Diagnostic Study of the June 30 Road Freight Sector – 2017 Draft Final Report
Towards Greener and This document contains the Draft Final Report of the More Efficient Logistics in Study on the Road Freight Transport Sector in Ukraine -submitted by Peter Krausz, Consultant Ukraine – a World Bank Project Draft Final Report Peter Krausz, Consultant 30 June 2017
Towards Greener and More Efficient Logistics in Ukraine: Diagnostic Study of the Road Freight Sector Draft Final Report Contents Executive Summary ...... 5 Summary of Observations / Recommendations and Proposed Action ...... 5 Objectives ...... 2120 Outline of the Study ...... 2120 Method of Work ...... 2221 Main Stakeholders and Sources of Information ...... 2221 Data Needs and Processing ...... 2221 Methods of Data Collection: Internet, Interviews and e-Survey ...... 2322 Data Collection Problems ...... 2423 Study Team, Reports, Workshops ...... 2625 On-going Reforms ...... 2726 Transport Strategy ...... 2726 Ukraine-European Union Association Agreement ...... 2928 National Law in Force ...... 3130 International Legal Framework ...... 3432 Evolving Domestic Legal Framework ...... 3735 Institutional Structure of Governing Bodies and Public Partners ...... 4240 Organogram ...... 4240 Policy Uncertainties ...... 4442 Lack of Competent Staff in Governing Bodies ...... 4442 Lack of a Representative Organisation of Domestic Hauliers ...... 4543 Transport Demand Drivers – Production & Trade ...... 4644 Recent Economic Trends ...... 4644 Foreign Trade ...... 5047 Domestic Trade...... 5148 Transport Network Geography and Main Features ...... 5350 Freight Transport Modal Split and Road Traffic Patterns ...... 5552 International Transport ...... 5653
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Domestic Transport ...... 5754 Road Freight Transport Output by Form of Undertaking ...... 5956 Domestic Road Transport by Main Commodities ...... 6057 Regional Distribution of Road Freight Transport Volumes (tons) and Performances (ton-km) ..... 6259 Most Frequented Roads ...... 6461 Most Frequented Border Crossing Points ...... 7067 Difficulties to Cross Borders ...... 7269 Structure of the Trucking Industry ...... 7471 Number of Operators and their Distribution by Size ...... 7471 Features of Operated Vehicle Fleets ...... 7976 Corruption – a ‘Social Disease’? ...... 8784 Informality in the Trucking Industry ...... 8885 Own-Account Transport ...... 9087 Traffic Controls, Roads and Road Users ...... 9289 Road side Checks and Inspection at Company Premises ...... 9289 Overloading ...... 9491 Transport Market Developments ...... 9693 Recent Trends and Expectations ...... 9693 Chain Contracts ...... 9794 Inter-company Indebtedness ...... 9795 Web-based Freight Exchanges ...... 9895 Renewal of State-owned Capacities ...... 9996 Fleet Development ...... 10097 Costs and Tariffs ...... 10298 Information from Interviews ...... 10298 Tariffs of a Freight Exchange ...... 103100 Cost Comparison with Other Modes ...... 106102 Cost Distribution ...... 108103 Average Distances and Empty Runs ...... 109105 Average Annual Mileage and Round Trip Distance ...... 109105 Empty Runs...... 110106 Labour Market Developments ...... 113109 Number of Employees and Salaries ...... 113109
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Professional Driver Shortage ...... 114110 Visa Restrictions ...... 117113 Supply of Qualified Managers ...... 117113 Facilitation, Efficiency and ‘Greening the Industry’ ...... 118114 Facilitation ...... 118114 Sustainability ...... 121116 Information and Communications Technology (ICT), Logistics and Multimodality ...... 121117 Road Safety – a Great Concern ...... 126121 Safety Performance ...... 126121 Truck Driver Discipline ...... 128123 Road-side Criminality ...... 128123 Conflict with the Russian Federation ...... 129124 Direct and Immediate Losses ...... 129124 Changes in Demand and Supply ...... 129124 Modified Traffic Patterns ...... 130125 Russian-made Vehicles ...... 131126 Survey on the Road Freight Transport Sector in Ukraine 2017 – Summary of Results ...... 133128 Annexes ...... 135130 Annex 1: On-going Reforms ...... 135130 Annex 2: Institutional Structure of Governing Bodies and Public Partners ...... 135130 Annex 3: Transport Demand Drivers – Production & Trade ...... 135130 Annex 4: Transport Network Geography and Main Features ...... 135130 Annex 5: Freight Transport Modal Split and Road Traffic Patterns ...... 135130 Annex 6: Structure of the Trucking Industry ...... 135130 Annex 7: Costs and Tariffs ...... 135130 Annex 8: Average Distances and Empty Runs ...... 135130 Annex 9: Labour Market Developments ...... 135130 Annex 10: Facilitation, Efficiency and ‘Greening the Industry’ ...... 135130 Annex 11: Road Safety – a Great Concern ...... 135130 Annex 12: Survey on the Road Freight Transport Sector in Ukraine 2017 ...... 135130 Charts, Tables and Boxes ...... 136131 Charts ...... 136131 Tables ...... 137132
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Boxes ...... 138133 Sources ...... 138133
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Executive Summary This study is based on desk research, personal interviews and results of a dedicated Survey among market players. The present Final Report introduces major features of the transport system in Ukraine with details on road freight transport. Despite a number of identified problems to resolve, the transport industry including road freight transport is essentially able to meet present basic needs of the society and economy at large and it is a major asset for the country. In every chapter, summary observations and / or recommendations are drafted in an effort to meet challenges stakeholders should face. These are presented here-below completed with a proposed Action Plan:
Summary of Observations / Recommendations and Proposed Action
Subject Observations / Recommendations Proposed Short-term Competent Action Plan for the Authority Government
Method of Work
Data Collection Improve data reporting and collection on 2017: equip and introduce Ministry of Problems individual (physical persons) and own-account new system of road traffic Infrastructure, operators in respect of transport volume and counting Ukravtodor, Ministry work. of Interior Service 2018: improvement of Centre, State Fiscal Equip Ukravtodor with new and modern traffic company and vehicle fleet Service, State counting stations. data Statistics Service Reinstall data reporting lines between various authorities and the State Statistics Service on goods transport vehicle fleets; make most recent vehicle data publicly available again. Introduce full-scale reporting and data collection on all types of road freight transport entrepreneurs (legal companies, individual and own-account operators). Provide data on their total number and breakdown by size (employees, vehicles operated, turn-over), profile, regional distribution, etc.
Transport Strategy
National Transport The new National Transport Strategy paper 2017: adoption of National Ministry of Strategy 2030 should contain, beyond strategic orientations, a Transport Strategy 2030 InfrastructureCabinet developing specific Action Plan of measures of Ministers completed with financing needs and time schedules as well as the assignment of tasks to competent governmental organisations directly concerned.
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Improvement of the Full-fledged implementation of the Road Fund is 2018: full-fledged Ukratodor road infrastructure, a must, including further efforts to attract implementation of the Road Ministry of a crucial element of financing to infrastructure development, Fund Infrastructure, National Transport intensified road safety enhancement measures Ministry of Finance Strategy and the installation of vehicle weight checking stations together with a simultaneous application of a strict overweight charging and sanctioning regime.
Efficient Improve credit absorption capacities by 2017: reinforcement of loan Ukravodor implementation of reinforcing institutions and professionalism on absorption capacities Ministry of the Third Road the reception side. Infrastructure Safety Improvement Project of The World Bank
UA-EU Association Agreement (AA)
General compliance Intense efforts should be undertaken by the UA 2017-18: reinforce Ministry of with provisions of side to stick to the time schedules of institutional capacities and Infrastructure, the AA in the field of implementation mutually agreed upon in professional competence to Other state organs road freight respect of the legislative approximation accelerate the legislative transport process. (Annex XXXII of the AA) approximation process
Special agreement Based on progress made in legislative reform 2019: preparation of a Ministry of on road transport according to the AA, the UA Government should special agreement on road Infrastructure, between UA and EU initiate the conclusion of an over-arching road transport between UA and Ministry of finance transport agreement (road freight transport EU included) with the EU in order to fully or partially replace existing bilateral road transport agreements.
International Legal Framework
UN ECE Conventions Evaluate the importance for UA of acceding to 2019: Evaluate the Ministry of the UN ECE agreements on the Issuance and importance of acceding to Infrastructure, Validity of Driving Permits (APC), Global the UN ECE conventions Ministry of Justice, Vehicles Regulations, 1998, Protocols to CMR, which UA is not a Ministry of Foreign Customs Treatment Pallets, 1960, and Customs Contracting Party to Affairs Pool Containers, 1994.
Bilateral Road Freight Transport Agreements
Restrictions imposed On the basis of the on-going adaptation of UA 2017-19: negotiate with Ministry of by existing bilateral transport regulation to the EU acquis and the bilateral governmental Infrastructure road freight real implementation of the new legislation, the partners on easing transport Ukrainian government should enter into restrictions in bilateral road agreements to be negotiations with its bilateral governmental
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Multilateral Market Access
Multilateral permits Ukraine should strive for maintaining these 2017-19: negotiate with Ministry of for international forms of access to international freight multilateral governmental Infrastructure, road freight transport markets (ECMT, BSEC) and obtain partners on preserving and Other state organs transport operations lifting limitations on their use as well as developing the ECMT and progressively increase multilateral permit BSEC acquis quotas.
Domestic Legal Framework
Fulfilment of the The process of drafting and adopting new 2017: adoption of 2017 programme for pieces of law and related by-laws should in submitted laws, in particular passing laws general be accelerated. the Draft Laws No. 4683 and according to the AA 4644 The Draft Law to adapt legislation in Ukraine to EU rules on admission to the profession of 2018-21: adaptation of transport operators and to markets as well as national legislation other basic requirements of technical nature according to provisions of (road worthiness tests, driving and rest periods) the AA No. 4683 should be adopted by September 2017 to be closely followed by by-laws as appropriate. The Draft Law to modify the Law on the Transportation of Hazardous Cargo No. 4644 should be adopted by September 2017 to be closely followed by by-laws as appropriate.
Extension of the The Government and Verkhovna Rada should 2018: practical Ministry of system of operator adopt operator licencing regime, i.e. the full set implementation of an all- Infrastructure licences of qualitative requirements of admission to the embracing operator transport operator’s profession, as a major step licencing system in the road to clean the road freight transport market and freight transport sector reduce the size of the shadow economy in this sector. Licencing should cover all road freight transport operators, irrespectively of whether they are set up as legal or physical persons. A robust registration process and licencing implementation scheme as backed up by a relevant IT system should be designed to reduce chances for illegal intrusions and corruption. Reasonable derogations from present EU requirements as to financial standing
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requirements should be found. Once such reasonable standards reflecting realities in Ukraine have been agreed upon they should be applied across the board without exceptions.
Entry into force of A quick, practical ad hoc solution should be 2017: adoption of an Ministry of the ECMT Quality found to comply with the ECMT Quality Charter appropriate piece of Infrastructure Charter on 1 January if the adoption of the new law on road legislation on the 2018 transport were delayed for any reason. implementation of the ECMT Quality Charter Adopt the newly planned legislation on ECMT permit tendering issuance procedures creating more transparency in this area as soon as possible.
Institutional Structure
Importance of the Strengthen participation of the State Statistics 2017-19: reinforce the role State Statistics State Statistics Service in ex ante preparatory and post factum and institutional structure Service Service evaluation processes of legislative work. For this of the State Statistics purpose, reinforce the role and institutional Service structure of this Service.
Non-public entities Strengthen the participation of non-public 2017-18: strengthen non- Ministry of (associations, entities in the permanent social dialogue governmental participation Infrastructure chambers, structure indispensable for an appropriate in preparation and universities, training preparation and implementation of legislation. implementation of institutions, etc.) legislation
Instability in the Stabilise existing governmental structures and 2017-18: stabilise existing Ministry of governmental entities if need be by a moratorium on changes. governmental structures Infrastructure organisational and Reduce political and personal involvement in overseeing the road freight functional structure; purely professional matters and the transport sector lack of coordination implementation of adopted legislation. Impose between entities; requirements for formal and substantial frequent political coordination among all competent bodies implications in governing road transport. purely professional matters
Lack of proficient Improve the moral and financial appreciation of 2017-19: improve Ministry of staff in civil servants employed in governmental professional competence of Infrastructure governmental structures. Reinforce long-term cooperation governmental staff bodies between these entities and universities / research institutes as potential sources of human resources (e.g. by means of state scholarship for talented students with prospects of state employment; swop of young university and research staff to state entities on the basis of exchange programmes).
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No representative State organs should encourage the creation of 2017-18: support setting up Ministry of and efficient trade representative associations of domestic hauliers representative associations Infrastructure organisation exists without wanting to impose state management of domestic hauliers on that unites domestic on these organisations. national and regional basis operators
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Transport Demand Drivers – Production & Trade
Economic situation Subsequent to falling GDP, 2016 was a year of - - stabilisation and modest recovery.
Geographic ‘Top’ regions: concentration of GDP GDP: Kiev Region, Dnepropetrovsk, Donetsk, production, Kharkov, Odessa, Lvov, Poltava, Zaporizhzhya industrial and and Lugansk. agricultural activities Agricultural production: Poltava, Kharkov, as well as trade Dnepropetrovsk, Vinnytsya and Odessa. Industrial production: Dnepropetrovsk, Donetsk, City of Kiev, Zaporizhzhya, Kharkov, Poltava, Kiev Region and Lvov. Domestic trade: City of Kiev, Dnepropetrovsk, Kharkov, Odessa, Lvov, Kiev Region and Zaporizhzhya.
Foreign trade Open economy. - - Negative growth in recent years. Main export partners: the EU as a block, Russia (declining), China, Egypt, Turkey, Poland and Italy. Top export commodities: minerals, metals, agricultural products, live animals, machines, transport and industrial equipment. Main import countries: the EU as a block, Russia (declining), China, Germany, Belarus, Poland and Italy. Top import commodities: minerals, metals, machines, transport and industrial equipment, chemical and leather products. Most export and import partner countries are accessible and most commodities except minerals are transportable by road.
Transport Network Geography and Main Features
Favourable Poor state of networks, incl. roads, and low quality - - geographic position; of service. availability of basic The country is an important part of the transit infrastructure chain between Eurasia and Middle-East with a number of transport corridors via its territory. Underutilised transit potential. Shortage of finance for roads. Out-dated vehicle fleets. Informal activities. Lack of modal interfaces.
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Freight Transport Modal Split and Road Traffic Patterns
International modal Rail is the leader followed by pipelines and road. - - split (volume); traffic International freight traffic by road is shrinking. development
Domestic freight Domestic freight traffic is declining with a slight - - traffic and modal catch-up in 2016. split Modal split: o Tons: 69 % by road, 24 % by rail, 7 % by pipelines o Ton-km: 58 % by rail, 29 % by pipelines, 12 % by road
Distribution of Transport companies (legal persons): 12 % 2017-18: analyse the Ministry of domestic road performances of transport Infrastructure Own-account and individual (physical) operators: freight transport companies (legal persons), 88 % (an exceptionally high proportion) volume by form of own-account and individual undertaking (physical) operators to understand their importance and prepare transport policy action to influence their shares if need be
Domestic road Metal ores and other mining products: 41 % - - transport by main Agricultural products, food, beverages and commodities tobacco: 24 % Other cargo: 13 % Chemical etc. products: 10 %
Regional distribution ‘Top’ regions (c.f. ‘top’ regions in respect of GDP - - of domestic road production, industrial and agricultural activities as freight transport well as trade):
Volumes (tons): Dnepropetrovsk, Odessa, Donetsk, Kiev and Ivano-Frankovsk Performances (ton-km): Lvov, Zakarpattya, Donetsk, Dnepropetrovsk, City of Kiev, Kiev
Most frequented M-05 (Kiev – Odessa) with an ADT for trucks value 2017: verify high truck ADT in Ukravtodor roads in Ukraine of 6’325 total traffic M-03 (Kiev - Kharkov - Dovzhansky (Rostov-on- Don)): 6’031 M-10 (Lvov - (Kraków)): 4’992 M-09 (Lvov - Rava-Ruska (Lublin)): 4’718, M-11 (Lvov - Shehyni (Kraków)): 4’639
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M-06 (Kiev - Chop (Budapest via Lvov, Mukachevo and Uzhgorod)): 3’985. (Exceptionally high truck ADT share in total traffic on most highways - further verification needed!)
Most frequented Yaghodyn-Dorohusk, PL-UA; border crossing Krakivets-Korchova, PL-UA; points Chop-Záhony, HU-UA; Goptovka-Nehotyeyevka, RU-UA Novi Yarylovychi - Nowa Huta, BY-UA
Border Crossing Problems
Long waiting times at In order to reduce long waiting times at the most 2017: negotiate with the State Fiscal a number of border important exit point of Ukraine, urgently reinforce Government of Poland to Service, Ministry crossing points, incl. dialogue between two sides of each border improve the situation at of Infrastructure Yaghodin-Dorogusk crossing point at operational and political levels, Yaghodin-Dorogusk without (UA-PL), the most particularly at Yaghodin-Dorogusk (UA-PL). delay important gateway All parties should implement earlier signed between UA and EU agreements on border crossing traffic processing.
Joint control at eight Extend joint control technology to other UA-PL 2018-19: negotiate with State Fiscal border crossing border crossing points, including at Yaghodin- bilateral governmental Service, Ministry points at the UA-PL Dorohusk. partners to extend real joint of Infrastructure and UA-MD border border control technology Extend the joint control technology to other sections without limitations at UA’s border sections, in particular with BY, RO and SK. frontiers Develop presently existing ‘consecutive joint controls’ into real ‘parallel joint controls’ by authorities of neighbouring states. Lift limitations on joint controls whereby trucks of up to a certain useful load ceiling (at the UA-PL border 3.5 tons only) may have access to joint border treatment.
Application of Single Clarify and resolve possible contradictions 2017-18: preserve and State Fiscal Window technology between Single Window application and a new law extend Single Window Service, Ministry and preliminary on ‘State Control over the Legislation concerning application in customs of Infrastructure documentary control Foodstuffs, Feedstuff, Animal by-Products, Animal procedures by UA Customs Health and Welfare’ expected to be adopted in June 2017.
100 % inspection of Negotiate with BY Government so that BY side 2017: negotiate with the State Fiscal all loaded vehicles at abandons unjustified checks on a 100 % basis and Government of Belarus on Service, Ministry New Yarylovichi - replace rigid controls by random techniques simplifying border of Infrastructure Novaya Huta" (UA- whereby trade and budgetary interests should be procedures BY) border by BY protected by up-to-date information technology authorities and other customs practices.
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Structure of the Trucking Industry
Number of road Licenced road freight operators represent less See above under Data Collection Problems freight transport than 30 % of all road freight transport operators undertakings (i.e. a clear minority of legal and non- legal persons in the road freight transport sector). There are highly contradicting official reports on the number of road freight transport undertakings. This is a real enigma, company statistics should be reorganised on the basis of the planned re- introduction of the licencing regime.
Size of road freight The road freight transport sector is very See above under Data Collection Problems transport companies fragmented (statistics are again contradictory and not targeted enough):
74 % of companies (legal entities in the land & pipeline transport, warehousing and support activities) employ a staff of less than 9 persons; companies hiring more than 50 persons represent only 8 %. Annual turnover of 95 % of companies (legal entities in the land & pipeline transport, warehousing and support activities) is less than 1 million Euros.
Features of operated Since 2000, total fleet has more than doubled (230 - - vehicle fleets %). Growth continued in 2016 (+ 9 %). Considering number of new registrations (2016), complete fleet renewal is expected to be between 12.5 (best) and 25 (worst) years. Overwhelming majority of trucks is fit for carrying general cargo. Bulk of trucks is in private hands. The majority of trucks (65 %) is owned by transport companies (legal persons). 75-80 % of all trucks is more than 10 years old. Total weight of more than 70 % of trucks and road trains is less than 10 tons. Around 50 % of trucks were manufactured by Russian and UA companies. Leading regions by size of truck fleet: City of Kiev; Odessa; Donetsk, Kharkov, Kiev Region, Lvov, Khmelnistkiy, Poltava and Dnepropetrovsk.
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Corruption
Corruption in ‘It is almost impossible to defeat corruption in the 2017-19: reinforce anti- Ministry of transport transport sector today.’ corruption activities in the Infrastructure sector according to a Fighting corruption is the responsibility of all comprehensive action plan to actors, governmental and non-governmental be implemented involving agencies as well as every citizen. Prevention governmental and non- should be supported by legislation and law governmental transport enforcement. organisations
Informality in the Trucking Industry
Shadow market in No licencing in road freight transport leads to less 2017-19: reinforce efforts to Ministry of road freight transparency therefore shadow activities. The reduce shadow economy in Infrastructure transport controlled introduction of operator licences is the sector on the basis of a going to be certainly one of the potential tools to comprehensive action plan efficiently reduce shadow activities on the road involving governmental and freight transport market. non-governmental transport organisations Informal economy goes hand-in-hand with corruption. Any progress to subdue one would moderate the other. An efficient tool to reduce informality in road freight movements and related commercial activities may be a system of electronic checking by authorities of all cargo movements on roads.
Own-account Transport (OAT)
OAT in Ukraine Very high: between 30-40 % of the total volume carried on the roads (tons, lack of precise data).
Reporting obligation Any economic entity owning registered goods See above under Data Collection Problems and for OAT operators to transport vehicles should report data to the State Distribution of Domestic Road Freight Transport the State Statistics Statistics Service on transport activities. This is Volume by Form of Undertaking Service more than often not the case and the reporting compliance rate of OAT operators should be increased.
OAT operators OAT operators can easily and informally move into interfering on the the hire and reward transport segment. It is hire and reward suspected that they do so. This should be subdued 2018-19: prepare and market as much as possible. introduce a non-bureaucratic Ministry of registration and certification Infrastructure Registry and The introduction of a mandatory but ‘light’ system for OAT operators certification for OAT registration and certification for OAT operators is operators highly recommended in Ukraine.
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Traffic Controls, Roads and Road Users
Road side checks and The reinforcement of these checks is vital for 2017-19: equip Ministry of inspections at higher law compliance, protection of the interests Ukrtransbespeka with Infrastructure, company premises of customers of transport operators, setting necessary IT and human Ukrtransbespeka conditions of fair market competition, increased resources to be able to road safety and security as well as enhanced reinforce road side checks protection of the environment. and inspections at company premises
Road-side facilities Secure truck parking sites of acceptable comfort 2018-21: re-brush earlier Ministry of level is a basic condition for hauliers to comply plans and renew nation-wide Infrastructure, with law on driving time and rest periods. A preparations for improving Ukravtodor network of truck parking sites should be built as an road-side facilities; build a integral part of road reconstruction programmes in network of up-to-date truck the country to enhance road safety and ensure parking areas facilities along reasonable working conditions for drivers. main highways
Maximum The highest values of maximum permissible total 2017-18: review present Ministry of permissible loads and axle weights (42 / 44 tons and 11.5 / 13 tons national standards of Infrastructure respectively) presently in force seem to be too permissible total and axle- high in comparison with the general state of the loads considering both road road network. These values should be surface protection needs and reconsidered and allowed considering the vehicle’s interests of road freight configuration in such a way as not to exceed 10 transport operators tons axle load (national and international highways).
Overloading The installation and use of modern technical 2017-18: put into operation Ministry of prevention facilities allowing pre-filtering of vehicles by the planned mobile road Infrastructure checking weight in motion is desirable. traffic control facilities without any further delay; Information and statistics on weight controls are reinforce control and sporadic and contradictory. This should be sanctioning changed. Diminishing overloading is achievable by a mix of measures such as tight control, strict sanctioning, distribution of responsibility between shipper and haulier as well as self-discipline.
Transport Market Developments
Recent Trends and There is over-supply of loading capacities at - - Expectations present coupled with mixed future expectations.
Chain contracts Chain contracts seem to be frequently used 2018-19: prepare and adopt Ministry of putting high pressure on tariffs and other legislation to restrict Infrastructure contractual conditions of true carriers. Efforts superfluous chain contracts should be made to cut through contractual chains. in transport
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Inter-company There is a need to review the legal framework to 2018-19: prepare and adopt Ministry of indebtedness fight high current inter-company indebtedness. legislation to limit inter- Finance, company indebtedness Ministry of
Infrastructure
Freight exchanges Freight exchanges offer a useful tool for matching - - load and loading capacity. Their use however should be avoided if available tariffs do not cover costs of operation.
Fleet Development
Credits and leasing Domestic operators cannot afford bank credits or 2018-19: review legislative Ministry of leasing for vehicle purchase due to high prevailing possibilities and potential Finance, interest rates. Solid partnership between haulier financial measures to allow Ministry of and shipper can best support vehicle leasing banks and leasing institutions Infrastructure contracts. to lower interest rates and introduce attractive bank Outright purchase seems to be a viable option, if products affordable.
Second-hand import The second-hand import market is disorganised. 2018-20: reinforce control State Fiscal market over the import of second- Service, Ministry hand vehicles of Interior, Ministry of Infrastructure
State taxation and State taxation and customs policy should be 2018-19: introduce more Ministry of customs policy beneficial for fleet renewal of import origin (e.g. preferential taxation Finance, VAT reduction is proposed). measures in favour of truck Ministry of fleet renewal Infrastructure Customs should accept for goods value the true and properly documented purchase price of imported vehicles.
Costs and Tariffs
Average costs and Average costs and tariffs are reported to be 17 - - tariffs (costs) and 20.5 (tariff) UAH / km for international and 12.8 (costs) and 20.1 (tariff) UAH / km for domestic operations. Freight rate information collected from freight exchange confirms tariff (and cost) levels communicated by interviewees in personal meetings.
Cost comparison River transport is the cheapest (domestic - - with other modes comparison). Rail is cheaper than road for examined international relations. For domestic rail and road tariffs a much more extensive comparison should be undertaken. In this Report, road is more expensive in one selected
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relation, in three other cases prices of the two modes are very close with road tariffs seemingly a bit lower than rail prices. (!) Further verification is needed.
Cost distribution For domestic & international road freight transport - - operations: 17 % driver, 47 % fuel, 17 % vehicle, 13 % overhead and 6 % other costs.
Average Distances and Empty Runs
Average annual Annual mileage: 110’000 km (heavy goods - - mileage and round vehicles, domestic and international traffic) trip distance Average round trip distances: around 50 km in domestic operations for all goods vehicles; above 400 km for heavy goods vehicles; 3’900 km in international operations. Average distances are higher for transport companies (legal persons) than for other operators.
Empty runs Domestic transport: 21 % (interview data) - - International transport: 9 % (interview data) Official statistics report on much higher empty share for domestic operations (47 %); to be verified.
Labour Market Developments
Number of Number of employees is growing in land (incl. - - employees and pipeline) transport. Salaries are also growing salaries though they are still at a low level.
Professional driver There is a professional driver shortage in big cities. - - shortage Many qualified drivers leave for abroad. The number of professional drivers and workers servicing motor vehicles is declining, particularly in young age groups. Most ‘driver-populated’ regions are: Dnepropetrovsk, Donetsk, Kiev, Lvov, Kharkov, City of Kiev and Odessa. Tools applied to reduce driver shortage: better remuneration, in-house training and the creation of acceptable working conditions by e.g. buying new vehicles if affordable, ensuring normal working hours, introducing a regular bonus system and creating a friendly company atmosphere
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where drivers feel appreciated by the management.
Visa restrictions Visa restrictions for drivers active in international 2017-21: negotiate with Ministry of operations reduce their availability for work. This bilateral governmental Foreign Affairs, problem persists in non-EU relations, government partners on visa issuance Ministry of and diplomatic efforts are needed to resolve this facilitation measures for Infrastructure issue. professional drivers
Supply of qualified Demand and supply for qualified managers is more - - managers or less in balance, signs of their relative shortage have however been experienced.
Facilitation, Efficiency and ‘Greening the Industry’
Facilitation Diminishing bureaucracy and administrative 2017-21: draft and Ministry of obstacles would automatically enhance efficiency implement a specific Economic and also increase transparency in business facilitation programme Development processes thus limiting chances for corruption and streamlining state and Trade, the development of shadow economic activities. administration involved in Ministry of domestic and international Infrastructure Logistics Performance Index (LPI): India, the top trade as well as transport performer in the income group of Ukraine is rated processes 35th in the global ranking compared to Ukraine’s 80th place. Ukraine needs to improve significantly in all LPI indicators.
Sustainability Economic, social and environmental sustainability - - should be pursued simultaneously. A major impediment in Ukraine to any progress in this respect is the poor state of its road infrastructure.
ICT, logistics and ICT: almost all international and important 2018-19: review and modify Ministry of multimodality domestic carriers use ICT systems. System if need be legislation to Infrastructure developers and service providers are more and support the construction of more numerous in Ukraine. modal interfaces (terminal facilities) and the purchase of Logistics: it seems that there is still resistance by special railway rolling stock and lack of ability of hauliers to provide complex needed for the development logistics services. Positive examples have also been of multimodal transport identified. Multimodality: terminal networks owned by the Ukrainian Railways or in private hands can become the physical support to the development of multimodality still negligible in the country. One example is the Centre of Transport Services LISKI (CTS LISKI). The further development of multimodal operations should be encouraged by the government.
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Reduction of Most national roads were built several decades ago, 2017-21: accelerate fleet State Fiscal pollution at the it is difficult to implement modern standards for air renewal by implementing Service, Ministry source pollution, noise level, vibration, road geometry and effective fiscal incentives; of Finance, distance to populated and built-up areas. introduce new vehicle Ministry of environmental standards in a Infrastructure The replacement of old polluting units should be phased-out manner; accelerated by the State implementing effective elaborate and introduce a incentives (e.g. fiscal benefits). Further means of reasonable road user charge environment protection in the sector: charges to scheme for commercial cover road use and externalities, more demanding vehicles with simultaneous vehicle parameters, accrued use of alternative fiscal compensation fuels, reduction of traffic noise at source, measures; build noise improved vehicle maintenance and inspection abatement walls along schemes, enhanced driver and manager training, critical road sections etc.
Road Safety
Safety performance Facing responsibilities in improving road safety is a joint task for all governmental and non- governmental players. 2017-21: elaborate and The number of road fatalities per million implement a governmental inhabitants dropped from 119 in 2012 to 93 in plan of action with the 2015, still very high rates in international involvement of comparison but a positive trend. The target for representative non- Ministry of 2030 is a 50 % reduction of fatalities. governmental transport and Infrastructure other organisations (civil Truck driver The most efficient way to improve safety society) in order to achieve a discipline performance is more intensive controls and law 50 % reduction in road traffic enforcement. Beyond compliance with working / fatalities by 2030 driving and rest hours, regular daily vehicle checks and maintenance as well as driver training can be very efficient to improve road safety.
Road side criminality Road side criminality may become a serious risk. 2017-18: reinforce security Ministry of Beyond reinforced police checks and patrolling, checks on roads and in Interior, operators’ measures are also vital: satellite parking areas by the re- Ministry of tracking, no drive during night hours, cautious organised road police Infrastructure route planning to avoid risky roads and parking sites, driver discipline.
Conflict with the Russian Federation
Direct and Human implications, forced selling of vehicles, - - immediate losses abandoning equipped warehouses and offices.
Changes in demand Industries have been interrupted and supply - - and supply chains cut. Trucking has decreased by about 66 %.
Modified traffic Transit through Ukraine has suffered. 2017-18: increase transit Ministry of patterns traffic through Ukraine by Infrastructure,
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Transit through Russia has contracted by 35-38 % trade and transport State Fiscal since 2013; Russian Silk Road sections have ceased facilitation measures (see Service, Ministry to exist and substitute routes via the Caucasus above under Facilitation); of Economic region have been tested; total additional costs for negotiate with governments Development the alternative route range between USD 2’900 of countries in newly and Trade, and 4’500 for a 40-tons road train. identified international Ministry of corridors to prepare and Foreign Affairs implement measures facilitating inter-continental transport activities
Russian-made Spare-parts supply and servicing becomes more - - vehicles used in and more complicated. important number Replacement of old vehicles by new Russian-made vehicles is practically impossible.
