Railway business develops in the Wider Black Sea Area

The Wider Black Sea Area is a geographical region rich in natural resources. With a strategic position for the development of land transports, the area is located in the median space of the Eurasian platform. With a dense population, the region benefits from a series of opportunities and challenges in all fields of activity. The area is expanding and has a high development potential, representing an important centre for energetic and transport flows. Despite the positive evolution in the past years, there are still gaps in the economic reform rhythm and the government quality of every country. The region needs initiatives that would complete and elaborate regional policies in order to stimulate the cooperation processes under development, especially in economic, energetic and transport sectors.

All means of transport in the Wider Black Sea Area ensure the connection with transports in European and extreme oriental regions. The significance of this particular area to the entire Europe results in a crucial role of investments in the development of economy in both continents. An efficient transport infrastructure, connected to the European transport network, also contributes to increasing economic competitiveness, facilitating European economy integration and allowing the development of new activities on internal markets.

Presently, giving the globalisation tendency, cross-border cooperation is imperative to region development. However, the diversity of peoples and unequal natural resources or different infrastructures of the countries represent a hindrance to development. Therefore, it is absolutely necessary to rely on the support of the European Union and other international organisations or associations.

The Wider Black Sea Area which includes, aside from Romania, Bulgaria, the Republic of Moldova, Russia, Ukraine, Turkey, Georgia, Azerbaijan, Armenia and many others and neighbor with other two regions, Western Balkans and Near East, has long been a geostrategic region, but not that important to the rest of Europe. The Black Sea Area is located at three macro security complexes: Euro-Atlantic, ex-Soviet and Middle East. Thus, Ukraine and the Republic of Moldova are located between Russia and the Euro-Atlantic community, the Caucasus region is a fault between Russia and Middle East and Georgia, Armenia and Azerbaijan are influenced by Islamic peoples and Russia. Turkey is located on a middle line: between Western institutions and economic flows and the identity of Islamic world.

The policy of Western Europe to consider the region as lacking importance originates back from the 18th – 19th century and continued until the 20th century.

When the communist period ended and in the wake of USSR’s decay, the region had a great influence on the entire European area , leading to tensions and conflicts which changed the course of the relationships between the countries in the region, which were also influenced by Western Europe countries.

“Local problems between small countries with no strategic importance whatsoever developed into expressions of the global security issue. We no longer have to do with the relationship between Moldavians and Transnistrians, but with NATO, EU and Russia connections. The issue of inter-ethical reports in Georgia represented a communication problem between Russia, the United States, Germany and France. Consequently, the relationships between the countries in the region are no longer just an expression of local issues but are directly and significantly influenced by the connections of these countries with the great players of global policies”, stated Victor Babiuc, former president of the Romanian Trade and Industry Chamber in his work “The economic development and regional security in the extended Black Sea area”.

The Black Sea area links the energetic corridors from the Caspian Sea to Western Europe and can ensure prosperity in the area if security is ensured in its turn.

At the moment, oil and natural gas prospecting is significant, exceeding 5% of worldwide resources, the development of their exploitation capacity requiring the rehabilitation and security of old existing infrastructures. Moreover, diversifying oil and gas pipes is also important to regional security and development. Around 50% of EU’s necessary energy comes from the wider Black Sea area and in the future ten years the percentage is expected to grow to 70% of the energy demand of EU countries.

“It is extremely important to implement a project that would coordinate the energy systems in Western, Central and Southern Europe with the CSI states’ systems and Baltic countries. Its implementation will enable the development of a ring of energetic systems that would connect European countries with those in the Black Sea region”, Vladimir Putin, the Russian President of the time, declared during the regional energetic summit held in Zagreb, in 2007.

Once the awareness on the importance of the extended Black Sea region is raised, bi and trilateral agreements are signed which initiate new ways of cooperation to solve many of the existing problems. Thus, in many countries of the region, economic development opportunities could benefit from certain cooperation efforts, as for example, transport infrastructure of flight connections. In addition to that, through these agreements, the EU is more and more interested in achieving and maintaining stability in the area in all fields of activity (economic, politic, military, transport, etc.). There is a series of special programmes and agreements that have been initiated for the implementation of these plans, such as the Development Programme, launched by UNO, the Partnership for Peace, initiated by NATO, the EU’s Southeast European Cooperative Initiative, the Individual Partnership Action Plan with the countries in the Black Sea region, the European Neighbourhood Policy, TRACECA – Transport Corridor Europe-Caucasus-Asia, PETRA – Pan-European Transport Area, as well as other programmes launched by OSCE, CSI and GU(U)AM.

