InterRail Newsflash NEWS FROM THE INTERRAIL GROUP. 3 Questions for Tufan Khalaji. No / 2014

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NEWS FROM THE INTERRAIL GROUP 3 Questions for Tufan Khalaji China is Asia s most important industrial state, and a motor for global economic growth.

In Central and Northwest China especially, local governments are committed to the development of international rail traffics and the use of the land bridge via Kazakhstan and Russia to Europe.

1 NEWS FROM THE INTERRAIL GROUP 3 Questions for Tufan Khalaji China is Asia s most important industrial state, and a motor for global economic growth. Over the past few years, the country has put specific emphasis on developing the logistics sector. In Central and Northwest China especially, local governments are committed to the development of international rail traffics and the use of the land bridge via Kazakhstan and Russia to Europe. For InterRail Services GmbH, (IRS), Germany, too, the traffics from and to China have gained importance. We would like to take this opportunity to ask Tufan Khalaji, Managing Director InterRail Services GmbH (IRS), a few questions. 1. What role does China play for IRS? In the course of these past years, the InterRail Group, which IRS is a member of, has increased its commitment in operating container block trains between China and Europe: In this, the Group now cooperates with partners and local governments in the up-and-coming metropolises of the Chinese hinterland, as well as with the Chinese railways and their affiliates. RZD and KTZ and their daughter companies are close partners, too. IRS contributes its experience as long-standing operator of the two container block trains OstWind/West- Wind. The know-how thus acquired is being used intensively for container traffics ex China. 2. What hindrances or challenges are there? We observe, on the one hand, the brisk development of container block train traffics between Europe and China, but on the other hand only weak efforts so far to offer open trains to be loaded with single containers or container groups from different companies. After all, a decisive share of the trade relations with the CIS states, with China, and Mongolia is held by customers from the SME sector. Yet container block trains are no viable option for these companies. This is why, together with our partners, we have developed, in the past few months, an appropriate offer for the market with Brest as the interface. 3. What are the future focusses of IRS? The marked demand for reliable transport services that cost less than air freight but are faster than ocean freight motivates us to further expand our service portfolio and to make it even more competitive. This also includes the mentioned rail product (editor s note: More on the new rail product in the next issue of our Inter- Rail Newsflash!). 1

NO. 07-08 / 2014 China: Chance and Challenge Coming soon: our own company in China In order to support the product development for the China traffics, the local InterRail delegation offi ce founded

With our own, local company we will be able to further extend our activities in China and thus to strengthen our position also in our other core markets, says Hans Reinhard, InterRail Chairman of the

«Sustainable and economically efficient container block trains need containers to move in roundtrips» Different products for different requirements The InterRail Group handles, among others, regular

2 NO / 2014 China: Chance and Challenge Coming soon: our own company in China In order to support the product development for the China traffics, the local InterRail delegation offi ce founded in March 2008 is at this time being expanded and turned into an op- What is needed to make rail products sustainable? erative company. With our own, local company we will be able to further extend our activities in China and thus to strengthen our position also in our other core markets, says Hans Reinhard, InterRail Chairman of the Board. «Sustainable and economically efficient container block trains need containers to move in roundtrips» Different products for different requirements The InterRail Group handles, among others, regular container block trains from Chengdu to Lodz and from Wuhan to Pardubice. In this, InterRail relies on strong, operative partnerships on China, Russia, and the CIS states. At the same time, there is constant work on offering open trains, as already mentioned in the interview with Tufan Khalaji. A decisive criterion for the realization of sustainable Euro-Asian rail freight products is, as Howard Lamb, CEO InterRail Group, emphasizes, the balance of container flows in both directions. Here, we still need more innovation. Traditionally, eastbound is regarded as a backhaul trade. Howard Lamb points out he sees potential in a reliable service with hubs in Brest and at the border stations in Western China: This could strengthen eastbound traffic and guarantee the cost-efficient roundtrip utilization of containers and rolling stock. Zabaikalsk / Manzhouli For single container shipments from China to Europe and from Europe to China, InterRail Logistics GmbH, Frankfurt, offers two container express trains: the TransSib Express via Siberia and the Trans-Kaz Express through Kazakhstan (see Newsfl ash No. 5-6/2014). The offer is suited for technological and commercials enterprises, for the automobile and mechanical engineering industries as well as for the pharmaceutical and chemical sectors. Dostyk / Alashankou China In 2013, the Chinese national economy grew by 7.7 %, which remains very high by international standards, even if the two-digit growth rates of past years were no longer reached. Chinese foreign trade has grown more than tenfold in the past 12 years. In 2013, exports went up by 7.9 %, imports by 7.3 %. Thus, the balance of trade surplus reached 260 billion USD or 2.5 % of the Gross Domestic Product. In exports, China is world champion, followed by the United States and Germany. (Source: Federal Foreign Offi ce, Berlin) 2 IMPRINT Public Relations - InterRail Holding AG, St. Gallen / Switzerland

