Report by Deputy CEO of IERT JSC S.N. Sharapov, D.Sc.(Tech.)

at the seminar Russia – EC studies in railway transport; the Eurasian Land Bridge as a tool for

bolstering the competitive position of the railway business

Report by Deputy CEO of IERT JSC S.N. Sharapov, D.Sc.(Tech.)

at the seminar Russia – EC studies in railway transport; the Eurasian Land Bridge as a tool for

bolstering the competitive position of the railway business

Open Joint-Stock CompanyInstitute of Economy and Transport Development

(IERT JSC)

Open Joint-Stock CompanyInstitute of Economy and Transport Development

(IERT JSC)

RZD JSCo within the system of international transport corridors.

Establishing a new seamless Eurasian transport corridor Moscow - Bratislava - Vienna

RZD JSCo within the system of international transport corridors.

Establishing a new seamless Eurasian transport corridor Moscow - Bratislava - Vienna

Moscow, 16 October 2012 Moscow, 16 October 2012

2 2

Types of transport corridor within the framework of the RETRACK project

Types of transport corridor within the framework of the RETRACK project

• Tikhomirov corridors

MAP LEGEND

Types of transport corridors within the RETRACK project

MAP LEGENDTypes of transport corridors within the

RETRACK project

- The Transsiberian trunk line- ТRАСЕКА- the Central Corridor

- Points of track gauge change

3 3

Diagram of the 1520 mm railway line Moscow - Kiev– Bratislava – Vienna

Diagram of the 1520 mm railway line Moscow - Kiev– Bratislava – Vienna

MAP LEGEND

- Existing railways

- 1520 mm railway line Moscow - Kiev– Bratislava – Vienna

- planned line

4 4

On the project forbuilding a Bratislava – Vienna railway

with atrack gauge of 1520 mm

On the project forbuilding a Bratislava – Vienna railway

with atrack gauge of 1520 mm

Berlin

Budapest

Zagreb

Ljubljana

Bern

Prague

France

Vienna

Kiev

Bratislava

The quadrilateral MoU signed (Russia, Ukraine, Slovakia, Austria) details the (continued) construction project for a 1520 mm railway line from Košice (Slovakia) to Vienna.Line length ≈500 KmAnticipated volume 16m to 26m tonnesThe goal of the project is to connect the Central European railway system with regions of the Transsiberian trunk line, attract freight traffic to the Asia – Russia – Central Europe route and to bolster the competitive advantage of railway transport.

Advantages of the new line: Time of delivery from the East to

Europe: 15 days vs. 35 days by sea;

environmentally friendly; macroeconomic effect for the

countries involved.

5 5

International transport corridorsInternational transport corridors

International transport corridors

West – East corridor

North-South corridor

Lines under construction and in design stages

Alternative sea routes

6 6

The Transsiberian trunk line: a connecting link between Europe and Asia

The Transsiberian trunk line: a connecting link between Europe and Asia

E.g., November 2011, a container train run from the Vostochny port to Shushary station (St Petersburg hub) took 6 days 16 hours.

Development of the railway infrastructure

Cooperation with international railways and organisations

Developing the intermodal transport technology

Developing logistics

Implementing state-of-the-art information technologies

The Transsiberian trunk line is fully electrified and equipped with state-of-the-art signalling automation and IT facilities.

RZD JSCo introduces a new transport product, the Transsiberian in Seven Days. By 2015, hauling a container from Western to Eastern Russian along the Transsiberian trunk line will take 7 days.

Today the speed is around 1200 Km/day (8 days).

Measures taken:

7 7

Versions of the line proposed in the interim Feasibility Study of the Project for a Wide Gauge Railway Link between Košice

and Vienna developed by Roland Berger Strategy Consultants

Versions of the line proposed in the interim Feasibility Study of the Project for a Wide Gauge Railway Link between Košice

and Vienna developed by Roland Berger Strategy Consultants

Total cost of the project: € 6.60 billion

Construction cost of the new rail line: € 6.36 billion Cost of terminal construction: € 0.24 billion

MAP LEGENDrail lines of the 1520 mm gauge

Versions of the line proposed in the interim Feasibility Study of the Project for a Wide Gauge Railway Link between Košice and Vienna

developed by Roland Berger Strategy Consultants

version 1: plain

version 1: plateau

version 1: plateau, centre

- version 4: modified basic version

- basic version / version 5: parallel to the

existing line

- transloading complexes proposed in the project developed by Roland

Berger.

BRATISLAVA

KOŠICE

VIENNA

8 8

The advantages of building railway lines with a track gauge of 1520 mm in countries with a different gauge

width

The advantages of building railway lines with a track gauge of 1520 mm in countries with a different gauge

widthIn accordance with the construction regulations (STNTs-01-95, etc.) of the Russian Federation, the load per axle and per unit length, the dimensions of the rolling stock and clearance to obstructions of the 1520 mm railways are substantially greater. For instance, the axle load for 1520 mm is up to 30 tf per axle; for 1435 mm, 22.5 tf/axle

The railway network of RZD JSCo provides for hauling heavy wagons and does not require significant adaptation.