Infrastructure projects

Trans-European Railway (TER)

The TER project, Trans-European Railway, was established in 1990 for the development of a coherent and efficient railway infrastructure and for improving railway transport quality. It currently has 17 member countries: Armenia, Austria, Bosnia & Herzegovina, Bulgaria, Croatia, the Czech Republic, Georgia, Greece, Hungary, Italy, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia and Turkey. In addition to this, other countries take part to the project as observers to certain project activities: Belarus, Latvia, the Republic of Moldova, Montenegro, Serbia, Macedonia and Ukraine, while Azerbaijan is in the pre-accession stage. During he 21st session of the project, held between the 14th and the 16th of November, 2005, TER Board of Directors decided to extend the agreement for the period 2006-2010, the participating governments being in charged to extend the project in conformity with the internal procedures of each state.

The elaboration of the TER Master Plan Project is the most important activity in the development                                                                                                                    of future projects, as well as in the development of the railway infrastructure in Central and Eastern Europe and its interoperability. The elaboration of the stuffy was concluded in March 2005, the Final Report being approved in June 2005, by the Project Coordination Commissions.

The 172 projects included and prioritized in the Master Plan were evaluated at EUR 52.55 Billion, the results being considered based on the problems raised by transport infrastructure financing and customs.

Thus, the programme assistance seeks to elaborate and introduce a plan of the TER network which includes the list of all railway lines, including railway knots and stations at the border crossings, to extend projects and elaborate maps. Moreover, the important part of project implementation also refers to the elaboration of the studies on the economic evaluation of railway projects, of the pre-feasibility studies on two corridors, the Baltic Sea/ Black Sea/ Eastern Mediterranean and the Adriatic Sea/Baltic Sea, as well as the elaboration of the studies for improved services on TER lines (Rijeka-Zagreb-Budapest-Bratislava-Warsaw-Gdansk).

The TER project report also stipulates the establishment of a TER data base which includes information and updates on railway infrastructure, rolling stock, transport flows. The purpose of the infrastructure development in the area is the conclusion of Technical Agreements with data on the operation parameters and TER line typology. It is intended to permanently adapt the technical standards of issuing technical documents, directions and recommendations for different problems related to the railway sector.

The implementation of all these objectives is expected to promote and improve cooperation between TER countries in all aspects related to railway transport by adapting a common long-term strategy for the well development of economic, financial, railway and TER countries management operations, by harmonising customs control procedures, as well as by establishing the institutional framework for the permanent management of TER project and for cooperation between member states.

In this context, the TER network will be connected to the EU network, the integration support requiring assistance in the implementation of EU directives on infrastructure, user access, access charges and the impact of public services. To this effect, several strategies with the set purpose of connecting European networks and Pan-European corridors are currently under development.

A transport demand prognosis has been developed by analysing the tendencies in the transport industry, to identify the interconnections between the transport demand and the socio-economic indicators (population, GDP and external trade) and by using these indicators from the reference year (2000) to the prognosis year (2020). As observation we can say that for some countries, these estimations are official. To a certain extent, the problem of using forecasts consists in the fact that they reflect the estimated outcome of economic and regional policies which sometimes depend on other uncontrollable factors, such as trade and international cooperation. Therefore, annual growths of 1.31% – 2.55% in passenger transport and 2.57% – 2.59% in freight transport are expected during 2000-2020.

Trans-Asian Railway Project (TAR)

In 1960, the United Nations Economic Commission for Asia and the Far East (ECAFE) has initiated the Trans-Asian Railway Project (TAR) with the purpose of ensuring the railway connection between Singapore and Turkey, through South-Eastern Asia, to Pakistan and Iran. After only 7 years, the ECAFE’s Transport Committee and Communication was pointing out the fact that “a large railway network can be developed through the cooperation of the railway administrations in the region, with the set purpose of linking several countries in the region with Europe and South-Western Asia, through the Trans-Asian Railway Project”, a UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific) document says.

After several pre-feasibility and feasibility studies, a strategy for the implementation of the Trans-Asian network is held during the 53rd session of the Commission, which encouraged the signing of the agreements.