3 NEWS FROM THE INTERRAIL GROUP 20 years TransRail-BCH Ltd., Belarus This year, TransRail-BCH Ltd. celebrates its 20-year jubilee. The company was founded in 1994 as a joint venture with the Bielorussian Railways in Minsk, Belarus. As a freight forwarding agency, TransRail markets the Railway services to forwarders and transport organisations in a competitively neutral way. These services include traditional transit as well as bilateral traffic with the CIS. Today, with Tatjana Kim as Managing Director, there are 23 employees who work for the company both in Minsk and in Brest. The offer of services comprises freight rates, detailed market know-how, solutions for problems during trans-shipment or when changing axles problems which arise due to the track change from the European norm to the Russian broad gauge container and conventional loads; liquid goods, bulk material and mass goods; wagon groups as well as block trains. As part of the InterRail Group, Trans- Rail-BCH Ltd. has a broad network thanks to its holding company, TransInvest. It can thus offer reliable support along the whole transportation route. In the past, TransRail Minsk also successfully promoted the use of the Internet for swifter customs clearance at border crossings. To this aim, cooperating with other partners from the TransInvest Group, TransRail-BCH established an IT portal for the electronic customs pre-clearance of shipments at the Belorussian border. News from the railway market More container trains on the Trans-Sib According to information from Gennadi Bessonov, Secretary General of the International Coordinating Council on Transsiberian Transports CCTT, the volume of transports via container trains along the Trans-Si- berian railroad corridor has increased markedly. He reports thousand TEUs transported on container trains along the Trans-Sib in 2013, an increase of almost 40 % as compared to 2012 in this business sector. At this time, says Bessonov, 30 regular national, and 30 regular international container train connections are using the Trans-Sib. RZD: Decrease in cargo transports continues In July 2014, the cargo transports volume along the Russian railway network showed a year-on-year decrease by 3.4 %. For August, a similar decrease between 3% and 4% is expected. In all, the RZD cargo transports have declined by 1.6% in the first six months of The 6.5% rise in export traffics especially to the ports was not able to balance the lower volumes in domestic traffic (-3.7%), import (-8.75%), and transit (-23.7%). 3

4 News from the railway market Carrying capacity of BAM and Trans-Sib to be increased The volume of investments in the Baikal Amur Magistral (BAM) and the Trans-Siberian Railway Magistral will, as per an evaluation from RZD, increase the carrying capacity of these railway corridors by 66 million tons per year. Recent polls show that the demand of the Russian economy requires a capacity increase of about 75 million tons per year along these routes. Today, BAM carries 10 million tons per year, the Trans-Sib 100 million tons. The consensus is that in future, on the BAM, mainly bulk goods traffics are to roll to the Pacific ports, while Trans-Sib is to be used mainly by container block trains. The Ukraine crisis has impacts on Russia traffic In the meantime, foreign trade between Russia and the EU is suffering under a double burden, which means impacts on the transport volumes across all carriers have to be expected. On July 31, in view of the crisis in Ukraine, the European Union adopted economic sanctions against Russia that are valid for new contracts beginning August 1st, The sanctions include an import and export embargo for arms goods to or from Russia, a ban on the export of dual-use goods, if they have a mili- tary use or are delivered to a military end consumer, and the duty to obtain a permit for the export to Russia of equipment and technological goods for the oil production (with the exception of sub-sea and arctic oil production as well as shale petroleum production). Moreover, by now, 20 organizations and 87 persons have been black-listed, which is an additional burden on trade and traffic with Russia. Russia, on her part, has reacted to the policy of sanctions especially from the EU and the US with a ban on the import of certain goods, a fact that also has negative consequences for trade and traffic with Russia. For a list of the products under the import embargo please go to the next page of this Newsflash. Similar sanctions, some of them even more restrictive, have been adopted by the USA, Canada, and other countries. A ban on all rail transports with final destination Donezk was introduced As per the Direction of the Council on Rail Traffic communiqué number DK-117 dated July 28, 2014, a ban on the transport of all goods and of empty containers / wagons with Donezk as the final destination was introduced until further notice, owing to the unstable situation. 4