Survey on the Road Freight Transport Sector in Ukraine 2017 Participation was much higher than expected. - - Summary of Results Survey results confirm study findings in respect of
Dominance of small hauliers regional concentration of domestic road freight transport activities domestic and international trip distance empty share of domestic and international operations (future surveys should be refined on this issue) driver shortage share of overloaded vehicles competition on the road freight market limited access to financing to renew/develop fleets road safety
Survey results and study findings should further be analysed / verified regarding
partner country ranking in international traffic total annual km performance in domestic as well as international transport (future surveys should be refined on this issue) market prospects extent of corruption extent of using modern tools supporting operational sustainability costs and tariffs
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Objectives ‘The World Bank is supporting the Ministry of Infrastructure of Ukraine to develop a sustainable logistics action plan with the objectives of (i) strengthening Ukraine’s logistics potential; (ii) enhancing interconnectivity of all transport modes; (iii) maintaining, modernizing, and expanding efficient transport and logistics infrastructure and promoting energy-efficient freight transport; (iv) improving transport and logistics related skills and services; and (v) promoting a trade facilitating environment.’1 Findings of the present study, part of preparations for elaborating the logistics action plan, should help the Ukrainian Government to ‘address prioritised regulatory and institutional barriers that compromise the efficiency, cost and quality of road transport services’.2 More particularly, recommendations for improvement should be articulated on the basis of a review of: 3 1. The size and composition of domestic and international movement of goods by road 2. The structure of the trucking industry and the market for trucking services 3. The cost and tariff structure of the industry, comparison with tariffs of other modes 4. The structure and main bottlenecks in domestic and international regulatory framework and its implementation regarding movement of goods by road including bottlenecks for road transport operators (to establish their businesses and access the markets, e.g. licensing, registration or other permit issuing procedures) 5. Main institutional arrangement and the roles of Competent Authorities regarding movement of goods by road 6. Prospects of ‘green freight solutions’ in Ukraine It is not possible to provide a full-fledged account of all challenges currently facing the sector or a panacea for now and the years to come. A review of questions listed above and the emanating recommendations for improvement will however put some light on important matters of concern for the road freight transport sector. These recommendations may later be integrated into the wide-scope logistics action plan to be presented by the World Bank to the Government of Ukraine. Outline of the Study The first delivery of the study was an Inception Report the contents of which, initial findings on the general state of the road freight transport sector as well as a brief summary of main challenges to face, were subsequently merged into the present Final Report. In the Final Report substantial and detailed findings on the Ukrainian road freight transport sector are presented as required by the Terms of Reference of the work. Results of a Survey conducted among Ukrainian business players in the road transport sector are also presented. Each chapter of the Final Report is complemented by a list of observations and recommendations for action to reinforce the smooth future development of the road freight transport sector in Ukraine. Detailed statistics (data belonging to charts included in the main body of the Report and other useful data and information) are included in Annexes assigned to relevant chapters of the Report.
1 Terms of Reference (TOR) of the present study issued by the competent service of The World Bank, 13 March 2017 2 Terms of Reference … (see above) 3 Based on Terms of Reference … (see above)
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Method of Work Table 1: Summary of Main Observations / Recommendations on the Method of Work
Subject Observations / Recommendations
Data Collection Problems Improve data reporting and collection on individual (physical persons) and own- account operators in respect of transport volume and work. Equip Ukravtodor with new and modern traffic counting stations. Reinstall data reporting lines between various authorities and the State Statistics Service on goods transport vehicle fleets; make most recent vehicle data publicly available again. Introduce full-scale reporting and data collection on all types of road freight transport entrepreneurs (legal companies, individual and own-account operators). Provide data on their total number and breakdown by size (employees, vehicles operated, turn-over), profile, regional distribution, etc.
Various ‘classical’ research and analytical tools have been applied in the framework of the present investigation. These include internet search on available literature and statistical information, furthermore interviews during missions to Ukraine, direct data input at special request from competent authorities and other players and a Survey on the state of the road freight transport sector. Main Stakeholders and Sources of Information Initially, the following institutions were considered to be the main stakeholders and data / information holders: Verkhovna Rada Transport Committee, Ministry of Infrastructure, Ministry of Interior, State Fiscal Service of Ukraine incl. Customs Administration, State Statistics Service, State Service for Transport Safety Ukrtransbespeka, State Road administration Ukravtodor, State Road Transport Research Institute, ASMAP UA and other road freight transport, logistics and forwarding associations, chambers of commerce, and last but not least road freight transport operators, forwarders, logistics companies and shippers. All these institutions, organisations and a number of transport operators have been contacted to obtain information and data supporting the present work. Data Needs and Processing The following information and data were planned to be collected for a good understanding of the actual situation in the industry: 1. Size and composition of domestic and international movement of goods by road Data reflecting basic macro-economic development, industrial and agricultural production, progress of domestic and foreign trade activities, identification of main production and consumption centres as well as main road freight transport corridors, domestic and international activities of the road freight transport industry, annual mileage of trucks with shares of laden/unladen trips, recent changes in geographic and traffic patterns due to general economic development and the conflict with the RF, general state of the road network as well as that of the network of uni- and multimodal terminals and road-side facilities. 2. The structure of the trucking industry and the market for trucking services Data reflecting the development of transport modal split in Ukraine, main trucking company features (size, ownership, legal form of undertaking, activity profile), number of road freight
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vehicles in the country (by type of vehicle, loading capacity, manufacture, vehicle average age, environmental classes), access to financing aimed at the renewal of vehicle fleets, changes in the road transport labour market (drivers, managers), state of application of modern technology in trucking, magnitude of informal activities in the sector, extent and impact of vehicle overloading. 3. The cost and tariff structure of the industry, comparison with tariffs of other modes Data reflecting costs of operation in domestic and international trucking by presenting the example of vehicles of various loading capacities as broken-down to mileage, fixed vehicle costs and driver costs, tariffs in domestic and international trucking, tariff comparison between land transport modes, impact of other than cost related factors on tariff levels, e.g. market competition. 4. The structure and main bottlenecks in domestic and international regulatory framework and its implementation regarding movement of goods by road including bottlenecks for road transport operators Information on main pieces of domestic and international regulation (basically concerning access to the profession and the markets, trucking efficiency and existing problems of implementation), bilateral road freight transport agreements concluded by UA (incl. the problem of shortages in international road freight transport permits), other obstacles (e.g. waiting times at borders), multilateral agreements on the exchange of road freight transport permits, state of implementation of UA’s Association Agreement with the EU in the field of road freight transport. 5. Main institutional arrangement and the roles of Competent Authorities regarding movement of goods by road Information on the governmental structure, related regulations and institutions in the road freight transport sector (role of various Competent Authorities), trade organisations, public-private dialogue in the sector, universities / research / training institutes, framework of the on-going UA- EU dialogue. 6. Promotion of ‘green freight solutions’ in Ukraine Information on possibilities and limits for modal shift and multimodal transport, “greening” road vehicle fleets, improving the environmental performance of vehicles, internalization of externalities of trucking and enhancement of road safety Methods of Data Collection: Internet, Interviews and e-Survey This Report is based on - a review of existing information, literature and data available on Internet - review of documents on road freight transport in Ukraine available within The World Bank - statistical data collection mainly from sources of the State Statistics Services of Ukraine, competent ministries and research organisations - personal encounters and interviews conducted with representatives of twenty-five stakeholders concerned during three missions to Ukraine between March and May 2017 including state organisations, transport operators, forwarders and shippers, the EU delegation in Kiev and finally three trade organisations (associations).
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In order to bridge difficulties experienced in data collection (see next paragraph), it was decided at an early stage of project activities to conduct an e-Survey among the main market players in Ukraine. The purpose of the confidential and anonymous survey was to collect information from Ukrainian road freight transport operators, logistics companies and shippers with / without own vehicles on conditions of domestic and international road freight transport operations. The questions raised deal with the main features of road freight transport companies, the characteristics of domestic and international movements of cargo on Ukrainian roads, the situation on the road freight transport market, vehicle fleet renewal, the availability of competent staff on the labour market, the costs of operations and the possibilities to enhance efficiency and sustainability of operations. The Survey was launched on April 20 and concluded on June 7, 2017. The Survey was web-based. This means that potential respondents and in particular their representative organisations (large transport companies, web-based freight exchanges, transport / logistics / forwarding associations, chambers of commerce) received an Internet link for direct response or further transmission to member companies / clients / partners with special request to participate in the Survey. Overwhelming majority of the questions were of closed nature and answers were requested to be given by simply ticking the appropriate box(es) according to the respondent’s choice of multiple reply options. Answers are strictly treated as anonymous and with total confidentiality, and the individual responses stay with The World Bank only. The soft-ware application used does not even allow the identification of individuals or companies answering the e-Questionnaire. In order to facilitate participation, three language options were made available: Ukrainian, Russian and English. Results of the Survey are presented in the last chapter of and in Annex 12 to the Report. Data Collection Problems Table 2: Summary of Data Collection Difficulties – Proposed Improvement Measures
Subject to be Data need Data Unit Source Availability Proposed covered Improvement
Transport work Tonnes lifted, Tonnes, ton-km State Statistics reasonable Improve data transport Service reporting and performed collection on individual (physical persons) and own- account operators
Recent reliable Daily average Number of Ukravtodor poor Equip Ukravtodor traffic data traffic by type of vehicles with new and vehicles modern traffic counting stations
Recent data on the Number of vehicles Number of State Statistics Only with Reinstall data size of the national in various vehicles Service special efforts reporting lines road goods vehicle breakdowns from vehicle between various registration authorities and the sources State Statistics
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fleet and its (Service Centre Service on goods breakdowns of the Ministry transport vehicle of Interior) fleets; make most recent vehicle data publicly available again
Number of trucking Number of Number of State Statistics Practically n.a.; Introduce full-scale companies and companies and companies Service and if yes, reporting and data individual breakdowns information is collection on all operators (physical fragmented types of road persons) as well as and very freight transport own-account contradictory entrepreneurs transport (legal companies, companies individual and OAT including their operators); provide breakdowns data on their total number and breakdown by size (employees, vehicles operated, turn-over), profile, regional distribution, etc.
Official statistics identified cover a great number of areas under review. However, data collection difficulties have also been identified. In respect of the work of the road freight transport sector (measured in tons and ton-km), data gaps seem to exist due to the fact that important parts of the market are not transparent where no or imprecise data on transport operations are available. This problem concerns the work of small operators or individual entrepreneurs (physical persons possibly operating 1-3 trucks) and companies carrying their own goods (own-account transport - OAT - operators) who together cater for a comprehensive part of road freight transport output. None of the competent state organs, organisations and research institutes, including the Ministry of Infrastructure, Ukravtodor, State Statistics Service, State Road Research Institute in charge of road network development or the State Road Transport Research Institute entrusted with the analysis of transport sector operations and economics are able to provide recent reliable traffic data (2014-16) on truck movements in Ukraine (average daily number of trucks). The lack of precise and reliable traffic data is a concern to be remedied since the availability of such basic data represents a condition sine qua non to identify main traffic flows and transport corridors as well as major origin and destination points in the country. More importantly, they can best be used together with data on the movement of other types of vehicles for the identification of road sections needing repair, rehabilitation or complete reconstruction in the present network as well as the selection of routes to be developed into modern, high-capacity motorways in the future. True that at least on scientific level, efforts have been employed to over-bridge the gap. The State Road Transport Research Institute has undertaken important modelling work to be able to estimate present and forecasted traffic on the Ukrainian network mainly to define the environmental footprint as well as
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Draft Final Report Peter Krausz, Consultant 30 June 2017 fuel consumption of road transport. 4 Such estimations (using the TransTools-3 modelling facility) often contradict officially promoted traffic data. For the purpose of the present study, results of a traffic counting exercise were considered undertaken by Ukravtodor back in 2013-14 and ‘updated’ by subsequent manual counting that unfortunately cannot be considered fully reliable.5 Recent data (2015-16) on the total size of the truck fleet and its breakdown cannot easily be obtained from competent Ukrainian organisations either. The State Statistics Service published corresponding data for the years 2011-12 and some details (e.g. on the types of vehicles by manufacturers) are available for 2014. More recent data were requested from the Ministry of Interior and indeed, following several exchanges they were delivered by the Service Centre of the Ministry. The reason given for the lack of publicly available recent data: regional vehicle registration centres working under the aegis of the Ministry were integrated into one single central registry in 2013. The creation of a solid IT background of the centralised registry is still an on-going process. As soon as the reorganisation of the information system is concluded, usual data accessibility will be reinstated including towards the State Statistics Service. Similarly, no official data are available on the number of trucking companies and individual operators including their breakdown by size, legal form, ownership, main profile, etc. Such data would be of primary importance to understand the structure of the industry and that of the road freight transport market. Study Team, Reports, Workshops The composition of the study team was the following: - The World Bank: Ms Gözde Isik, Senior Transport Economist, Task Leader; Mr Megersa Abera Abate, Transport Economist - Project leader in charge of developing the full logistics action plan for the Ukrainian Government: Mr Lauri Ojala, Professor, University of Turku - Consultant in charge of the road freight transport sector study: Mr Peter Krausz, author of the present Report; local support to the consultant was provided by Andrii Shkliar, Head of Advisory at the Centre for Transport Strategies (CfTS), Kiev, and his staff - Back up by administrative staff of the World Bank in Washington and Kiev The road freight transport sector study was launched on 15 March and terminated on 30 July 2017. During this period, three deliverables were provided: an Inception Report for 1 May, the Draft Final Report for 30 June and the Final Report for 30 July 2017. The Inception Report and the Draft Final Report were debated at workshops with the participation of local stakeholders held in Kiev on 17 May 2017 and 6 July 2017 respectively.
4 Development of national policy on regulation of road transport CO2 emissions and energy consumption in Ukraine, Produced as part of Clima East Expert Facility assignment CEEF2015-043-UA: “Development of potential in the elaboration of National policy on regulation of CO2 emissions and energy consumption by road transport”, Final Report, 28 October 2016 5 In Spring 2017, a limited traffic data verification exercise was carried out with the help of major cell-phone operators in Ukraine. Total traffic movements were identified on the basis of mobile phone signals on a short road section between Odessa and the Romanian border. It is somewhat encouraging that the results of this unique traffic counting exercise globally confirm total traffic data of Ukravtodor (no break-down by type of traffic was possible). (Source: team of consultants of The World Bank working on traffic data)
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On-going Reforms
Transport Strategy Table 3: Summary of Main Observations / Recommendations on the Transport Strategy
Subject Observations / Recommendations
National Transport Strategy 2030 The new National Transport Strategy paper should contain, beyond strategic orientations, adeveloping specific Action Plan of measures completed with financing needs and time schedules as well as the assignment of tasks to competent governmental organisations directly concerned.
Improvement of the road Full-fledged implementation of the Road Fund is a must, including further efforts to infrastructure, a crucial element of attract financing to infrastructure development, intensified road safety National Transport Strategy enhancement measures and the installation of vehicle weight checking stations together with a simultaneous application of a strict overweight charging and sanctioning regime.
Efficient implementation of the Improve credit absorption capacities by reinforcing institutions and professionalism Third Road Safety Improvement on the reception side. Project of The World Bank
Back in 1998, The World Bank considered6 that the pace of reform in the whole of the transport sector was slow, assets in the sector were eroding, traffic contracted and road transport might gain a more important share. It drew attention to the need of technical innovation and technological upgrading. Among other things, the Bank proposed the continuation of institutional and pricing reforms as well as the adoption of a transport policy framework. It suggested the removal of barriers to access to the profession of transport operators as well as the elimination of “needless controls” by the authorities. It suggested the rehabilitation of infrastructure (road and rail) along main international and domestic routes. Most of these findings of the Bank, or some mistaken - though to a certain extent popular - liberalisation measures (like the abolition of operator licencing in road transport in 2010), seem to be long-standing concerns of the Ukrainian transport sector as found in the course of the present work. In order to tackle them, The World Bank itself has already approved and implemented several projects of outstanding importance, for example in road transport7 over the last decades. Among other things, the on-going Third Road Safety Improvement Project of the Bank serves exactly this purpose, namely road rehabilitation and maintenance, as well as the improvement of road network management and development in the framework of lending several hundreds of millions of USD to the Ukrainian Government between 2015 and 2021. As a result, improved road infrastructure will clearly open up new opportunities to increase the sustainability of road freight transport operations. According to information available on the present phase of implementing the project, there is an urgent need to improve credit absorption capacities by reinforcing institutions and professionalism of the Ukrainian side. The Ukrainian Government has equally recognised that wide-ranging action should be undertaken to remedy the situation. In 2010, Ukraine’s transport strategy 2020 was adopted targeting many issues of
6 Republic of Ukraine Transport Sector Review, Volume 1: Policy Note; World Bank, November 30, 1998, Report No. 18636-UA 7 Road Sector Development Project, The World Bank, http://projects.worldbank.org/P149322?lang=en
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Draft Final Report Peter Krausz, Consultant 30 June 2017 our interest in the following areas8: infrastructure improvements, liberalisation and facilitation, protection of environment & safety, fleet development, improved logistics & IT applications, integration into the European transport system and resolving transport employment issues. The implementation of the Government’s transport strategy is currently under review. The latest draft was published in June 2017. Now, the strategy is planned to be put into inter-service consultation and its adoption is expected the latest by the end of 2017.9 In the latest draft, strategic goals are grouped in five priority areas: (1) improvement of public governance of transport, (2) provision of quality transport services and integration of Ukraine’s transport system into the international transport network, (3) sustainable financing of the transport sector, (4) Improvement of transport safety and security and (5) enhancement of urban mobility and regional integration.10 Comments publicly available on drafts circulated have been quite critical pointing among other things to the absolute need of improving the country’s transit facilities via rehabilitating roads and constructing new highways, providing greatly improved logistics services and developing new transit connections and corridors between the EU and Asia. It has indeed been acknowledged that true difficulties are to be overcome in order to create smooth ‘international transportation between Ukraine - Georgia - Azerbaijan – Kazakhstan and the continuation of the given route to China, Iran, India and other Asian countries on one side, and Poland, Hungary, Slovakia and other countries of Northern and Western Europe on the other side’. 11 It is reasonable to aim at the creation of special framework conditions ted for international operations. This focus is justified on the one hand by the ‘growing importance of road transport for the development of interregional transport links between Western, Central and Eastern Europe, the Black Sea region, the Middle East and the Asia-Pacific area’ 12, and on the other hand by the need to integrate the Ukrainian transport system into the European transport network. A public debate on an advance draft strategy took place in December 2016.13 Participants highlighted the need for an ‘efficient State management of the transport sector, the provision of high-quality transport services, steady financing of the transport sector, improvement of transport safety and reliability … and the regional integration of Ukraine’. Financial resources should be ensured also by involving private operators and international financing institutions. It is stated in a report on the meeting 14 that ‘… everyone knows the list of the problems in the transport sector, but nobody offers solutions’. With regard to road infrastructure, a number of recent observations and critical comments concern the financing of road maintenance works; in 2016, UAH 8 billion was allocated from the State Budget to the new Road Fund for road surface maintenance and "pothole" repairs. The Fund however covers less than half of real needs. 15
8 Cabinet of Ministers of Ukraine Instruction No 2174-r dated October 20th 2010 Kiev on approving the Transport Strategy of Ukraine for the period of up to 2020 9 Based on the consultant’s exchange of views during missions in Ukraine (EU Delegation, 19 May 2017) 10 National Transport Strategy of Ukraine 2030, Draft, June 2017 11 Speech of the Minister of Infrastructure of Ukraine Volodymyr Omelyan within the Global Conference for Sustainable Transport (26.11.2016, Ashgabat) 12 Resolution of the XVII IRU – ASMAP UA International Conference on International Road Transport: Problems, Solutions, Prospects, Kiev, Ukraine, 20 October 2016 13 Unanswered Questions: How Ukraine’s Transport Strategy Was Discussed, http://en.cfts.org.ua/articles/unanswered_questions_how_ukraines_transport_strategy_was_discussed A short summary of the public debate on the preparation of Ukraine’s National Transport Strategy: general phrases instead of concrete figures, Olga Bystritska, 06 December 2016 14 Unanswered Questions: … (see above) 15 A Review of 2016 in the Transport Industry Infrastructure: interview with Minister Volodymyr Omelyan on the achievements of the transport industry in 2016; Olga Bystritska 23 January 2017 http://en.cfts.org.ua/articles/a_review_of_2016_in_the_transport_industry
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Regarding road freight transport operations, experts participating in the strategy review process rightly emphasise 16 that this sector is unique by its ability to provide door-to-door services and freight transport to small towns, villages and rural areas. While acknowledging qualities of the road freight transport sector, they also raise the issue of poor vehicle weight control practices and insufficient road surface quality, furthermore high accident rates on the roads. Low traffic intensity on a number of road sections in urgent need of repair and the uncertain legal environment negatively impact on chances to attract private capital to road investments in the form of PPP. Thus financing would remain the exclusive task of the State as supported by international financing institutions. Remedies recommended to mitigate these problems encompass the reform of the road management system (operation and maintenance) coupled with a full-fledged implementation of the Road Fund, further efforts to engage financing to infrastructure development, intensified road safety enhancement measures and the installation of vehicle weight checking stations together with a simultaneous application of a strict overweight charging and sanctioning regime. The high share of informal services and wide-spread corruption (see details for both issues further down) create a non-transparent situation on the transport market and lead to important losses in state budget revenues. The planned revision of the licencing requirements for road transport operators, if implemented in a coherent manner for all market actors, might be part of problem resolution in this regard. In respect of the much desired extension of multimodal transport in Ukraine17, the same experts 18 underline that though there are some ‘existing capacities for processing multimodal traffic (container terminals, multimodal railway stations, ferry lines, deep sea berths)’ and private multimodal transport operators are present on the market (container traffic), the share of multimodal operations is still very small compared to total cargo movements. The shortage of modern logistics centres and multimodal terminals aggravate the situation while bureaucratic procedures hold back the construction of road-rail interfaces. In addition, traffic is characterised by unbalanced container flows leading to a high share of empty units circulating in the system and slow turn-around times of rail platforms.
Ukraine-European Union Association Agreement Table 4: Summary of Main Observations / Recommendations on the UA-EU Association Agreement
Subject Observations / Recommendations
General compliance with provisions Intense efforts should be undertaken by the UA side to stick to the time schedules of the AA in the field of road freight of implementation mutually agreed upon in respect of the legislative approximation transport process. (Annex XXXII of the AA)
16 Update/Upgrade National Transport Strategy 2030 Part 2 : Transport Sector Analysis, Dornier, Expertise France, egis International, September 2016 17 Multimodal transport is understood in line with the definition of the International Transport Forum (ITF) as ‘carriage of goods by two or more modes, often under one and the same contract’. It may cover the transport policy concept of ‘inter-modality’ whereby the major part of the transport operation is done by rail, IWWT or sea and only the initial and final hauls by road. Source: Intermodal Transport Operations in and with Turkey, OECD/ITF, 2009, https://books.google.ch/books?id=C- _saXSePq0C&pg=PA101&lpg=PA101&dq=ITF+multimodal+transport+definition&source=bl&ots=ML8AS7AeRL&sig=N3nqPmyfQL3oyte9Kfy4W- SLEkc&hl=fr&sa=X&ved=0ahUKEwj237CSgoPUAhWrA5oKHfmvD8MQ6AEILTAB#v=onepage&q=ITF%20multimodal%20transport%20definition&f =false 18 Update/Upgrade National Transport Strategy 2030 Part 2 … (see above)
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Special agreement on road Based on progress made in legislative reform according to the AA, the UA transport between UA and EU Government should initiate the conclusion of an over-arching road transport agreement (road freight transport included) with the EU in order to fully or partially replace existing bilateral road transport agreements.
The Association Agreement signed in 2014 embodies an impetus for most reforms underway in the country, therefore it deserves particular attention. In order to accelerate the implementation of the Agreement, a permanent dialogue has started19 between the Contracting Parties in accordance with Article 370 of the said Agreement. Some of the provisions of the Agreement are most pertinent for road freight transport; it is therefore justified to highlight these clauses here-below: 20 Transport operations and services - Provisions on transit rely on WTO provisions (Article V of GATT 1994, and related provisions); Parties target progressive interconnectivity of their respective customs transit systems, with a view to Ukraine participating in the future in the Common Transit System; they cooperate and coordinate between all relevant authorities and agencies to facilitate traffic in transit and promote cooperation across borders including between authorities and the private sector in relation to transit (Art. 76, items 4 a, b and c) - Conditions of mutual market access in road, rail and inland waterways transport shall be dealt with by possible future special road, rail and inland waterways transport agreements; prior to the conclusion of such agreements, Parties do not render the conditions of mutual market access more restrictive as compared to the situation existing before entry into force of the Agreement; provisions of existing bilateral agreements not covered by future possible agreements shall continue to apply (Art. 136, items 1, 2 and 3) Sustainability of transport operations - Parties cooperate in order to contribute to the development of sustainable transport systems; they promote efficient, safe and secure transport operations as well as inter-modality and inter- operability of transport systems; they enhance the main transport links between their territories; develop sector strategies for the upgrading of technical equipment and transport fleets to meet the highest international standards; they develop a multimodal transport network to be connected to the Trans European Transport Network (TEN-T); they elaborate funding strategies focusing on maintenance, capacity constraints and missing links in infrastructure networks; they promote scientific and technical cooperation regarding e.g. intelligent transport systems (Art. 367, items a, b and c; Art. 369, items a, b, c, d, e and f) Modernisation of the transport system in Ukraine - Parties facilitate the restructuring and modernisation of Ukraine's transport sector and gradual approximation towards operating standards and policies comparable to those in the EU; they improve the movement of goods, increase fluidity of transport flows between Ukraine, the EU and third countries by removing administrative, technical, cross-border and other obstacles,
19 Ukraine and EU start transport dialogue, 16 January 2017, http://mtu.gov.ua/en/timeline/Mizhnarodni-zvyazki.html 20 Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the other part; 29.5.2014 Official Journal of the European Union L 161/3
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improve transport networks and upgrade infrastructure in particular on main axes connecting the Parties including border-crossings (Art. 368, items 1, 2 and 3) Annex XXXII to the Agreement lists EU legislation which Ukraine undertakes to gradually approximate its own national legislation to within the given timeframe. In road transport, this list covers technical (vehicles: speed limiters, maximum weights and dimensions, roadworthiness tests), transport safety (driving licence and tests, transport of dangerous goods), social (recording equipment, working, driving hours and rest periods, conditions of pursuing the occupation of road transport operator, initial qualification and periodic training of drivers) and fiscal conditions (tolls or charges for the use of infrastructure). Finally, Annex XXXIII deals with planned forms of cooperation targeting the development of transport connections between Ukraine and EU territories as well as third countries. Indeed, since signing the Agreement, Verkhovna Rada and Government have initiated a series of laws to launch overhauling national legislation in line with EU rules. This concerns for example 21 conditions of pursuing the occupation, driving hours and rest periods, initial qualification and periodic training of drivers, speed limiters and roadworthiness tests. Details of intended legislative changes are tackled further down in this Report.
National Law in Force Table 5: Summary of Main Observations / Recommendations on National Law in Force
Subject Observations / Recommendations
Continue and accelerate legal See under Chapter ‘Evolving Domestic and International Legal Framework’ reform
Key pieces of present legislation regulating road freight transport in Ukraine are as follows. The main contents of each piece of law are presented in an annex to the Report (Annex 1: On-going Reforms) 22 23 Basic law: Law of Ukraine on motor transport of 05.04.2001, №2344-III. 24 Law of Ukraine on transport & forwarding activities of July 1, 2004, No. 1955-IV 25 Resolution of the CMU dated 02.12.2015 №1001 on the approval of conditions of licensing of economic activities like the transport of passengers, dangerous goods and hazardous waste management, road transport, international transport of passengers and goods by road 26 Law of Ukraine on the transportation of dangerous goods last amended by 901-VIII (901-19) of 23.12.2015, BD, 2016 27
21 Progress in Implementation of the EU-UA Association Agreement on Transport Issues in 2015, Maya Koshman Director of the International Cooperation Department of the Ministry of Infrastructure of Ukraine, Slide Presentation, 2015 22 Based partially on a list of law provided by ASMAP to the consultant by email, May 2017 23 Based partially on another list of law provided by ‘Support to the Implementation of the Association Agreement and of the National Strategy in the Transport Sector in Ukraine’, Project funded by the European Union, May 2017 24 Law of Ukraine on motor transport, http://zakon2.rada.gov.ua/laws/show/2344-14 25 Law of Ukraine on transport-forwarding, http://cis-legislation.com/document.fwx?rgn=16938 26 Resolution on licencing, http://zakon3.rada.gov.ua/laws/show/1001-2015-%D0%BF 27 Law on dangerous goods transport, http://zakon2.rada.gov.ua/laws/show/1644-14
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Resolution of the Cabinet of Ministers of Ukraine (CMU) dated 18.01.2001 №30 on the movement of large and heavy vehicles on roads, in streets and across railroad crossings 28 Resolution of the CMU of 27.06. 2007 №879 on measures for the preservation of public roads 29 Law enforcement Resolution of the CMU dated 08.11.2006 №1567 on the state inspection in road transport 30 Regulation of the CMU dated September 3, 2008 № 790 on the approval criteria of classifying business entities by the degree of risk of their activities in the field of road transport and determining the frequency of State Inspection 31 Code of Administrative offences (enforcement measures) last modified by Number 1952-VIII of 03.16.2017, BD 2017 32 CMU Decree No. 103 on the State Body for Transport Safety (Ukrtransbezpeka) 33 CMU Decree of 09.06.2011 № 929 on administrative services provided by Ukrtransbezpeka 34 Domestic regulation of international activities Decree of the Ministry of Transport of Ukraine (MTU) of 20.08.2004 number 757 on the system of processing, issuance, use and registration of permits for international transportation of passengers and goods by road 35 Customs Code last modified by 1796-VIII of 12.20.2016, BD 2017 36 Law on transit cargo last modified by N 406-VII (406-18), 04.07.2013, ВВР, 201437 Vehicle technical inspection CMU Decree of 30.01.2012 № 137 on the procedure for the compulsory technical control of vehicles 38 Work of the driver Order of the Ministry of Infrastructure (MoI) of 24.06.2010 № 385 on the approval of the regulations on the use of control devices (tachographs) in motor transport 39 Order of the Ministry of Infrastructure (MoI) of 07.06.2010 № 340 on the approval of working time and rest periods for drivers of wheeled vehicles 40 CMU Decree of 31.01.1992 number 47 on the requirements of national and international driving licences 41 CMU Decree of May 8, 1993 № 340 on the issuance, replacement, renewal or exchange of driving licenses, and the establishment of new terms of validity for driving licenses for different categories of vehicles 42
28 Law of Ukraine on large and heavy vehicles, http://zakon3.rada.gov.ua/laws/show/30-2001-%D0%BF 29 Resolution on the preservation of public roads, http://zakon3.rada.gov.ua/laws/show/879-2007-%D0%BF 30 Resolution on state inspection, http://zakon2.rada.gov.ua/laws/show/1567-2006-%D0%BF 31 Regulation on classifying business entities by risks, http://zakon2.rada.gov.ua/laws/show/790-2008-%D0%BF 32 Code of Administrative offences http://zakon2.rada.gov.ua/laws/show/80731-10 33 Decree on Ukrtransbezpeka, http://zakon3.rada.gov.ua/laws/show/103-2015-%D0%BF 34 Decree on Ukrtranspezbeka’s admin services, http://zakon3.rada.gov.ua/laws/show/929-2011-%D0%BF 35 Decree of international permits, http://zakon2.rada.gov.ua/laws/show/z1075-04 36 Customs Code http://zakon2.rada.gov.ua/laws/show/4495-17 37 Law on transit, http://zakon3.rada.gov.ua/laws/show/1172-14 38 Decree on technical control, http://zakon3.rada.gov.ua/laws/show/137-2012-%D0%BF 39 Order on tachographs, http://zakon3.rada.gov.ua/laws/show/z0946-10 40 Order on working and rest periods, http://zakon3.rada.gov.ua/laws/show/z0811-10 41 Decree on driving licences, http://zakon2.rada.gov.ua/laws/show/47-92-%D0%BF 42 Decree on the issuance … of driving licences, http://zakon3.rada.gov.ua/laws/show/340-93-%D0%BF
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International Legal Framework Table 6: Summary of Main Observations / Recommendations on the International Legal Framework
Subject Observations / Recommendations
UN ECE Conventions Evaluate the importance for UA of acceding to the UN ECE agreements on the Issuance and Validity of Driving Permits (APC), Global Vehicles Regulations, 1998, Protocols to CMR, Customs Treatment Pallets, 1960, and Customs Pool Containers, 1994.
UN ECE Conventions Ukraine is signatory of the most important international transport conventions of the UN Economic Commission for Europe governing road freight transport in Europe. In this sub-chapter only a list of main conventions is presented, see more details an annex to this Report (Annex 1: On-going Reforms). Ukraine’s status in respect of the UN ECE conventions is presented in the following table (Table 7). The Government of Ukraine should consider accessing to conventions marked in blue in the table, in particular on Global Vehicle Regulations, the Protocols to the CMR Convention and the customs treatment of pallets and container pools. Table 7: Ukraine’s status in respect of the UN ECE conventions 43 Abbreviated name of UN ECE Convention of relevance for international road freight transport UA status E Road Network (AGR), 1975 x E Comb. Tr. Network (AGTC), 1991 x Road Traffic, 1968 x Road Signs & Signals, 1968 x Suppl. 1968 Convention Road Traffic, 1971 x Suppl.1968 Conv. Road Signs & Signals, 1971 x Protocol Road Markings, 1973 x Issue and Validity of Driving Permits (APC) Vehicles Regulations, 1958 x Techn. Inspect. Vehicles, 1997 x Global Vehicles Regulations , 1998 Work of Crews Int. Road Transport (AETR), 1970 x Contract Road Goods Transport (CMR) ,1956 x Protocol to CMR, 1978 Add'l Protocol to CMR, (e-CMR) 2008 TIR Convention, 1975 x Temp. Import. Commerc. Vehicles, 1956 x Customs Container Convention, 1972 x Customs Treatment Pallets, 1960 Harmoniz. Frontier Controls Goods, 1982 x Customs Pool Containers, 1994 SMGS Transit by Rail, 2006 s Dang. Goods by Road (ADR) , 1957 x Protocol to ADR, 1993 x Perishable Foodstuffs (ATP), 1970 x
X = Ratification, accession, definite signature; S = Signature; Conventions and agreements listed in Table 7 above regulate the following main areas of direct relevance for international road freight transport operations: 44
43 UN ECE Agreements and Conventions, http://www.unece.org/fileadmin/DAM/trans/conventn/agree_e.pdf 44 UN ECE Agreements and Conventions (see above)
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Working Conditions - European Agreement concerning the Work of Crews of Vehicles engaged in International Road Transport (AETR), of 1 July 1970 Private Law - Convention on the Contract for the International Carriage of Goods by Road (CMR), of 19 May 1956 Border Crossing Facilitation - Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention), of 14 November 1975 (and of 15 January 1959) - Customs Convention on the Temporary Importation of Commercial Road Vehicles, of 18 May 1956 - International Convention on the Harmonisation of Frontier Controls of Goods, 21 October 1982 Transport of Dangerous Goods - European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR), of 30 September 1957 Transport of Perishable Foodstuffs - Agreement on the International Carriage of Perishable Foodstuffs and on the Special Equipment to be used for such Carriage (ATP), of 1 September 1970
Bilateral Agreements on Market Access Table 8: Summary of Main Observations / Recommendations on Bilateral Road Freight Transport Agreements
Subject Observations / Recommendations
Restrictions imposed by existing On the basis of the on-going adaptation of UA transport regulation to the EU acquis bilateral road freight transport and the real implementation of the new legislation, the Ukrainian government agreements to be turned into should enter into negotiations with its bilateral governmental partners targeting the facilitation tools for border crossing replacement of quantitative restrictions with qualitative requirements for access to freight transport by road international markets.