Under the circumstances, the document says that “one of the most important projects adopted was the UNESCAP/OSJD Association for proving the project of container transport on the railway routes part of the northern corridor (Trans-Asian Railway Northern Corridor)”. Another important agreement is signed with the International Union of Railways (UIC), Belarus, China and Poland (2002). Also, UNECE and UNESCAP and other 18 member countries have signed a common letter planning to participate to railway infrastructure projects. Aside from these countries, the agreement requested financial support from World Bank, European Bank for Reconstruction and Development and Asian Development Bank.

In 2006, 18 of the 28 member states sign the Intergovernmental agreement on the Trans-Asian Railway Project: Armenia, Azerbaijan, Cambodia, China, Indonesia, Iran, Kazakhstan, Laos, Mongolia, Nepal, Korea, Russia, Sri Lanka, Tajikistan, Thailand, Turkey, Uzbekistan and Vietnam. This agreement came into force on June 11, 2009.

At the moment, the TAR network includes a little over 114.000 km of railways, lines which have been selected thanks to their potential to serve international trade in the region, as well as between Asia and Europe. Thus, the selected lines connected the capitals of each TAR member state, as well as industrial and agricultural centres, important maritime and fluvial ports and terminals and depots for container traffic.

Once the agreement with OSJD (the Organisation for Cooperation of Railways) has been signed, cooperation in the railway sector (both for infrastructure development and extension of services) expanded towards East European countries. The OSJD member states are Albania, Azerbaijan, Belarus, Bulgaria, China, the Czech Republic, Estonia, Georgia, Hungary, Iran, Kazakhstan, Korea, Kirghizstan, Latvia, Lithuania, the Republic of Moldova, Mongolia, Poland, Romania, Russia, Slovakia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, and Vietnam.

The OSJD railway network is 276.000-km long and has two types of gauge (1.435 mm – 1.520 mm) and a big number of border points. Moreover, railway transport operations between Europe and Asia are regulated by law which is different from that in Western Europe.

In 1996, based on freight transport volumes between the countries of the two continents, OSJD identified 13 main routes and during 1996-2000, OSJD elaborated an analysis of technical and operational indicators including date on the technical equipments of railway infrastructure, especially at borders, of the 13 routes for improving freight transport technology. This determined the elaboration of complete measures for improving the international organisation of transport operations on the transport corridors which connect Europe and Asia. The interested countries have signed memorandums of understanding for the development of these corridors generating the reorganisation and modernisation of the respective lines.

Considering the constantly changing transport flows, OSJD permanently adapts the development strategies of intercontinental railway connections. For example, the development strategy for 2005-2010 includes detailed plans for improving transport and expanding the network.

TRACECA connects the European and Asian infrastructure

TRACECA or the “New Silk Road” is an intergovernmental programme which establishes the railway connection between the Black Sea region and Central Asia. TRACECA is part of TACIS financing programme, a European Commission programme for the CSI states, the equivalent of PHARE for the countries and Central and Eastern Europe.

Until the moment, the European Union focused on technical assistance and investment projects for TRACECA with the purpose of reviving the old “Silk Road”.

TRACECA programme was initiated at the Conference in Brussels of May 3, 1993, attended by ministers of transport and trade from 8 countries, 5 states from Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) and 3 countries from the Caucasus (Armenia, Azerbaijan and Georgia). In 1996 Ukraine and Mongolia also joined this programme, in 1999 Moldova and in 2002 Bulgaria, Romania and Turkey officially became members of TRACECA Programme.

The objectives of the programme consist in the establishment of special platforms for the development of the corridor, as an alternative to the Northern Trans-Siberian route, connecting it to European transport network and supporting the political and economic independence of the CSI countries and then of the member states of the multilateral agreement on international transport for the development of Europe-Caucasus-Asia corridor. The agreement mainly aims at bringing its contribution to the development of economic relationships, trade and transport connections with Europe in the Black Sea area, Caucasus, the Caspian Sea region and Asia, ensuring traffic safety, freight integrity and environment protection, creating fair competition conditions for strengthening transport and harmonising transport policies and transport regulations.

Since 1996 until 2006, 61 technical assistance and 15 investment projects have been developed through TRACECA programme, with total costs of EUR 160 Million.

