Ways to increase the competitiveness of the railway transport of

Mr. Sergey Stolyarov

Head of International Cooperation Department JSC Railway Transport – a Locomotive of the National Economy

National income VAT Social Tax Income Tax

~1.6 % of the National GDP ~1.0 % of the consolidated state budget

Workforce 1070 thousand employees

A strategic element of the transport system The value of net assets amounted to 3.5 trillion rubles (€ 73.5 billion) in 2013

One of the largest Diesel fuel – 10% in Russian Federation consumers of products Electric energy – 5% in Russian Federation and services in the country Ferrous metals – 2% in Russian Federation

2 GDP of Russia – Trends and Forecasts

GDP Trend in 1992‐2013 55967 62218 66755 60000 46309 15.0 +8.5 41277 +10.0 38807 40000 +4.7 +7.2 +6.4 +8.2 33248 10.0 21610 26917 +1.4 +6.4 +5.1 +7.3 20000 13208 +5.2 +4.5 +4.3 5.0 4823 8944 17027 +3.4 18 162 611 1429 2008 2343 2630 7306 10831 +1.3 0 0.0

‐20000 ‐5.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ‐8.7 ‐4.1 ‐5.3 ‐40000 ‐3.6 ‐7.8 ‐10.0 ‐12.7 ВВПGDP,, млрд billion. руб. (rublesдо 1997 г(in. включительно в трлн trillion rubles prior. руб to.) (1997левая шкала incl.),) left scale ‐60000 ‐14.5 ‐15.0 ВВПGDP,, % к предыдущему году % to the previous(правая шкала year (right )scale)

Forecast of the IMF for the period 2014‐2015 +2.5 Forecast of the Ministry of Economic Development of the Russian +2.3 Federation for the period 2014‐2015. +2.0 +3.1 +1.3 +2.5 +2.0 +1.0 +1.0 Sept. +1.0 +0.5 +0.5 +0.2 +0.2

2014 2015 2014 2015 декабрь December,2013 г . май May,2014 2014 г. январь January,2014 г. начало апреля Beginning of2014 г. конец апреля End of April,2014 г. июль July,2014 2014 г. 2013 2014 April, 2014 2014

3 The effect of investment into infrastructure on growth of output (according to IMF)

IMF estimation: an increase of state investment into infrastructure by 1 percentage point of GDP provides for an additional increase of output:

In developed countries In developing countries +1.5%

+0.5%

+0.4% +0.25%

в этот же год через четыре года в этот же год через четыре года Given an increase of state investment into infrastructure in Russia in 2015 by 1 percentage point of GDP (about 770 billion rubles) the growth of industrial output in the same year would increase from 1.6 to 1.85% according to the forecast of the Ministry of Economic Development of the Russian Federation, whereas in four years the additional increase would amount to +0.5 percentage points per year.

Estimation of the Centre for Strategic Research: one ruble of state investment into infrastructure multiplies into 1.46 rubles of GDP

4 Projects of development of the Trans-Siberian Railway Line

By 2015 the transportation of containers along the Trans‐Siberian Railway line from the eastern to the western frontiers of Russia will take 7 days The current movement speed amounts to about 1100 km per day (8 days)

Areas of Activity: Development of railway infrastructure Cooperation with foreign railways and organizations Development of intermodal transportation technologies Development of logistics sector Implementation of modern information technologies

5 Prospective network of terminal and logistics centers on the Russian railways

Key: First stage facilities of the TLC network creation

Key satellites of the first stage

Projects in the railway hub

TLC Kaliningrad

Baltiyskiy railway port (Shushary, St.Petersburg)

Beliy Rast, Kuntsevo-II, Moscow-Tovarnaya-Yaroslavskaya (Severyanin), Stupino CLG, CLG, Lyublino, Khovrino

TLC Doskino (Nizhniy-Novgorod)

Samara

Yuzhnouralskiy TLC Kleshikha (Novosibirsk) TLC Volgograd Ussuriysk Grodekovo Zabaikalsk Artem-Primorskiy-I Nakhodka

6 Measures to augment the client-oriented approach

Organizational Regulatory Technological

1.1. FormationФормирование сети ТЛЦ of a TLC network 1. Adoption of sector‐wide quality 1. Implementation of new technical standards for provision of services resources (freight cars, 2. Provision of services on the basis 2. Оказание услуг по принципу 2. Improvement of the regulatory containers, etc) of«Одного окна “single point» of contact” principle and legal framework 2. Increase of the level of routing of 3. Развитие сборных отправок unladen cars 3. Development of batch shipments 3. Introduction of liability for 4. Гибкость при согласовании untimely finalization of purchase 3. Modernization of infrastructure in 4. Flexibilityзаявок при in finalizing«регулярных purchase» orders public domain ordersперевозках in “regular” shipments 5.5. FormationСоздание гибких of flexible logistics schemesлогистических схем порожних for unladen train runs

7 Additional transport and logistics solutions

Organization of freight train transportation in accordance with schedule

Provision of comprehensive transport and logistics services (CTLS)

Станция прибытия Продукция

Parking (paid temporary stationing of cars along the journey route on the public domain infrastructure upon request of the client)

8 Freight delivery routes from the countries of the Asia-Pacific Region to Europe

Hamburg • Busan – Brest/Dobra, 15 trains Duisburg • Chongqing – Duisburg, 36 trains Warsaw St.Petersburg • Suzhou–Warsaw, 1 train Lodz Brest • Zhengzhou – Hamburg, 9 trains Moscow • Chengdu – Lodz, 31 trains Dobra • Brest – Zabaikalsk, Zabaikalsk – Brest, 126 trains