Bilateral road freight transport agreements have been the tool for governments to control access to the market for operators on a strictly bilateral basis since WW2. Having gained independence, Ukraine has also signed such agreements with most European and Asian governments. The main feature of these agreements is the quantitative regulation of market access in the form of limited annual quotas of transport permits valid separately for direct export / import, transit and third-country operations, cabotage being totally and mutually prohibited. Ukrainian international operators are disadvantaged by most of such restrictive agreements (c.f. lack of bilateral permits highlighted elsewhere in various chapters of this Report) which Ukraine has practically been obliged to sign in the given circumstances to ensure international market access for its own operators as well as foreign operators interested in operations to / from and in transit through its own territory.
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On the basis of the on-going adaptation of UA transport regulation to the EU acquis and the real implementation of the new legislation, the Ukrainian government should enter into negotiations with its bilateral governmental partners targeting the replacement of quantitative restrictions with qualitative requirements for access to international markets.
Multilateral Market Access Regulation Table 9: Summary of Main Observations / Recommendations on Multilateral Market Access Regulation
Subject Observations / Recommendations
Multilateral permits for Ukraine should strive for maintaining these forms of access to international freight international road freight transport transport markets (ECMT, BSEC) and obtain lifting limitations on their use as well as operations progressively increase multilateral permit quotas.
Ukraine became member of the European Conference of Ministers of Transport (ECMT, today a part of the global inter-governmental International Transport Forum - ITF) in 1996. ECMT introduced multilateral transport licenses in 1974, in order to facilitate the gradual liberalisation of road freight transport among its member countries. Licences within the limits of a multilateral quota, allow bilateral, third-country and transit road freight operations between any ECMT member countries (i.e. third-country operations) contrary to restrictions inherent to bilateral permits. Unfortunately, beyond growing pressure on freedoms offered by ECMT multilateral permits (resulting e.g. in the introduction of the obligation to return to the country of registration after a certain number of trips), some countries (Austria, Greece, Hungary, Italy and Russia) apply general limitations in their territories. Access by UA hauliers to road freight markets of these countries is indeed most problematic either in bilateral or multilateral format. Ukraine accepted the ECMT Quality Charter (2015) which contains the same requirements for admission to the occupation of transport operators, their market access and a great number of related provisions as those in force in the EU. Ukraine is also member of the Black Sea Economic Cooperation (BSEC) organisation. In the framework of this governmental organisation, road transport associations interested in facilitating access to international markets by their member hauliers established the Union of Road Transport Associations (BSEC URTA), an ngo, in 2001. Experiencing the restraints of bilateral road transport agreements, BSEC URTA, influenced by the example of the ECMT model, decided to set up a sub-regional multilateral quota system in order to facilitate international haulage among BSEC member states in 2009. The BSEC multilateral permit is valid for a round trip in transit and/or bilateral transport among the seven cooperating states, including Ukraine. The multilateral regulation of market access seems certainly to be superior to bilateral schemes, therefore Ukraine’s vested interest is to maintain these forms of regulation and, as far as other member states are in agreement, obtain lifting limitations on their use as well as progressively increase multilateral permit quotas.
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Evolving Domestic Legal Framework Table 10: Summary of Main Observations / Recommendations on the Domestic Legal Framework
Subject Observations / Recommendations
Fulfilment of the 2017 programme The process of drafting and adopting new pieces of law and related by-laws should for passing laws according to the AA in general be accelerated. The Draft Law to adapt legislation in Ukraine to EU rules on admission to the profession of transport operators and to markets as well as other basic requirements of technical nature (road worthiness tests, driving and rest periods) No. 4683 should be adopted by September 2017 to be closely followed by by-laws as appropriate. The Draft Law to modify the Law on the Transportation of Hazardous Cargo No. 4644 should be adopted by September 2017 to be closely followed by by-laws as appropriate.
Extension of the system of operator The Government and Verkhovna Rada should adopt operator licencing regime, i.e. licences the full set of qualitative requirements of admission to the transport operator’s profession, as a major step to clean the road freight transport market and reduce the size of the shadow economy in this sector. Licencing should cover all road freight transport operators, irrespectively of whether they are set up as legal or physical persons. A robust registration process and licencing implementation scheme as backed up by a relevant IT system should be designed to reduce chances for illegal intrusions and corruption. Reasonable derogations from present EU requirements as to financial standing requirements should be found. Once such reasonable standards reflecting realities in Ukraine have been agreed upon they should be applied across the board without exceptions.
Entry into force of the ECMT Quality A quick, practical ad hoc solution should be found to comply with the ECMT Quality Charter on 1 January 2018 Charter if the adoption of the new law on road transport were delayed for any reason. Adopt the newly planned legislation on ECMT permit tendering issuance procedures creating more transparency in this area as soon as possible.
A unique chapter of this Report is devoted to the UA-EU Association Agreement (AA) which targets highly important changes in domestic and international legal conditions relevant to the road freight transport sector in Ukraine (see details on AA in Chapter ‘Ukraine – European Union Association Agreement’). Due to the AA, which contains specific deadlines for legislative changes, law approval procedures should be accelerated by the Verkhovna Rada and the Government of Ukraine. Practically, all pieces of domestic regulations mentioned under the Chapter ‘National Law in Force’ are concerned by the required changes. Just as examples, some of the deadlines mutually agreed upon are listed here:45 changes on the admission to the occupation and access to markets should be accomplished by September 2017 (one part by 2021), periodic road worthiness tests of vehicles by September 2017 (one deadline passed in 2015 already),
45 ‘Support to the Implementation of the Association Agreement and of the National Strategy in the Transport Sector in Ukraine’, Project funded by the European Union, May 2017
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Draft Final Report Peter Krausz, Consultant 30 June 2017 tachographs by September 2019, driving times and rest periods as well as driver training by September 2017 and September 2019, dangerous goods transport by road by September 2017 (one deadline passed in 2015 already). Therefore, this year seems to be crucial for Ukraine to prove that it is able to comply with the planned timing of legal reforms of relevance for road freight transport. The task is not easy as shown in the long list of EU legislation to be adopted in the framework of the draft new Law on Road Transport alone. (See this list in Annex 1: On-going Reforms). As part of on-going changes, early 2017, a Law on the Road Fund was adopted by the Parliament. This development, indirectly related to subject matters being reviewed in this study, is positive and clearly of importance to road users such as the trucking industry, a potential beneficiary of improved roads. The law foresees financing road repair, maintenance and development in the framework of a still modest annual budget of UAH 10 billion (2017, an increase of UAH 2 billion compared to 2016). Furthermore, the Ministry of Infrastructure has recently submitted to the Parliament for adoption 46 the - Draft law to modify the Law on the Transportation of Hazardous Cargo No. 4644; this draft has been returned to the Ministry for modifications. - Draft law to adapt legislation in Ukraine to EU rules on admission to the profession of transport operators and to markets as well as other basic requirements of technical nature (popularly but imprecisely called the “law on the admission to the market”) No. 4683; this draft has also been redirected to the Ministry for modifications - Law on the liability insurance of professional transport operators No. 4642, interrelated with the draft No. 4683 In this context, a number of existing pieces of national legislation is under review inter alia to incorporate mandatory liability insurance of carriers (incl. hauliers) for damage caused to life and health of (passengers) and third parties. 47 It is expected that with these new legislative acts, the rule in Ukraine will be brought much more in line with numerous EU Directives and Regulations in respect of technical (vehicles: speed limiters, maximum weights and dimensions, roadworthiness tests; dangerous goods transport), transport safety (driving licence and tests, transport of dangerous goods), social (recording equipment, working, driving hours and rest periods, conditions of pursuing the occupation of road transport operator, initial qualification and periodic training of drivers) and fiscal conditions (tolls or charges for the use of infrastructure) of road freight transport. The newly initiated draft pieces of law No. 4683 and 4642, if approved as they are proposed today, will reintroduce the requirements for a transport operator licence for all professional transport operators, hopefully in a coherent way, i.e. for legal and physical persons 48 alike. It is a highly significant and desirable
46 Meeting with the Secretariat of the Transport Committee of the Verkhovna Rada, March 2017 47 Draft law of Ukraine on Amendments to Certain Laws of Ukraine regarding the mandatory liability insurance of carriers for damage caused to life and health of passengers and third parties 48 In Ukraine, there is a large sub-sector of individual hauliers (physical, non-legal persons - FOPs, a Ukrainian abbreviation). The relevant piece of law (Ukrainian Tax Code) distinguishes between two types of businesses: those done by physical (FOP) and those conducted by legal persons. The most spectacular difference between the two appears in taxes imposed. Legal persons (medium-size and large hauliers belong to this category) are obliged to pay 18 % tax on profit, 20 % VAT, 1.5 % special contribution in view of the armed conflict with Russia and 22 % social contribution on wages. An FOP runs a simplified accounting system and pays a preferential universal tax. FOPs fall into three categories of which two are irrelevant for road freight transport undertakings (very small businesses with an annual turnover of less than 3 million UAH). The upper limit of total annual turn-over for the third category relevant for road transport is 5 million UAH. If they go for paying VAT, their universal turn-over tax rate is 3 %; if they opt out of VAT, it is 5 %.
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Draft Final Report Peter Krausz, Consultant 30 June 2017 change. The implementation of the law will be supported by by-laws such as a planned resolution of the Cabinet of Ministers on amendments to the licensing conditions of the transportation of (passengers), dangerous goods and hazardous waste as well as international transport of (passengers) and goods by road. The draft resolution details the documentary and administrative requirements for the admission to the occupation and the licencing procedure. 49 At the heart of the licencing system, there will be a new Central Registry of admitted road transport operators. According to plans to be implemented as soon as the relevant law enters into force, application documentation reflecting the fulfilment of admission criteria corresponding to EU standards (professional competence and good repute for the transport manager, financial standing of the transport undertaking, the establishment and existence of a road transport company, company vehicle data) should be submitted to regional offices of the State Road Service for Safety Ukrtransbespeka that will enter approved applicants into the Central Registry. All competent authorities (traffic control, police, taxation authorities, customs, etc., and even authorities concerned of EU member states) will have access to the registry to check the status of registered companies. They can signal any contraventions committed as well as qualify entrepreneurs by means of a risk criteria classification system consisting of low-medium-high risk categories. It will be Ukrtransbespeka’s task to verify if remedy action has been undertaken by sanctioned operators within the imposed deadlines and if the they can recuperate their previous “no or low risk” status and eventually withdrawn licences. At all levels and for all measures taken in the system, automation and intensive checking efforts will be applied to reduce the chances of illegal intrusions and corruption. (See Chart 1)
The FOP status is in danger as the IMF insists on a wide-scale tax reform for the sake of more transparency and increased budget revenues in Ukraine. Definitely, FOP manipulations have been reported on, e.g. creating several FOPs for one and the same economic entity in order to keep annual turnover per undertaking below legally permissible limits. 49 Draft resolution of the Cabinet of Ministers on amendments to the licensing conditions of economic activities like the transportation of passenger, dangerous goods and hazardous waste as well as international transport of passengers and goods by road (manuscript)
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Chart 1: Planned Operator Licence Management Processes in Ukraine 50
File submission Enquiry
Central Licence Registry Regional Offices of Competent authorities Ukrtransbespeka (Maintains database and receives inquiries) (Carry out checks on (Collect applications the road and at and submit files of premises & apply approved licence) sanctions + risk management)
Risk management The AA allows the Ukrainian Party to define the monetary value of the financial standing criterion. The Ukrainian government proposes to Verkhovna Rada to apply Euro 9’000 for international (fully in accordance with present EU requirement) and about Euro 900 for domestic operators for the first vehicle of the licenced operator but these figures are still subject to discussion. It seems that bank guarantees would not be accepted as proof of financial standing, while an insurance policy for operator liability may replace any other piece of proof. This seems to be contradictory as insurance companies are not necessarily more reliable than banks. A rating system for both banks and insurers may be applied as a tool of solvability verification. In general, ASMAP and all interviewed transport operators support the introduction of an operator license, including for FOPs, according to EU criteria. ASMAP believes that in respect of financial standing, legal persons will and should enjoy advantages over FOPs as they are to present annual balance sheets including information on their fixed assets. Essentially, ASMAP does not expect changes in the present draft in respect of the introduction of the general licensing regime for hauliers in the course of the current legislative process. At several meetings, interviewed operators emphasized that adapting the EU standards to Ukrainian realities in a reasonably progressive and staged-out process was an absolute necessity such as by reducing the financial standing requirement from 9’000 Euros for the first and 5’000 Euros for each subsequent vehicles to 4’500 and 2’500 Euros respectively even in case of international operators. Licensing for international operators was re-introduced on 18 October 2016 but not fully in accordance with relevant EU directives. Therefore, the entry into force of the ECMT Quality Charter at the beginning of 2018 makes it inevitable to accelerate the current legislative process. Seen the slow speed of parliamentary procedures, ASMAP strongly proposes the rapid adoption of ECMT (=EU) requirements in
50 Based on the consultant’s interviews during missions in Ukraine (meeting in the Ministry of Infrastructure, 29 March 2017)
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Draft Final Report Peter Krausz, Consultant 30 June 2017 a low-level decree or resolution; once the general law on road transport is approved by Verkhovna Rada, the low-level regulation of preliminary nature could simply be cancelled. In this context it is worth mentioning that the tendering for and issuance of ECMT permits by and to Ukrainian hauliers is also under review in order to prevent past controversies in this area. The draft legislative initiative contains provisions targeting more transparency in permit bidding procedures, permit distribution and redistribution, registration, renewal and reissuance, administration as well as the order of permit use. 51 Regarding other areas of legislative developments, an initial concept paper for a law on multimodal transport should be mentioned. 52 It has been proposed by consultants working on the concept to keep the text of the law as concise as possible and incorporate detailed regulations in by-laws as needed.
51 Manuscript: draft order of the Ministry of Infrastructure of Ukraine on tendering and issuing permits European Conference of Ministers of Transport 52 Concept on a Draft Law, Support to The Implementation of The Association Agreement , and of The National Strategy in The Transport Sector In Ukraine, A project implemented by Dornier Consulting International in consortium with Egis International / Expertise Francais , This project is funded by The European Union The European Union’s ENPI program for Ukraine
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Institutional Structure of Governing Bodies and Public Partners Table 11: Summary of Main Observations / Recommendations on the Institutional Structure
Subject Observations / Recommendations
Importance of the State Statistics Strengthen participation of the State Statistics Service in ex ante preparatory and Service post factum evaluation processes of legislative work. For this purpose, reinforce the role and institutional structure of this Service.
Non-public entities (associations, Strengthen the participation of non-public entities in the permanent social dialogue chambers, universities, training structure indispensable for an appropriate preparation and implementation of institutions, etc.) legislation.
Instability in the governmental Stabilise existing governmental structures and entities if need be by a moratorium organisational and functional on changes. Reduce political and personal involvement in purely professional structure; lack of coordination matters and the implementation of adopted legislation. Impose requirements for between entities; frequent political formal and substantial coordination among all competent bodies governing road implications in purely professional transport. matters
Lack of proficient staff in Improve the moral and financial appreciation of civil servants employed in governmental bodies governmental structures. Reinforce long-term cooperation between these entities and universities / research institutes as potential sources of human resources (e.g. by means of state scholarship for talented students with prospects of state employment; swop of young university and research staff to state entities on the basis of exchange programmes).
No representative and efficient State organs should encourage the creation of representative associations of trade organisation exists that unites domestic hauliers without wanting to impose state management on these domestic operators organisations.
Organogram On top of the legislative structure, we find the Parliament (Verkhovna Rada), in particular its Transport Committee that discusses and adopts laws on road transport. Proposals for new pieces of legislation mainly originate from the Government. They are drafted by competent ministers of the Ministry of Infrastructure and other ministries concerned by road transport like the Ministry of Interior, the State Fiscal Services (tax and customs administration) and the Ministry of Justice. In the governmental structure, the importance of the State Statistics Service is also underlined as the principal source of information for understanding the status quo in the sector before and after the adoption of new pieces of legislation. If appropriate measurement of de facto, expected and post factum impacts of regulatory and policy measures is not in place, it is impossible to exercise efficient and successful governance over any economic-social activity. The Ministry of Infrastructure, in its quality of being in charge of future development and smooth operations of the whole transport system, is supported by subordinate state organs like the State Service for Transport Safety (Ukrtransbespeka) whose main function is the inspection of operators and operations to ensure compliance with regulations and the State Road Administration (Ukravtodor) in charge of road maintenance, repair and development.
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Attention is drawn also to trade organisations active in the sector representing the interests of trade and transport operators. They are in principle part of a permanent social dialogue structure indispensable for an appropriate preparation and implementation of legislation. We consider as part of the governing structure also universities and professional training institutions which are frequently though indirectly involved in the development of policy and regulation by means of research and analytical work. They bear direct responsibility for shaping the ‘human factor’ via training professionals for the sector whether would-be politicians, legislators, transport company managers or ‘simple’ truck drivers and warehouse workers. In the following chart, basic state institutions are presented in a hierarchical order as complemented by important non-public entities (Chart 2): Chart 2: Governmental structure supervising the road transport industry 53
Parliament (Verkhovna Rada)
(Transport Committee)
Government (Office of the Deputy Prime Minister in charge of transport)
State Fiscal Service Ministry of Ministry of Interior (Department of Infrastructure (Service Centre, City Patrol Revenues and Duties (Department of Strategic State Statistics Service Police, Department of of Legal Entities, Development of the Road Traffic Safety) Customs Control Road Transport Market) Department)
State Service for State Road Transport Safety Administration (Ukrtransbespeka) (Ukravtodor)
State Road Transport State Road Research Research Institute, Institute (transport market and transport operations (road network analysis) development)
Trade organisations (e.g. ASMAP Ukraine, Freight Forwarding Universities and
Association, Logistics Training Institutions Associations, Chambers)
See details on Ukrtransbespeka, Ukravtodor, the Service Centre of the Ministry of Interior and Transport Associations in Annex 2: Institutional Structure of Governing Bodies and Public Partners.
53 Based on the consultant’s interviews during missions in Ukraine
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Policy Uncertainties Formal and informal changes are frequent in the government’s organisational and functional structure, e.g. in the competent Deputy Prime Minister’s office, the Ministry of Infrastructure, competent bodies in charge of road traffic management and inspection, etc. A certain level of rivalry and jealousy seems to exist between institutions, the lack of tight cooperation between competent organisations like the State Statistics Service and reporting state agencies is remarkable. Competition seems to evolve to get in control of newly created entities like the Logistics Committee of Ukraine or activities like weight control on the roads. Tensions between personalities charged with important files often seem to be high; there are frequent political implications in purely professional matters like by MPs of the Verkhovna Rada and its Transport Committee. Sudden and surprising suspensions of application of certain provisions of law in force have been initiated by the Government and the Ministry of Infrastructure, e.g. in the form of cancelling the transport operator licencing scheme for most market players five years ago, or the suspension by law of the right of controlling bodies to carry out inspections at transport company premises in November 2016. 54 Unjustified political and / or biased involvement by decision makers in the foreseen changes from the present state of an almost complete deregulation towards qualitative licensing of the profession may disturb clear vision and controlled development of the road freight transport sector. It may demoralise checking authorities and creates uncertainties for transport operators and shippers alike. An additional element of this complex picture is a permanently perceived menace of corruption in law enforcement and related bureaucracy. There is equally an inward looking approach by some state organisations not willing to consider other issues than those falling strictly into their legally defined sphere of activities. This has been experienced e.g. in case of entities dealing with road network maintenance, rehabilitation and reconstruction, which do not always seem to be attentive enough to concerns of one of the main user groups of road infrastructure, the road freight transport industry. A number of interviewees think that government structures are disorganised and transport policy orientations remain unidentified. They think that there is no leadership and authorities are considered to be in ‘bureaucratic disorder’. A complete change of attitude of civil servants is needed. They should not consider the road freight transport industry as a cash-cow serving misinterpreted state or informal private interests.
Lack of Competent Staff in Governing Bodies Some of the interviewed operators and organisations highlight the lack of proficient staff in competent state organisations. According to them, it is hard to meet road transport professionals in top transport policy jobs; there has recently been no appointed head of the department dealing with road transport in the Ministry of Infrastructure, other high-level jobs are filled with non-professionals. Changes in the composition of staff and reshuffles are permanent therefore the risk of ‘losing institutional memory’ is high. Part of the resolution of this concern may come from reinforcing long-term cooperation between these entities and universities / research institutes as potential sources of human resources (e.g. by means of
54 Law of Ukraine on temporary measures in respect of State Inspection of economic activity; Bulletin of the Verkhovna Rada, 2017, number 4, article 37, http://zakon.rada.gov.ua/laws/show/1728-19
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Draft Final Report Peter Krausz, Consultant 30 June 2017 state scholarship for talented students with prospects of state employment; swop of young university and research staff to state entities on the basis of exchange programmes).
Lack of a Representative Organisation of Domestic Hauliers Business organises itself into various trade organisations and various chambers of commerce. These are based on voluntary membership and their main function is the protection of interests of their members in constant dialogue with governmental organisations. Practically, no representative and efficient trade organisation exists that unites domestic operators. As domestic operators are almost exclusively in private hands, their majority is small (driver-owner) and medium-size companies. It is a highly disintegrated sector but able even in its present state to shape the road freight transport industry into being the leading transport mode as far as the volume of goods moved is concerned (tons). Trade associations of domestic hauliers are weak, except in specialised niches, where SMEs feel the need for uniting forces in associations, like companies carrying heavy and oversize cargo. (Their close cooperation in this special market segment is targeted at obtaining route permits from authorities for cargo exceeding axle, total load and dimension limitations.) By contracts, ASMAP, the association of Ukrainian international road carriers of freight (and passengers), seems to be a well-established and respected organisation representing the interests of its members domestically and abroad.
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Transport Demand Drivers – Production & Trade Table 12: Summary of Main Observations / Recommendations on Transport Demand Drivers – Production & Trade
Subject Observations / Recommendations
Economic situation Subsequent to falling GDP, 2016 was a year of stabilisation and modest recovery.
Geographic concentration of GDP ‘Top’ regions: production, industrial and GDP: Kiev Region, Dnepropetrovsk, Donetsk, Kharkov, Odessa, Lvov, Poltava, agricultural activities as well as Zaporizhzhya and Lugansk. trade Agricultural production: Poltava, Kharkov, Dnepropetrovsk, Vinnytsya and Odessa. Industrial production: Dnepropetrovsk, Donetsk, City of Kiev, Zaporizhzhya, Kharkov, Poltava, Kiev Region and Lvov. Domestic trade: City of Kiev, Dnepropetrovsk, Kharkov, Odessa, Lvov, Kiev Region and Zaporizhzhya.
Foreign trade Open economy. Negative growth in recent years. Main export partners: the EU as a block, Russia (declining), China, Egypt, Turkey, Poland and Italy. Top export commodities: minerals, metals, agricultural products, live animals, machines, transport and industrial equipment. Main import countries: the EU as a block, Russia (declining), China, Germany, Belarus, Poland and Italy. Top import commodities: minerals, metals, machines, transport and industrial equipment, chemical and leather products. Most export and import partner countries are accessible and most commodities except minerals are transportable by road.
Recent Economic Trends Ukraine is the second largest country in Europe with a surface of 603’700 km. (See maps of Ukraine in Chart 3 below.) It has common borders with Belarus, Russia, Moldova, Romania, Hungary, Slovakia and Poland and a long (2’800 km) sea-coast in the South (Black and Azov seas). Its main cities: Kiev, the Capital, with a population of 2.6 million, Kharkov (1.47 million), Dnepropetrovsk (1.07 million), Odessa (1.03 million), Donetsk, Zaporizhzhya, and Lvov. 2 ‘Ukraine’s resources and economic strengths include rich agricultural land, a strong scientific establishment, an educated and skilled workforce, and significant mineral reserves.’ 55
55 Doing Business in Ukraine 2015, © Brussels Worldwide Services BVBA, April 2015
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Chart 3: Geographic and Political Maps of Ukraine 56
The country’s population is almost 43 million. With a current GDP of above USD 90 billion, the per capita value is around USD 2’100. (See Charts 4-5; details in Annex 3: Transport Demand Drivers – Production & Trade.) GDP was falling in 2014-15 due to the conflict with Russia in the first place, and this trend was logically followed by shrinking performance of the transportation and storage sector. The contribution of the latter
56 Google https://www.google.ch/maps/place/Ukraine/@49.6094051,26.0357305,6z/data=!4m5!3m4!1s0x40d1d9c154700e8f:0x1068488f64010!8m2!3 d48.379433!4d31.16558?hl=fr and https://www.google.ch/search?q=regions+in+ukraine&hl=fr&rlz=1T4ADRA_enHU412FR415&tbm=isch&imgil=qP51SGRTPHSEkM%253A%253BZ SFuLsXBpB9r0M%253Bhttp%25253A%25252F%25252Fwww.infoukes.com%25252Fukremb%25252Fmappuzzle.html&source=iu&pf=m&fir=qP5 1SGRTPHSEkM%253A%252CZSFuLsXBpB9r0M%252C_&usg=__g0ZIh5nmFVTzJ6QE_BeZl7mfros%3D&biw=1440&bih=773&ved=0ahUKEwiAraSy 4IbUAhUJb5oKHZcHDlIQyjcIWw&ei=540kWcCdHIne6QSXj7iQBQ#imgrc=qP51SGRTPHSEkM:&spf=1495567837852
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Draft Final Report Peter Krausz, Consultant 30 June 2017 to GDP has recently been stagnating between 6.4 and 7.4 % while employing 7% of the total workforce. (Attention, 2016 data reflect 1st quarter only!) Chart 4: Ukraine’s GDP, share of transportation and storage, 2010-16, billion USD and %, current prices57
200
180 183 176 160 162
140 135 132 120 GDP*
100 90 80 Transportation and storage 60 Transportation 40 and storage %
20 13 12 13 10 8 6,6 7,7 7,9 7 7,1 6,4 6 7,4 0 2010 2011 2012 2013 2014 2015 2016**
* In 2010-14: excluding the temporarily occupied territories, the Autonomous Republic of Crimea and the city of Sevastopol; in 2015-16, in addition, excluding part of the anti-terrorist operation zone ** 1st Quarter Chart 5: Development of GDP per capita in USD, current prices, 2010-1558
57 State Statistical Service, https://ukrstat.org/en/operativ/operativ2016/vvp/vvp_kv/vvp_kv_e/vvpf_kv2016e_n.htm 58 State Statistics Service, https://ukrstat.org/en/operativ/operativ2016/vvp/vvp_kv/vvp_kv_e/vvpf_kv2016e_n.htm
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4500
4000 4031 3854 3500 3560
3075 3000 2946
2500
2100 GDP per capita 2000
1500
1000
500
0 2010 2011 2012 2013 2014 2015
The economy seems to have stabilised in 2016 but did not yet take the path leading to complete recovery and continuous growth. The conflict in the East and the question of a fair peace figure high on the political agenda next to achieving a stable macro-economic equilibrium, reforming the whole economy, including the transport sector, and reducing corruption.59 Specific signs of recovery: the “economy grew by 0.8% in the first half of 2016 compared to a contraction of 4.5% in the second half of 2015 … with growth of 5.0% y-o-y in manufacturing, 5.5% y-o-y in domestic trade, and 4.0% y-o-y in transport and storage … while agriculture contracted mildly by 0.3% in the first half of 2016.” Data presented in the draft Transport Strategy 2030 confirm favourable macro-economic performance for the whole of 2016: in real terms, GDP grew by 2.3%. 60 Simultaneously, a modest growth is forecasted for the immediate future: +2% in 2017 thought to reach a more important rate of 3-4% in the medium term subject to many uncertain factors.61 Consumption and fixed investment shrunk significantly in 2014-15 (investment already in 2013) but growth seemed to be returning in 2016 (consumption: +0.2, investment: +8.7%). Forecasts present a mounting trend with more robust figures for investment (2017: +11.3%, 2018: +5.6%) than for consumption growth (2017: +2.9%, 2018: +3.1%). By contrast, a decline in the country’s export and import performances has practically continued ever since 2012-13 reaching low values in 2015 (-16.9% for export and -22.0% in import), somewhat still shrinking in 2016 (“only” by -2.7% for export and -1.9 for import) but with positive forecasts for 2017-18 (+2.7% and +5.4% respectively for export and +2.6% and +6.1% respectively in import).62 Kiev Region is by far the most important contributor to the country’s GDP, followed by distance by Dnepropetrovsk, Donetsk, Kharkov, Odessa, Lvov, Poltava, Zaporizhzhya and Lugansk.
59 An overview of The World Bank’s work in Ukraine, Ukraine Snapshot Final, World Bank October 2016, http://www.worldbank.org/en/country/ukraine/ 60 National Transport Strategy 2030, draft published in June 2017 (pdf) 61 An overview of The World Bank’s work … (see above) 62 Ukraine Economic Update, September 22, 2016, The World Bank, www.worldbank.org/ua
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Concentration of production, trade and transport activities in these regions is therefore to be expected. Indeed, main agricultural production centres are the regions Poltava, Kharkov, Dnepropetrovsk, Vinnytsya and Odessa. Leaders in industrial production are Dnepropetrovsk (19 %), Donetsk (12 %), City of Kiev, Zaporizhzhya, Kharkov, Poltava, Kiev Region and Lvov.63 Details on the economic importance of the individual regions are presented in Annex 3: Transport Demand Drivers – Production & Trade.
Foreign Trade Ukraine has an open economy. The value of exports of goods and services is equal to almost 53% of the GDP; the same indicator reaches almost 55% for imports.64 International trade has however been on the decline for the last 5 years as shown below (see Chart 6 - attention, 2016 data stand for January-May only!). Total foreign trade has practically halved since 2012. 65
63 State Statistics Service, https://ukrstat.org/en 64 WITS, The World Bank, 2015, http://wits.worldbank.org/countrysnapshot/en/UKR 65 State Statistics Services, April 2017, https://ukrstat.org/en/operativ/operativ2012/zd/ztt/ztt_e/ztt1212_e_bez.htm
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Chart 6: Ukraine’s export, import and total trade with the World, USD bn, 2011-16 66 a
160 150,9 140 138,1
120 108,3 100 Exports 80 83,1 75,8 75,6 Imports
60 Total 67,8 62,3 54,4
40 53,9 37,5 28,1 38,1 20 14,4 13,7 0 2012 2013 2014 2015 2016*
*Jan-May 2016 a) Excluding the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and part of the anti-terrorist operation zone Ukraine’s main export partners are Russia (on a sharp decline), China, Egypt, Turkey, Poland and Italy. Outstanding export target regions are the CIS, Asia and Europe. In 2015, top export commodities were minerals and metals (33 %), agricultural products and live animals (32 %) and machines, transport and industrial equipment (14 %). Main import countries are Russia with drastically falling values, China, Germany, Belarus, Poland and Italy. Main import commodities are minerals and metals (37 %), machines, transport and industrial equipment (24 %), chemical and leather products (21 %).67 Most export and import partner countries are accessible by road (not Egypt while China only with difficulties). Traded commodities carried are also suitable for road haulage except for minerals. CIS-related export-import trade dominates foreign economic relations of the regions Lugansk, Kherson, Sumy and Zaporizhzhya in the eastern part of the country. EU trade is most important in foreign commercial links of the regions Zakarpattya, Volyn, Lvov and Ternopol in the West. More details on the main trading partners and traded commodities are presented in Annex 3: Transport Demand Drivers – Production & Trade.
Domestic Trade Domestic trade is logically most intensive in regions that are major contributors to the GDP. These are: City of Kiev ranked first proving that Kiev is the commercial centre of the country. City of Kiev is followed by Dnepropetrovsk, Kharkov, Odessa, Lvov, Kiev Region and Zaporizhzhya (see Chart 7 and details in Annex 3: Transport Demand Drivers – Production & Trade).
66 State Statistics Services , https://ukrstat.org/en 67 State Statistics Service , https://ukrstat.org/en
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Chart 7: Turnover of retail trade by regions, 2015, million UAH and % 68
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
* Excluding the temporarily occupied territories, the Autonomous Republic of Crimea, the city of Sevastopol and part of the anti-terrorist operation zone. ** Data for 2015 may be revised.