A significant number of projects for institutions, infrastructure, rolling stock, ports and so on have been financed through TRACECA. Until the moment, the programme is considered successful, having a significant contribution in increasing transport volumes which makes TRACECA corridor still a priority on the list of future EC programmes.

Freight railway transport develops in Eurasian area

Location is a determinant factor of costs in transports because it indicates the distance to large markets and is also seen as a significant factor of economic development.

International transport has the capacity to reduce the economic importance of distance but high transport infrastructure costs determine an elevated difficulty level in establishing efficient transport connections. Another problem of international context comes from the fact that there are many technical, regulatory, commercial and organisational aspects which prevent the complete interoperability and efficiency of railway transport. Therefore, not only the railway operators in Asia and Europe are faced with the challenge of interoperability but also the countries in these continents themselves. Despite the fact that plans and strategies are being elaborated for transport regulations, we still cannot talk about a completely open market in Europe or about a completely integrated transport. The solution to these problems, especially border issues, is the conclusion of regional and international agreements that would include single norms for freight transport, including common charges for freight traffic.

The importance of railway transport, especially cargo transport, between Europe, Russia and Asia is every day more important to business environment.

Under the circumstances, at the beginning of 2008, the German operator Deutsche Bahn (DB AG) and the Russian railway operator (RZD) established Trans Eurasia Logistics (TEL) which provides container transport services between Europe and Asia on Germany-Russia-China route. In the autumn of 2008, the distance between Xiangtang-Hamburg (10,000 km of railways) was crossed in 17 days. Trans Eurasia Express is a reliable alternative for all types of goods that can be shipped on rails, especially very heavy goods. Starting February 2009, the transport to China has a weekly frequency.

A successful experiment on another railway freight transport route is Paris-Shanghai Rail Express (on Shanghai- Ürümqi-Volgograd-Vienna-Paris route). The total length of the route is 11,500 km with 7,850 km less than on sea (19,350 km, Shanghai-Suez-Antwerp). The project for transport on this route aims at increasing freight volume capacity by 200 million tonnes of goods per direction/route, with an estimated train frequency of 5 minutes, at a 9-km distance between trains. If so, a train would reach destination in 9 days. According to various statistics, freight volume shipped on rails is equal to that shipped through Suez Channel or four times bigger than the weight of the containers shipped on sea between China and Europe, without the CSI region.

The Bosphorus Express logistics service provided by operator Europe Intermodal, established in 2007 following a partnership of the German company Kombiverkehr and the Slovenian company Adria Kombi, proved once again that a journey between Europe and Asia on Ljubliana-Istanbul route most of which corresponding to the Pan-European Corridor X, can only take 35 hours, after during March 16-17, 2009, the train crossed the 1,577 km in a record time. Bosphorus Europe Express (BEEX) left the central railway station in Ljubliana and reached Halkali container terminal in Istanbul two hours earlier than the time estimated at the beginning of the project, which was 37 hours. Customs control was reduced to the minimum, with less then 30 minutes spent at every border check point. The technical support for the test which aimed at cutting the distance time travel was provided by Deutsche Bahn. The organiser was Balkan Business Advisory Council, the successor organisation of the Balkan Stability Pact, in collaboration with railway companies from 5 countries SŽ (Slovenia), HZ (Croatia), ZS (Serbia), BDZ (Bulgaria) and TCDD (Turkey). Crossing Corridor X on rails would normally take 50-60 hours, the BEEX’s success proving the potential of railway transport on this route, the same distance being crossed in 48 hours on sea. “The project proves that we can touch a common goal and that no truck will ever be able to equal the train’s performance”, declared Hartmut Mehdorn, former DB president during the train departure.  Europe Intermodal introduced the first train on Munich-Istanbul route, via Ljubliana, at the end of April 2008.

From these few example we can draw the conclusion that railway transport has reached an impressing market quota between EU and the wider Black Sea are, including Central Asia. Railway routes in Eurasia are considerably reducing the distance between the two continents, as compared to road corridors, as interest for freight transport continues to rise.

The development of railway infrastructure in the Wider Black Sea Area, its connection to the European Union railway network and the stimulation of railway operators’ activities aim at developing a coherent and dynamic international transport policy, supported by all international organisations and bodies and with the set purpose of increasing cooperation in the Wider Black Sea Area.


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