Novorossiysk Vladivostok Iletsk Nakhodka Zabaikalsk Naushki Dostyk Zhengzhou Busan Chengdu Suzhou ‐ Usage of CIM/SMGS consignment note ‐ Successful trial run transportation of high‐technology Chongqing electronics in refrigerator cars during the winter period

9 GEFCO – Subsidiary Company of Russian Railways

Lead supplier of integrated 3PL/4PL logistics services One of the 10 largest logistics operators in Europe

3PL JSC RZD PSA Warehouse Logistics

Automobile 75% 25% sector logistics

• JSC Russian Railways has purchased from Peugeot S.A. 75% of shares of the GEFCO Company • At the present time the plan to integrate GEFCO into the structure of the RZD Holding Company is carried out – a package of logistics services is being formed for Russian and international enterprises • Since October 2013 – young employees of the RZD Holding Company undergo internships on the basis of GEFCO

10 UTLC – a key instrument for the integration of the transportation systems of the CES member-states

Growth of revenue . 21st June 2013 – Agreement to establish UTLC Augmentation of of national railway . 10th October 2013 – Agreement, stipulating basic Facilitation of international enterprises due to principles of establishment and operation of UTLC integration of th competitiveness of the increase in . 7 November 2013 – planning schedule of actions to transportation CES railway transport volumes of establish the UTLC processes . 25th November 2013 – Board of Directors approved the upon the global international and within the CES participation of JSC RZD in the charter capital of UTLC, in transportation market transit freight partnership with railway enterprises of Belarus and transportation Kazakhstan . March 2014 – Memorandum of understanding between Shareholders Project office UTLC LLC and DHL Global Forwarding (in June – 2 additional Agreements) . 29th May 2014 – the Treaty on Eurasian Economic Union signed by the heads of the CES member states Operational Management Companies

Transportation and Freight‐Forwarding Services

30th August 2014 the Government of the Russian Federation approved the contribution of 50%+2 shares of JSC TransContainer along with 100%‐1 shares of JSC RZD Logistics to the share capital of UTLC

11 The current system of legal regulation of the railway transport

Legal regulation of the railway transport at the global level

At the level of UN and regional commissions At the level of World Trade Organization

UN Agreements and conventions WTO agreements, first and foremost GATT and GATS

(legal regulation, standards and recommended practice in (legal regulation of the access for services and their the field of infrastructure, rolling stock, transportation providers to the international markets of the railway technology and border crossing) transportation)

Legal regulation of the railway transport at the regional level (relating to )

OSJD Legal basis COTIF («Eastern railway legal basis») («Western railway legal basis»)

Bilateral and multilateral regional agreements

Bilateral agreements on direct Agreements accepted within Agreements on formation of and intermodal railway EU legal basis the Council for railway the Common Economic Space transportation transport of the CIS States (CES)

12 Comprehensive amendments and additions into the Agreement on International Goods Transport by Rail (SMGS) and Procedure Instructions to SMGS

REVISED TEXT OF THE SMGS ENVISAGES: Regulation of the procedures on signing, amending and executing contracts for  transportations  Rights and obligations of parties to a contract for transportation  Responsibility of the contacting parties  Mutual responsibility of the freight carriers SMGS standards

Rules, which regulate the order of applying SMGS Legal standards, Clauses for informational norms, as well as specialized included into the purposes, stipulated in the conditions of transportation, principle text of the Information Instructions – included into the Code of rules SMGS appendix to SMGS of freight transportation – appendix to SMGS

13 Formation of the Unified Convention on Direct International Rail Transport

CONVENTION ON DIRECT INTERNATIONAL The Convention regulates both the activity of RAIL TRANSPORT the OSJD itself and the legal basis for carrying smooth transportation of passengers and ATTACHMENTS: cargoes on the entire Eurasian domain:  Purposes, approaches and activity areas General provisions for General provisions for of the OSJD Agreement on freight agreement on passenger international transportation international transportation  OSJD structure  Decision‐making procedure by the highest governing bodies of the General provisions for General provisions for usage of Organization international railway the freight cars in terms of infrastructure international transportation  Conciliation procedures and arbitrage at the OSJD Committee  Contract for transportation of cargoes General provisions for railway General provisions for (incl. railway‐ferry transportation) and rolling stock in terms of international transportation of passengers international transportation the dangerous goods  Usage of freight and passenger cars  Technical requirements to the General provisions for usage of passenger cars in terms infrastructure and rolling stock of international transportation

14 Unified transport law

UNIFIED TRANSPORT LAW

Convention OSJD Draft concerning Unified CIM/SMGS Convention on Direct International Carriage consignment note International Rail by Rail (COTIF) Transport

15 Trans-Eurasian corridor RAZVITIE – project of planetary scale

Within the High speed planet: RAZVITIE transportation platform for the entire world Power bridge Trans- continental frames: Redistribution of the “…Europe is to water resources the left and Asia is to the right from Russia” Oil and gas (Vladimir Putin) transportation

New cities

New lines of industry Within the in Europe, Russia, structuring of Kazakhstan and China the Eurasian Union: territorial reorganization of Eurasia Within the country: change of the economic model in Russia

16 Thank you!