68 State Statistics Services, https://ukrstat.org/en
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Transport Network Geography and Main Features Table 13: Summary of Main Observations / Recommendations on Transport Network Geography and Main Features
Subject Observations / Recommendations
Favourable geographic position; Poor state of networks, incl. roads, and low quality of service. availability of basic infrastructure; The country is an important part of the transit chain between Eurasia and Middle- East with a number of transport corridors via its territory. Underutilised transit potential. Shortage of finance for roads. Out-dated vehicle fleets. Informal activities. Lack of modal interfaces.
Ukraine’ geographic position is favourable for trade and transport: it is at the cross-roads of important routes on the Eurasian Continent. Its transport network includes: 22’000 km of railway tracks; 170‘000 km of roads; 2’200 km of domestic navigable waterways; 13 sea ports, 4 fishing ports and 11 river terminals and 21 airports. 69 Thanks the advantageous geographic position and the available basic transport infrastructure, the territory of the country is an important part of the transit chain between Eurasia and Middle-East. A number of transport corridors including the road transport mode pass through the country. See Chart 8, details are presented in Annex 4: Transport Network Geography and Main Features. Chart 8: International transport corridors in Ukraine 70
The transport system meets basic needs of the economy. This is a positive fact to be emphasised. However, safety level, service quality, transport efficiency and logistics capabilities are insufficient to meet requirements of sustainability from environmental, economic and social points of view. This is true for domestic and international operations alike.
69 Ministry of Infrastructure of Ukraine, http://www.mtu.gov.ua/en/content/investoru.html 70 National Transport Strategy 2030, draft published in June 2017 (pdf)
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In respect of transit traffic for example, the favourable geographic position is significantly underutilised and only partly due to the continuing conflict in the East or the impact of other competing international routes. Regarding the road transport sector in particular, road quality and density or the share of motorways in the total road network are very low by international standards and many roads need major reconstruction due to poor conditions causing much harm and loss to the economy. Around 4% of all Ukrainian enterprises are active in the transport industry, most of which are small and medium-size companies (95%) engaged in road transport. 71 The majority of the rolling stock used is old and out-dated; transport infrastructure maintenance, of roads in particular, is lagging behind elementary requirements due to the lack of sufficient finance. 72 Overloaded road vehicles cause important road damage mainly because of the low efficiency of weight controls and related sanctioning. Interfaces between transport modes are insufficient in numbers and quality (lack of logistic centres, multimodal terminals). 73 According to anecdotal evidence, important parts of the road freight market (between 30- 50% depending on commodity carried!) are informal. As found in an investigation conducted in 2014, the commodity composition of the whole transport sector “is dominated by products of ore mining and the smelting industry (almost 40%), energy carriers (18%) and construction materials (13%) … the share of high-tech cargo is less than 5%.” Recently, grain transport has become the “fastest growing cargo base” (annually 20-25 million tons harvested in the 1990s and 30- 35 million tons in the 2010s). 74 According to the same study75, one of the main features of the present freight transport modal split in Ukraine is the extremely low share of inland waterways in particular in the light of the importance of this mode in other European countries and the length of rivers in Ukraine.
71 Update/Upgrade National Transport Strategy 2030 Part 2 : Transport Sector Analysis, Dornier, Expertise France, egis International, September 2016 72 Update/Upgrade National Transport Strategy … (see above) 73 Update/Upgrade National Transport Strategy … (see above) 74 Transportation balance of Ukraine 2013/2014, Alexander Gusev, Lead Consultant of Transactions Support Department at Baker Tilly, An independent member of Baker Tilly International 75 Transportation balance … (see above)
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Freight Transport Modal Split and Road Traffic Patterns Table 14: Summary of Main Observations / Recommendations on Freight Transport Modal Split and Road Traffic Patterns
Subject Observations / Recommendations
International modal split (volume); Rail is the leader followed by pipelines and road. International freight traffic by road traffic development is shrinking.
Domestic freight traffic and modal Domestic freight traffic is declining with a slight catch-up in 2016. split Modal split: Tons: 69 % by road, 24 % by rail, 7 % by pipelines Ton-km: 58 % by rail, 29 % by pipelines, 12 % by road
Distribution of domestic road freight Transport companies (legal persons): 12 % transport volume by form of Own-account and individual (physical) operators: 88 % (an exceptionally high undertaking proportion)
Domestic road transport by main Metal ores and other mining products: 41 % commodities Agricultural products, food, beverages and tobacco: 24 % Other cargo: 13 % Chemical etc. products: 10 %
Regional distribution of domestic ‘Top’ regions (c.f. ‘top’ regions in respect of GDP production, industrial and road freight transport agricultural activities as well as trade):
Volumes (tons): Dnepropetrovsk, Odessa, Donetsk, Kiev and Ivano-Frankovsk Performances (ton-km): Lvov, Zakarpattya, Donetsk, Dnepropetrovsk, City of Kiev, Kiev
Most frequented roads in Ukraine M-05 (Kiev – Odessa) with an ADT for trucks value of 6’325 M-03 (Kiev - Kharkov - Dovzhansky (Rostov-on-Don)): 6’031 M-10 (Lvov - (Kraków)): 4’992 M-09 (Lvov - Rava-Ruska (Lublin)): 4’718, M-11 (Lvov - Shehyni (Kraków)): 4’639 M-06 (Kiev - Chop (Budapest via Lvov, Mukachevo and Uzhgorod)): 3’985. (Exceptionally high truck ADT share in total traffic on most highways - further verification needed!)
Most frequented border crossing Yaghodyn-Dorohusk, PL-UA; points Krakivets-Korchova, PL-UA; Chop-Záhony, HU-UA; Goptovka-Nehotyeyevka, RU-UA
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Novi Yarylovychi - Nowa Huta, BY-UA
Border crossing difficulties See in separate table (Table 18)
International Transport Rail is the mode carrying most goods (tons) across Ukraine’s borders. Pipelines follow and road transport takes the third position (2014). A significant part of the statistically unidentified “other” category may partially be considered to be road freight transport performance. Rail is involved mainly in export and pipelines mostly in transit movements. The road freight sector is active in all the three areas. (See Chart 9 below; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns.)
Chart 9: International goods transport flow across the borders of Ukraine by modes of transport, 2014, 1’000 tons76
160000
140000
120000
100000 Transit 80000 Import 60000 Export
40000
20000
0 road river rail sea air pipeline other*
* Road vehicle on railway wagons, railway wagons on ships, unaccompanied trailers or semi-trailers on ships, mail, river boats on ships (?), propelled road transport (?), luggage and unknown mode of transport. (States Statistics Service definition) Border crossing road freight traffic has reached a peak in 2012 with important decrease in 2013 and 2014, in particular across the UA-RF border.
Considering all road goods vehicles, main border sections are those between UA & PL, UA & RF and UA & MD (Chart 10).
For vehicles registered in Ukraine the two first most frequented borders are the same as for all vehicles but the third lies between UA & BY followed by the UA-MD and UA-HU borders (2014). Most foreign vehicles crossed the UA-RF border in 2013 but the situation has changed in 2014 whereby the UA-MD border became the leading border section for foreign vehicles followed by the UA-PL and the UA-RF border sections. 77
76 State Statistics Services, https://ukrstat.org/en 77 State Statistics Services, https://ukrstat.org/en
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See further details on most frequented border crossing points further below.
Regarding road freight transit operations, despite an eye-catching decline of traffic, the border between UA and RF is still in leading position (2014) followed by the UA-MD and UA-BY borders. Detailed data on border crossing traffic in export-import and transit are shown in Annex 5: Freight Transport Modal Split and Road Traffic Patterns. 78
Chart 10: All road goods transport vehicles by border sections, in both export and import directions, (no distinction made between UA and foreign vehicles), number of vehicles, 2000-1479
900000
800000 UA-PL 700000 border UA-SK 600000 border UA-HU border 500000 UA-RO border 400000 UA-MD border 300000 UA-RF border 200000 UA-BY border UA sea 100000 ports 0 2000 2005 2010 2011 2012 2013 2014
*including traffic in border areas
Domestic Transport The volume of cargo moved by freight transport reached its peak in 2011 and 2013. It was on the decline in 2014 and 2015.
As to domestic freight transport modal split, absolute majority of cargo (tons) is carried by road (69 %). Road is followed by rail (24 %) and pipelines (7 %). (Chart 11; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns.)
78 State Statistics Services, https://ukrstat.org/en 79 State Statistics Service, https://ukrstat.org/en
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Chart 11: Domestic transport modal split in Ukraine, 2010-15, million tons80
2000
1800 155 128 126 153 1600 100 97 1400 pipelines 1200 air 1253 1260 1261 1000 1168 road freight total * 1131 1021 river 800 sea ** 600 rail 400
469 457 444 200 433 386 350 0 2010 2011 2012 2013 2014 2015
* Including cargo volume carried on own account and commercial freight volume carried by individual transport operators (non-legal persons). ** Cabotage Regarding the work of the sector (ton-km), rail is certainly the dominating mode (58 % in 2016) followed by pipelines (29 %) and road (12 %). (Chart 12) Further data on domestic modal shares are shown in Annex 5: Freight Transport Modal Split and Road Traffic Patterns. 81
Chart 12: Domestic transport modal split in Ukraine, 2010-15, million ton-km 82
450000
400000
350000 112505,1 109651,8 300000 82050,9 Air 80944,1 94378,9 39194,1 250000 40487,2 Pipelines 37764,2 200000 34431,1 37654,9 IWW Road 150000 237274,6 Rail 224017,8 209634,3 100000 194321,6 187215,6 17192,4 50000 5302,4 0 31199,1 2012 2013 2014* 2015** 2016** 2017***
* Excluding the temporarily occupied territory of the Crimea and Sevastopol. ** Excluding the temporarily occupied territory of the Autonomous Republic of Crimea and Sevastopol as well we zones of counter-terrorist activities. *** Jan –Feb 2017; excluding the temporarily occupied territory of the Autonomous Republic of Crimea and Sevastopol as well we zones of counter-terrorist activities.
80 State Statistics Services, https://ukrstat.org/en 81 State Statistics Services, https://ukrstat.org/en 82 State Statistics Services, https://ukrstat.org/en
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Road Freight Transport Output by Form of Undertaking A highly important comment should be made on the split of cargo carried (tons) by operators of various forms of undertaking. The part moved by transport companies established as legal persons seems to be exceptionally low: 12 % (2014). The rest, 88 % is possibly carried by own-account and individual operators (the latter established as physical non-legal persons). Transport policy considerations of these astonishing proportions are tackled elsewhere in the report. (Charts 13-14; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns) Chart 13: Volume of cargo carried by road freight transport split by form of undertaking, 2010-14, million tons83
1400
1200 118 122 126 99 131 1000 road freight by transport companies 800
600 1138 1069 1135 1135 1000 road freight by own- account and 400 individual operators
200
0 2010 2011 2012 2013 2014
83 State Statistics Services, https://ukrstat.org/en
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Chart 14: Volume of cargo carried by road freight transport broken down by form of undertaking, 2014, million tons and %84
131; 12%
road freight by own-account and individual operators road freight by transport companies
1000; 88%
Domestic Road Transport by Main Commodities Metal ores and other mining products take a very high proportion of all type of cargo carried by road (41 % in 2016). This is followed by agricultural and food products, beverages and tobacco which make together (24 %). Next category is other cargo (13 %), while chemical etc. products represent 10 %. The below Chart does not contain information on cargo carried by individual entrepreneurs (physical persons). (Chart 15; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns)
84 State Statistics Service, https://ukrstat.org/en
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Chart 15: Main commodities carried by domestic road transport companies (legal persons), 2016, % and 1’000 tons, *, **85
bitumen and machinery, other; 16516,18; lignite; oil and vehicles ; 13% gas, coke, 2378,91; 2% petroleum agricultural products; 7122,1; products; chemical 6% 15739,81; 13% products, non- metal mineral products, basic metal; 12254,47; 10% wood, paper and paper products, furniture; metal ores, other 5171,93; 4% mining products; 49809,54; 41% textile, textile products; leather, leather products; 420,16; 0% food, beverages, tobacco; 13783; 11% * Excluding the temporarily occupied territory of the Autonomous Republic of Crimea and in Sevastopol and area and parts of counterterrorist operations **Excluding the carriage of goods by individual entrepreneurs Just for comparison, it is worth looking at the composition of commodities carried by the railways. As we can see (Chart 16), the main type of rail cargo is mineral ores (24 %, 2016), followed by coal, coke, oil and oil products (23 %), building material and cement (14 %), grain (11 %) as well as metals (10 %). (See details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns). This means that rail carries more than 80 % bulk cargo, the same type of goods moved on roads represents roughly 60 %.
85 State Statistics Service, https://ukrstat.org/en
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Chart 16: Main commodities carried by rail, 2016, million tons and % a b 86
coal
coke
Oil & oil 46,2; 16% products 57,2; 20% 7,1; 2% iron ore & manganese 3,3; 1% ferrous metals
35,4; 12% timber cargo
chemical & mineral fertilizers 69,2; 24% grain and 31,9; 11% 5,9; 2% grinding cement
27,9; 10% 4,1; 1% building materials 4,2; 1% other goods
a) Excluding the temporarily occupied territory of the Autonomous Republic of Crimea and in Sevastopol area and parts of counterterrorism operations. b) According to the JSC "Ukrainian Railways."
Regional Distribution of Road Freight Transport Volumes (tons) and Performances (ton-km) In which regions is road freight transport most concentrated? The region roads of which are carry most cargo measured in tons is by far Dnepropetrovsk. Odessa, Donetsk, Kiev and Ivano-Frankovsk follow. The lowest volumes are carried in Cherkasy, Zhitomyr, Volyn and Zaporizhzhya regions (Chart 17, 2014; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns).
86 State Statistics Service, https://ukrstat.org/en
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Chart 17: Regions in order of cargo volume moved by road, million tons, total (incl. hire & reward by companies and FOPs & OAT), 201487
400 361,7 350
300
250 213,8 200
150
100
47,1
45,7
36,9
32,3
31,4 29,1
50 26,9
25,9
21
20,9
19,4
17,3
12,2 12,2
11,7
11,4
10,7
10
10,1
8,9 5,1
0
Lviv
Kyiv
Sumy
Rivne
Volyn
Odesa
Kharkiv
Poltava
Luhansk
Kherson
Donetsk
Ternopil
Cherkasy
Chernihiv
Zhytomyr
Vinnytsya
Chernivtsi
Mykolayiv
Kirovohrad
City of Kyiv of City
Zakarpattya
Zaporizhzhya
Khmelnytskiy
Dnipropetrovsk Ivano-Frankivsk
It is noteworthy that the order of regions changes if the volume of cargo carried by transport companies founded as legal persons is considered only. The leading position is taken by the region of Donetsk; it is followed by Dnepropetrovsk, Kiev City, Lvov and Lugansk. At the bottom of the list, we find Chemihiv, Sumy Zakarpattya and Chemivtsi regions. The modified ranking is related to the share of companies created as legal contrary to physical persons and / or possibly OAT operators. 88 The concentration of cargo volumes carried by road in the regions mentioned basically follows the regional ranking mentioned above as to contribution to the GDP, industrial and agricultural production as well as the intensity of domestic trade. A counter-check of rail cargo volume distribution by regions confirms the ranks of ‘top’ regions. Railway Regions with most intensive railway freight movements are: Prydniprovska Railway Region (incl. Dnepropetrovsk) and Donetsk Railway Region (incl. Donetsk and Lugansk) followed by The South Railway Region (incl. Kiev). 89 Further data (tons) on the regional distribution of cargo movements by roads can be consulted in Annex 5: Freight Transport Modal Split and Road Traffic Patterns. The regional distribution of road freight transport performances in ton-km provides another picture picture. Lvov region comes first followed by Zakarpattya, while previous top regions (regarding volume carried, tons) like Donetsk, Dnepropetrovsk and the City of Kiev are ‘condemned’ to lower ranking. The reason is possibly that cargo moving in Lvov and Zakarpattya as well as to/from these regions is carried on longer distances within the country due to their ‘peripheral’ geographic location. (Chart 18; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns)
87 State Statistics Service, https://ukrstat.org/en 88 State Statistics Service, https://ukrstat.org/en 89 State Statistics Service, https://ukrstat.org/en
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Chart 18: Regions in order of road freight transport, million ton-km, total (incl. hire & reward by companies and FOPs & OAT), 201490
5000 4564,4
4500 4410,7
4125,9 3798,3 4000 3741,1
3500 3172,8 2707,9
3000 2705,1
2644,3 2335,3
2500 2325,7
2051,2 1894,7
2000 1790
1622,7
1491,7
1429,5
1409,5
1385,2 1324,5
1500 1304
1097,2
1049 827 1000 755,8
500
0
If transport performance (ton-km) by transport companies founded as legal persons is considered only, the ranking of regions changes slightly. Lvov keeps its leading role, and it is followed by the City of Kiev, Dnepropetrovsk, Donetsk and Odessa. Zakarpattya region falls back to rank seven. Further data on the regional distribution of transport performances by road (ton-km) can be consulted in Annex 5: Freight Transport Modal Split and Road Traffic Patterns.
Most Frequented Roads Highways of international importance marked M-01 to M-29 cover a length of over 7’300 km which is about 10 % of all national highways. 74 % of the total length is built with more than two lanes, at least on certain sections. International highways in Ukraine are shown below (Chart 19, Table 15).
90 State Statistics Service, https://ukrstat.org/en
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Chart 19: Highways of international importance in Ukraine 91 92
Table 15: Highways of international importance in Ukraine 93
Number Itinerary km lanes М-01 Kiev Chernigiv - New Yarylovychi (Gomel) 206 4 М-02 Kipti - Gluhiv - Bachivsk (Bryansk) 242 2 М-03 Kiev - Kharkov - Dovzhansky (Rostov-on-Don) 585 2, 4, 8 М-04 Znamenka - Lugansk - Izvaryne (Volgograd across Dnepropetrovsk and Donetsk) 388 2, 4 М-05 Kiev - Odessa 477 4 М-06 Kiev - Chop (Budapest via Lvov, Mukachevo and Uzhgorod) 813 2, 4 М-07 Kiev - Kovel - Yagodyn (Lublin) 487 2 М-08 Bypassing of Uzhgorod - checkpoint "Uzhgorod" 15 2 М-09 Lvov - Rava-Ruska (Lublin) 63 2 М-10 Lvov - (Kraków) 62 2 М-11 Lvov - Shehyni (Kraków) 72 2 М-12 Stry - Ternopol - Kirovograd - Znamenka (Vinnitsa) 743 2, 4 М-13 Kirovograd - Platonove (Chisinau) 254 2 М-14 Odessa - Melitopol - Novoazovsk (Taganrog) 610 2, 4 М-15 Odessa - Reni (Bucharest) 291 2 М-16 Odessa - Kuchurgan (Chisinau) 59 2
91 Highway map, https://www.google.ch/search?q=M- 04+road+Ukraine&hl=fr&rlz=1T4ADRA_enHU412FR415&tbm=isch&imgil=5YagbVDFcExkYM%253A%253BsSYaTuJodtw- 3M%253Bhttps%25253A%25252F%25252Fen.wikipedia.org%25252Fwiki%25252FHighway_M04_(Ukraine)&source=iu&pf=m&fir=5YagbVDFcExkYM%253A%252CsS YaTuJodtw-3M%252C_&usg=__c8AWwKu8cDWXDvJ2SUIM1-yd0As%3D&biw=1440&bih=773&ved=0ahUKEwjgk- vdwY3UAhVEDCwKHUExCBcQyjcIOw&ei=RxkoWaDUHMSYsAHB4qC4AQ#imgrc=CY19LoMafEeK_M:&spf=1495800127128 and http://mtu.gov.ua/intermap/# 92 Ukravtodor traffic counts and estimations, 2016-17 93 Ukravtodor traffic counts … (see above)
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М-17 Kherson - Dzhankoy - Feodosiya - Kerch 114 2, 4 М-18 Kharkov - Simferopol - Alushta - Yalta 519 2, 4 М-19 Domanove (in Brest) - Kovel - Chernivtsi - Terebleche (Bucharest) 519 2, 4 М-20 Kharkov - Scherbakivka (Belgorod) 28 2, 4 М-21 Zhytomyr -Mohyliv-Podolsky 221 2, 4 М-22 Poltava - Olexandria 148 2 М-23 Beregove - Beregove - Velika Kopanya 50 2 М-24 Mukachevo - Beregove - PPC "Luzhanka" 38 2 М-25 PPC "Solomonov" - Velika Dobron - Yanoshi to "Kosyno" 60 2 М-26 PPC "Vylok" - Vylok - Neventlenfolu - PPC "Djakovo" 21 2 М-27 Odessa - Illichivsk 14 4 М-28 Odessa - Yuzhny - / M-14 / 50 2 М-29 Kharkov - Krasnograd -Pereschepyne - / M-18 / 161 4 Total length 7308
The following most frequented domestic routes have been identified in interviews conducted (Table 16). As stated, Kiev City is often unnecessarily part of transport routes due to the poor quality of other roads by-passing the Capital or even Kiev Region. Table 16: Roads mostly used by trucks as per interviews 94
Most frequented roads in order of priority Road Number 1. Kiev – Lvov M-06 2. Kiev – Harkov M-03 3. Kiev - Odessa M-05 4. Lvov – Ternopol – Khmelnytskyi – Vinnica – Ouman – H-02 - E-50 5. HarkovKirovohrad – Zaporijia – Dnipropetrovsk M-18 6. Kiev – Prylouky – Romny – Sumi H-07 Doubts about official traffic data of Ukravtodor have been referred to under Chapter “Data Collection Problems”. As other detailed official traffic data are not available for the present Report, truck traffic counts by Ukravtodor have been used despite uncertainties to verify information received in interviews. The highest traffic considering all vehicles can be observed on roads leading to Lvov, Ivano-Frankovsk, Kiev, Odessa and Kharkov (Average Daily Traffic /ADT/ > 10’000 units95). Traffic density data maps for light, medium and heavy goods vehicles are enclosed to this report (Annex 5: Freight Transport Modal Split and Road Traffic Patterns). Most truck-frequented highways according to Ukravtodor’s counts are: M-05 (Kiev – Odessa) with an ADT for trucks value of 6’325, M-03 (Kiev - Kharkov - Dovzhansky (Rostov-on-Don)) - 6’031, M-10 (Lvov - (Kraków)) - 4’992, M-09 (Lvov - Rava-Ruska (Lublin)) - 4’718, M-11 (Lvov - Shehyni (Kraków)) - 4’639 and
94 Based on the consultant’s interviews during missions in Ukraine 95 According to information received, the so called Passenger Car Unit (PCU) correction for vehicles other than passenger cars (such as trucks, buses, etc.) has not yet been undertaken in these data. The PCU correction factor is 1 for small trucks, 2.5 (non-urban roads) and 1.4 (urban roads), for medium-size trucks, 2.5 (non-urban) and 1.8 (urban) for heavy trucks. Traffic on Hungarian national roads in 2015 (Az országos közutak 2015. évre vonatkozó keresztmetszeti forgalma), Magyar Kozut, Budapest, November 2016 http://internet.kozut.hu/SiteCollectionDocuments/Az%20országos%20közutak%202015.%20évre%20vonatkozó%20keresztmetszeti%20forgalma.pdf
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M-06 (Kiev - Chop (Budapest via Lvov, Mukachevo and Uzhgorod)) - 3’985. This list of most truck- frequented roads clearly proves the concentration of commercial traffic at and around the capital city. Attention is drawn to the exceptionally high ADT proportion for trucks in total traffic measured on most highways of international importance. Truck ADT shares varying between 30 % and 60 % seem to be completely out of proportion and need further verification. 96 (Charts 20-24; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns) Chart 20: Average daily traffic (ADT) of trucks a and all vehicles on international highways, number, 2016 97
20000
17972 17789
18000 17564
16817
16768 16535
16000 15564
14000 13471
12000 11320 9367 10000 9271 ADT
truck 8095
8000 7374
6457
6325
6116
6031
5844 5576 5560 ADT
6000 5131
4992
4846
4718
4639
4558 4558
4558 all veh
4434
4134
3985
3961
3394 3193
4000 3109
2597 2597 2597
2493
2413
2352
2322
2201
2150
2106
2014
1854
1578
1539
1460
1406
1391
1311 1241
2000 1223
1013
764 426
0
02 03 04 05 06 07 08 09 10 11 12 13 14
------
M-17 M-22 M-01 M-15 M-16 M-18 M-19 M-20 M-21 M-23 M-24 M-25 M-26 M-27 M-28 M-29
М М М М М М М М М М М М М a) Small, medium, heavy goods vehicles and trailer / semi-trailer combinations included
96 According to experts, the share of truck traffic is about 12 % in case of roads with leisure and about 18 % with business traffic. The part of all trucks in the ADT on Hungary’s highways (2015) represented 14% (small trucks: 15%, medium: 2 %, heavy: 2 %, with trailer: 1 %, with semi- trailer: 9 %); Kozut, HU, http://internet.kozut.hu/Lapok/forgalomszamlalas.aspx 97 Ukravtodor traffic counts … (see above)
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Chart 21: Average daily traffic (ADT) of trucks a on international highways, number, roads in order of truck ADT, 2016 98
7000
6325 6031
6000
4992 4718
5000 4639 3985 4000
3193 ADT 3109 Truck
3000
2597 2597 2597
2493
2413
2322
2201
2106 2014
2000 1854
1578
1539
1460
1406
1391
1311
1241
1223 1013
1000 764 426
0
… … … … … … … … … … … … …
------
M-… M-… M-… M-… M-… M-… M-… M-… M-… M-… M-… M-… M-… M-… M-… M-…
М М М М М М М М М М М М М a) Small, medium, heavy goods vehicles and trailer / semi-trailer combinations included Chart 22: Proportion of trucks a in ADT on international highways, %, 2016 99 60 57 57 57
50 43 41 40 39 39 40 38 36 36 35 35 34 33 33 30 29 29 28 28 28 30 ADT truck 22 21 20 % 20 18
13 12 10 8
0
07 10 13 12 02 14 03 05 04 06 09 11 08
------
M-29 M-17 M-20 M-18 M-22 M-25 M-01 M-19 M-21 M-23 M-16 M-26 M-24 M-27 M-15 M-28
М М М М М М М М М М М М М a) Small, medium, heavy goods vehicles and trailer / semi-trailer combinations included
98 Ukravtodor traffic counts … (see above) 99 Ukravtodor traffic counts … (see above)
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Chart 23: Map of total traffic on international highways, 2016 100
Chart 24: Map of total truck traffic on international highways, 2016 101
100 Ukravtodor traffic counts … (see above) 101 Ukravtodor traffic counts … (see above)
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Most Frequented Border Crossing Points Border crossing points open for goods transport by road including Ukraine’s cargo sea ports are presented in an annex to the present report (Annex 5: Freight Transport Modal Split and Road Traffic Patterns). Most frequented border crossing points were reported in interviews with international operators as presented below. (Table 17) The interviewees ‘impressions’ are only partially supported by official statistical data. Table 17: Most frequented border crossing points for trucks 102
Border crossing points reported to be most frequented
Bachivsk - Troebortnoie UA-RF
Skitok - Skytok UA-BY
Yaghodyn - Dorohusk UA-PL
Rava-Ruska - Hebenne UA-PL
Mostyska - Mosciska UA-PL
Krakovets - Korczowa UA-PL
Shehyni - Medyka UA-PL
In order to verify information obtained in interviews, customs data used for another investigation were used103. We have considered the volume of cargo moved through road border crossing points in both direction (export, import – transit data are not available). Border crossing points were selected presenting traffic volumes (net weight) over 100’000 tons at least in one direction. On this basis, border stations with the most intensive traffic are: Yaghodyn-Dorohusk, PL-UA; Krakivets-Korchova, PL-UA; Chop-Záhony, HU- UA; Goptivka-Nehotyeyevka, RU-UA and Novi Yarylovychi - Nowa Huta, BY-UA. Leading partner countries with the highest border crossing road freight volumes (tons) are Poland, Russia and Belarus. (Charts 25-27; details in Annex 5: Freight Transport Modal Split and Road Traffic Patterns)
102 Based on the consultant’s interviews during missions in Ukraine 103 CFTS-Consulting, Kiev, 2015 70
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Chart 25: Most frequented border crossing points for trucks 104
Novi Yarylovychi - Nowa Bachivsk - Troyebortne Yaghodyn-Dorohusk Huta
Goptivka-Nehotyeyevka Rava-Ruska-Hrebenne
Uzhgorod-Vishne-Nyemetske Krakivets-Korchova
Chop-Záhony
Porubne-Siret
Chart 26: Most important road border crossing points, export-import directions, net tons, 2015 105
3 500 000
3 000 000
2 500 000
2 000 000
1 500 000
1 000 000 Import Export 500 000
0
104 Based on an interactive map of the State Border Guard Service of Ukraine, http://dpsu.gov.ua/ua/map/ 105 CFTS-Consulting, Kiev, 2015
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Chart 27: Leading partner countries with highest border crossing road freight traffic, export-import directions, net tons, 2015 106
6 000 000 5 494 939
5 000 000
4 000 000
3 000 000 2 707 474
2 000 000
838 546 1 000 000 633 216 625 071 115 248 0 PL RU BY RO SK MD
Difficulties to Cross Borders Crossing the borders takes shorter today than 10-15 years ago. According to views of a shipper interviewed, if all import documents are in order and the trading company possesses financial means for a customs-requested deposit when submitting a preliminary customs declaration, trucks can pass the border to Ukraine without great difficulties. Another trucker’s practical experience is different: in average 3-4 hours are needed to pass the Polish customs and 24 hours (!) to go through Ukrainian customs at the two sides of various border posts where unnecessary documents are required and heavy bureaucracy prevails. Yaghodin – Dorohusk between Ukraine and Poland is one of the most critical border crossing points in this respect. ASMAP, the association of international hauliers of Ukraine, summarises experiences of its members in the following way: 107 during the years 2016-17, the state of affairs at border crossing points with EU countries worsened considerably. Waiting times in the queue leaving Ukraine at the checkpoint ‘Yaghodin-Dorogusk’ (UA-PL) grew to more than three days, at ‘Uzhhorod-Vyshne Nemetske’ (UA-SK) more than two days, at ‘Porubne-Siret’ (UA-RO) two days, ‘Krakovets- Korczowa’ (UA-PL) one or two days. As a result, Ukrainian carriers and exporters suffer significant losses. See specific recommendations for the solution of problems experienced at UA borders in Table 18 below. There are some positive signs of progress, like cooperation agreements signed with neighbouring states, the existence of joint controls on certain border sections, the full harmonisation of opening hours at the two sides of the borders (accomplished in 2000-05), application since 2011 of Single Window technology and preliminary documentary control by UA Customs. Much depends on an efficient implementation of agreements and streamlined border checking technologies.
106 CFTS-Consulting … (see above) 107 ASMAP’s direct written input to the present study, June, 2017
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Table 18: Summary of Main Observations / Recommendations on Border Crossing Problems 108
Subject Observations / Recommendations
‘Yaghodin-Dorogusk (UA-PL)’, the In order to reduce long waiting times at the most important exit point from Ukraine, most important gateway between urgently reinforce dialogue between two sides of each border crossing point at UA and EU: in accordance with a operational and political levels, particularly at Yaghodin-Dorogusk (UA-PL). UA-PL agreement (between border All parties should implement earlier signed agreements on border crossing traffic and customs departments) on processing. ‘System of preliminary notification of emergency situations at border checkpoints on the border of UA and PL, during one shift (12 hours) 300 trucks should be processed through the border (i.e. 600 a day) in one direction of traffic. In 2016-17, the average daily number of loaded vehicles amounted only to 403 departing from Ukraine
Joint control at eight border Extend the joint control technology to other UA-PL border crossing points, including crossing points at the UA-PL 109 and Yaghodin-Dorohusk. UA-MD 110 border sections Extend the joint control technology to other border sections, in particular with BY, RO and SK. Develop presently existing ‘consecutive joint controls’ into real ‘parallel joint controls’ by authorities of neighbouring states. Lift limitations on joint controls whereby only trucks of up to a certain useful load limit (at the UA-PL border 3.5 tons) may have access to joint border treatment.
Application of Single Window Clarify and resolve possible contradictions between Single Window application and technology and preliminary a new law on ‘State Control over the Legislation concerning Foodstuffs, Feedstuff, documentary control by UA Animal by-Products, Animal Health and Welfare’ expected to be adopted in June Customs 2017
100 % inspection of all loaded Negotiate with BY Government so that BY side abandons unjustified checks on a 100 vehicles at New Yarylovichi - Novaya % basis and replace rigid controls by random techniques whereby trade and Huta" (UA-BY) border by BY budgetary interests should be protected by up-to-date information technology and authorities other customs practices.
108 Based on ASMAP’s direct written input … (see above) 109 Joint controls at the UA-PL border have been introduced progressively at checkpoints Ustilug-Zosin (Volyn Customs DFS, 1998), Smilnitsa- Krosssenko (Lviv Customs DFS, 2003), Grushev-Budomezh (Lviv Customs DFS, 2013, "Ugrinov-Dolgobichev" (Lviv Customs DFS, 2014) 110 On the basis of an inter-governmental agreement signed between UA and MD in 1997
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Structure of the Trucking Industry Table 19: Summary of Main Observations / Recommendations on the Structure of the Trucking Industry
Subject Observations / Recommendations
Number of road freight transport Licenced road freight operators represent less than 30 % of all road freight transport operators undertakings (i.e. a clear minority of legal and non-legal persons in the road freight transport sector). There are highly contradicting official reports on the number of road freight transport undertakings. This is a real enigma, company statistics should be reorganised on the basis of the planned re-introduction of the licencing regime.