5 Products and goods affected by the Russian import ban Please find here a list of the agricultural products, raw materials, victuals from the USA, the EU countries, Canada, Australia, and Norway that must not be imported into the Russian Federation for a twelve-month period. Please note that we do not guarantee the completeness and accuracy of this list. Code ТН ВЭД ТС (Code according to FEACN CU - Foreign Name of the goods *)***) Economic Activity Commodity Nomenclature of the Customs Union) 0201 Beef, fresh and refrigerated 0202 Beef, frozen 0203 Pork, fresh, refrigerated, or frozen 0207 Poultry or sub-products of poultry as per item 0105, fresh, refrigerated, or frozen from 0210 )** Salt meat, in brine, hard cured or smoked 0301, 0302, 0303, 0304, 0305, 0306, 0307, 0308 Fish and shellfish, mollusks and other invertebrate water animals 0401, 0402, 0403, 0404, 0405, 0406 Milk and dairy products 0701, , 0703, 0704, 0705, 0706, , Vegetables, edible root vegetables and tubers 0708, 0709, 0710, 0711, 0712, 0713, , 0802, 0803, 0804, 0805, 0806, 0807, 0808, 0809, Fruits and nuts 0810, 0811, Sausage and analogous products made from meat, meat sub-products or blood; finished foods made from these products , Finished food products, including cheese and curd (cottage cheese) based on plant oils , , , Food stuffs (products on the basis of plant oils containing milk) * Fur the purposes of application of this list it is necessary to be guided solely by a FEACN CU Code (Code ТН ВЭД ТС); name of product is given for ease of use. ** For the purposes of application of this item it is necessary to be guided both by a FEACN CU Code (Code ТН ВЭД ТС), and by name of product. *** Except for the products intended for infant use. TARIFF POLICY, Additional Freight costs and fees Rise in tariffs - Ukraine 2014 As per the Ukrainian Ministry for Infrastructure communiqué number 306, dated July 11, 2014, new coefficients have been introduced for the freight tariffs for export / import and inland traffic. The tariffs increase by about 12 %. 5

News from the TransInvest Group A fresh wind in trade with Iran (Source: ITJ Special Iran 23-26/2014) Recent signs pointing to a better economic climate in Iran, thanks to improving relations with

6 News from the TransInvest Group A fresh wind in trade with Iran (Source: ITJ Special Iran 23-26/2014) Recent signs pointing to a better economic climate in Iran, thanks to improving relations with several trading partners, have been welcomed by business communities the world over. According to Iran s ministry of economic affairs and finance, 800 foreign investors visited the country in the period following the easing of sanctions up to early May of this year. Yousef Sherkati, CEO and member of the Board of the international group TransInvest, recently shared his enthusiasm about the revival of trade with Iran with ITJ correspondent Christine Kulke-Fiedler. Yousef Sherkati, CEO and Member of the Board of TransInvest How important is Iran in TransInvest s overall business? Several companies and networks in our group have been involved in transport and logistics operations with Iran for more than 50 years, and have had offices of their own there for a very long time. Our entities also focus on transit operations, taking international consignments through Iran. One of our firms that I want to draw your attention to is the Perse International Forwarding Co. This network of companies is active in every Iranian transport and logistics field. In what ways has your group s infrastructure expanded in Iran in recent years? We aren t only experienced in the market, with developed know-how, but also have the appropriate infrastructure in Iran itself, as you say. Our focus in the years before the revolution especially in the period before the collapse of the Soviet Union was on the regions in the north. Our transit freight passed through the former Soviet Union, via Djulfa, through Turkey, via Bazarghan and across the Caspian Sea. Later the Persian Gulf port of Bandar Abbas was developed and expanded, and our focus shifted there. Your group is obviously well-positioned for an upturn in international trade with Iran. Are you already experiencing this growth? Iranian imports declined drastically during the embargo, but we were able to retain all our managers by concentrating on providing services to the minerals export sector, as well as offering freight transit facilities to and from Central Asia through Iran. We presently have many new enquiries coming in and are making many new contacts. We hope that these will result in concrete new business opportunities before long. You have a direct business interest in the port of Bandar Abbas. Several large shipping lines decided not to call at Bandar Abbas any more in recent years. Are some of these activities returning? Our group has more than 700,000 sqm of terminal and storage area in Bandar Abbas and we re the only service provider there with a private terminal with railway sidings. We also have a terminal with railway sidings for bulk transhipments there. Some lines have signed up for resumed direct services to Bandar Abbas. Others are negotiating with us. A number of companies have their bills of lading issued directly to Bandar Abbas, yet they get the containers themselves routed via Jebel Ali (UAE), using feeder services provided by third parties. The shipping companies that resort to these arrangements include Yang Ming, OOCL, Wan Hai, Emirates, Evergreen, Hyundai, Hanjin, MSC, Messina, PIL and Perma. Have the changes in the structure of Iranian foreign trade affected business? In the last Iranian calendar year (to 20 March), around 75% of Iran s imports came from Asia, and only 22% from Europe. In the 1990s the ratio was more or less the opposite. So we had to change the focus of our activities accordingly, especially with 6

