНАЯ ПОЕЗДКА И СЕМИНАР: CОВРЕМЕННАЯ ПРАКТИКА И ОПЫТ ФУНКЦИОНИРОВАНИЯ МЛЦ З А Д А Ч И Д Л Я С Т Р А Н Т Р А С Е К А ГЕРМАНИЯ НОЯБРЯ Too much time for travelling, suggest to concentrate on 2 main sites connected to ports, in general too much lost time due to travelling 6. No remarks, very interesting programme, perfect organisation, suggestion to organize study tour for 10 days, many thanks for everything! 7. No remarks, materials of presentations should be used for reports about the necessity of implementation of the project 8. More participants from sites Thank you very much for your co-operation! Please return this questionnaire by 10 December 2009 to: Dornier Consulting GmbH Ms. Yulia Usatova yuliya.usatova@dornier-consulting.com or fax to: Page 26 of 26 Additional materials Progress Report ll

223 Published January 2010 This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of the Consortium led by Dornier Consulting and can in no way be taken to reflect the view s of the European Union.