Size of road freight transport The road freight transport sector is very fragmented (statistics are again companies contradictory and not targeted enough):
74 % of companies (legal entities in the land & pipeline transport, warehousing and support activities) employ a staff of less than 9 persons; companies hiring more than 50 persons represent only 8 %. Annual turnover of 95 % of companies (legal entities in the land & pipeline transport, warehousing and support activities) is less than 1 million Euros.
Features of operated vehicle fleets Since 2000, total fleet has more than doubled (230 %). Growth continued in 2016 (+ 9 %). Considering number of new registrations (2016), complete fleet renewal is expected to be between 12.5 (best) and 25 (worst) years. Overwhelming majority of trucks is fit for carrying general cargo. Bulk of trucks is in private hands. The majority of trucks (65 %) is owned by transport companies (legal persons). 75-80 % of all trucks is more than 10 years old. Total weight of more than 70 % of trucks and road trains is less than 10 tons. Around 50 % of trucks were manufactured by Russian and UA companies. Leading regions by size of truck fleet: City of Kiev; Odessa; Donetsk, Kharkov, Kiev Region, Lvov, Khmelnistkiy, Poltava and Dnepropetrovsk.
Number of Operators and their Distribution by Size According to information available on the website of the Ministry of Infrastructure, the total number of road freight transport operators is over 56’000 in the country. It is not detailed whether these include only legal persons or also physical entities (FOPs). As stated earlier, with some exceptions, the admission to the profession is free. Licensed operators (those engaged in international activities or transport hazardous cargo) represent 27 % of all operators. (Chart 28; details Annex 6: Structure of the Trucking Industry)
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Chart 28: Number of operator licenses issued in road freight transport compared to number of all hauliers (legal and physical entities without OAT), 2017 111
60000 56200
50000
40000
30000
20000 13087
10000 2026 0 Licenced operators Licenced operators Licenced and non-licenced of transport of dangerous goods of transport of goods operators
Possibly the bulk of non-legal entities does not belong to the ‘licenced category’. It is noteworthy that licensed road freight transport companies (legal entities alone) represent more than 40 % of all licensed legal entities in the transport sector and related areas. (Chart 29; details in Annex 6: Structure of the Trucking Industry) Chart 29: Number of licensed legal entities by main economic activities in road transport and related areas as well as other freight transport modes, April 2017 112
240; 1% 158; 1% 51; 0% 53; 0% 106; 1% road freight transport
warehousing
support services ground transportation cargo handling
other support activities in 7471; 36% 9019; 43% transport removal companies
rail freight
Sea freight
river freight
1513; 7% 1497; 7% air freight 777; 4%
111Ministry of Infrastructure, http://mtu.gov.ua/content/statistichni-dani-po-galuzi-avtomobilnogo-transportu.html , 7 May 2017 112 State Statistics Service, https://ukrstat.org/en
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Draft Final Report Peter Krausz, Consultant 30 June 2017 a Excluding the temporarily occupied territories of Crimea and Sevastopol City. Nota bene, there are important discrepancies among figures on the number of road freight transport operators originating from different official sources. The Ministry of Infrastructure speaks about 56’000 operators113. In principle, all the 56’000 operators should be tax payers. Still the State Fiscal Services announced in a letter addressed to The World Bank114 speaks about 12’282 tax payers (‘legal entities, detached units of legal entities, private entrepreneurs‘) whose type of activity is basically road freight transport. (June 2017) The Ministry of Interior Service Centre has directly communicated different numbers completely out of order compared to the other authorities’ figures. 115 This is a real enigma, company statistics should fully be reorganised on the basis of the planned re- introduction of the licencing regime. Just for the sake of international comparison, the number of road freight transport operators in Poland (comparable country by size but not by level of economic development) has changed over the years 2010-12 as follows: 79’430, 84’739 and 81’893 respectively.116 The size of transport companies is often characterised by the number of their employees. Official statistics available for the present study contain such data for road freight transport companies (legal persons) engaged in two aggregate sectors: “land and pipeline transport” (i.e. all land transport modes, i.e. railways included) and “warehousing and support activities of transport”. There is again uncertainty about the total number of companies under review. As can be seen, the two inter-related sectors are populated mainly by small undertakings. Three-quarters of them employ a staff of less than 9 persons and companies employing more than 50 staff members represent only 8 %. Small operators dominate the industry also elsewhere in the world. If data were included also for non-legal entities (FOPs), the proportion of small operators with little staff would be even higher. (Charts 30-31; details in Annex 6: Structure of the Trucking Industry) These data can be compared to the latest communication of the State Fiscal Services (SFS)117 on the number of tax payers and their distribution by the number of employees. According to SFS (June 2017), 70 % of all tax payers (road freight transport operators) have less than 10 employees, 25 % between 11 and 50 and 5 % above 51. State Statistics Service data presented in Charts 30-31 are of the same order of magnitude as these figures, further verification would however be useful. Again, just for international comparison, in Poland 96 % of operators mentioned above had 1-9 employees, 3% between 10-19 and 1 % above 20.
113 Ministry of Infrastructure, http://mtu.gov.ua/content/statistichni-dani-po-galuzi-avtomobilnogo-transportu.html , 7 May 2017 114 Letter from the State Fiscal Services to The World Bank, 15 June 2017 115 Service Centre of the Ministry of Interior (data received by correspondence), June 2017: 849’000 individual road freight transport entrepreneurs (non-legal entities, FOPs) and 145’000 road freight transport companies (legal entities) in 2016. We highly doubt these data. 116 Number of road freight transport operators by number of employees, Eurostat http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=road_ec_entemp&lang=fr 117 Letter from the State Fiscal Services … (see above)
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Chart 30: Transport companies (licensed legal entities), by number of employed workers in certain types of economic activity, number of units, 2015 118
7000
6000 5774 5132 5000
Land and 4000 pipeline transport 3000 Warehousing and support 2000 1666 activities of transport 997 1000 485 370 116 116 0 - 9 10 - 49 50 - 249 250 -
Chart 31: Transport companies (licensed legal entities), by number of employed workers in certain types of economic activity, %, 2015 119
2% Distribution of companies in land & pipeline transport, warehousing 6% and support activities by number of employees
18%
- 9 10 - 49 50 - 249 250 -
74%
a Excluding the temporarily occupied territories of Crimea and Sevastopol City as well as the area of counterterrorism operations. No precise public information is accessible on the composition of operators by the size of their vehicle fleet. If we consider the total number of transport operators communicated by the Ministry of
118 State Statistics Services, https://ukrstat.org/en 119 State Statistics Services, https://ukrstat.org/en
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Infrastructure (56’000 operators; Chart 28) and the total number of vehicles (1’951’000 vehicles; Chart 34), the average number of vehicles is almost 35 vehicles per operator. 120
Annual turn-over data confirm the high degree of fragmentation prevailing in the road freight transport industry. The turn-over of an overwhelming majority of investigated companies in the two areas is less than 1 million Euros (2015). (Charts 32-33; details in Annex 6: Structure of the Trucking Industry)
For the sake of verification, turn-over figures communicated by the State Fiscal Service (June 2017) 121, can be quoted. Accordingly, out of all road freight transport operators having declared their profit tax for 2016 (7’009 operators): there are 1 large, 5 medium-size, 29 small, 5’573 micro (80 %) and 1’401 other (20 %) operators. 122 Once more, the order of magnitude of these data corresponds to data from the State Statistics Service, though further clarifications would be useful.
Chart 32: Transport companies by size of annual turn-over in certain types of economic activities (licensed legal entities), million Euros, number of units, 2015 123
8000 7060 6785 7000 Land and 6000 pipeline transport 5000
4000 Warehousing 3000 and support activities of 2000 transport
1000 180 166 132 110 32 76 11 1 12 1 4 1 4 0 0 -1 1 - 2 2 - 5 5 - 10 10 - 20 20 - 50 50 - 200 200 -
120 However, if we used the information on the number of entrepreneurs having registered trucks with the Ministry of Interior Service Centre (June 2017), clearly subject to further verification, the number of trucks per physical persons and companies (legal persons) would be 1.5 and 4.7 vehicles respectively. 121 Letter from the State Fiscal Services … (see above) 122 Letter from the State Fiscal Services … (see above) According to SFS definitions: Micro-enterprises are legal entities being the business entities of any organizational legal form and form of ownership, which average headcount for the accounting period (calendar year) does not exceed 10 persons and their annual income from any business activity does not exceed the amount of funds equivalent of EUR 2 million; small enterprises are legal entities being the business entities of any organizational legal form and form of ownership, which average headcount for the accounting period (calendar year) does not exceed 50 persons and their annual income from any business activity does not exceed the amount of funds equivalent of EUR 10 million; large enterprises are legal entities being the business entities of any organizational legal form and form of ownership, which average headcount for the accounting period (calendar year) exceeds 250 persons and their annual income from any business activity exceeds the amount of funds equivalent of EUR 50 million; other business entities belong to the medium-sized enterprises 123 State Statistics Services, https://ukrstat.org/en
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Chart 33: Transport companies by size of annual turn-over in certain types of economic activities (licensed legal entities), million Euros, %, 2015 124
2% 0% 0% 0% 0% 2% 1% Distribution of companies in land & pipeline transport, warehousing and support activities by annual turn-over, million Euros
-1 1 - 2 2 - 5 5 - 10 10 - 20 20 - 50 50 - 200 200 - 95%
a Excluding the temporarily occupied territories of Crimea and Sevastopol City as well as the area of counterterrorism operations.
Features of Operated Vehicle Fleets Data from the State Statistics Service on the number of operated vehicles and their distribution by type, age and manufacture have been available only until 2014. Efforts to obtain more recent data from vehicle registration authorities (Service Centre of the Ministry of Interior) have been successful. Therefore despite some data discrepancies due to using two different sources, information for 2015-16 received from the Ministry of Interior is also used in the present Report wherever possible.
Total number of trucks Since the year 2000, the total fleet of trucks has more than doubled (to 230 %). There was stagnation from 2014 to 2015 and the growth continued in 2016 (+ 9 %) reflecting generalised economic revival. (Chart 34 and Annex 6: Structure of the Trucking Industry) Chart 34: Development of the total truck fleet, 1’000 vehicles, 2000-16 125
2500
1951 2000 1780 1790
1500 1337,9
945,2 1000 837,5 888,5
500
0 2000 2005 2010 2011 2014 2015 2016
124 State Statistics Services, https://ukrstat.org/en 125 State Statistics Service, https://ukrstat.org/en and Service Centre of the Ministry of Interior (data received by correspondence, June 2017)
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The number of first registrations is accessible only for trucks. This figure reached 142 and 160 thousand units in 2015 and 2016 respectively. 126 The share of new registrations compared to the total number of trucks is annually around 8 %. New registrations in Ukraine may cover new and second-hand import vehicles. If all second-hand purchased vehicles represent a relatively high technical and environmental standard, the fleet can be renewed in 12.5 years. But if we suppose that only half of the new registrations represent ‘progressive’ new models, the whole truck fleet can be renewed only in 25 years, i.e. a very long period of time. Fleet renewal will hopefully be accelerated in parallel with economy entering a stable growth path.
Types of trucks A long time series of data shows changes in fleet composition by type of vehicles since 2000. (Chart 35; details in Annex 6: Structure of the Trucking Industry) Chart 35: Types of trucks, 1’000 vehicles, 2000-16 127
1000 900 870 800 700 708,2 600 general cargo, flat 500 dumpers 423 400 338,2 308,9 saddle tractors 300 302,9 323 286,4 300 307,7 245,5 Special goods 200 208 199,8 207,2 195 164 167 vehicles 100 99,5 119,6 52,2 71,5 0 2000 2005 2010 2011 2014 2015 2016
A spectacular sudden increase from 2010 to 2014 of the fleet of ‘special goods vehicles’ is possibly due to changes in the statistical reporting scheme. According to the definition of the State Statistics Service, the majority of the ‘special goods vehicles’ seem to be quite ordinary trucks with a closed loading compartment (box). The rest of the trucks falling into the ‘special category’ are indeed more ‘atypical’ like tankers for foodstuff and fuel transport, refrigerator vehicles, vehicles with cranes and those of the fire brigade. The part of ordinary trucks in the ‘special category’ is however above 80 %. (Chart 36)
126 Service Centre of the Ministry of Interior (data received by correspondence, June 2017) 127 State Statistics Service, https://ukrstat.org/en and Service Centre of the Ministry of Interior (data received by correspondence, June 2017)
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Chart 36: Distribution of ‘special goods vehicles’, number of units, 2014 128
Total number of special vehicles , 2014: 1% 1% 867'333 4% 3%
7% Box on truck chassis Tanks for foodstuff Refrigerators Fire brigade Crane vehciles Tanks for fuel 84%
Vehicle ownership The share of vehicles in private hands was rapidly growing in the early 2000s. Recent information is not available but it is presumed that the part of state-owned trucks has significantly diminished since 2011. (Chart 37) Chart 37: Share of privately owned trucks in 2000 and 2011, number, % 129
35% Private of total Private of total fleet 41% fleet Total: 837 500 Total: 1 337 900 Not private in 2011 Not private in 2000 59% 65%
The majority of trucks (65 %, 2016) is owned by transport companies (legal persons). The owners of the rest of the fleet are individual entrepreneurs. (Chart 38)
128 State Statistics Service, https://ukrstat.org/en 129 State Statistics Service, https://ukrstat.org/en
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Chart 38: Number of trucks owned by transport companies (legal entities) and individual entrepreneurs (physical persons), 2015-16, 1’000 vehicles 130
1400 1272
1200 1149
1000
800 Owned by physical persons 679 641 600 Owned by physical persons
Owned by companies 400 Owned by companies 200
0 2015 2016
Age of vehicles 75 % of all trucks is more than 10 years old, i.e. the Ukrainian truck fleet is in need of a whole-scale renewal. 22 % of the fleet is aged between 5 and 10 years and 3% only less than 5. Age composition varies by type of vehicles: 85 % of all vehicles fit for general cargo transport is more than 10 years old, this share increases to 93 % in case of dumpers, it is somewhat less for saddle tractors and special goods vehicles, 78 % and 69 % respectively (2014). These proportions might have improved in the course of recent years. (Chart 39 completed with details in Annex 6: Structure of the Trucking Industry)
Chart 39: Age distribution of vehicles, vehicle types, number of units, 2014 (State Statistics Service) 131
599508 Special goods vehicles 235003 24799 11026
127981 Saddle tractors 31532 10 years < 2812 1591 5.1 - 10 years
300859 2.1 - 5 years Dumpers 17487 3140 < 2 years 1918
361271 General cargo 55959 4279 1666
1 100 10000 1000000
130 Service Centre of the Ministry of Interior (data received by correspondence, June 2017) 131 State Statistics Service, https://ukrstat.org/en
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Chart 40: Age distribution of vehicles, %, 2014 (State Statistics Service) 132
1% 2%
22%
< 2 years 2.1 - 5 years 5.1 - 10 years Total: 1 780 831 10 years <
75%
Due to a different structure of data on vehicle age received from the Ministry, here-below the age composition for trucks is reproduced in separate charts. (Chart 41) They confirm data of the State Statistics Service including on the very high share of trucks aged more than 10 years (78 % and 81 % for 2015-16 respectively).
Chart 41: Age distribution of vehicles, %, 2015-16 (Service Centre of the Ministry of Interior)133
4% 2015 4% 2016 18% 15% < 5 years < 5 years 5-10 years 5-10 years Total: 1'790'000 Total: 1'951'000 10-15 years 10-15 years 16% 18% 62% 63% 15 years < 15 years <
For comparison’s sake it may be worth to take a glance at the age composition of the rolling stock of the Ukrainian Railways admitting that life time expectations in this segment are not the same as for trucks. A few examples still show that rail rolling stock is also seriously out-dated: 96 % of all covered goods wagons are more than 26 years old, in case of flat platforms this part of the fleet is 47 %, regarding tank wagons it is 78 %. 88 % of electric locomotives is older than 26 years. (Chart 42)
132 State Statistics Service, https://ukrstat.org/en 133 Service Centre of the Ministry of Interior (data received by correspondence, June 2017)
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Chart 42: Age of railway rolling stock by type of vehicles, %, 2014 134
100 Steam loc 0 53 Electric loc 4,5 34,9 15,5 Diesel loc 11,6 72,6 7,2 40 < years Goods waggons, of which 19,4 66,4 26-40 years Refrigerators 12,1 85,9 16-25 years 19,4 56,2 9-15 years Tank 21,5 < 8 years 50,7 Gondolas 10,9 46,8 Flat platform 52,8
Covered 4 95,1
0 20 40 60 80 100 120
Total weight of trucks and road trains The distribution of trucks and road trains (tractor and semitrailer combination) by total laden weight follows the below pattern (2016): more than 70 % of these vehicles weigh less than 10 tons. 17 % is between 10 and 20 tons and an important part (7 %) belongs the 30-40-tons category. (Chart 43)
Chart 43: Distribution of trucks and road trains by total laden weight, tons, %, 2016 135
30-40 tons 20-30 tons 7% 5% 40 tons < Total: 2'166'000 units 0%
< 10 tons 10-20 tons 17% 10-20 tons 20-30 tons 30-40 tons 40 tons < < 10 tons 71%
Vehicles by manufacturers Data indicating vehicle manufacturers are available only for trucks carrying general cargo, dumpers and saddle tractors, not for special vehicles. More than 60 % of these vehicles have been manufactured by
134 State Statistics Service, https://ukrstat.org/en 135 Service Centre of the Ministry of Interior (data received by correspondence, June 2017)
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Russian and UA companies (UAZ, GAZ, ZIL, Ural, KamAZ, KrAZ, MAZ and modifications). Seen the age composition of the fleet, it is a plausible proportion. (Chart 44)
The highest share of eastern manufacture has been found in respect of general cargo trucks (86 %) while 69 % of all saddle tractors was built by western and other manufacturers. (Further details are seen in Annex 6: Structure of the Trucking Industry.)
Chart 44: Goods vehicles by manufacturer, number of vehicles and %, 2014 136
General cargo vehicles, dumpers and saddle tractors
26% UAZ, GAZ, ZIL, Ural, KamAZ, KrAZ and MAZ and all modifications
VOLVO, DAF, IVECO, IFA, MAGIRUS, MAN, MERCEDES, SCANIA, TATRA, RENEAULT and 11% 63% PEGEUT Other
Regarding trucks only, just like in case of saddle tractors, the proportion of non-Russian import vehicles is relatively high; it actually reaches 36 % (followed by 48 % - Russian and UA and 16 % - other; 2016). 137 (Annex 6: Structure of the Trucking Industry.)
Domestic trucks are being manufactured by AvtoKrAZ vehicle factory in Kremenchuk, Poltava region. This plant produces mainly special service vehicles including for military purposes. Civilian KrAZ trucks include tractors, dumpers, flat platforms, timber trucks, special vehicles and trailers available in a number of axle configurations. 138 Domestic truck manufacturing is not sufficient to meet market demands for commercial goods vehicles.
Regional distribution of vehicles In 2016, leading regions by truck registration: City of Kiev; Odessa; Donetsk, Kharkov, Kiev Region, Lvov, Khmelnistkiy, Poltava and Dnepropetrovsk. (Chart 45 and Annex 6: Structure of the Trucking Industry)
136 State Statistics Service, https://ukrstat.org/en 137 Service Centre of the Ministry of Interior (data received by correspondence, June 2017) 138 Kremenchuk Automobile Plant AvtoKrAZ, http://www.autokraz.com.ua/index.php/en/fabrication/automobile/civil
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Chart 45: Distribution of trucks by region, 1’000 units, 2016 139
160
137 140
114 115 117 117 120 110 106 100 93 88 83 80 72 74 61 63 64 64 56 56 58 60 52 53 47 47 49 42 40
20
0
139 Service Centre of the Ministry of Interior (data received by correspondence, June 2017
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Corruption – a ‘Social Disease’? Table 20: Summary of Main Observations / Recommendations on Corruption
Subject Observations / Recommendations
Corruption in transport ‘It is almost impossible to defeat corruption in the transport sector today.’ Fighting corruption is the responsibility of all actors, governmental and non- governmental agencies as well as every citizen. Prevention should be supported by legislation and law enforcement.
According to a world-wide corruption rating (Ernst & Young), Ukraine appears to be one of the most corrupted countries. 140 A representative of the Ukrainian movement ‘no - corruption in transport’ has recently stated that ’it is almost impossible to defeat corruption in the transport sector today’. 141 Sea ports, where there are many types and frequent inspections, seem in particular to be sunk into corruption. 142 As said by a road transport operator interviewed, corruption indeed penetrates every possible structure and institution: frontier guards, customs, police, army, transport inspection and vehicle technical certification services, therefore, drivers should regularly receive and carry ‘company pocket money’ to pay to rent-seekers for the sake of smooth daily operations. A ‘standard daily bribe’ can be anything between a few hundreds and a few thousands of UAH depending on the situation and the matter to ‘regularise’. Corruption is suspected equally in road construction tendering and bidding procedures but clearly of another order of magnitude. Fighting corruption is the responsibility of all actors, governmental and non-governmental agencies as well as every citizen. Prevention should be supported by legislation and law enforcement.
140 Ukraine took the first place in the world on corruption in business, EurAsia Daily, 10 April 2017, https://eadaily.com/ru/news/2017/04/10/ukraina-zanyala-pervoe-mesto-v-mire-po-korrupcii-v-biznese 141 Corruption in transport is indestructible? Narodnyi Korrespondent, 25.10.2015, Http://nk.org.ua/obshchestvo/korruptsiya-na-transporte- neistrebima-28029 142 Ports of Ukraine are "stoked" in corruption, Argument, March 2017, Http://argumentua.com/stati/porty-ukrainy-topyat-v-korruptsii
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Informality in the Trucking Industry Table 21: Summary of Main Observations / Recommendations on Informality in the Trucking Industry
Subject Observations / Recommendations
Shadow market in road freight No licencing in road freight transport leads to less transparency therefore shadow transport activities. The controlled introduction of operator licences is going to be certainly one of the potential tools to efficiently reduce shadow activities on the road freight transport market. Informal economy goes hand-in-hand with corruption. Any progress to subdue one would moderate the other. An efficient tool to reduce informality in road freight movements and related commercial activities may be a system of electronic checking by authorities of all cargo movements on roads.
A few World Bank data reflect the seriousness of informality (and corruption) in the Ukrainian economy. (Table 22)
Table 22: Informality and corruption features in Ukraine, 2002-13 143
Type of informality & corruption 2002 2005 2008 2013
Firms that do not report all sales for tax purposes (% of firms) 36.75 27.05
Informal payments to public officials (% of firms) 55.7 49.8 31.8 73.1
Firms competing against unregistered firms (% of firms) 48.5 50.1
Bribery incidence (% of firms experiencing at least one bribe payment request) 38.5 50.4
In a letter addressed by the State Fiscal Services to The World Bank and dated 15 June 2017, it was announced that out of 12’282 road freight transport companies, tax payers, 7’009 taxpayers only have declared their profit tax for 2016 (57%). 144 In 2014, the Head of the former Ukrtransbespeka, stated that ‘the legitimacy of issuing … permits for international transport’ would be investigated by a special committee. He added that ‘system violations occur not only in international transport, they are present in all areas. The proportion of the shadow market in taxi transport is 95%, and it is about 70% in all passenger transport (activities subject to licencing – note by the author). The market of freight road transport is partially in the shadow, in this sector there is no licencing’. 145 Indeed, no licencing presently prevailing in road freight transport leads to less transparency therefore shadow activities. A few examples are listed below:
143 Ukraine, World Bank, http://data.worldbank.org/country/ukraine 144 Letter from the State Fiscal Services … (see above) 145 Head of Ukrtransinspection promises to confiscate transport from illegal carriers, 03 April 2014, https://delo.ua/business/glava-ukrtransinspekcii-obeschaet-konfiskovat-transport-u-neleg-232193/ © delo.ua
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- In international relations, the state-owned postal services with large own transportation capacities face the challenge of significant quantities of parcels and even letters / documents moved illegally across borders in passenger buses. - At many petrol stations the quality of fuel (diesel and petrol) is poor, states one of the interviewees, as it is simply mixed with water. There are even illegal (gas) fuel stations in the country. 146 - A number of transport operators gets involved in cargo manipulations: undocumented transport of excise-duty products, smuggling of valuable consumer goods, etc., cannot often be accomplished without active co-operation by carriers. 147 148 Efficient prevention tools should be implemented in the medium term, e.g. by electronic checking on cargo movements on roads. Such system is based on an advance registration of goods carried by road in a central, state-run databank by the cargo owners. The purpose is to track the factual route of the cargo, ensure the payment of taxes imposed on goods sales and purchases (VAT), protect consumer interests (perishable goods) and prevent sales of goods undeclared to customs. 149 - According to certain reports, there may be transport companies whose revenues do not enter the territory of Ukraine and they are kept on foreign bank-accounts with all possible negative consequences for the state budget. - In addition, informal interventions often take place along the road where trucks may be stopped for checks not at the prescribed checking areas, even at night with bad visibility by legitimate control bodies which however are not non-mandated for the task. Rent-seeking or over-zealousness might be the motivation behind such practices.
146 Ukraine: more than 500 illegal gas stations in Kiev, 06/13/2016, Http://transukr.dp.ua/2016/06/13/ukraina-v-kieve-bolee-500-nelegalnyx- gazovyx-zapravok.html 147 In the Chernivtsi region, transport was detained with 10 tons of illegal alcohol, Kiev, April 13, 2017 - AIF-Ukraine, Http://www.aif.ua/society/law/v_chernovickoy_oblasti_zaderzhali_transport_s_10_tonnami_nelegalnogo_spirta 148 Chernivtsi customs officers detained a consignment of consumer goods worth 8.3 million UAH, Depo UA, April 27, 2017, Http://odesa.depo.ua/eng/chernovtsy/chernivecki-mitniki-zatrimali-partiyu-tovariv-narodnogo-vzhitku-vartistyu-8-3-mln-grn-20170427563455 149 Electronic Public Road Trade Control System, launched by the National Tax and Customs Administration in Hungary on 1 January 2015, https://ekaer.nav.gov.hu/
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Own-Account Transport Table 23: Summary of Main Observations / Recommendations on Own-Account Transport (OAT)
Subject Observations / Recommendations
OAT in Ukraine Very high: between 30-40 % of the total volume carried on the roads (tons, lack of precise data).
Reporting obligation for OAT Any economic entity owning registered goods transport vehicles should report data operators to the State Statistics to the State Statistics Service on transport activities. This is more than often not the Service case and the reporting compliance rate of OAT operators should be increased.
OAT operators interfering on the OAT operators can easily and informally move into the hire and reward transport hire and reward market segment. It is suspected that they do so. This should be subdued as much as possible.
Registry and certification for OAT The introduction of a mandatory but ‘light’ registration and certification for OAT operators operators is highly recommended in Ukraine.
Own-account transport operations (OAT)150 are often disregarded even by governmental organisations or experts and consultants reporting on road freight transport in Ukraine. According to available information, the share of OAT itself in Ukraine is very high; it is estimated to be between 30-40 % of the total volume carried on the roads (tons). 151 This rate is much higher than OAT’s share in a great number of EU countries (15-20 % in domestic, 5-10 % in international road freight transport and 10-15 % in average). Limited knowledge about OAT prevails despite the fact that the State Statistics Service seemingly reports separately on performances of professional (hire and reward) and ‘non-professional’ (own-account) operators. It is in principle the obligation of any economic entity owning registered goods transport vehicles, whether for professional or own-account transport purposes, to report to the Service on tons carried and ton-km performed. This is more than often not the case and the compliance rate of OAT operators with the reporting obligation should be increased. 152 Furthermore, as stated by the State Statistics Service, own-account operators must theoretically carry a special transport document (some sort of a waybill) and a certain type of a cargo certificate to prove that the transport conducted is legal and exclusively on own account. In principle, OAT operators must not get involved in conducting transport for hire and reward. However, it is highly suspected that at present where neither hire and reward nor OAT operators are licenced or certified in Ukraine, OAT can easily and informally move into the hire and reward transport segment. Price conditions become distorted and over-capacities are created, both very destructive for professional hire and reward operators. In the short run, customers may find more supply of loading capacities at low
150 Own-account transport (OAT) is a transport activity by trucks owned by a production or trading company, not a professional transport operator. These vehicles are driven by the company’s own drivers and they carry its own goods between its own plants. The transport activity is only ancillary to the main profile of the company. 151 The joint share of OAT and individual operators (physical persons) in road freight transport volume moved (tons) is almost 90 % (see in Chapter ‘Freight Transport Modal Split and Road Traffic Patterns’). 152 Verbal communication by a representative of the State Statistics Service, March 2017
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Draft Final Report Peter Krausz, Consultant 30 June 2017 freight prices very attractive, however in the long run the qualitative under-performance of OAT operators on the professional market may cause huge losses to shippers and the whole economy alike. It is important to clarify that in most EU countries, operator licencing does not apply to OAT. This is true also for countries, like Germany, Austria, Hungary and Latvia, where, competent authorities153 must be informed of creating and operating an OAT unit by a manufacturing, agricultural, trading etc., company. In a number of countries, a certificate for own-account transport operations should be obtained and carried on board. Such certificates and the registration of OAT with competent authorities do not mean the application to OAT operators of requirements in force for hire and reward transport undertakings; they simply create a soft framework of OAT control to the benefit of the industry, shippers and the society (e.g. regarding road safety aspects). There is no intention to propose to the Ukrainian authorities the introduction of operator licencing for OAT transport companies contrary to individual hauliers (FOPs). In the present situation, however, where informality is a daily phenomenon, the introduction of some sort of a registration combined with a simple certification for OAT operators are highly recommended to create a more controllable, cleaner and more transparent road freight transport sector.
153 Germany: Bundesamt für Güterverkehr; Austria: Vehicle Registry; Latvia: Ministry of Transport
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Traffic Controls, Roads and Road Users Table 24: Summary of Main Observations / Recommendations on Traffic Controls, Roads and Road Users
Subject Observations / Recommendations
Road side checks and inspection at The reinforcement of these checks is vital for higher law compliance, protection of company premises the interest of customers of transport operators, setting conditions of fair market competition, increased road safety and security as well as enhanced protection of the environment. (See details in Table 24)
Road-side facilities Secure truck parking sites of acceptable comfort level is a basic condition for hauliers to comply with law on driving time and rest periods. A network of truck parking sites should be built as an integral part of road reconstruction programmes in the country to enhance road safety and ensure reasonable working conditions for drivers.
Vehicle overloading Overloading leads to disproportionately high road damage, still it is a generalised phenomenon.
Maximum permissible loads The highest values of maximum permissible total and axle weights (42 / 44 tons and 11.5 / 13 tons respectively) presently in force seem to be too high in comparison with the general state of the road network. These values should be reconsidered and allowed considering the vehicle’s configuration in such a way as not to exceed 10 tons axle load (national and international highways).
Overloading prevention The installation and use of modern technical facilities allowing pre-filtering of vehicles by checking weight in motion is desirable. Information and statistics on weight controls are sporadic and contradictory. This should be changed. Diminishing overloading is achievable by a mix of measures such as tight control, strict sanctioning, distribution of responsibility between shipper and haulier as well as self-discipline.
Road side Checks and Inspection at Company Premises Road side checks and inspection at company premises are conducted by the State Service for Transport Safety Ukrtransbesbeka. These cover a variety of aspects of road transport operations and they are targeted at higher law compliance, protection of the interest of customers of transport operators, setting conditions of fair market competition, increased road safety and security as well as enhanced protection of the environment. (See Table 25) Table 25: Road side checks and inspection at company premises conducted by the State Service for Transport Safety Ukrtransbespeka
Type of checks by Ukrtransbespeka Issues at stake
Checks on weights and dimensions of vehicles Vehicle overloading causes abnormally high costs to roads. It leads to quicker wear and tear of the road surface, increased repair and maintenance costs and earlier need for full
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reconstruction. Weight and dimension checks should be completely reviewed, improved and based on new equipment to be purchased and put into operation without delay. (See further details in Chapter ‘Overloading’.)
Technical inspection of vehicles Fair and accurate technical inspections should support the implementation of law (existing and forthcoming) on the roadworthiness test and periodical inspection of trucks; new facilities to be purchased will help the conduct this exercise.
Driving hours and rest periods checks Experience is limited and the number of infractions identified remains statistically insignificant; the right to check the availability of on-board measurement equipment was suspended and there are currently only 10 (!) non- computerised (!) driver card readers at the disposal of the inspectorate. Compliance with driving hours and rest periods is crucial from road safety aspect and it should be completely reviewed and improved also in the light of legislative changes(both for international and domestic operations).
Transport documentation control This function will gain much in importance as soon as the generalised licence obligation for all hauliers will enter into
force to efficiently filter informal operators. Check on OAT operators should also be reinforced, in particular if a registration and certification requirement were adopted.
Inspection of cargo and cargo fastening on board Regular checks on cargo and its fastening are equally relevant from a road safety point of view.
Checks on possible illegal cabotage operations by non- The discovery and sanctioning of illegal cabotage should be resident operators further pursued to prevent disturbances on the road transport market.
Checking dangerous goods (ADR) and perishable foodstuff Checking dangerous goods / perishable foodstuff transport transport on a regular basis contributes to enhanced road safety, the protection of consumers and that of the environment.
Inspections at company premises It is of vital importance that the right of inspection by the competent authorities be re-established at company premises. Such inspection should be carried out in such a way as not to disturb normal daily operations of the undertaking.
