Transport & Logistics

Transcription

1 Transport & Logistics 55 The Rostov region is the 'port of five seas' and Russia's gateway to Eastern Europe % of all cargo handled by Rostov ports is destined for export. 55 $280m port upgrade will create new docks, terminals, warehouses and infrastructure to more than double cargo capacity by New $823m South Hub international airport project will create the largest airport in the south of Russia. 55 Major upgrades of the M4 highway and more than $500m to build new logistics centers will help facilitate Sochi A new $290m bridge over the Don River will handle 60,000 cars per day.

2 Transport and logistics Alexandra Starikova, Analyst, MARCHMONT Capital Partners The port of five seas and Russia s gateway to Eastern Europe The region is a key domestic and international transpor hub. Rail is the main carrier of domestic and export bulk goods, but the M4 Don national highway accounts for the half of the freight shipped through the region's ports. Major investments are planned for a new airport, logistics centers and M4 highway upgrades, prompted by mounting pressure to improve infrastructure in advance of Sochi The Rostov region is a part of transport corridor #7 (Danube) that runs from the Azov to the Caspian sea and the #9 Helsinki- St Petersburg Moscow Rostov on Don Novorossiysk and transcontinental corridor North-South. The main carrier of domestic and foreign bulk goods is the North Caucasus Railway. It connects different areas of the country, for example the South to Siberia. The tracks wind their way through the Rostov region for more than 1,800 km. Along the route, numerous hubs receive, handle and dispatch all types of cargo from sunflower oil to automobiles throughout Russia as well abroad. The port of five seas The region s ports provide access to the Black, Azov, Baltic, White and Caspian seas. One of the transport corridors passes from the center of the country through the Rostov region via river to the Black and Mediterranean seas. There are five ports in the region: Rostov International River Port (it has three cargo districts, focusing on handling minerals, construction, packaged cargo, timber and metal); Taganrog International Sea Trading Port (equipment for transshipping loose, general and container goods, rolled ferrous metals); Azov International Sea Port (mineral and construction materials, packaged cargo, timber, coal and rolled ferrous metals); Volgodonsk Port (grain and construction materials); Ust Donetzky Port (sulfur processing, scrap metal, timber and road rubble). The first three ports have twentyfour-hour navigation. More than 80 % of the cargo handled by these ports is exported. The region s ports receive shallow draft river-sea vessels (a cargo capacity up to 5,000 tons.) Air traffic up 35 %, but new airport will replace existing one Although Rostov's main airport has international status, planners have decided to build a new state of the art suburban airport (South Hub, see facing page) rather than upgrade this aging facility. Located close to the city center, its land and surrounding property will eventually be redeveloped for industrial and mixed use. The current airport can handle up to 420 tons of cargo per day. The passenger terminal is limited to 600 passengers an hour in the Russian sector and 200 passengers an hour in the international. In the first six months of 2007 the airport served 255,300 passengers (24.3 % up on the second quarter of 2006) including 179,300 passengers on domestic lines (20 % up on the second quarter of 2006) and 76,000 passengers on international lines (35.7 % up on the second quarter of 2006). Automotive transport and road construction Automotive transport accounts for 82 % of passenger and 39 % of cargo transportation. In 2006 the latter amounted to 13.8 million tons. The M4 Don is a national motorway, the largest in the region, which accounts for most of traffic bound for the ports of the RF South. Donavtovokzal, is the main provider of bus transportation in the South of Russia. It has 55 coach terminals all over the Rostov region. The company serves more than six million passengers annually. Its terminals dispatch more than 1,800 buses to 374 destinations daily. Passenger transportation Passenger transportation in the city and its suburbs is carried out by five municipal companies, 21 national companies and more than 30 commercial firms. There are more than 2000 buses, including 500 electric buses. The municipal trolleybus grid has 12 routes and the bus grid has 28 routes. According to the Rostov Statistics Committee, the region has 11,200 km of 86

