Belgrade, October, 21 2009Slavoljub Jevtić, Managing director

Sectoral integration of the Western Balkans in the European Union

Transport potentials - key factor for development in Western

Balkan Region

Agenda

Western Balkan Infrastructure potentials 3 - 11

Conditions for improvement 12 - 13

DB SCHENKER 14 - 15

The Pan-European corridors: Backbone of the intra-regional network.

•M.Wolf defined globalisation as “ the process of integration, across frontiers of liberalizing market economies at the time of rapidly falling costs of transport and communications”

•The Pan-European transport corridors, defined at a series of Pan-European Transport Conferences, have been generally accepted in all Balkan countries.

•There is general awareness of the corridors and their significance, and the corridors have been particularly guiding in relation to transport investment by the EU and the EIB.

Core Network- Base for logistics development in Western BalkanRegional Balkans Infrastructure Study-Transport, the project financed by the EU Commission, focuses on the development of regional transport infrastructure which interlinks the countries of the region and links them to the rest of Europe.

Taking the EU strategic networks as a basis, a "Core Network" for the region was proposed.

It includes the main corridors and routes between the five capitals of the regionand the cities of Banja Luka, Podgorica and Priština. It also links these cities tothe capitals of the neighboring countries and connects to the strategic ports at the Adriatic Sea.

The network includes the river Danube, the ports of Durres, Rijeka, Split, Dubrovnik, Ploče, Bar and Vlore and the airports of the six capitals and of Banja Luka, Split, Dubrovnik and Pristina (Tuzla and Osijek)

Core Road Network- Base for logistics development in Western Balkan

Core Rail Network- Base for logistics development in Western Balkan

The network is less dense than the road network which reflects the fact that the role of the railways has declined substantially over the past decades, and that it will be necessary for the railways to adopt a very focused investment strategy in order to afford the upgrading of infrastructure to international standards.

Main transit rail routes are capable for P/C 70

The Core Network also includes the River Danube - Pan-European Corridor VII. This river already plays an important interregional role, and it is expected to gain further importance in the future.

Initiatives have recently been taken to re-open the Sava river for commercial navigation.

Core Inland Waterways Network- Base for logistics development in W. BalkanThe inland waterways regional transport system involves rivers and inland ports in Serbia, Croatia and in Bosnia and Herzegovina. The Core Network of the region includes one inland waterway, the Danube.The Sava is, thus, the second most important inland waterway seen from a regional perspective.The Croatian waterways network comprises the river Sava (to Sisak) and the river Drava (to Osijek).The Bosnia and Herzegovina network includes an important section of the Sava.The main international ports on the Danube in Serbia are: Apatin, Novi Sad, Pančevo, Smederevo, Prahovo and Belgrade, of which Belgrade and Novi Sad are the primary ones. In addition, also Kovin and Sombor are national ports. In Croatia main port is Vukovar.In Serbia Sava is serviced by ports at Belgrade, Sremska Mitrovica and Šabac. The two other ports than Belgrade are considered minor ports with limited strategic importance compared to ports on the Danube. The main ports in BIH are Brcko, Šamac (not in operation) and Brod. On the Croatian side, the port at Slavonski Brod is second in Croatia to Sisak, Croatia's biggest river port and centre of river shipping industry.

Seaports Core Netework-Base for logistics development in Western BalkanThe Balkan countries have outlets to the Adriatic Sea. The ports are, generally, important for oil and other bulk commodities, while container traffic is gradually being developed, especially in Rijeka. Outside the region, the port of Koper in Slovenia and Thessaloniki in Greece are important ports for traffic to/from Bosnia and Herzegovina, Serbia and Montenegro as well as FYRO Macedonia. With the exception of the ports along the Mediterranean sea, Northern and Western European ports still have a strong foothold within the market of overseas traffic related to South European countries in general (specially container traffic) via ports such as Rotterdam, Antwerpen and Hamburg. Nevertheless, a system of “Hub-ports”11 or transshipment ports recently developed in Malta, in Italy (GioiaTauro, Taranto) and in Spain (Algeciras) or other transhipment ports is strengthening the position of the Mediterranean ports.

The Core Network consists of the following ports:• Rijeka ( Croatia) • Split ( Croatia) • Dubrovnik ( Croatia) • Ploce ( BiH) • Bar ( Montenegro)• Durres ( Albania) • Vlore ( Albania)

Airports of Core Network-Base for logistics development in Western Balkan

The Core Network of airports comprises airports in the capitals: Belgrade, Zagreb, Sarajevo, Podgorica, Skoplje and, furthermore, the airports in Banja Luka, Split, Dubrovnik, Niš, Priština and Podgorica . Potential: Tuzla and Osijek

Potentional airports for cargo flights in Serbia: Ladjevci ( Kraljevo), Sombor, Ponikve (Užice)

Balkan- Key elements of bottle neck of Europe/Rail

• 86% of the network has only single track• 59% of the network is electrifiedRestore original design speeds and technical standards of the network. Operation speeds are below the original design speed.