Road-side facilities including parking sites of appropriate security and comfort level are indispensable to increase driver compliance with regulations on driving hours and rest periods. Such facilities should be built and operated by Ukravtodor, the State Road Administration. According to information received, there are some 1’400 sites provided with various services (shops, hotels, filling stations, etc.) in the country but no details have been communicated. In any case, a list of sites is accessible on the Ukravtodor’s website by regions. In 2013-14, Ukravtodor elaborated a concept of developing a network of up-to-date parking sites for lorries with the intention of building 120 such facilities. The implementation of this programme has however been postponed. Today, the number of high-level ‘TIR parking sites’ listed on ASMAP’s website is only 56 (!) for the whole country.
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It has been reported that companies particularly those involved in dangerous goods transport make efforts selecting and using only secure and payable parking areas. Night-driving is not allowed, this is company policy, reports one haulier. Another one allows (obliges?) night driving in domestic operations due to competition pressure (‘the customer is the king!’).
Overloading
Long-term Real Losses, Short-term Doubtful Benefits Vehicle overloading causes abnormally high costs to roads. It leads to quicker wear and tear of the road surface, increased repair and maintenance costs and earlier need for full reconstruction. By contrast, it provides short-term ‘benefits’ to irresponsible operators by reduced specific operational costs (e.g. costs per tons or ton-km, etc.) or ‘increased driver productivity’ notwithstanding increased costs of vehicle operation and maintenance.
Exponential Damage Damage caused to roads is multiple. “Additional weight carried by overloaded trucks accelerates the deterioration of the roadway, leading to rutting, fatigue cracking, and in certain cases structural failure”. It was found that every USD spent on overload prevention results in economising USD 4.50 in avoided damage. Due to overloaded, thus extremely heavy goods vehicles, the risk of fatal accidents also increases if such vehicles are implicated in a road accident (resulting e.g. from breaking distance growth, vehicle instability and easy loss of vehicle control by drivers). 154
According to the AASHTO (American Association of State and Highway Transportation Officials) load equivalency equation, the damage caused to the pavement surface by a particular load increase is not linear but exponential, namely by a power of four. 155 156
The risk of over-loading depends widely on the type of cargo carried: voluminous cargo never gets over but rather ‘under loaded’. Overloading is particularly frequent in port areas (like Odessa) in case of domestic grain transport in bulk for export. By contrast, operators participating in international traffic do not dare overloading due to heavy sanctions they may face abroad. Those who are conscious of the overloading problem do not undertake domestic operations at all, as reported in interviews, due to fierce and unfair competition by domestic operators not complying with the maximum permissible weight limitations.
Norms to be respected Which weight norms are to be respected according to existing law? On local roads, maximum permissible axle load (single axle) is equal to 6 tons, on regional roads 10 tons, on national highways 11.5 tons and on some international ones 13 tons (the latter introduced in 2016). Further values are fixed for a number of various axle variations. The 11.5 tons and 13 tons permissible axle loads seem to be high in comparison with the general state of the road network. Even if some major highways may be capable to support higher axle loads, such high
154 Degree of Vehicle Overloading and its Implication on Road Safety in Developing Countries, Mohamed Rehan Karim1*, Ahmad Saifizul Abdullah1, Hideo Yamanaka2, Airul Sharizli Abdullah1, Rahizar Ramli1, Civil and Environmental Research www.iiste.org, ISSN 2224-5790 (Paper) ISSN 2225-0514 (Online), Vol.3, No.12, 2013, http://www.iiste.org/Journals/index.php/CER/article/viewFile/8636/8832 155 Pavement interactive, http://www.pavementinteractive.org/equivalent-single-axle-load/ 156 Limit truck overloading: a first step to improve the state of our roads, Larry Herman, 6 Apr, 2016 http://www.speed-program.com/blogs/by- author/larry-herman/limit-truck-overloading-a-first-step-to-improve-the-state-of-our-roads
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Draft Final Report Peter Krausz, Consultant 30 June 2017 values on the core network invite less conscious operators to overloading on approaching road sections of much lower standards. The increase in axle loads is reflected in the recent growth of total permissible weight limits: while the maximum total laden weight in force was 38 tons until 2007 and 42 tons until 2016, the new norm introduced in 2017 is 44 tons (!). Certain operators and ASMAP still believe that the present maximum permissible load of a triple-axle combination of 22 tons should be increased to 24 tons in order to benefit from the higher total permissible vehicle weight limits. Some operators insist, particularly in respect of tankers, that only total laden weight should count as even if this is strictly observed, axle load may easily surpass limits due to instable weight distribution in liquid tanks. Seen these arguments, Ukravtodor has identified certain roads where increased axle load is tolerated but such a measure does not help carriers involved in international activities as none of the appointed roads cross country borders.
Overloading Prevention In order to avoid further deterioration of roads in Ukraine, vehicle overloading should drastically be reduced. Today, only about 30 weigh bridges are in operation on the whole road network, and there are only hopes that procurement procedures for new mobile weighing stations will soon be terminated. Modern technical facilities are available today that allow pre-filtering vehicles by checking weight in motion even at high speed at a given road cross-section on all traffic lanes and in both directions. By means of licence plate readers and communications tools, suspicious vehicles can be stopped at check points for detailed weight control on officially calibrated weigh-bridges.157 The implementation of similar systems at least at most critical locations and road sections would be desirable in Ukraine. Campaign-like weight control measures by authorities do not help. Undeniably, according to an operator’s view, the State does not face its vested responsibilities for proper compliance control in this regard. This should be changed. Information and statistics on weight controls are sporadic and contradictory. This should be changed. In 2016, vehicle weight controls were intensified in the regions of Odessa, Mykolaiv, Kherson and elsewhere in Ukraine. During the special inspection period, 4’556 vehicles were checked and 319 loading violations detected (7 %). 158 According to anecdotal evidence, however, the share of overloaded trucks in port areas may be as high as 30 %. Part of the legal responsibility for the prevention of overloading should be put on the shippers. As a matter of fact, an Ukrainian forwarder reports on putting over-loading responsibility on its customers who must weigh loaded trucks before the transport operation starts and adjust weights if need be yet at the loading place. If over-load still occurs and is sanctioned, customers should pay the penalty and face any juridical consequences.
157 Weight control station on M7 at Zalakomári, April 2016, http://hungarokamion.hu/2016/04/10/tengelysuly-es-ossztomeg-meroallomas- letesul-az-m7-es-autopalyan-zalakomarinal/ 158 What awaits Ukrainian's truckers with overweight, Yuri Gogolev, 05/16/2016, https://www.autocentre.ua/ (During this special inspection exercise penalties were imposed on truckers for overload according to the Decree of the Cabinet of Ministers of June 27, 2007 No. 879.)
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Transport Market Developments Table 26: Summary of Main Observations / Recommendations on Transport Market Developments
Subject Observations / Recommendations
Recent Trends and Expectations There is over-supply of loading capacities at present coupled with mixed future expectations.
Chain contracts Chain contracts seem to be frequently used putting high pressure on tariffs and other contractual conditions of true carriers. Efforts should be made to cut through contractual chains.
Inter-company indebtedness There is a need to review the legal framework to fight high current inter-company indebtedness.
Freight exchanges Freight exchanges offer a useful tool for matching load and loading capacity. Their use however should be avoided if available tariffs do not cover costs of operation.
Recent Trends and Expectations According to a view echoed during interviews, recovery after the 2008-09 financial crisis was quicker than subsequent to the outbreak of the conflict with the Russian Federation. Main reasons for the prolonged fall of performances have been “mutual sanctions of Russia and Ukraine, increasing fuel prices caused by the devaluation of the UAH, military operations …, changing supply chains in conflict areas and a number of adjacent regions; shift of customer preferences towards transport companies capable of providing complex services.” 159 Some of the interviewed companies are pessimistic about future trends in Ukraine that determine the development of demand on the transport market (complex political situation, slow economic progress, unfavourable foreign trade perspectives, low rate of investments, high UAH exchange rates). They do not really look at the future and live only for the day. Most questioned companies use sub-contractors whenever demand supersedes loading capacities of the company. At current low demand, sub-contracts are not concluded. For a forwarder, loading capacities on the supply side seem to be in abundance. Concluding even long- term contracts with shippers was an easy task in the past but lower demand today has made long-term contracting a more complicated exercise. A company representative engaged in moving food and other agro-products is by contrast more optimistic about the future as Ukraine’s agriculture has recently performed quite well. True, the annual fluctuation of harvested grain and other agro-products represents continuous uncertainty. Demand for transporting agricultural products (cereals, corn, sunflower and other crops) still seems to be a solid base for road transport market stabilisation. Growing severity of authorities with overloaded trucks carrying agro- products also increases the demand for loading capacity. 160
159 Interfreight, October 2015, http://www.interfreight.biz/en/o-kompanii/zhizn-kompanii/343-perspektivy-razvitiya-avtomobilnykh-perevozok- v-mire.html 160 Freight market - an indicator of the economy; Is the cargo transportation market developing in Ukraine?, 08/19/2016, Logist.FM Http://logist.fm/publications/rynok-gruzoperevozok-indikator-ekonomiki
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Other transport modes (rail, inland shipping) are not considered as serious competitors by domestic road freight carriers with one exception: carriage of liquids and gas where rail may put up real competition. On the international stage, fierce competition is experienced only from Ukrainian companies as foreign operators restrain from entering Ukraine basically due to the state of the road network and the important price advantages of Ukrainian players. The level of corruption is also perceived as a discouraging factor for foreigners to transport to / from Ukraine. ‘The status of Ukraine has deteriorated’ as one of the interviewed companies has declared. Operators involved in logistics activities face difficulties in finding appropriate warehouses in Ukraine that correspond to requirements (e.g. distance to inhabited areas). This issue has been solved by one visited logistics company by building ‘green-field’, up-to-date high warehouses where goods of its permanent partners are stocked and all processes are computer-controlled including movements in and out as well as within the storing area. In this warehouse workers communicate with an IT system of Polish origin via bar-code reader-type equipment. Beyond storage, basic cargo manipulation is also undertaken (such as splitting bigger units or re-packing in case of packaging damage). Besides growing demand for complex logistics services, another new phenomenon is the “growing popularity of parcel deliveries”. 161 This development is strongly interrelated with the extension of e- commerce and connected rapid deliveries (courier services). Ukrainian consumers use e-retail services of both domestic and foreign web platforms. Products sold through such commercial channels reach consumers almost exclusively by road.
Chain Contracts Both in international and domestic operations, chain contracts seem to be frequently used, mainly in high transport seasons. In an interview with an important trading company active Europe-wide and involved in Ukrainian export-import operations via its Kiev-based subsidiary, it was stated that a main transport contract had been signed for export-related operations between the foreign mother company and a well- known international logistics conglomerate; this conglomerate had subsequently signed sub-contracts with a number of foreign and Ukrainian forwarders, while further sub-contracts had been concluded between these forwarders and the real transport operators. This contractual hierarchy is rather complex and hardly transparent, even if in this special case, the result of an open tendering process at all levels. Tariffs and other contractual conditions of true carriers at the bottom of the legal ladder are under heavy pressure. By contrast, and this is encouraging, for import operations and domestic distribution, the same trading multinational has signed a single-level contract directly with hauliers. 162 The decision is in the hands of the shipper (cargo owner). In order to obtain the quality of service for the price it pays, if directly contracting transport operators, it should exclude the right of the latter to proceed to subcontracting but in exceptional cases (break-down of vehicle, etc.).
Inter-company Indebtedness The need for an appropriate legal framework to fight high current inter-company indebtedness and the non-respect of legal or contractual payment delays has been highlighted by one interviewed company.
161 What is happening on the logistics market in Ukraine, UkrAgroConsult, 03/25/2016 http://www.ukragroconsult.com/news/chem-zhivet- rynok-logistiki-v-ukraine 162 Interesting to note that the same trading conglomerate mandating 1’600 heavy trucks a year only for inbound traffic (going to Ukraine), declares that all logistics costs (transport, warehousing at hired premises with own staff, office costs, etc.) make only 1% (!) of the total company turnover, a very low share compared to 5% experienced by the same company in Western Europe.
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The institution of factoring would particularly be needed in a country where late debt payments often force transport operators into an undesirable position of money lenders and / or bankruptcy. In the present legal framework, road freight transport operators often have no other choice than going to court against debtors, a very lengthy and costly exercise with limited chances of success.
Web-based Freight Exchanges Both in domestic and international freight canvassing, freight exchanges (see examples in the region in Table 27) are widely used to match cargo and vehicles. For example, Lardi-Trans https://lardi- trans.com and Della-UA http://www.della-ua.com are quite well-known and popular sites. Contracted tariffs published by Della seem to reflect experience of the interviewees even if in some cases they are perceived to be low. Freight exchanges may indeed assist in putting pressure on freight prices. It should though be considered normal that spot-prices visible on these sites are lower than freight rates negotiated between permanent partners (shippers and transport operators) in the framework of long-standing commercial contracts. An important interviewed Ukraine-based forwarder, a subsidiary of a major international logistics firm, avoids spot markets such as web-platforms and it doubts prices and quality offered on the latter. Even if sometimes it contacts transport companies on the web platforms, it prefers entering into a solid contractual relationship with the selected transport operator. Table 27: Freight exchanges in the region 163
Name Website
CargoAgent http://gruzoperevozki.cargoagent.net/
AvtoTransInfo http://ati.su/
Della http://della.ua/
TimoCom https://www.timocom.ru/
TRANS.EU http://www.trans.eu/by/transportnaja-birzha
Lardi-Trans https://lardi-trans.com
Moldova Truck http://moldovatruck.md/ru/prosmotr-gruzov-nayti-gruz-poisk-poputnyih-gruzov-predlozheniya-gruzov-888.php Код поля изменен TIR-Logistica http://tir-logistica.com/
DeGruz http://degruz.com/
Transinfo.by http://www.transinfo.by/
Avtodispetcher https://www.avtodispetcher.ru/
SITtrans http://sit-trans.com/
easycargo http://www.easycargo.ro/
BursaTransport https://www.bursatransport.com/
Ghid Transport http://ghidtransport.ro/
Poland-Transport.eu http://www.poland-transport.eu/pl Код поля изменен Avtocargo.com http://www.avtocargo.com/
163 Based partially on ‘Perevozki – nasha zhizny’, http://logistic-life.blogspot.fr/2012/11/transportniebirzhi.html
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An important related aspect is that paying for the freight is not easy for Ukrainian shippers in case they want to buy transport services from foreign operators (difficulties of cross-border hard currency transfer out of Ukraine).
Renewal of State-owned Capacities Attention is drawn to Ukrposhta 164, which gets more and more engaged in true transport market operations either buying-in transport services from the market (out-sourcing) or entering new market segments with its own large vehicle fleet mainly in courier services and e-retail sales. E-commerce or catalogue-sales whereby goods purchased are carried by road, already now represent some 5-10 % of all cargo movements initiated by Ukrposhta. The growth rate of this activity in rural areas where the Post’s presence is unbeatable attains 1’000 % a year. An exciting question remains: how to ensure that public postal services be separated from commercial business, including commercial road transport activities, to avoid any cross-subsidisation between various services.
164 Ukrposhta is a huge state conglomerate even after the dramatic dwindling in size over the last 10 years (annual turn-over was equal to 4.7 billion UAH in 2016 of which road transport represented a value of about 0.8 billion UAH serving 11’500 post offices and millions of customers all over the country). A spectacular fleet of 3’500 trucks of all sizes (of which only 2’500 are operational) supports daily domestic activities (for international services mainly aviation is used). An important part (70-80%) of Ukrposhta’s operations, incl. related transport, is outside of the scope of commercial activities and fall into the category of universal public postal services comprising a monopoly right over mail under 50 gr and parcels under 10 kg (without declared value). Mail, newspaper and small parcel distribution is on a rapid decline. Therefore, for its survival, Ukrposhta is condemned to change. There are plans to completely reconstruct terminal infrastructure and vehicle fleet engaged in classical postal services (not considered in the framework of this study but meriting a special investigation and support). If Ukrposhta, a major cash distributor and collector, receives the right to undertake banking operations, its rural network, to be reorganised into 5-7 major hubs, would further be reinforced. In the extremely competitive logistics and courier market, this would be an asset.
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Fleet Development Table 28: Summary of Main Observations / Recommendations on Fleet Development
Subject Observations / Recommendations
Credits and leasing Domestic operators cannot afford bank credits or leasing for vehicle purchase due to high prevailing interest rates. Solid partnership between haulier and shipper can best support vehicle leasing contracts. Outright purchase seems to be a viable option, if affordable.
Second-hand import market The second-hand import market is disorganised.
State taxation and customs policy State taxation and customs policy should be beneficial for fleet renewal of import origin (e.g. VAT reduction is proposed). Customs should accept for goods value the true and properly documented purchase price of imported vehicles.
Leasing and bank credit rates are so high that they are almost inaccessible for many operators. According to them, more bank products should easily and quickly be available in case of need. Financial product development is however on hold due to excessive state control of the bank sector. Prevailing interest rates on credits in UAH are 13-28 % coupled with 25-35 % down-payment. Credits in Euro cost annually 10.5-15 %; leasing in Euro: 9.8-14 % with 20 % down-payment. Bank loan credit rates in Poland are at more reasonable levels: 4-5 % (USD). One interviewed operator has even managed to negotiate an interest rate of 2.3-2.5 % on restructured bad loans. In such a situation, outright purchase seems to be the viable option, if affordable, whereby one of the schemes verbally reported is that the company owner buys the vehicle as a private person and puts it to rent for his own transport company. This solution facilitates reselling the vehicle. Outright purchase from company funds is also practiced by some operators with deferred payment schedules. As declared by a very important state-owned company, tendering is compulsory for state-owned entities when it comes to vehicle leasing. Rules of tendering are estimated to be overly complicated in case of leasing, a complex financial product in itself. Tendering obligation also implicates the danger of a forced diversification of existing fleets with potentially negative impacts on vehicle servicing and spare-parts supply. Most of the trucks are imported new or second-hand (the latter available also on the domestic market) mainly manufactured in member countries of the EU. The second-hand import market is however disorganised, it is difficult to find official import traders specialising in this activity such as was the case earlier with reputable Western truck manufacturers. Today, self-appointed Ukrainian dealers often request cash payment for imported second-hand vehicles. A big operator (doing international and domestic transport with a diversified fleet carrying liquid, gas, general cargo and grain in bulk) reports on ‘swop purchases’ of new imported trucks whereby selling the company’s old vehicles is made part of the payment. Operators emphasise that state taxation and customs policy should be beneficial for fleet renewal of import origin. It is proposed to reduce or even cancel the 20 % VAT on imported vehicles or at least offer
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Costs and Tariffs Table 29: Summary of Main Observations / Recommendations on Costs and Tariffs
Subject Observations / Recommendations
Average costs and tariffs Average costs and tariffs are reported to be 17 (costs) and 20.5 (tariff) UAH / km for international and 12.8 (costs) and 20.1 (tariff) UAH / km for domestic operations. Freight rate information collected from freight exchange confirms tariff (and cost) levels communicated by interviewees in personal meetings.
Cost comparison with other modes River transport is the cheapest (domestic comparison). Rail is cheaper than road for examined international relations. For domestic rail and road tariffs a much more extensive comparison should be undertaken. In this Report, road is more expensive in one selected relation, in three other cases prices of the two modes are very close with road tariffs seemingly a bit lower than rail prices. (!) Further verification is needed.
Cost distribution For domestic & international road freight transport operations: 17 % driver, 47 % fuel, 17 % vehicle, 13 % overhead and 6 % other costs.
Information from Interviews Interviewees have emphasised that domestic tariffs are relatively low compared to international freight rates. Seasonality has an important effect on tariff fluctuation, mainly in respect of transporting agricultural products. Prices in high-season (March-April-May, July-Aug and Oct-Nov-Dec) can be 20-30% higher than in low season (Jan-Feb, June). Cost and tariff information collected by means of personal interviews is the following (see summary in Chart 46): - Domestic tariff of a transport operation by a 40-ton road vehicle carrying general cargo between Kiev-Odessa is reported to be: 11-17 UAH per km. Loaded return is even cheaper: 10 UAH per km. - ASMAP does not interfere with the markets, e.g. it does not communicate any standpoints regarding tariff policy of market players. According to the association’s experience, UAH 29 per km for a trip by a 40-ton vehicle from Ukraine to Poland and UAH 21 for the return trip seems to be standard international freight tariffs in the present market situation (+ - 15%). - An operator consulted during the mission reports on lower tariffs, namely UAH 18 per km for a 40-ton road vehicle if Polish trucks are used in international activities and UAH 13.5 per km for Ukrainian operators. (!) - Oversize or heavy cargo transport is priced 40 UAH per km on domestic routes. - Costs of an Ukrposhta vehicle (10 tons total weight) reaches 12 UAH/km; outsourced services cost for the Post 7-8 UAH/km only because sub-contractors more than often do not keep drivers’ working/driving/rest hours limitations which a state-owned company cannot afford - Tariffs of a carrier involved in international dangerous goods transport fluctuates between 0.6 - 1.5 Euro per km (18 - 45 UAH/km) as verbally reported - Rates reported by another international haulier: 11 UAH/km costs with a margin of 6 UAH/km, i.e. a tariff of 17 UAH/km
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- Costs of a forwarding company with own vehicles engaged in international operations: 13 UAH/km (without tolls and ferry expenses if applicable); tariffs paid for purchased loading capacities: 16-18 UAH/km on UA territory and 30 UAH/km (1 Euro/km) abroad - Costs of another international operator: 0.5 Euro/km (15 UAH); tariff: 0.6 Euro (18 UAH) Chart 46: Average costs and tariffs a, UAH/km, 40-ton vehicle, April 2017 165
25
20
15 20,5 20,1
17 10 12,8
5
0 Cost Tariff Cost b Tariff c International Domestic a) Cost and tariff levels to be verified by the Survey to be performed in the framework of the present study b) Mid-size vehicles (10-ton) incl. c) Heavy and oversize cargo excl. According to these data, the cost-tariff margin for international carriers is half of what domestic operators report on (3.5 vs. 7.3 UAH/km). The limited number of interviewees involved does not allow gaining a realistic insight into this phenomenon. Variations in the degree of competition on the international and the domestic markets may just be one of the explanations.
Tariffs of a Freight Exchange Freight rate information collected from one freight exchange web-application actually confirms tariff levels communicated by interviewees in personal meetings with the consultant. True that the majority of company representatives interviewed judge freight prices of this web application to be a bit low (see explanation on spot and contractual prices above). Possibly, the low price rates of freight exchanges can be considered as being cost levels of well-established carriers. Information on domestic rates is presented in the below chart. (Chart 47 with more details in Annex 7: Costs and Tariffs)
165 Based on the consultant’s interviews during missions in Ukraine
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Chart 47: Domestic road freight rates by transport distance; heavy, medium and light trucks a, UAH / km, 9-10 May 2017 166
30
28,13
25 23,96
21,18 20 20,27 19,36 18,23 18,56 heavy 17,47 17,61 medium 16,76 16,54 15,93 15 light 14,56 13,46 Логарифмическая (heavy) 12,82 13 12,17 Логарифмическая (medium) 11,67 11,32 10,42 Логарифмическая (light) 10 9,97 9,49 9,43 9,26 8,28 8,27 8,68 7,71 7,16 6,96 6,14 5,67 5,99 5,87 6,09 5 4,88 5,04
2,74
0 0 200 400 600 800 1000 a Heavy: 18-23 ton loading capacity trucks; medium: 8-12 ton loading capacity trucks; light: 3-7 ton loading capacity trucks Domestic rates were observed twice on the website mentioned, in March and in May 2017. Both data series witness about highest rates per km for heavy and lowest ones for light trucks. Rates remained stable between March and May. They are normally declining with growing transport distances, though rates for heavy trucks remained fairly stable or indifferent to changes in distance in May 2017. Yearly trends provided by the web application witness about steadily growing rates despite daily fluctuations. (See data in Annex 7: Costs and Tariffs.) For international operations, observations were made in May 2017 for six country pairs, Ukraine on the one hand and Poland, Turkey, Russia, Germany, Italy and Romania on the other hand, countries being considered as important partners for Ukrainian haulage companies. Here-below, only UA-PL freight rates are presented (Chart 48), price information for other geo-relations is available in the relevant annex (Annex 7: Costs and Tariffs).
166 Della Trans, http://www.della-ua.com/cost/local/ , 27 March, 9 May 2017
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Chart 48: International road freight rates applied between Poland and Ukraine, by transport distance and direction of traffic, UAH / km, 9-10 May 2017 167 a
60 Poland and Ukraine
50 47,37 45,71 44,07 42,95 41,51 40 39,58
35,09 35,46 34,88 PL -UA
30 30,17 UA-PL 27,38 Логарифмическая (PL -UA) 25,38 25,03 25,67 24,88 23,97 Логарифмическая (UA-PL) 22,77 23,34 21,86 22,53 22,23 20 19,64 20,46 18,73 17,93 16,43 16,3 16,35
10
0 0 500 1000 1500 2000 a 15 – 22.5 tons loading capacity trucks
A number of comments on international road freight rates are made (see related charts in Annex 7: Costs and Tariffs). - Declining UAH / km rates with growing transport distance normally characterise all examined relations. Differences prevail only in the slope of the curves. E.g. in the UA-RF relationship, tariffs for operations from RF to UA hardly react to growing distances. The same observation is true for traffic from UA to IT. - The annual trend of transport tariffs is slightly growing in the majority of the examined relations. However, in some relationships, the tendency is negative: e.g. for traffic from UA to TR, from RF to UA and from UA to IT. Negative tendencies may indicate the persistence of over-supply of loading capacities in-between countries concerned. - The highest average rate has been agreed upon for operations from UA to RF (39.7 UAH / km) possibly due to insufficient loading space supply. This high average is followed by the average for rates from IT to UA (38.1) and from UA to RO (36.1). In four relations out of the six, tariff rates for operations into UA (import) are higher than in the opposite direction. Without knowing details of operations concerned (like nationality of the carriers, outgoing and return transport routes, etc.) it is not possible to give an explanation for this phenomenon. (Chart 49; details in Annex 7: Costs and Tariffs)
167 Della Trans, http://www.della-ua.com/cost/local/ , 27 March, 9 May 2017
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Chart 49: Average road freight tariffs in six geographic relations, UAH / km, 9 May 2017 168
PL-UA UA-PL TR-UA UA-TR RF-UA UA-RF DE-UA UA-DE IT-UA UA-IT RO-UA UA-RO
Cost Comparison with Other Modes According to a study on grain logistics169, transport costs per tonne carried between Kremenchug and Mykolaiv are around 16 USD for the road, 10 USD for the rail and 8 USD for the river mode. A small scale comparison of the rail, river and road modes has been accomplished for the purpose of the present Report. (Chart 50 and Annex 7: Costs and Tariffs)
168 Della Trans, http://www.della-ua.com/cost/local/ , 27 March, 9 May 2017 169 Ukraine -Grain Logistics, March 24, 2015 (Maurizio Guadagni, World Bank, Agriculture Global Practice; Maria Claudia Pachon, World Bank, Transport Global Practice; Aliya Karakulova, World Bank, Transport Global Practice; Oleg Nivyevskiy, World Bank, Agriculture Global Practice; Andrii Shkliar, Centre for Transport Strategies (CfTS); Dmitry Prikhodko, FAO; RodionRybchynskyi, APKInform)
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Chart 50: Intermodal tariff comparison for a few domestic and international relations, UAH / ton, 2017 170
707 707
476 476
353 353 353 353
246 Rail a
Road b 120 River c
a) Rail transport only to border crossing points. Loading & unloading operations are not included in calculations. b) Average domestic and international freight rates and distances - Della Trans 9-10 May 2017. c) Loading & unloading operations are not included in calculations. River transport is the cheapest mode of transport. For Kiev – Dnepropetrovsk it offers tariffs around 70 % below rail and road prices per ton carried. For Kiev – Odessa, it is 40 and 30 % cheaper than rail and road respectively. Rail is cheaper than road towards Poland and Romania by about 20 % and 40 % respectively. Results of this limited comparison between domestic rail and road tariffs seem to be embarrassing: road is more expensive only for Kiev – Kharkov, in the three other selected cases rail tariffs are slightly more expensive than road prices. (!) A much more extensive comparison would be desirable.
170 Rail and river tariffs for selected origins & destinations and a cargo of 20-ton steel pipes were computed by the Centre for Transport Strategies (CfTS), Kiev, June 2017; average international and domestic road freight tariffs were extracted from Della Trans, http://www.della- ua.com/cost/local/ , 9 May 2017
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Cost Distribution Considering views of all interviewed companies (domestic and international), cost distribution follows the below rough pattern (see Chart 51; details in Annex 7: Costs and Tariffs): Chart 51: Distribution of costs of operation a, 40-ton vehicle, April 2017 171
Driver 6% 17% 13% Fuel
Vehicle amortisation, maintenance, tires 17% Administration and overheads
47% Heavy and oversize transport permit, toll / road user charge
In comparison with the cost structure of an average EU operator, the most striking difference is in the proportion of driver related expenses. Driver wages are significantly higher in EU member states where this cost element reaches about 40 % of the total costs of operation at the expense of other costs.
171 Based on the consultant’s interviews during missions in Ukraine
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Average Distances and Empty Runs Table 30: Summary of Main Observations / Recommendations on Average Distances and Empty Runs
Subject Observations / Recommendations
Average annual mileage and round Annual mileage: 110’000 km (heavy goods vehicles in domestic and international trip distance traffic) Average round trip distances: around 50 km in domestic operations for all goods vehicles; above 400 km for heavy goods vehicles; 3’900 km in international operations. Average distances are higher for transport companies (legal persons) than for other operators.
Empty runs Domestic transport: 21 % (interview data) International transport: 9 % (interview data) Official statistics report on much higher empty share for domestic operations (47 %); to be verified.
Average Annual Mileage and Round Trip Distance According to information received during personal interviews, heavy goods vehicles in both domestic and international operations run in average a bit over 110’000 km/year. The following average round trip distances have verbally been reported (Charts 52; details in Annex 8: Average Distances and Empty Runs): Chart 52: Average annual mileage, round trip distance, interviewed operators, heavy goods vehicles, km and 100 km, April 2017 172
4 500
4 000
3 500 3 880 3 000
2 500 km/trip 2 000 annual mileage, 100 km
1 500
1 000 1 136 500 1 120 430 0 International Domestic
172 Based on the consultant’s interviews during missions in Ukraine
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State statistics173 also report on average distances made by road freight vehicles: average transport distance by all trucks (from small to heavy vehicles) engaged in domestic operations is around 50 km (data for 2014 subsequent to a continuous increase over the previous 5 years). It is important to note that the same indicator is about 160 km (all vehicles) for hauliers established as legal persons. The average distance they run is superior to the distance performed by FOPs and possibly OAT operators. In view of the official statistics, the average trip distance (430 km) reported for domestic traffic by interviewees (legal persons) seems to be correct compared to official statistics (2 x 160 = 320 km). Part of the difference possibly comes from different vehicle categories considered (in interviews: only heavy goods vehicles; in official statistics: all goods vehicles). Road transport values are in any case significantly lower than the equally growing average transport distance for rail (Chart 53; details in Annex 8: Average Distances and Empty Runs). Chart 53: Average transport distance by rail and road freight transport, 2000-14174
600
544 520 520 500 497 504 506 484 Rail
400
Road, all 300
200 Road 171 163 163 147 158 transport companies 100 109 (legal 59 46 46 46 47 49 persons) 21 31 0 2000 2005 2010 2011 2012 2013 2014
Average road freight transport distance in domestic road freight operations is comparatively high for operators registered in Western regions (Zakarpattya, Lvov, Chernivitsi) where ton-km performances are also high. The distinction, observed between average distance run by all hauliers on the one hand and companies (legal persons only) on the other hand, is true also for individual regions. Detailed statistics for average transport distances by regions can be consulted in an annex to the present Report (details in Annex 8: Average Distances and Empty Runs). For international comparison, average transport distances in the EU are 86 km in national and 581 km in international transport. 175
Empty Runs The share of empty runs reported in interviews for the Ukrainian market seems to be a bit low. (Chart 54)
173 State Statistics Service, https://ukrstat.org/en 174 State Statistics Services, https://ukrstat.org/en 175 Road transport by type of operation – EU, http://ec.europa.eu/eurostat/statistics- explained/index.php/Road_freight_transport_by_journey_characteristics#Road_transport_by_type_of_operation
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At EU-28 level, a fifth of journeys were performed by empty vehicles (21.1 % in 2015). The share of empty journeys grows to 24.3 % for national transport (UA: 21 %), but is only 12.6 % (UA: 9 %) for international transport in 2015. 176 Chart 54: Share of empty trips and number of monthly trips, interviewed operators, % and numbers, April 2017
25 22 21
20
15 Empty %
10 9
monthly number of trips 5 2
0 International Domestic
The officially reported share of unloaded total mileage is accessible also in data of the State Statistics Service. The empty share for all regions officially reported seems to be extremely high with regional values between 33 % and 65 % and in average 47 %. These data should further be investigated and verified all the more so since reported data are valid for hauliers established as legal persons whose operational efficiency is normally higher than that of FOPs and OAT operators. (Charts 55-56 and Annex 8: Average Distances and Empty Runs)
176 Road transport by type of operation … (see above)
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Chart 55: Total mileage of trucks operated by companies (legal persons), incl. loaded share, by regions, 1’000 km, 2014 177
900000 800000 700000 600000 500000 Total 400000 300000 200000 Of which loaded 100000 0
Chart 56: Proportion of loaded and unloaded total mileage of trucks operated by companies (legal persons), %, 2014 178
Proportion of loaded and unloaded mileage of trucks in Ukraine
47% unloaded 53% loaded
177 State Statistics Services, https://ukrstat.org/en 178 State Statistics Services, https://ukrstat.org/en
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Labour Market Developments Table 31: Summary of Main Observations / Recommendations on Labour Market Developments
Subject Observations / Recommendations
Number of employees and salaries Number of employees is growing in land (incl. pipeline) transport. Salaries are also growing though they are still at a low level.