3 Transport infrastructure roads. In 2006 a new overpass, bypass and transport junction were commissioned. In 2007 the construction of the Kashary- Pervomayskoe-Milutinskaya-Morozovsk and Tzimlyansk-Surovkino highways will be completed. The construction of two new bridges is also planned. The coming Olympic Games in Sochi already have a great influence on road construction in the South Federal District and the Rostov region. In 2007 the plan was to allocate $ 118m from the regional budget for construction. For , funding will jump to $ 816m. M4 Don highway is a critical roadway for the region's economy The key M4 Don highway has not received sufficient funding until recently. Today its traffic capacity is up %. Over the past several years only 13-15km have been repaired. However, this year the RF Ministry of Transport developed a program of accelerated development of the highway. In billion rubles from the federal budget was allocated to reconstruct the Rostov stretch of the highway, in 2008, 4.7 billion rubles, in 2009, 5.8 billion rubles. After it became known that the Olympics-2014 would be held in Sochi, M4 development intensified. If the Transport Ministry allocates extra funds, investment in M4 will increase substantially. New logistics centers planned, investment will exceed $500m During the Sixth International Investment Forum Sochi-2007, a Protocol of Intent between the Ministry of Economy, Trade and Foreign Relations of the Rostov region and Eurasia Logistic Company on Implementating an Investment Project in the Rostov region (town of Bataysk) of Constructing a Manufacturing Logistic Complex in the South Federal District was signed. It will include a customs terminal, officewarehouse complex of A-class (total area is about ,000 sq m), container sites, special warehouses; manufacturing premises for processing, packaging and assembling; railway distributing station and engineering infrastructure. This new logistic complex will be part of the initial phase of setting up an international transport corridor from Russia's South to Eastern Asia-China-Kazakhstan-Russia- Europe. The construction will begin in 2008 and take two years. The planned investmen is five billion rubles ($ m). South Hub project will create the largest airport in the south of Russia Distance from Rostov-on-Don: 12 kilometers Total land area: 1,029 hectares Length of the runway: 4,200 meters. The airport's runway and passenger terminal faciltiies will be designed to handle all types of commercial aircraft, including the new Airbus SuperJumbo and Boeing's new Dreamliner. Airport capacity: eight million passengers and 70,000 tons of cargo Investment: $823m Cost of engineering infrastructure: $94m. Private-state partnership: 40 50% of the project's cost includes expenditures by the RF government such as the runway, taxi ramps and lighting systems. Private equity is planned to be spent on contruction of airport buildings, a fuel complex, terminals and parking areas. Source: Agency for Investment Development of the Rostov region MARCHMONT Investment Guide to Russia 2007, vol 1, #4 87

4 Transport and logistics Another logistics center is planned for the Aksakaysky district (3 km from Rostov on Don). This 230,000 sq m facility will be constructed by Logopark Don (part of the Avalon Group of Companies) and the British investment fund Raven Russia. The investment is estimated at $ 166m. Just recently, two more investment projects to build logistic centers were announced. The developers are the National Logistic Company and French company MLP. Major Russian partners of Rostov on Don Airport 2nd quarter of 2007 Aeroflot-Don Siberia Sky-Express Flights Share of served passengers Major foreign partners of Rostov on Don Airport Armavia Austrian airlines Lufthansa Uzbekistan airways SKAT Flights 1,6 2,5 2 0,7 0,5 1,3 Share of served 2,2 1,6 1,6 1 0,4 1,5 passengers Turkish Airlines SWOT Strengths 55 The transport system of the Rostov region is well integrated, but needs major investment, which is beginning to happen. 55 Ports in Taganrog, Azov and Volgodonsk are major export routes and help promote sector development that relies on export sales, 55 The coming Olympic Games in Sochi will increase the pace of infrastructure development. More than $500m is planned for new logistics centers 55 A new international airport and major port upgrades will make a significant contribution to the region's infrastructure. Weaknesses 55 Current cargo capacity at airport and port facilities is poor. 55 M4 and other major roadways upgrades are incomplete. Opportunities 55 Creating new logistics centers will dramatically increases cargo flow and develop the region s transport infrastructure. 55 Part of the cargo traffic from Novorossiysk (the Krasnodar region) is likely shift to Rostov ports when the port revitalization program is completed. Threats 55 Major roadways need expanding and upgrading. Earmarked funding is not always available 55 The port project and other major construction projects will take years to complete. 88