The Development Strategy of the Railway Transport of the Russian Federation up to 2030 sets the following target parameters for freight wagons for wagon building enterprises:

– axle load increase to 27–30 tf/axle;

– 30% increase in the time to freight wagon failure

- speed increase to 140 km/h;

- building platforms with variable gauge wheelsets for container transport.

Russian plants produce heavy duty locomotives for heavy freight trains with a weight of 6000 t.

Railways of EC countries (1435 mm) cannot accommodate rolling stock with an axle load exceeding the specified limit. For this reason, modernised rolling stock conforming to the EC standard has to be used for mass transport utilising automated track switching, variable gauge wheelsets or carriage replacement. Using wagons with an axle load of 22.5 tf/axle within the 1520 mm gauge railway network will reduce the efficiency of infrastructure use, especially on busy lines

9 9

List of impediments inherent in different corridors and associated

with specific problem types (RETRACK)

List of impediments inherent in different corridors and associated

with specific problem types (RETRACK)Problem group Operating impediments

power limitations and obsolete infrastructure at stations located at the junctures of sections with differing track gauge and at transloading stations;

customs procedures, delays at border crossings;

power limitations and obsolete infrastructure at stations located at the junctures of sections with differing track gauge and at transloading stations;

customs procedures, delays at border crossings;

numerous technical stops for changing locomotives and drivers;inadequate throughput capacities at the ports of the TRACECA corridor;intermodal transport including two sea sections — the TRACECA corridor;shipments using unit trains mixed with carload shipments;unpunctuality and unreliable transit times;

numerous technical stops for changing locomotives and drivers;inadequate throughput capacities at the ports of the TRACECA corridor;intermodal transport including two sea sections — the TRACECA corridor;shipments using unit trains mixed with carload shipments;unpunctuality and unreliable transit times;

optimisation of wagon fleet, especially in Ukraine and in the private sector in Russia: the Transsiberian and Central corridors;

providing wagons: the TRACECA corridor;providing and allocating flat cars (especially for the Transsiberian);providing and allocating containers;

optimisation of wagon fleet, especially in Ukraine and in the private sector in Russia: the Transsiberian and Central corridors;

providing wagons: the TRACECA corridor;providing and allocating flat cars (especially for the Transsiberian);providing and allocating containers;

Chinese quality certificate;confirmation of unloading at Chinese container terminals;differences in administrative rules and freight documentation;information flows based on manual processing: the Central and TRACECA corridors;language problems associated with documents in the national or dominant working language or

mismatching character sets;

Chinese quality certificate;confirmation of unloading at Chinese container terminals;differences in administrative rules and freight documentation;information flows based on manual processing: the Central and TRACECA corridors;language problems associated with documents in the national or dominant working language or

mismatching character sets;

Border crossing

Transit time

Provision of wagons and containers;

Administrative rules and

documentation

oversize freight cannot be carried across Caucasus: the TRACECA corridor;lack of safety in connection with hazardous cargo: the Central corridor;

semi-monopolistic railway structures prohibiting real competition;

differences in the maximum permissible train length and weight;

Feasibility of railway shipments

Free market

Capacities

10 10

Problem group Organisational impediments

Limited interest in continued international development owing to the high share of domestic shipments: the Transsiberian corridor;

lack of funds for investing in the competitive position of the railway infrastructure;insufficient progress in developing the infrastructure from the political standpoint: the Central

corridor;

low/insufficient volume and imbalance of freight traffic, inadequate volumes of goods for organising corridors with scheduled train traffic

Absence of agreements between the countries regarding tariff questions: the TRACECA corridor;

payment is only refunded for booking a ferry on the Caspian Sea: the TRACECA corridor;customs guarantees with respect to transit shipments: the Transsiberian and Central corridors;

varying criteria for loading equipment in different countries, especially in China (e.g., European tanks are banned in China, Chinese tanks are incompatible with European loading terminals, chemicals in drums are not allowed (they can be handled all over the world except China), etc.)

unfair competition;

Capacities

Tariffs

Organisational and regulatory

issues

HR development and training.HR development and training.

lack of a common interpretation of the relevant laws and regulations — TRACECA and the Central Corridor;

lack of a common interpretation of the relevant laws and regulations — TRACECA and the Central Corridor;

Reliability

Capacities

Administrative rules and

documentation

HR

Problem group Market impediments

users fail to understand the conditions of shipping, delivery and defining the liabilities of the parties: the TRACECA corridor;

priority given to individual types of freight;

Tariffs high and unstable tariffs.high and unstable tariffs.

List of impediments inherent in different corridors and associated with specific problem types (RETRACK)

List of impediments inherent in different corridors and associated with specific problem types (RETRACK)

11 11

Differing electrical systems on different sections;different signalling / control systems on certain sections;different track gauge;

Transit time

Reliability lack of modern monitoring and tracking equipment: the Central Corridor, TRACECA;

Border crossing Inefficient and obsolete track standards at transloading stations between the European and Russian tracks

List of impediments inherent in different corridors and associated with specific problem types (RETRACK)

List of impediments inherent in different corridors and associated with specific problem types (RETRACK)

Problem group Technical impediments

Open Joint-Stock CompanyInstitute of Economy and Transport Development

(IERT JSC)

Open Joint-Stock CompanyInstitute of Economy and Transport Development

(IERT JSC)

Thank you !