respect to the source of imports. With the easing of the embargo we ll certainly be taking up imports from Europe and the US again, provided there is the requisite customer interest.

7 respect to the source of imports. With the easing of the embargo we ll certainly be taking up imports from Europe and the US again, provided there is the requisite customer interest. One of the Iranian government s transport policy priorities is the development of international corridors. What is the state of these projects? Since the revolution Iran has invested heavily in the railway sector, amongst other fields. TransInvest also became heavily involved in the railway sector. One of our projects was for a terminal for conventional cargo, with an adjacent rail terminal, a container facility as well as a bulk freight rail hub. Another project we re involved in is for the development of rail corridors, particularly for the north-south trade. This is moving along satisfactorily. Of course it s true that many railway routes are still single-track, and not electrified. Transport operations are thus relatively simple. But we expect several new opportunities to open up in the near future, especially in the international corridors east and west of the Caspian Sea, as well as along the New Silk Road to China. Are any of your firms active at the new border-crossing points to Afghanistan and Turkmenistan, or to other countries? As mentioned, we re heavily involved in transit operations, for example providing services to Afghanistan via Bandar Abbas and Tayebad, or logistics services to Turkmenistan for various kinds of equipment suppliers. We also haul cotton and fertilizers from Uzbekistan. In order to provide the best possible service to our customers we have a presence at all major border crossings, old and new, either through partners or with our own agents. Are you planning any new investment projects in transport and logistics services to improve your business with Iran? We re exploring opportunities in Bandar Abbas for a bulk export terminal and are also looking into the purchase of hopper wagons. We re also talking to PMO about a joint investment in a third container-handling dock in Bandar Abbas. In any case, one way or another we re confident that there is a rosy future for the transport and logistics business in trade with and through Iran. PTB Rail Bulk Terminal in Bandar Abbas InterRail in Iran InterRail participates actively in rail transports via the Iranian transit route, for instance for cotton and fertilizer transports. Tarabari Rail, the Iranian InterRail affiliate, was founded in 1997 and registered under this name. Since 2004, the company has been part of the InterRail Group. The company has offices in Teheran, Sarakhs, Mashad, and Bandar Abbas. InterRail Iran offers end-toend tariffs in imports, exports, as well as for transit from and to Russia, Central Asia, India, China, Turkey and Europe. For the transports, different carriers are used. The country Iran belongs to the key countries along the 2000 year old historical Silk Road, which was the most important trade route between Europe and Asia for a long time. The main stream came from what today is known as Turkmenistan and crossed the Iranian border at today s Sarakhs. Amongst others, it led via Rey, a city about 15 km south of Tehran and a hub of the trading route in those days. To date, Iran is an important transit country. By far the most important trading ports are Bandar Abbas and Bandar Imam Khomeini on the Persian Gulf, and Bandar Anzali on the Caspian Sea. During the past years, this large-scale network has undergone a revival all along of five main corridors, important traffic projects have been launched and others will follow. 7

New Partner for Sweden and Norway

// News from the InterRail Group InterRail Trans Siberian Express Service LLC with a new Managing Director New Partner for Sweden and Norway Mark Develop Spedition AB, Västerås (Sweden), became a partner