5 Transport infrastructure Alexander Poteryakhin, Deputy Head of the Coordinating Council of Industrialists and Entrepreneurs in Southern Federal District Transportation infrastructure needs to be completed to ensure continued regional investment growth There are many projects in process or planned that will improve transportation infrastructure, but unless they are completed and more is done, overall regional investment could suffer. The transport industry ranks among the top economic sectors in the SFD, constituting over 9% of the gross regional product. In 2006 traffic by all modes of transport was more than 165 million tons, while the transshipment in Southern seaports totaled nearly 160 million tons. Rail transport accounted for 67% of all cargo shipped. The Rostov region, often dubbed Russia s Southern Gateway plays a key role in the transportation system of the SFD. The region s transport infrastructure and operations fall within the network of international transport corridors (ITC), which cross the territory of Russia. They include North-South and Trans-Siberian Railways and those which are likely to be extended into Russia in the future, like Berlin-Dresden-Kiev-Rostov-on-Don Railway (ITC #3), Danube Waterway (ITC #7) and St.Petersburg-Moscow-Novorossiysk (ITC #9). Many mainline railroads linking central regions, Ural and Siberia to the Azov Sea, Black Sea and Caspian Sea ports, North Caucasian resorts and the Black Sea coast also run through the Rostov region. The total length of public roadways in the region is over 11,500 kilometers, and a number of Federal highways, including M-4 Don, Alexander Poteryakhin, Ph.D. in Economics, member of Transport Commission attached to Competitiveness and Sectoral Strategy Council to the Russian Union of Industrialists and Entrepreneurs. Mr. Poteryakhin graduated from Rostovon-Don Institute of Agricultural Engineering (present-day Don State Technical University), the Automation of Technological Processes Department. From 2003 to 2007 he held the position of Chief Advisor on Transport Operations and Development to the President s Plenipotentiary in Southern Federal District (SFD). At present Mr. Poteryakhin is appointed as Deputy Head of the Coordinating Council of Industrialists and Entrepreneurs in SFD, apart from that he is a lecturer at Rostov State University of Transport Communications. M-29 Caucasus and M-21 Volgograd-Lugansk traverse the region. Rostov region s water transport infrastructure: Rostov-on-Don, Ust-Donetsk and Volgodonsk River ports as well as Taganrog and Azov seaports link the region to five seas. Although our regional transport systems are able to meet growing demand, analysts claim the slow pace of infrastructure development is impeding economic growth. There are many inadequate technical facilities that need upgrading at our seaports. The low traffic capacity of railway stations lying next to seaports needs to be improved and there is a growing shortage of warehouse and storage terminals. The region s trunk roads, especially those adjacent to large cities and bestknown recreation areas, are overloaded; roads covering more than 30% of the total road length are not able to handle traffic flow. There is a dramatic lack of modern roads on Center-South route. Long-delayed air transport infrastructure in the SFD is finally being addressed. Investments in the future are starting to happen Restoring operational reliability of the Volga-Don shipway and boosting its traffic capacity is clearly among the region s top-priority goals in this field. Experts forecast that by 2020 the ship canal s traffic flow is set reach 35 million tons. In order to realize this potential, there is a new port plan that will increase its capacity at least 2.5 times but not until A number of other strategically important investment projects aimed to further the Rostov region s transportation and logistics system have been started. They all need to carefully monitored and completed. If they are successful, they will not only make the Rostov region a prominent player in the global transportation services market, but ensure continued overall regional investment. Our success will also help keep the national economy strong. Strategically important investment projects in the field of transportation and logistics: 55 Renovation of the M-4 Don highway into a four-lane road able to handle 30,000 automobiles per day and 150 km/hr traffic; 55 Construction of a 8.5 km bridge with a 60,000 cars per day capacity across the Don River, estimated at $299m; 55 Introduction of high-speed and extra highspeed passenger traffic on the Center-South route, particularly on Rostov-Krasnodar and Rostov-Mineralniye Vody routes; 55 Seaport development and near-port infrastructure in Rostov-on-Don, Taganrog and Azov; 55 Construction of international airport hub in Yuzhny, 12 km south of Rostov-on-Don; 55 Construction of a Class A transportationlogistics complexes in Rostov suburbs. MARCHMONT Investment Guide to Russia 2007, vol 1, #4 89

6 Transport and logistics Turkish Airlines introduces new level of quality service to Russia Turkish Airlines selected Rostov-on-Don as one of its destinations because of the region's favorable economic and geographic location. Many of the airline's clients already do business here specifically in the construction and retail sectors. Their numbers are increasing due to the growth of international businesses and JV's in the region. The growth in the number of passengers and cargo volume going to and from Russia is growing and this allows us to be quite optimistic about our future here. It's the reason why we have now begun to fly three times a week to Rostov. The newest flight we added was a Sunday service. Since we first arrived here, we have established two offices of Turkish Airlines and have entered into long-term relationships with corporate clients. We are very confident about the development of the Russian market for international air transportation. It is growing very rapidly, contrary to what is happening in other parts of the world. This makes it very attractive for large and medium-size airlines wishing to enter the market here. According to the report of the Association of European Airlines, Turkish Airlines is now ranked second among the top ten most reliable companies ensuring uninterrupted and high quality service. This is yet another reason why we decided to enter the Russian market to introduce the Russian public to our high quality of service and outstanding performance. Our cooperation with other Russian airlines is developing very nicely. Our relationship with Russia's largest airline, Aeroflot, is also good. We believe that our competitive advantages are service, quality and reliability and in our rivalry with other airlines, we stress these advantages. In October 2007, in an audit carried out by Skytrax, Turkish received four stars The head of the Rostov office of Turkish Airlines is Mr. Birol Tamac and was named as one of the most prestigious airlines in the world. 90