Balkan- Key elements of bottle neck of Europe/RoadsThe geometrical characteristics of the core road network varies substantially from 2-lane roads with less than 7m pavement to 4-lane roads and motorways. Generally, the roads have sufficient capacity to carry the present traffic, although some sections in and around cities are in need for capacity improvement.

Corridor X has 4 lanes on most of its sections, except for the southern part, while the other corridors and routes have 2-lane roads. In the central part of the region bottlenecks of around 870 km of roads need widening or realignment due to insufficient pavement width. These roads have less than 7 m carriageway which is considered to be the minimum or the curve radius are too small.

Liberalization of trade and what diminish its positive effects

Free Trade Agreement in Central Europe CEFTA 2006 is designed in order to liberalized trade in the SEE region. Some of the problems that were emerging in the implementation bilateral agreement remained a stumbling block.

•Procedures at border crossings - Extensive and long procedures for the import license, a huge administration, and a large number of certificates, forms that accompany the goods in international trade significantly slow traffic, but also, and various other problems, such as, for example, the existing time inconsistency of the Inspector (sanitary, veterinary, for radiology) with a time of customs cause the creation of bottlenecks at customs crossings and waiting at the border and up to 24 hours. In that inspection fees are not small.

• The problem of recognition of different certificates of quality -agreements on mutual recognition of documents between the countries in the region have not been made yet , and this type of control each country does for itself • Licenses (for example the necessary permits in Serbia for the transport of dangerous goods, etc.) • Disharmony of domestic standards and technical regulations with international standards. • Complicated visa regime • The high tolls and high fees for parking at the border• Improving quality, speed and efficiency of customs procedures

Western Balkan- Key elements of bottle neck of Europe

Solution of transport and logistics problems which we are facing today in region, which actually shows efficiency of transport industry but also the degree of competitiveness and regional integration and thus a global economic trends, should be found in:

• improval of legal regulations as well as in• investment in transport infrastructure • Investment in logistics facilities

Infrastructure problems have resulted in a lack of adequate transportation and the necessary supporting infrastructure in the fields of banking, insurance, telecommunications and barriers imposed by national regulations in these areas (for example, inadequate and inflexible banking system, lack of suitable credit insurance, different regulations in the field of transport etc.).

Rail Freight Transport Freight Forwarding and Logistics

Rail Freight

Inter-modal

Land Transport

Air/OceanFreight

ContractLogistics/

SCM

Fully integrated sector solutions1

Integrated services/products2

Integrated sales for major customers3

Further development of cross-business unit solutions for key sectors

- Automotive - Chemical/Pharmaceutical- Industrial- Consumer goods

Advance integrated services and position them on the market. Examples: rail logistics at Schenker, seaport hinterland services and combined transport solutions, railports…

Key account management to develop cross-selling potential between rail freight and Schenker

The Transportation and Logistics Division’s aim is to leverage cross-business unit potential

Schenker as part of DB transportation and logistics division

We are a leading logistics company

No. 1 Public transport in Europe

No. 2 Passenger rail transport in Europe

No. 1 European rail freight transport

No. 1 European land transport

No. 1 Biggest rail network in Europe

As of 31.12.2008 1) Difference between the sum of the departments and DB concern result of other activities/consolidation

Employees (‘000) 240

EBIT (EUR bn) 2.483

Rev. (EUR bn) 33.5

1)

Rev. (EUR mn) 6,687EBIT (EUR mn) 857Employees (‘000) 25

DB BahnRegional

Rev. (EUR mn) 14,680EBIT (EUR mn) 381Employees (‘000) 62

DB SchenkerLogistics

Rev. (EUR mn) 344EBIT (EUR mn) 210Employees (‘000) 5

DB NetzeStations

Rev. (EUR mn) 3,523EBIT (EUR mn) 306Employees (‘000) 15

DB BahnLong Distance

Rev. (EUR mn) 4,654EBIT (EUR mn) 307Employees (‘000) 29

DB SchenkerRail

Rev. (EUR mn) 725EBIT (EUR mn) 670Employees (‘000) 41

DB Netze Track

Rev. (EUR mn) 112EBIT (EUR mn) 131Employees (‘000) 25

DB Services

Rev. (EUR mn) 554EBIT (EUR mn) 74Employees (‘000) 2

DB NetzeEnergy

Rev. (EUR mn) 1,962EBIT (EUR mn) 205Employees (‘000) 12

DB BahnStadtverkehrDB BahnUrban

Thank you for attention!