Professional driver shortage There is a professional driver shortage in big cities. Many qualified drivers leave for abroad. The number of professional drivers and workers servicing motor vehicles is declining, particularly in young age groups. Most ‘driver-populated’ regions are: Dnepropetrovsk, Donetsk, Kiev, Lvov, Kharkov, City of Kiev and Odessa. Tools applied to reduce driver shortage: better remuneration, in-house training and the creation of acceptable working conditions by e.g. buying new vehicles if affordable, ensuring normal working hours, introducing a regular bonus system and creating a friendly company atmosphere where drivers feel appreciated by the management.
Visa restrictions Visa restrictions for drivers active in international operations reduce their availability for work. This problem persists in non-EU relations, government and diplomatic efforts are needed to resolve this issue.
Supply of qualified managers Demand and supply for qualified managers is more or less in balance, signs of their relative shortage have however been experienced.
Number of Employees and Salaries The number of employees is growing in land (incl. pipeline) transport contrary to the decline observed in other transport modes and related areas (Chart 57; see details in Annex 9: Labour Market Developments). Average monthly salary has also been steadily growing in the same sector between 2010 and 2014, where salaries are still at the lowest level in comparison with other transport modes and related areas. (Annex 9: Labour Market Developments)
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Chart 57: Average number of full-time employees, 1’000 persons, 2010-14 179 a
900
800 Total transport, 700 warehousing, postal and courier activities 600 Land and 500 pipeline transport
400 Storage and auxiliary 300 transport activities 200 Other (inland ww, 100 air, postal courier)
0 2010 2011 2012 2013 2014
a Data provided for legal entities and their separate subdivisions with not more than 10 employees
Professional Driver Shortage At present, there is a professional driver shortage, mainly in big cities (e.g. Kiev, Lvov), as many capable drivers leave for abroad for work and often permanent living. A professional driver earns easily 1’500 Euros a month in Lithuania compared with around 1’000 Euros paid in Ukraine to drivers engaged in international operations.180 Top drivers working in domestic transport may earn as much as 300 Euros. 181 Main target countries for emigrating drivers are Poland and the Baltic States since drivers nationals of these countries move to work in other Western-European EU member states.182 According to PricewaterhouseCoopers (PwC), Poland alone could absorb 100’000 foreign professional drivers.183 Macro employment data also testify about a declining number of professional drivers and workers servicing motor vehicles. Their total number shrunk from more than a million to less than 850’000 persons (-19 %) between 2011 and 2016. The reduction was most spectacular in the age group below 24 years: - 56 % (!). It was -14 % between 25-29 years and -30 % between 30-34 years. A further problematic age group is the one of the 40-49 years old, where the reduction attained -22 %. In other age groups shrinking is of less than 10%. (Charts 58-59 and Annex 9: Labour Market Developments))
179 State Statistics Services, https://ukrstat.org/en 180 Information received in interviews conducted by the consultant. 181 Bigmir.net, 22.12.16, http://finance.bigmir.net/career/77106-Vyrosli-zarplaty-i-trebovanija--kakim-byl-rynok-truda-v-2016-godu 182 Who earns the most and what surprises await in 2017: the situation in the labour market, Segodnnya, 7-December-2016, Http://www.segodnya.ua/life/work/kto-zarabatyvaet-bolshe-vseh-i-kakie-zhdut-syurprizy-v-2017-m-situaciya-na-rynke-truda-776756.html 183 The labor market in Poland lacks 100’000 professional drivers, 18.01.2017, JDM Ukraine, http://ru.jdm-ukraine.com/news/rynok-truda- polshi-ispytyvaet-nedostatok-100-000-professionalnyh-voditelej
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Chart 58: Employment of drivers and workers servicing motor vehicles, total number, 1’000 persons, 2011-16 184 a
2011 2012 2013 2014 2015 2016 a) Since 2014 excluding the temporarily occupied territory of Crimea and Sevastopol; for the years 2015-16 also excluding territories of counterterrorist operations Chart 59: Employment of drivers and workers servicing motor vehicles, distribution by age groups, 1’000 persons, 2011-16 185 a
15-24 years 25-29 30-34 35-39 40-49 50-59 60-70
1 2 3 4 5 6 a) Since 2014 excluding the temporarily occupied territory of Crimea and Sevastopol; for the years 2015-16 also excluding territories of counterterrorist operations The concentration of professional drivers and workers servicing motor vehicles in a number of key-regions is no surprise. Regions employing most of them correspond to the regions’ economic weight, their share in road transport performances as well as the size of their commercial road vehicle fleets. Most ‘driver-
184 State Statistics Services, https://ukrstat.org/en 185 State Statistics Services, https://ukrstat.org/en
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Draft Final Report Peter Krausz, Consultant 30 June 2017 populated’ regions are: Dnepropetrovsk, Donetsk, Kiev, Lvov, Kharkov, City of Kiev and Odessa. (Annex 9: Labour Market Developments) We can observe the decline of the profession in many regions. Ten of the regions have however been able to keep and even increase the number of drivers and workers servicing motor vehicles in the period of 2011-16. (Chart 60) By contrast, shrinking has been quite substantial in the regions of Kharkov (- 41 %), Donetsk (- 70 %) and Lugansk (- 73 %). Chart 60: Employment of drivers and workers servicing motor vehicles, distribution by regions, 2016 compared to 2011, % 186 a
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a) Since 2014 excluding the temporarily occupied territory of Crimea and Sevastopol; for the years 2015-16 also excluding territories of counterterrorist operations Some interviewed operators have actually the impression that ‘the driver profession is dying’. Earlier, family traditions were handed over from generation to generation (driver father to driver son); such chains are now broken. Certain operators fight this phenomenon by better remuneration, in-house training and the creation of acceptable working conditions by e.g. buying new vehicles if affordable, ensuring normal working hours, introducing a regular bonus system and creating a friendly company atmosphere where drivers feel appreciated by the management. In order to keep their employees, other operators do not exclude semi- legal or ‘tolerated’ forms of driver compensation stemming from economising on fuel consumption and the purchase / use of spare-parts. Among interviewed companies, the majority employs drivers in numbers equal to the number of vehicles. For them, surprisingly, holidays, sickness leaves or working / driving / rest periods of drivers do not represent an issue, in practice ‘everything straightens out in an automatic manner’. By contrast, some companies emphasise that three to two is the ideal proportion of drivers to vehicles (3 drivers / 2 vehicles).
186 State Statistics Services
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However, only a single international operator interviewed applies this ‘ideal’ proportion by employing 1’000 drivers for 600 vehicles.
Visa Restrictions Visa issuance problems are not directly related to the labour market situation. Visa restrictions for drivers however limit drivers’ availability for work, and they are a major concern for carriers involved in international operations. Wherever visas are applicable, the removal or an important liberalisation of visa restrictions for Ukrainian certified drivers, e.g. by issuing annual multi-entry visas, would be the right solution. The general cancellation of the EU visa obligation will greatly ease daily operations between Ukraine and EU Member States.
Supply of Qualified Managers The shortage of managers is less accentuated but Ukrposhta needed 4-5 months to hire a capable transport manager for a leading position (Head of Department). An international operator reports about the lack of sales experts. Most qualified young sales professionals demand a salary of 1’000 Euro a month and the company mentioned cannot offer more than 700 Euro and various bonuses. Furthermore, per experience, young post-graduates are by far not aware of even the basics of the profession. Qualified young managers tend to open up their own private business as forwarding agents or other entrepreneurs either in transport and logistics or other economic sectors. Many leave the country to work and live abroad. High-quality professional training at regular intervals for both managers and drivers may be one of tools for a successful retention of key personnel and the improvement of the image of the profession. Ukraine is cooperating in this respect with the IRU Academy. 187 188 Special courses are organised almost in every region of Ukraine for drivers involved in the transport of dangerous cargo (ADR training and certification are obligation for this activity). Certificates issued in Ukraine are acknowledged in other countries parties to the ADR Convention. 189 190
187 Ukraine to promote IRU Academy training as key quality benchmark, IRU, 5 Oct 2016, https://www.iru.org/resources/newsroom/ukraine- promote-iru-academy-training-key-quality-benchmark 188 International transport with the receipt of the International IRU Certificate, Odessa Region State Training Centre, http://avtokursi.com.ua/page.php?post=kod95_mezhdunarodnie_perevozki_s_polucheniem_mezhdunarodnogo_sertifikata_iru 189 ADR training in Ukraine, https://www.labadr.com.ua/Sprav/perevozochnye-dokumenty/dopog-svidetelstvo-o-podgotovke-voditelej- transportnyx-sredstv-perevozyashhix-opasnye-gruzy/ 190 Gruz-xatt - freight transport by road, Http://gruz- xatt.com/publ/osobennosti_perevozki_gruzov/osobennosti_perevozki_gruzov/podgotovka_voditelej_k_perevozke_opasnykh_gruzov_i_spisok _uchebnykh_centrov_adr_v_ukraine/8-1-0-188
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Facilitation, Efficiency and ‘Greening the Industry’ Table 32: Summary of Main Observations / Recommendations on Facilitation, Efficiency and ‘Greening the Industry’
Subject Observations / Recommendations
Facilitation Diminishing bureaucracy and administrative obstacles would automatically enhance efficiency and also increase transparency in business processes thus limiting chances for corruption and the development of shadow economic activities. Logistics Performance Index (LPI): India, the top performer in the income group of Ukraine is rated 35th in the global ranking compared to Ukraine’s 80th place. Ukraine needs to improve significantly in all LPI indicators.
Sustainability Economic, social and environmental sustainability should be pursued simultaneously. A major impediment in Ukraine to any progress in this respect is the poor state of its road infrastructure.
ICT, logistics and multimodality ICT: almost all international and important domestic carriers use ICT systems. System developers and service providers are more and more numerous in Ukraine. Logistics: it seems that there is still resistance by and lack of ability of hauliers to provide complex logistics services. Positive examples have also been identified. Multimodality: terminal networks owned by the Ukrainian Railways or in private hands can become the physical support to the development of multimodality still negligible in the country. One example is the Centre of Transport Services LISKI (CTS LISKI). The further development of multimodal operations should be encouraged by the government.
Reduction of pollution at the source Most national roads were built several decades ago, it is difficult to implement modern standards for air pollution, noise level, vibration, road geometry and distance to populated and built-up areas. The replacement of old polluting units should be accelerated by the State implementing effective incentives (e.g. fiscal benefits). Further means of environment protection in the sector: charges to cover road use and externalities, more demanding vehicle parameters, accrued use of alternative fuels, reduction of traffic noise at source, improved vehicle maintenance and inspection schemes, enhanced driver and manager training, etc.
Facilitation Diminishing bureaucracy and administrative obstacles that hamper smooth business conduct by domestic and international road carriers would automatically enhance efficiency of the sector. But abandoning superfluous paperwork and related procedures would not only be profitable for the profession but it would also lead to beneficial changes in social sense, for example by means of increasing transparency in business processes thus limiting chances for corruption and shadow economic activities. As stated elsewhere in this paper, Ukraine has lot to do in this complex socio-economic area.
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In order to grasp the magnitude of facilitation tasks ahead, the position of Ukraine is presented here- below in the global ranking of The World Bank’s Logistics Performance Index (LPI): (Charts 61-63; see details in Annex 10: Facilitation, Efficiency and ‘Greening the Industry) Chart 61: Logistics Performance Index (LPI): Ukraine compared to India, the top performer in its income group, 2016 (1=worst, 5=best) 191
Ukraine: red colour
Chart 62: Logistics Performance Index (LPI): Ukraine compared to Germany, the top performer in the world in 2016 (1=worst, 5=best) 192
191 Logistics Performance Index, The World Bank, http://lpi.worldbank.org/international/scorecard/radar/254/C/UKR/2016/C/IND/2016#chartarea 192 Logistics Performance Index … (see above)
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Ukraine: red colour Chart 63: Logistics Performance Index (LPI): Ukraine compared to Europe and Central Asia, 2016 (1=worst, 5=best) 193
Ukraine: red colour
India, the top performer in the income group of Ukraine was rated 35th in the global ranking compared to Ukraine’s 80th place out of 160 countries. Germany’s first position in the global ranking is confronted with Ukraine’s 80th rank. Finally, Europe and Central Asia, Ukraine’s neighbouring regions, is presented in comparison with Ukraine’s position.
193 Logistics Performance Index … (see above)
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Ukraine needs to improve significantly in all LPI indicators. Its best performance has been achieved regarding timeliness of shipments (reaching destination within scheduled or expected delivery time). The country’s best LPI score was attained in 2007 (2.55), its worst in 2014 (2.98). The 2016 score is its third best, but improvements since 2014 are not acknowledged in the global LPI due to other countries more dynamic progress. In three years’ time Ukraine actually fell from the 61st (2014) to the 80th (2016) LPI position.
Sustainability The goal is to establish a sustainable transport system in the country whereby economic sustainability (economic and operational efficiency) goes hand-in-hand with social (road safety improvements, improved employment and working conditions) and environmental sustainability (less pollution of any sort causing damage to nature). Unfortunately, a major impediment to any efficiency increase is the very poor condition of roads which in certain places simply ‘do not exist’, says an interviewed operator. This understanding has been confirmed by Ukrposhta’s experience: due to bad road quality, postal vehicles cannot attain higher travel speeds than maximum 50-55 km per hour. Important time reserves should consequently be foreseen for any on- time delivery. Delay in any segment of operations causes important disturbances in the star logistics model applied by the Post (‘domino effect’). The shortest roads are definitely not the quickest ones.
Information and Communications Technology (ICT), Logistics and Multimodality
ICT Real-time navigation support as a possible tool to increase operational efficiency is problematic in some regions where GPS availability is restricted. Certain companies as stated by interviewees do not even let the drivers use navigation tools and they should follow instructions of the company traffic dispatcher who is to approve any proposed modification of pre-selected routing. Other companies do rely on the daily use of navigation systems available in the driver’s cab mainly if engaged in international operations. A quick ASMAP survey of international carriers shows, that almost all association members use IT systems to some extent (e.g. for route and fuel consumption optimization, tracking). In the domestic market, ASMAP believes, reputable carriers do the same, as their main clients especially of a certain size require being able to track the movement of their cargo. 194 Soft-ware products to support optimisation efforts by operators and underpin complex logistics activities are being developed also by domestic firms. 195 A number of service providers support carriers with various ICT products (mobile communication, freight identification and security systems, multifunctional on-board units, vehicle and cargo tracking). 196 An interviewed transport company offers a newly developed web platform as an efficiency booster built on but separated from its traditional haulage business. The platform is equipped with a series of software applications incl. loading capacity reservation (freight exchange) and vehicle tracking facilities in addition to payment facilities, etc., similar to those employed by Über Taxi or Flexibus. One thousand trucks have
194 ASMAP, e-mail information provided to the consultant, 10 May 2017 195 Forum of leaders of transport and warehouse logistics in Kiev, November 13, 2014, Http://it4m.com.ua/2014/11/13/%D0%A4%D0%BE%D1%80%D1%83%D0%BC-%D0%BB%D0%B8%D0%B4% D0% B5% D1% 80% D0% BE% D0% B2-% D1% 82% D1% 80% D0% B0% D0% BD% D1% 81% D0% BF% D0% BE% D1% 80% D1 % 82% D0% BD% D0% BE% D0% B9-% D0% B8-% D1% 81% D0% BA% D0% BB% D0% B0% D0% B4% D1% 81% D0% BA / 196 ICT service providers, http://www.kiberlog.ru/; http://tms.abmcloud.com/en/company/; http://logdep.ru
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Logistics Some seemingly strong companies, as stated in interviews, refrain from complex logistic operations considering that they should yet be familiarised with this activity. A few of these reticent operators still offer ‘broker services’ like customs clearance for third parties and consultancy in matters like warehousing and transport security, maybe an initial step towards multifaceted logistics activities. Another company visited by the consultant has developed extended warehousing activities owning and hiring modern high-storage facilities in the neighbourhood of Kiev as well as other parts of Ukraine and abroad (e.g. in Poland). For collection and distribution purposes, it uses own vehicles but allows vehicles of shippers or other transport companies have access to the warehousing system according to a pre- determined in and out schedule for means of transportation. The interviewed company implements a storage management system developed in Poland whereby warehouse workers are instructed in their daily work via hand-held barcode readers equipped with a small communication screen. For important clients 24/24-hours service on a 7/7-day basis is offered. Apart from transport by road and storage, further services are provided like customs clearance in close cooperation with inland customs offices, 24-48-72 hours delivery schedules (e.g. for e-retail services), re-packaging and product unitisation. Examples of operations performed by the visited logistics operator: - Imported bottled Borjomi water arrives from Poti, Georgia, by rail ferry to Odessa, Ukraine wherefrom it is distributed by trucks to inland destinations and abroad; a test of rail involvement in distribution was discontinued due to service quality and price (!) considerations - Sugar produced in Ukraine is transported in bulk by rail from various inland points to Odessa and carried overseas by ships - An important west-European white goods manufacturer exports its products from 29 factories to Ukraine and elsewhere in the world exclusively by trucks whereby the interviewed operator is engaged for transport and storage.
Multimodality An important Ukrainian company operating several hundreds of 40-ton road-trains had earlier been engaged in multimodal operations (international road-rail tank container movements) but these services were given up as they proved to be uneconomical from the point of view of delivery times and freight prices. Terminal networks owned by the Ukrainian Railways or in private hands may become the physical support to the development of multimodality still negligible in the country.
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One example of a network is that of the railways. The railway Centre of Transport Services LISKI (CTS LISKI) 197 was created in order to develop container transport in Ukraine (domestic and international) back in 1995. Today, "CTS LISKI is the main organiser of rail and intermodal container transport in transit, export and import using three modes of transport: railway, road and sea. Services are offered for 20 and 40-foot dry, tank and refrigerated containers. Forwarding and containerised cargo handling, modal transhipment, door-to-door services, warehousing, customs clearance, transport insurance, delivery in small consignments and the management of discarded containers complete CTS LISKI’s offers. Branches and terminals of the company are organised following the regional scheme of the Ukrainian Railways and they are located in Kiev, Kharkov, Lugansk, Donetsk, Dnepropetrovsk, Odessa and Chop Lvov. (Chart 64) Chart 64: LISKI container terminals in Ukraine 198
Reduction of Pollution at the Source Finally, as to the protection of the environment close to roads, Ukravtodor calls attention to the fact that most national roads were built several decades ago and it is difficult to implement modern standards for air pollution, noise level, vibration, road geometry and distance to populated and built-up areas. State and road users must face a common responsibility in reducing the negative impact of traffic on the environment. In order to motivate the replacement of old polluting units with more efficient and ‘greener’ lorries, the State should implement effective incentives (e.g. fiscal benefits). Actually, Verkhovna Rada has just postponed the introduction of the Euro-6 environmental standards for trucks to January 1, 2020. This will
197 Center of Transport Service "Liski" branch of the Public Joint Stock Company "Ukrainian Railways, http://www.liski.ua/en/services/15.html
198 Center of Transport Service "Liski" … (see above) 123
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199 Standard "Euro-6" will begin to operate in Ukraine in 2020, http://en.cfts.org.ua/news
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Box 1: Electric passenger cars in Ukraine200 In Ukraine 2’284 electric passenger cars have so far been registered, still representing an insignificant share of the total car fleet. The number of new registrations reached 1’591 in 2016 and 679 in January-March 2017 (over two times more than in the same period of 2016). Most of the electric cars used in Ukraine have been manufactured by Nissan (followed by Ford, Tesla, BMW and many other makes). The majority is located in the Kiev Region (23%), followed by other rich regions like Odessa (21%), Kharkov (20%), Dnepropetrovsk and Lvov. Chart 65: Number of electric passenger cars in Ukraine, 2016-17 (1st Quarter), monthly registrations and total figure
1000
Total number of electric cars in Ukraine: 2’284 394 281 199 196 202 143 153 144 109 89 89 85 100 70 62 54
10
1 2016 feb march april may june july aug sept oct nov dec 2017 feb march jan jan
The possible introduction of road user charges or tolls combined with new vehicle taxation techniques to cover externalities of road traffic is just one of the many alternative regulatory measures at hands, like the introduction of more demanding technical parameters for engines and vehicles, an accrued use of alternative fuels and energy sources, the reduction of traffic noise at source and along the roads (noise abating walls), improved vehicle maintenance and inspection schemes, enhanced driver and manager training, strictly implemented road safety requirements, better monitoring of driving times and rest periods, use of incentives for fleet renewal programmes, etc.
200 Based on information received from the Service Centre of the Ministry of Interior, 2017 April
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Road Safety – a Great Concern Table 33: Summary of Main Observations / Recommendations on Road Safety
Subject Observations / Recommendations
Safety performance Facing responsibilities in improving road safety is a joint task for all governmental and non-governmental players. The number of road fatalities per million inhabitants dropped from 119 in 2012 to 93 in 2015, still very high rates in international comparison but a positive trend. The target for 2030 is a 50 % reduction of fatalities.
Truck driver discipline The most efficient way to improve safety performance is more intensive controls and law enforcement. Beyond compliance with working / driving and rest hours, regular daily vehicle checks and maintenance as well as driver training can be very efficient to improve road safety.
Road side criminality Road side criminality may become a serious risk. Beyond reinforced police checks and patrolling, operators’ measures are also vital: satellite tracking, no drive during night hours, cautious route planning to avoid risky roads and parking sites, driver discipline.
Safety Performance Safety performance in the road transport sector is a major concern; therefore, though it is part of the triple sustainability concept presented in another chapter (‘Facilitation, Efficiency and ‘Greening the Industry’), it deserves separate examination. Facing responsibilities in improving road safety is a joint task for a number of governmental agencies, like the Ministry of Infrastructure and its subsidiary bodies, the Ministry of Health, the Ministry of Education as well as the Verkhovna Rada, not to speak about ngo-s working for the reduction of the number of fatalities and injuries caused by road accidents. The role of the educational system should also be underlined. The target for 2030 is a 50 % reduction of fatalities on the roads. 201 The total number of fatalities due to road accidents in Ukraine was over 9’000 in the years 2008-09, but as stated by Ukravtodor, in consequence of a subsequent drastic intensification of fines for traffic contraventions, this number quickly fell to 5’000 oscillating slightly under this figure ever since. Indeed, indicators show a declining trend of the number of accidents however the number of victims and in particular those killed in accidents remains very high. (Charts 66-67; details in Annex 11: Road Safety – a Great Concern’) Annual losses of Ukraine due to accidents (as per estimate of The World Bank and the World Health Organization) amount to 4-5 billion USD. Road repair and reconstruction programmes (loans) implemented by international financing institutions (The World Bank, the European Bank of Reconstruction) as well as a number of changes in legislation and the reinforcement of Ukrtransbespeka and its functions serve among other things the improvement of the safety situation. In Ukraine the number of road fatalities per million inhabitants dropped from 119 in 2012 to 93 in 2015, still very high rates in international comparison but a positive trend that should further be reinforced. The
201 National Transport Strategy 2030, draft published in June 2017 (pdf)
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EU average number of road fatalities per million inhabitants was 50 in 2016 (Poland 79, Hungary 62, Romania 97, Lithuania 85, Estonia 54, Denmark 37 and Sweden 27). 202 Chart 66: Road transport safety performance: number of accidents, a 2010-15 203
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0 … injured 0 2010 2011 2012 2013 2014 2015 a) From 2014 on, excluding the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and part of the anti-terrorist operation zone Chart 67: Road transport safety performance: number of fatalities, a 2010-15 204
Killed in accident
6000 5131 4875 4908 4833 5000 119 4439 113 114 4000 4003 112 per million inhabitants 103 3000 93
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0 2010 2011 2012 2013 2014 2015 a) From 2014 on, excluding the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and part of the anti-terrorist operation zone
202 Road Safety: Encouraging results in 2016 call for continued efforts to save lives on EU roads, European Commission, https://ec.europa.eu/transport/modes/road/news/road_safety_encouraging_results_in_2016_en 203 State Statistics Service 2017 204 State Statistics Service 2017
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Truck Driver Discipline No data are available on the involvement of goods vehicles in road accidents. In respect of commercial traffic, according to Ukravtodor, the most efficient way to improve safety performance is more intensive controls and law enforcement. Efficient intervention on the short-term is feasible by transport managers and professional drivers to avoid driver fatigue, an important cause of possible accidents, through the compliance with rules on driving times and rest periods. Companies and their drivers engaged in international operations normally obey by the provisions of the international agreement on the work of vehicle crews (UN ECE AETR) and observe legal driving hours and rest periods due to intense controlling and possible heavy sanctioning of any infringement abroad. This is not the case for domestic operations or operators (the majority of their trucks is not even equipped with digital tachographs), who do not fear sporadic road side checks and possible subsequent sanctioning which in practice can often be circumvented. As mentioned elsewhere, even law compliant companies and drivers meet tremendous difficulties in finding appropriate parking sites for rest and other needs. Beyond compliance with working / driving and rest hours, an interviewed transport company assesses regular daily vehicle checks and maintenance as well as driver training as most efficient road safety prevention measures. Another operator reports on 3-monthly in-house tests for employed drivers on their rules awareness. Driver teams of a number of transport operators participate at regional and national gymkhana championships. Such events besides promoting the case of road safety are suitable for the demonstration of driving skills and competencies and they improve the image of the driver profession.
Road-side Criminality In principle, security matters are only indirectly related to road safety issues. Road side criminality may however pose serious risks for transport operations. An interviewed company trading in high value goods carried by road across borders or in Ukraine has had to face road criminality, namely cargo and complete vehicle thefts (the first mainly abroad, the latter mostly in Ukraine). As stated elsewhere in this report, the Road Police is expected to be reconstructed and thus checks on the roads intensified in the near future. In any case, for transporting valuable cargo, cautious operators rely on the use of satellite tracking; they do not drive during night hours and apply careful route planning to avoid risky roads and parking sites.
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Conflict with the Russian Federation Table 34: Summary of Main Observations / Recommendations on Conflict with the Russian Federation
Subject Observations / Recommendations
Direct and immediate losses Human implications, forced selling of vehicles, abandoning equipped warehouses and offices.
Changes in demand and supply Industries have been interrupted and supply chains cut. Trucking has decreased by about 66 %.
Modified traffic patterns Transit through Ukraine has suffered. Transit through Russia has contracted by 35-38 % since 2013; Russian Silk Road sections have ceased to exist and substitute routes via the Caucasus region have been tested; total additional costs for the alternative route range between USD 2’900 and 4’500 for a 40-tons road train.
Russian-made vehicles used in Spare-parts supply and servicing becomes more and more complicated. important number Replacement of old vehicles by new Russian-made units is practically impossible.
The annexation of the Crimea and the occupation of the Donbas region, resulting in the de-facto isolation of the east of the country, coupled with the recent sanctions imposed by Russia on road goods traffic previously entering the territory of the Russian Federation from Ukraine has had a significant impact on the road freight transport sector.
Direct and Immediate Losses An interrogated haulier reports on dozens of trucks lost when conflict broke out in the Eastern regions. Additionally, this operator was forced to sell hundreds of vehicles as it decided to leave the conflict region with no return. Tens of thousands of square-meters of equipped warehouses and offices were left behind. Not only remaining vehicles, equipment and documentation were moved out of the conflict zone but also dozens of company managers and their families together with a great number of mechanics and drivers.
Changes in Demand and Supply On the demand side, industries have been interrupted such as mining, steel and iron production and trade relations heavily disturbed leading to dwindling export, import and transit activities in-between the regions concerned not counting between Ukraine and the Russian Federation. On the supply side, previously integrated supply chains have been cut, trucking activities to and from the Crimea and the conflict-hit regions as well as in the latter territories have dramatically decreased (by about 66 % according to verbal information from the State Statistics Service), reporting lines between economic entities in the conflict zones and central organs have been broken.
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Modified Traffic Patterns Transit through Ukraine has suffered tremendously due to the conflict: West-East transit has practically ceased to exist and whatever remained is carried almost exclusively in the North-South direction. 205 Most UA hauliers try to avoid entering conflict zones and they apply a 100 km long “no-go radius” in their daily route planning and transport operations as declared by interviewed operators. This is how they try to protect drivers, cargo and vehicles, the latter among other things being an easy target for confiscation by armed forces. A transport company reports on moving its vehicles in convoys in Ukraine (and in some foreign countries considered being less secured than other ones). These convoyed vehicles normally carry hazardous cargo but they still enter the Ukraine-controlled zones of the conflict regions. No incident has happened yet thanks to the company’s ‘own intelligence service’. Earlier, the same company carrying export-import cargo between the Eastern regions of the country and abroad, conducted important transit traffic through Ukraine to Russia and via Russia to Central Asia (previously 95 % of all its activities). These transit operations had to be completely abandoned. In general, transport operations conducted by Ukrainian hauliers to / from and in transit through Russia have contracted by 35-38 % since 2013. 206 For Ukrainian transport companies, Russian Silk Road sections have ceased to exist and substitute routes via the Caucasus region have been searched (see Chart 68). If in exceptional cases a transit operation is undertaken via Russia to Central Asian countries, entering Russian territory is possible only via Belarus.207 Otherwise, ferry lines across the Black Sea to Georgia, From Georgia following the land route to Azerbaijan and from there ferrying across the Caspian Sea is the only physically viable land transport option. Economically, however, this option is not viable as costs are much higher than across Russia due to longer distances, expensive as well as time consuming transport technology as well as the complete loss of Russian return cargo back to Ukraine. Considering a trip by truck (40-ton road train) on board a ferry from Port of Illichivsk (UA) to Poti / Batumi (GEO), the land route from Poti / Batumi (GEO) to Baku (AZB), the second sea ferry route from Baku (AZB) to Aktau (KAZ), total additional costs for the alternative route range from USD 2’900 to 4’500. 208
Simultaneously to road freight operations along the new routes, railway trains have also tested similar alternative routing bypassing the territory of the Russian Federation through Georgia, Azerbaijan and Kazakhstan to China. A test train ran along this route early 2016 and it proved to be more time consuming than planned due to delays during sea crossing and also on land sections. 209 In view of the major obstacles caused by Russia closing its borders to trucks and trains from Ukraine, ‘Ukraine addressed a meeting of the World Trade Organization’s Dispute Settlement Body … demanding
205 As a matter of fact, not all blame for the loss of transit cargo through Ukraine can be put on the conflict with the Russian Federation. ‘We recently asked a cargo owner what needed to be done to redirect his cargo through Ukraine. He replied very frankly that he would consider such possibilities if our rates were lower.’ What Needs To Be Done To Launch Alternative Transit Routes, 24 February 2016, Yurii Vaskov, http://en.cfts.org.ua/experts_cts/what_needs_to_be_done_to_launch_alternative_transit_routes 206 State Statistics Service, https://ukrstat.org/en 207 Transit cargo from Ukraine to Kazakhstan via Russia will be carried out through Belarus in sealed load compartments, InterFax-Ukraina Information Agency, 01.01.2016, Http://interfax.com.ua/news/economic/315213.html 208 How much is an alternative way of delivery of goods from Ukraine to Kazakhstan?, National Chamber of Companies, Kazakhstan, 29 July 2016, http://palata.kz/ru/news/23471-skol-ko-stoit-al-ternativnyj-put-dostavki-gruzov-iz-ukrainy-v-kazahstan 209 The first train on the "Silk Road" from Ukraine, bypassing the Russian Federation, arrived in China, CensorNet UA, 01.02.2016 http://censor.net.ua/news/372046/pervyyi_poezd_po_shelkovomu_puti_iz_ukrainy_v_obhod_rf_pribyl_v_kitayi 130
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It is not easy for Ukrainian transport operators involved in international activities to re-profile their market pattern as parallel to Russian borders closing-down, a number of EU and non-EU countries impose a series of restrictions on Ukrainian companies in the form of permits, quotas, limitations of using the ‘liberal’ ECMT permits, minimum wage requirements for drivers, tolls and road user charges, etc.
Russian-made Vehicles There is a special impact of the conflict on vehicle fleet renewal in Ukraine. In Ukrainian fleets of today, many of the completely out-dated, old Soviet-Russian vehicles are still in use. Spare-parts supply and servicing becomes more and more complicated due to restrictions imposed on trade between the two countries. Replacement of old vehicles by new Russian-made vehicles is practically impossible though service stations, garages and know-how are still there to keep such models in life. Indeed, the purchase of new Russian trucks is prohibited due to Ukraine boycotting the import of any product emanating from military-related industries in Russia. As most Russian commercial vehicle manufacturers (UAZ, GAZ, KAMAZ) belong to military-industrial conglomerates, whether wanted or not, instead of importing well-known Russian models, even domestic operators are obliged to switch to more expensive Western, Chinese or any other models. Internationally active operators are already accustomed to this situation as for them this change took place a number of years ago. The domestic network of service
210 Ukraine Addresses WTO In Case Involving Transit Conflict with Russia, Centre for Transport Strategies, 22 February 2017 http://en.cfts.org.ua/news/ukraine_addresses_wto_in_case_involving_transit_conflict_with_russia 211 Policy and Strategy of Ukraine for transport corridors development via Ukraine; Realisation of transport initiatives, such as "One belt – one road" and Baltic Sea –Black Sea– Caspian Sea Volodymyr Omelyan, Minister of Infrastructure of Ukraine, http://mtu.gov.ua/files/1.%20OMELYAN.pdf
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Survey on the Road Freight Transport Sector in Ukraine 2017 – Summary of Results Table 35: Survey on the Road Freight Transport Sector in Ukraine 2017 – Summary of Results
Summary of Results Participation was much higher than expected. Survey results confirm study findings in respect of
Dominance of small hauliers regional concentration of domestic road freight transport activities domestic and international trip distance empty share of domestic and international operations (future surveys should be refined on this issue) driver shortage share of overloaded vehicles competition on the road freight market limited access to financing to renew/develop fleets road safety Survey results and study findings should further be analysed / verified regarding
partner country ranking in international traffic total annual km performance in domestic as well as international transport (future surveys should be refined on this issue) market prospects extent of corruption extent of using modern tools supporting operational sustainability costs and tariffs
Participation was much higher than expected (134 entrepreneurs). Almost 70 % of the respondents are professional hauliers. Vehicle fleet, employee and turn-over data of survey respondents confirm that the sector is dominated by small operators. Almost half of all respondents carry out / mandate mainly domestic operations. The palette of commodities carried is relatively evenly distributed among the six commodity categories investigated. The dominant type of cargo is agricultural and food products (more than 20 %). Choices of Survey respondents partially confirm the findings of the study on the concentration of domestic road freight transport activities by region. Regarding international traffic, the respondents’ country choices basically reflect the list of most important trading partners of Ukraine as well as the most important border crossing points of the country as identified in the study except for Romania’s strong first position in the Survey. The domestic and international trip distance value (400 km and more than 1’000 km respectively) reported by respondents corresponds to the findings of the study. The total annual km performance in domestic as well as international transport per vehicle reported does not reflect realities: a very high share of choices falls into the unrealistic annual mileage class of more than 300’000 km/year/vehicles. The empty share of domestic and international operations is estimated to be less than 20 %. This value is close to the study finding based on interviews. Survey confirms the findings of the study on the seriousness of driver shortage and the less preoccupying situation regarding managers.
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Almost 38 % of all respondents believe that the share of overloaded vehicles is over 30 % on roads in UA. Survey results thus confirm findings of the study on the seriousness of overloading practices in the country. Respondents believe that the use of more stationary or mobile weight control stations combined with more stringent sanctioning is the most effective means to fight back overloading practices. The general view is that most important competitors in domestic and international traffic are Ukrainian fellow operators (view of 50 % of all operators) followed by logistics operators. These results correspond to findings of the study. As to general market expectations, most operators believe that competition from other domestic hauliers as well as foreign operators will increase most importantly. In general, results of the Survey seem to be more optimistic about short term market prospects than findings of the study. A very important share of respondents think that corruption related to road-side checks and permit / licence management is not a daily phenomenon; a view less critical than found in the study. An overwhelming majority of operators reports about limited access to sufficient financing to renew / develop vehicle fleets. Respondents’ basic choice is outright purchase from own. Survey results confirm findings of the study. A great majority of respondents (62 %) have not invested in the renewal or development of their fleet at all since January 2015. Almost half of the respondents (48 %) do not acquire any vehicles in 2017-18. These results confirm the pessimistic scenario of fleet renewal prospects presented in the study. Some of the modern tools supporting operational sustainability seem to have already been put into use by a majority of respondents: e.g. fuel consumption tracking is in place with 77 % of the respondents, 64 % of them use today e-tracking of cargo and vehicle as well as route optimization tools. This part of Survey results is more positive than findings of the study. Survey results for domestic operations show a cost rate of 10.2 UAH / km and a tariff of 11.5 UAH/km for vehicles with a laden weight of 7.5 tons. The cost rate for 40-ton laden weight vehicles has been reported to be 18.1 UAH/km with a lower (!) tariff of 16.1 UAH/km; an information that needs additional clarification. Regarding international rates, the cost rate for a 40-ton laden weight unit is 24.3 UAH/km compared to the tariff rate of 34.4 UAH/km. There are a number of discrepancies between Survey results and study findings that merit further investigation. The most promising action to increase vehicle use efficiency is driver training. Survey results confirm study findings. On-line freight exchanges seem to be most appreciated to try to minimize empty trips. Study findings reflect more reserves in respect of using on-line freight exchanges. A very high share of vehicles of respondents has been involved in at least one or even 2-5 accidents in 2016-17. These figures confirm information about the present poor state of road safety highlighted in the study. Survey participants give much preference to the strict application of regular vehicle maintenance to reduce the number of road accidents. This is followed by compliance with regulations on driving times and rest periods and driver training in harmony with study findings. Annex 12 of the Report contains all charts and data tables as well as the full databank of the Survey. xxx
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Annexes
Annex 1: On-going Reforms
Annex 2: Institutional Structure of Governing Bodies and Public Partners
Annex 3: Transport Demand Drivers – Production & Trade
Annex 4: Transport Network Geography and Main Features
Annex 5: Freight Transport Modal Split and Road Traffic Patterns
Annex 6: Structure of the Trucking Industry
Annex 7: Costs and Tariffs
Annex 8: Average Distances and Empty Runs
Annex 9: Labour Market Developments
Annex 10: Facilitation, Efficiency and ‘Greening the Industry’
Annex 11: Road Safety – a Great Concern
Annex 12: Survey on the Road Freight Transport Sector in Ukraine 2017
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Charts, Tables and Boxes
Charts Chart 1: Planned Operator Licence Management Processes in Ukraine Chart 2: Governmental structure supervising the road transport industry Chart 3: Geographic and Political Maps of Ukraine Chart 4: Ukraine’s GDP, share of transportation and storage, 2010-16, billion USD and %, current prices Chart 5: Development of GDP per capita in USD, current prices, 2010-15 Chart 6: Ukraine’s export, import and total trade with the World, USD bn, 2011-16 Chart 7: Turnover of retail trade by regions, 2015, million UAH and % Chart 8: International transport corridors in Ukraine Chart 9: International goods transport flow across the borders of Ukraine by modes of transport, 2014, 1’000 tons Chart 10: All road goods transport vehicles by border sections, in both export and import directions, (no distinction made between UA and foreign vehicles), number of vehicles, 2000-14 Chart 11: Domestic transport modal split in Ukraine, 2010-15, million tons Chart 12: Domestic transport modal split in Ukraine, 2010-15, million ton-km Chart 13: Volume of cargo carried by road freight transport split by form of undertaking, 2010-14, million tons Chart 14: Volume of cargo carried by road freight transport broken down by form of undertaking, 2014, million tons and % Chart 15: Main commodities carried by domestic road transport companies (legal persons), 2016, 1’000 tons and % Chart 16: Main commodities carried by rail, 2016, million tons and % Chart 17: Regions in order of cargo volume moved by road, million tons, total (incl. hire & reward by companies and FOPs & OAT), 2014 Chart 18: Regions in order of road freight transport, million ton-km, total (incl. hire & reward by companies and FOPs & OAT), 2014 Chart 19: Highways of international importance in Ukraine Chart 20: Average daily traffic (ADT) of trucks and all vehicles on international highways, number, 2016 Chart 21: Average daily traffic (ADT) of trucks on international highways, number, roads in order of truck ADT, 2016 Chart 22: Proportion of trucks in ADT on international highways, %, 2016 Chart 23: Map of total traffic on international highways, 2016 Chart 24: Map of total truck traffic on international highways, 2016 Chart 25: Most frequented border crossing points for trucks Chart 26: Most important road border crossing points, export-import directions, net tons, 2015 Chart 27: Leading partner countries with highest border crossing road freight traffic, export-import directions, net tons, 2015 Chart 28: Number of operator licenses issued in road freight transport compared to number of all hauliers (legal and physical entities without OAT), 2017 Chart 29: Number of licensed legal entities by main economic activities in road transport and related areas as well as other freight transport modes, April 2017 Chart 30: Transport companies (licensed legal entities), by number of employed workers in certain types of economic activity, number of units, 2015 Chart 31: Transport companies (licensed legal entities), by number of employed workers in certain types of economic activity, %, 2015 Chart 32: Transport companies by size of annual turn-over in certain types of economic activities (licensed legal entities), million Euros, number of units, 2015 Chart 33: Transport companies by size of annual turn-over in certain types of economic activities (licensed legal entities), million Euros, %, 2015 Chart 34: Development of the total truck fleet, 1’000 vehicles, 2000-16 Chart 35: Types of trucks, 1’000 vehicles, 2000-16 Chart 36: Distribution of ‘special goods vehicles’, number of units, 2014 Chart 37: Share of privately owned trucks in 2000 and 2011, number, % Chart 38: Number of trucks owned by transport companies (legal entities) and individual entrepreneurs (physical persons), 2015- 16, 1’000 vehicles Chart 39: Age distribution of vehicles, vehicle types, number of units, 2014 (State Statistics Service) Chart 40: Age distribution of vehicles, %, 2014 (State Statistics Service) Chart 41: Age distribution of vehicles, %, 2015-16 (Service Centre of the Ministry of Interior) Chart 42: Age of railway rolling stock by type of vehicles, %, 2014 Chart 43: Distribution of trucks and road trains by total laden weight, tons, %, 2016 Chart 44: Goods vehicles by manufacturer, number of vehicles and %, 2014
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Chart 45: Distribution of trucks by region, 1’000 units, 2016 Chart 46: Average costs and tariffs, UAH/km, 40-ton vehicle, April 2017 Chart 47: Domestic road freight rates by transport distance; heavy, medium and light trucks, UAH / km, 9-10 May 2017 Chart 48: International road freight rates applied between Poland and Ukraine, by transport distance and direction of traffic, UAH / km, 9-10 May 2017 Chart 49: Average road freight tariffs in six geographic relations, UAH / km, 9 May 2017 Chart 50: Intermodal tariff comparison for a few domestic and international relations, UAH / ton, 2017 Chart 51: Distribution of costs of operation a, 40-ton vehicle, April 2017 Chart 52: Average annual mileage, round trip distance, interviewed operators, heavy goods vehicles, km and 100 km, April 2017 Chart 53: Average transport distance by rail and road freight transport, 2000-14 Chart 54: Share of empty trips and number of monthly trips, interviewed operators, % and numbers, April 2017 Chart 55: Total mileage of trucks operated by companies (legal persons), incl. loaded share, by regions, 1’000 km, 2014 Chart 56: Proportion of loaded and unloaded total mileage of trucks operated by companies (legal persons), %, 2014 Chart 57: Average number of full-time employees, 1’000 persons, 2010-14 Chart 58: Employment of drivers and workers servicing motor vehicles, total number, 1’000 persons, 2011-16 Chart 59: Employment of drivers and workers servicing motor vehicles, distribution by age groups, 1’000 persons, 2011-16 Chart 60: Employment of drivers and workers servicing motor vehicles, distribution by regions, 2016 compared to 2011, % Chart 61: Logistics Performance Index (LPI): Ukraine compared to India, the top performer in its income group, 2016 Chart 62: Logistics Performance Index (LPI): Ukraine compared to Germany, the top performer in the world in 2016 Chart 63: Logistics Performance Index (LPI): Ukraine compared to Europe and Central Asia, 2016 Chart 64: LISKI container terminals in Ukraine Chart 65: Number of electric passenger cars in Ukraine, 2016-17 (1st Quarter), monthly registrations and total figure Chart 66: Road transport safety performance: number of accidents, 2010-15 Chart 67: Road transport safety performance: number of fatalities, 2010-15 Chart 68: New routes to Asia under investigation
Tables Table 1: Summary of Main Observations / Recommendations on the Method of Work Table 2: Summary of Data Collection Difficulties – Proposed Improvement Measures Table 3: Summary of Main Observations / Recommendations on the Transport Strategy Table 4: Summary of Main Observations / Recommendations on the UA-EU Association Agreement Table 5: Summary of Main Observations / Recommendations on National Law in Force Table 6: Summary of Main Observations / Recommendations on the International Legal Framework Table 7: Ukraine’s status in respect of the UN ECE conventions Table 8: Summary of Main Observations / Recommendations on Bilateral Road Freight Transport Agreements Table 9: Summary of Main Observations / Recommendations on Multilateral Market Access Regulation Table 10: Summary of Main Observations / Recommendations on the Domestic Legal Framework Table 11: Summary of Main Observations / Recommendations on the Institutional Structure Table 12: Summary of Main Observations / Recommendations on Transport Demand Drivers – Production & Trade Table 13: Summary of Main Observations / Recommendations on Transport Network Geography and Main Features Table 14: Summary of Main Observations / Recommendations on Freight Transport Modal Split and Road Traffic Patterns Table 15: Highways of international importance in Ukraine Table 16: Roads mostly used by trucks as per interviews Table 17: Most frequented border crossing points for trucks Table 18: Summary of Main Observations / Recommendations on Border Crossing Problems Table 19: Summary of Main Observations / Recommendations on the Structure of the Trucking Industry Table 20: Summary of Main Observations / Recommendations on Corruption Table 21: Summary of Main Observations / Recommendations on Informality in the Trucking Industry Table 22: Informality and corruption features in Ukraine, 2002-13 Table 23: Summary of Main Observations / Recommendations on Own-Account Transport (OAT) Table 24: Summary of Main Observations / Recommendations on Traffic Controls, Roads and Road Users Table 25: Road side checks and inspection at company premises conducted by the State Service for Transport Safety Ukrtransbespeka Table 26: Summary of Main Observations / Recommendations on Transport Market Developments Table 27: Freight exchanges in the region Table 28: Summary of Main Observations / Recommendations on Fleet Development Table 29: Summary of Main Observations / Recommendations on Costs and Tariffs Table 30: Summary of Main Observations / Recommendations on Average Distances and Empty Runs
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Table 31: Summary of Main Observations / Recommendations on Labour Market Developments Table 32: Summary of Main Observations / Recommendations on Facilitation, Efficiency and ‘Greening the Industry’ Table 33: Summary of Main Observations / Recommendations on Road Safety Table 34: Summary of Main Observations / Recommendations on Conflict with the Russian Federation Table 35: Survey on the Road Freight Transport Sector in Ukraine 2017 – Summary of Results
Boxes
Box 1: Electric passenger cars in Ukraine Sources 1. Terms of Reference (TOR) of the present study issued by the competent service of The World Bank, 13 March 2017 2. Development of national policy on regulation of road transport CO2 emissions and energy consumption in Ukraine, Produced as part of Clima East Expert Facility assignment CEEF2015-043-UA: “Development of potential in the elaboration of National policy on regulation of CO2 emissions and energy consumption by road transport”, Final Report, 28 October 2016 3. Republic of Ukraine Transport Sector Review, Volume 1: Policy Note; World Bank, November 30, 1998, Report No. 18636- UA 4. Road Sector Development Project, The World Bank, http://projects.worldbank.org/P149322?lang=en 5. Cabinet of Ministers of Ukraine Instruction No 2174-r dated October 20th 2010 Kiev on approving the Transport Strategy of Ukraine for the period of up to 2020 6. National Transport Strategy of Ukraine 2030, Draft, June 2017 7. Speech of the Minister of Infrastructure of Ukraine Volodymyr Omelyan within the Global Conference for Sustainable Transport (26.11.2016, Ashgabat) 8. Resolution of the XVII IRU – ASMAP UA International Conference on International Road Transport: Problems, Solutions, Prospects, Kiev, Ukraine, 20 October 2016 9. Unanswered Questions: How Ukraine’s Transport Strategy Was Discussed, http://en.cfts.org.ua/articles/unanswered_questions_how_ukraines_transport_strategy_was_discussed 10. A short summary of the public debate on the preparation of Ukraine’s National Transport Strategy: general phrases instead of concrete figures, Olga Bystritska, 06 December 2016 11. A Review of 2016 in the Transport Industry Infrastructure: interview with Minister Volodymyr Omelyan on the achievements of the transport industry in 2016; Olga Bystritska 23 January 2017 http://en.cfts.org.ua/articles/a_review_of_2016_in_the_transport_industry 12. Update/Upgrade National Transport Strategy 2030 Part 2 : Transport Sector Analysis, Dornier, Expertise France, egis International, September 2016 13. Intermodal Transport Operations in and with Turkey, OECD/ITF, 2009, https://books.google.ch/books?id=C- _saXSePq0C&pg=PA101&lpg=PA101&dq=ITF+multimodal+transport+definition&source=bl&ots=ML8AS7AeRL&sig=N3nqP myfQL3oyte9Kfy4W- SLEkc&hl=fr&sa=X&ved=0ahUKEwj237CSgoPUAhWrA5oKHfmvD8MQ6AEILTAB#v=onepage&q=ITF%20multimodal%20tran sport%20definition&f=false 14. Ukraine and EU start transport dialogue, 16 January 2017, http://mtu.gov.ua/en/timeline/Mizhnarodni-zvyazki.html 15. Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the other part; 29.5.2014 Official Journal of the European Union L 161/3 16. Progress in Implementation of the EU-UA Association Agreement on Transport Issues in 2015, Maya Koshman Director of the International Cooperation Department of the Ministry of Infrastructure of Ukraine, Slide Presentation, 2015 17. Law of Ukraine on motor transport, http://zakon2.rada.gov.ua/laws/show/2344-14 18. Law of Ukraine on transport-forwarding, http://cis-legislation.com/document.fwx?rgn=16938 19. Resolution on licencing, http://zakon3.rada.gov.ua/laws/show/1001-2015-%D0%BF 20. Law on dangerous goods transport, http://zakon2.rada.gov.ua/laws/show/1644-14 21. Law of Ukraine on large and heavy vehicles, http://zakon3.rada.gov.ua/laws/show/30-2001-%D0%BF 22. Resolution on the preservation of public roads, http://zakon3.rada.gov.ua/laws/show/879-2007-%D0%BF 23. Resolution on state inspection, http://zakon2.rada.gov.ua/laws/show/1567-2006-%D0%BF 24. Regulation on classifying business entities by risks, http://zakon2.rada.gov.ua/laws/show/790-2008-%D0%BF 25. Code of Administrative offences http://zakon2.rada.gov.ua/laws/show/80731-10 26. Decree on Ukrtransbezpeka, http://zakon3.rada.gov.ua/laws/show/103-2015-%D0%BF 27. Decree on Ukrtranspezbeka’s admin services, http://zakon3.rada.gov.ua/laws/show/929-2011-%D0%BF 28. Decree of international permits, http://zakon2.rada.gov.ua/laws/show/z1075-04
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29. Customs Code http://zakon2.rada.gov.ua/laws/show/4495-17 30. Law on transit, http://zakon3.rada.gov.ua/laws/show/1172-14 31. Decree on technical control, http://zakon3.rada.gov.ua/laws/show/137-2012-%D0%BF 32. Order on tachographs, http://zakon3.rada.gov.ua/laws/show/z0946-10 33. Order on working and rest periods, http://zakon3.rada.gov.ua/laws/show/z0811-10 34. Decree on driving licences, http://zakon2.rada.gov.ua/laws/show/47-92-%D0%BF 35. Decree on the issuance … of driving licences, http://zakon3.rada.gov.ua/laws/show/340-93-%D0%BF 36. UN ECE Agreements and Conventions, http://www.unece.org/fileadmin/DAM/trans/conventn/agree_e.pdf 37. ‘Support to the Implementation of the Association Agreement and of the National Strategy in the Transport Sector in Ukraine’, Project funded by the European Union, May 2017 38. Draft resolution of the Cabinet of Ministers on amendments to the licensing conditions of economic activities like the transportation of passenger, dangerous goods and hazardous waste as well as international transport of passengers and goods by road (manuscript) 39. Manuscript: draft order of the Ministry of Infrastructure of Ukraine on tendering and issuing permits European Conference of Ministers of Transport 40. Concept on a Draft Law, Support to The Implementation of The Association Agreement , and of The National Strategy in The Transport Sector In Ukraine, A project implemented by Dornier Consulting International in consortium with Egis International / Expertise Francais , This project is funded by The European Union The European Union’s ENPI program for Ukraine 41. Law of Ukraine on temporary measures in respect of State Inspection of economic activity; Bulletin of the Verkhovna Rada, 2017, number 4, article 37, http://zakon.rada.gov.ua/laws/show/1728-19 42. Doing Business in Ukraine 2015, © Brussels Worldwide Services BVBA, April 2015 43. Google https://www.google.ch/maps/place/Ukraine/@49.6094051,26.0357305,6z/data=!4m5!3m4!1s0x40d1d9c154700e8f:0x10 68488f64010!8m2!3d48.379433!4d31.16558?hl=fr and https://www.google.ch/search?q=regions+in+ukraine&hl=fr&rlz=1T4ADRA_enHU412FR415&tbm=isch&imgil=qP51SGRTP HSEkM%253A%253BZSFuLsXBpB9r0M%253Bhttp%25253A%25252F%25252Fwww.infoukes.com%25252Fukremb%25252F mappuzzle.html&source=iu&pf=m&fir=qP51SGRTPHSEkM%253A%252CZSFuLsXBpB9r0M%252C_&usg=__g0ZIh5nmFVTzJ6 QE_BeZl7mfros%3D&biw=1440&bih=773&ved=0ahUKEwiAraSy4IbUAhUJb5oKHZcHDlIQyjcIWw&ei=540kWcCdHIne6QSXj7 iQBQ#imgrc=qP51SGRTPHSEkM:&spf=1495567837852 44. State Statistics Service, https://ukrstat.org/en/ 45. An overview of The World Bank’s work in Ukraine, Ukraine Snapshot Final, World Bank October 2016, http://www.worldbank.org/en/country/ukraine/ 46. National Transport Strategy 2030, draft published in June 2017 (pdf) 47. Ukraine Economic Update, September 22, 2016, The World Bank, www.worldbank.org/ua 48. WITS, The World Bank, 2015, http://wits.worldbank.org/countrysnapshot/en/UKR 49. Ministry of Infrastructure of Ukraine, http://www.mtu.gov.ua/en/content/investoru.html 50. Letter from the State Fiscal Services to The World Bank, 15 June 2017 51. Number of road freight transport operators by number of employees, EU, Eurostat http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=road_ec_entemp&lang=fr 52. Update/Upgrade National Transport Strategy 2030 Part 2 : Transport Sector Analysis, Dornier, Expertise France, egis International, September 2016 53. Transportation balance of Ukraine 2013/2014, Alexander Gusev, Lead Consultant of Transactions Support Department at Baker Tilly, An independent member of Baker Tilly International 54. Highway map, https://www.google.ch/search?q=M- 04+road+Ukraine&hl=fr&rlz=1T4ADRA_enHU412FR415&tbm=isch&imgil=5YagbVDFcExkYM%253A%253BsSYaTuJodtw- 3M%253Bhttps%25253A%25252F%25252Fen.wikipedia.org%25252Fwiki%25252FHighway_M04_(Ukraine)&source=iu&pf =m&fir=5YagbVDFcExkYM%253A%252CsSYaTuJodtw-3M%252C_&usg=__c8AWwKu8cDWXDvJ2SUIM1- yd0As%3D&biw=1440&bih=773&ved=0ahUKEwjgk- vdwY3UAhVEDCwKHUExCBcQyjcIOw&ei=RxkoWaDUHMSYsAHB4qC4AQ#imgrc=CY19LoMafEeK_M:&spf=1495800127128 and http://mtu.gov.ua/intermap/# 55. Ukravtodor traffic counts and estimations, 2016-17 56. CFTS-Consulting, Kiev, 2015 57. State Border Guard Service of Ukraine, http://dpsu.gov.ua/ua/map/ 58. ASMAP’s direct written input to the present study, June, 2017 59. Ministry of Infrastructure, http://mtu.gov.ua/content/statistichni-dani-po-galuzi-avtomobilnogo-transportu.html , 7 May 2017 60. Service Centre of the Ministry of Interior (data received by correspondence), June 2017
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61. Kremenchuk Automobile Plant AvtoKrAZ, http://www.autokraz.com.ua/index.php/en/fabrication/automobile/civil 62. Ukraine took the first place in the world on corruption in business, EurAsia Daily, 10 April 2017, https://eadaily.com/ru/news/2017/04/10/ukraina-zanyala-pervoe-mesto-v-mire-po-korrupcii-v-biznese 63. Corruption in transport is indestructible? Narodnyi Korrespondent, 25.10.2015, Http://nk.org.ua/obshchestvo/korruptsiya-na-transporte-neistrebima-28029 64. Ports of Ukraine are "stoked" in corruption, Argument, March 2017, Http://argumentua.com/stati/porty-ukrainy-topyat- v-korruptsii 65. Ukraine, World Bank, http://data.worldbank.org/country/ukraine 66. Head of Ukrtransinspection promises to confiscate transport from illegal carriers, 03 April 2014, 67. https://delo.ua/business/glava-ukrtransinspekcii-obeschaet-konfiskovat-transport-u-neleg-232193/ © delo.ua 68. Ukraine: more than 500 illegal gas stations in Kiev, 06/13/2016, Http://transukr.dp.ua/2016/06/13/ukraina-v-kieve-bolee- 500-nelegalnyx-gazovyx-zapravok.html 69. In the Chernivtsi region, transport was detained with 10 tons of illegal alcohol, Kiev, April 13, 2017 - AIF-Ukraine, Http://www.aif.ua/society/law/v_chernovickoy_oblasti_zaderzhali_transport_s_10_tonnami_nelegalnogo_spirta 70. Chernivtsi customs officers detained a consignment of consumer goods worth 8.3 million UAH, Depo UA, April 27, 2017, http://odesa.depo.ua/rus/chernovtsy/chernivecki-mitniki-zatrimali-partiyu-tovariv-narodnogo-vzhitku-vartistyu-8-3-mln- grn-20170427563455Http://odesa.depo.ua/eng/chernovtsy/chernivecki-mitniki-zatrimali-partiyu-tovariv-narodnogo- vzhitku-vartistyu-8-3-mln-grn-20170427563455 71. Electronic Public Road Trade Control System, launched by the National Tax and Customs Administration in Hungary on 1 January 2015, https://ekaer.nav.gov.hu/ 72. Degree of Vehicle Overloading and its Implication on Road Safety in Developing Countries, Mohamed Rehan Karim1*, Ahmad Saifizul Abdullah1, Hideo Yamanaka2, Airul Sharizli Abdullah1, Rahizar Ramli1, Civil and Environmental Research www.iiste.org, ISSN 2224-5790 (Paper) ISSN 2225-0514 (Online), Vol.3, No.12, 2013, http://www.iiste.org/Journals/index.php/CER/article/viewFile/8636/8832 73. Pavement interactive, http://www.pavementinteractive.org/equivalent-single-axle-load/ 74. Limit truck overloading: a first step to improve the state of our roads, Larry Herman, 6 Apr, 2016 http://www.speed- program.com/blogs/by-author/larry-herman/limit-truck-overloading-a-first-step-to-improve-the-state-of-our-roads 75. Weight control station on M7 at Zalakomári, April 2016, http://hungarokamion.hu/2016/04/10/tengelysuly-es-ossztomeg- meroallomas-letesul-az-m7-es-autopalyan-zalakomarinal/ 76. What awaits Ukrainian's truckers with overweight, Yuri Gogolev, 05/16/2016, https://www.autocentre.ua/ 77. (During this special inspection exercise penalties were imposed on truckers for overload according to the Decree of the Cabinet of Ministers of June 27, 2007 No. 879.) 78. Interfreight, October 2015, http://www.interfreight.biz/en/o-kompanii/zhizn-kompanii/343-perspektivy-razvitiya- avtomobilnykh-perevozok-v-mire.html 79. Freight market - an indicator of the economy; Is the cargo transportation market developing in Ukraine?, 08/19/2016, Logist.FM Http://logist.fm/publications/rynok-gruzoperevozok-indikator-ekonomiki 80. What is happening on the logistics market in Ukraine, UkrAgroConsult, 03/25/2016 http://www.ukragroconsult.com/news/chem-zhivet-rynok-logistiki-v-ukraine 81. ‘Perevozki – nasha zhizny’, http://logistic-life.blogspot.fr/2012/11/transportniebirzhi.html 82. Della Trans, http://www.della-ua.com/cost/local/ , 27 March, 9 May 2017 83. Ukraine -Grain Logistics, March 24, 2015 (Maurizio Guadagni, World Bank, Agriculture Global Practice; Maria Claudia Pachon, World Bank, Transport Global Practice; Aliya Karakulova, World Bank, Transport Global Practice; Oleg Nivyevskiy, World Bank, Agriculture Global Practice; Andrii Shkliar, Centre for Transport Strategies (CfTS); Dmitry Prikhodko, FAO; RodionRybchynskyi, APKInform) 84. Road transport by type of operation – EU, http://ec.europa.eu/eurostat/statistics- explained/index.php/Road_freight_transport_by_journey_characteristics#Road_transport_by_type_of_operation 85. Bigmir.net, 22.12.16, http://finance.bigmir.net/career/77106-Vyrosli-zarplaty-i-trebovanija--kakim-byl-rynok-truda-v-2016- godu 86. Who earns the most and what surprises await in 2017: the situation in the labour market, Segodnnya, 7-December-2016, Http://www.segodnya.ua/life/work/kto-zarabatyvaet-bolshe-vseh-i-kakie-zhdut-syurprizy-v-2017-m-situaciya-na-rynke- truda-776756.html 87. The labor market in Poland lacks 100’000 professional drivers, 18.01.2017, JDM Ukraine, http://ru.jdm- ukraine.com/news/rynok-truda-polshi-ispytyvaet-nedostatok-100-000-professionalnyh-voditelej 88. Ukraine to promote IRU Academy training as key quality benchmark, IRU, 5 Oct 2016 https://www.iru.org/resources/newsroom/ukraine-promote-iru-academy-training-key-quality-benchmark 89. International transport with the receipt of the International IRU Certificate, Odessa Region State Training Centre http://avtokursi.com.ua/page.php?post=kod95_mezhdunarodnie_perevozki_s_polucheniem_mezhdunarodnogo_sertifika ta_iru
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90. ADR training in Ukraine, https://www.labadr.com.ua/Sprav/perevozochnye-dokumenty/dopog-svidetelstvo-o-podgotovke- voditelej-transportnyx-sredstv-perevozyashhix-opasnye-gruzy/ 91. Gruz-xatt - freight transport by road, Http://gruz- xatt.com/publ/osobennosti_perevozki_gruzov/osobennosti_perevozki_gruzov/podgotovka_voditelej_k_perevozke_opasn ykh_gruzov_i_spisok_uchebnykh_centrov_adr_v_ukraine/8-1-0-188 92. Logistics Performance Index, The World Bank, http://lpi.worldbank.org/international/scorecard/radar/254/C/UKR/2016/C/IND/2016#chartarea 93. Forum of leaders of transport and warehouse logistics in Kiev, November 13, 2014, Http://it4m.com.ua/2014/11/13/%D0%A4%D0%BE%D1%80%D1%83%D0%BC-%D0%BB%D0%B8%D0%B4% D0% B5% D1% 80% D0% BE% D0% B2-% D1% 82% D1% 80% D0% B0% D0% BD% D1% 81% D0% BF% D0% BE% D1% 80% D1 % 82% D0% BD% D0% BE% D0% B9-% D0% B8-% D1% 81% D0% BA% D0% BB% D0% B0% D0% B4% D1% 81% D0% BA / 94. ICT service providers, http://www.kiberlog.ru/; http://tms.abmcloud.com/en/company/; http://logdep.ru 95. Center of Transport Service "Liski" branch of the Public Joint Stock Company "Ukrainian Railways, 96. http://www.liski.ua/en/services/15.html 97. Standard "Euro-6" will begin to operate in Ukraine in 2020, http://en.cfts.org.ua/news 98. Road Safety: Encouraging results in 2016 call for continued efforts to save lives on EU roads, European Commission, https://ec.europa.eu/transport/modes/road/news/road_safety_encouraging_results_in_2016_en 99. What Needs To Be Done To Launch Alternative Transit Routes, 24 February 2016, Yurii Vaskov, http://en.cfts.org.ua/experts_cts/what_needs_to_be_done_to_launch_alternative_transit_routes 100. Transit cargo from Ukraine to Kazakhstan via Russia will be carried out through Belarus in sealed load compartments, InterFax-Ukraina Information Agency, 01.01.2016, Http://interfax.com.ua/news/economic/315213.html 101. How much is an alternative way of delivery of goods from Ukraine to Kazakhstan?, National Chamber of Companies, Kazakhstan, 29 July 2016, http://palata.kz/ru/news/23471-skol-ko-stoit-al-ternativnyj-put-dostavki-gruzov-iz-ukrainy-v- kazahstan 102. The first train on the "Silk Road" from Ukraine, bypassing the Russian Federation, arrived in China, CensorNet UA, 01.02.2016 103. http://censor.net.ua/news/372046/pervyyi_poezd_po_shelkovomu_puti_iz_ukrainy_v_obhod_rf_pribyl_v_kitayi 104. Ukraine Addresses WTO In Case Involving Transit Conflict with Russia, Centre for Transport Strategies, 22 February 2017 http://en.cfts.org.ua/news/ukraine_addresses_wto_in_case_involving_transit_conflict_with_russia 105. Policy and Strategy of Ukraine for transport corridors development via Ukraine; Realisation of transport initiatives, such as "One belt – one road" and Baltic Sea –Black Sea– Caspian Sea Volodymyr Omelyan, Minister of Infrastructure of Ukraine, http://mtu.gov.ua/files/1.%20OMELYAN.pdf
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