SUMMARY of the Conception on establishment of the International Transport-Logistic Center
1. The scope of the project and the purpose of establishment of the ITLC.
2. Reasons of expediency of establishment of the ITLC .
3. Major principles and conditions of functioning of the International Transport-Logistic Center.
3.1 Major tasks and functions of the ITLC.
3.2 The infrastructure of the ITLC:
· Location of the enterprise.
· General description of the enterprise to be established.
· The scheme of location of production objects.
· Products and services.
3.3 Customs procedure.
3.4 Tax preferences.
4. The market and marketing investigation.
5. Development measures and promotion of logistic services at the international market.
6. Prospective tendencies in development of the ITLC:
· Automobile transportation.
· The river port.
· Internal transportation.
In order to reinforce the position of the domestic transport at the international market and taking into account unification of the neighbouring with Ukraine countries with the European Union, às well as Ukraine’s intentions as regards entering the WTO, Association «The European Union of Ukrainian Transport Companies» (ÀEUUTC) has worked out the Conception on establishment of the International Transport-Logistic Centre (ITLC) at the territory of Ukraine in Chop, at the border with the EU.
The scope of the project and the purpose of establishment of the International Transport-logistic Centre
Insistent intentions of Ukraine regards the most rapid integration into the world community, partnership multivectorial intentions connected with development of economic trade relationships with other states, objectively create favourable conditions for free migration of goods, services, capitals and human resources through our country. This, in its turn, leads to an increase of transnational flows of goods and to an increase of the international transit of cargoes. Therefore, Ukraine has quite real prospects in self-assertion of its role as a transit country. This is, first of all, due to such objective factors like the geopolitical position and availability of a powerful transport system at its territory.
Beneficial geographic location of Ukraine on the way of main transit flows between Europe and Asia with a quite developed transport infrastructure, where there is accumulated the tenth part of the country’s national wealth, provides all the necessary preconditions for an increase in the volume of transit cargoes.
Currently, an increase in the international transit through the territory of Ukraine can become an important factor in stabilization and structural reorganization of its economics. Meanwhile, one should take into consideration the fact that the transit as a kind of transport services export is one of the most effective means, and investments into this sphere of the transport activity bring a rapid reimbursement.
The transport system of Ukraine combining all the modern transport means, which in general correspond to internal and external transport-economic relations of the country, requires currently considerable improvement and modernization for increase of transport services quality and, first of all, those in the international communication. This has been caused by radical changes of the nature of transport-economic relations of Ukraine in conditions of its independence, when the majority of them has already become a part of the category of foreign-economic, export, import and transit connections.
According to the Law of Ukraine and the decree of the Cabinet of Ministers of Ukraine from 16.11.2002, ¹ 659-ð "On approval of the plan of measures regards accomplishment "The comprehensive program of affirmation of Ukraine as a transport state in 2002 - 2010" in 2002-2005”, one of the major tendencies of increase of efficiency and quality of transport servicing in the international communication is passing over to logistic technologies of organization of running material flows in the process of goods delivery to the customer.
Taking into consideration the above mentioned, the conception suggests establishment of the international transport-logistic centre functioning as a system of transport services at the border of Ukraine and the European Union at the Ukrainian side. The necessity of establishment of the ITLC at the territory of Ukraine has been caused by the following reasons:
· territorial adjacency with international transport main road lines, an extended and diversified transport net;
· a favourable economic-geographical position (the frontier zone);
· availability of the necessary infrastructure (transport, warehousing and communication);
· inclination to existing or prospective centers of business collaboration;
· availability of a historically formed system of foreign-trade relationships with foreign partners and a basis for its development.
A convincing reason for this proposition lies also in the difference of standards of the railroad gauge, the difference in technologies and administration of the transport sphere (the transport rights of CIM and SMGS) is still so great that establishment of the logistic centre at the side of the EU’s member will not allow to urgently and efficiently resolve matters of transportation of foreign-trade cargoes. Meanwhile, Ukraine, having joined the Convention about the international railroad communication (CÎÒIF), is the most prepared for providing simultaneously logistic services for all the project participants. The urgency of the proposition may also be proved by the availability of a number of the above mentioned normative documents of Ukraine presupposing establishment of such a structure at the Ukrainian side of Chop-Zahony transport junction.
The International Transport-Logistic Centre will become an operator of export-import and transit cargo flows and, on the basis of general information space, at the common centre, will be able to ensure efficient integral logistic servicing of the process of delivery and processing of cargoes, às well as the customs-brokers’ and adjacent services.
Reasons of the expediency for establishment the International Transport-Logistic Centre (ITLC) in the town of Chop.
One of the main priorities of maintenance and reinforcement of positions of the domestic transport at the international transport market is doubtlessly the efficient functioning of the national net of transport corridors corresponding to the world standards of integral transport-forwarding servicing of international transportation, where the 5-th (Cretan) international transport corridor is of a considerable importance.
On condition of the state support of Ukraine, with its favourable geopolitical location, the country may considerably enlarge the volume of transit cargo transportation, having insured thus an increase of the budget revenue.
Therefore, one of strategic objectives of the state is an efficient use of reserves which exist in the system of the flows of goods between Europe and Asia. With this aim there had to be taken urgent measures on adjustment of the national transport net and transport means in correspondence with the international standards: beginning from simplification of the procedure of crossing the state frontier of Ukraine up to an extensive implementation of advanced technologies into transportation of foreign-trade and transit cargoes.
One of the major tendencies of modern European transport politics is a transition to the transport logistics and transport-terminal systems of cargo transportation, allowing improving the organization of transportation, ensuring an overall service for consumers of transport services, creating conditions for development of combined transportation, decreasing the ecological load on the environment.
Taking into consideration the current tendencies in the development of the logistic services market, it may be affirmed that logistic centers have become basic components of running flows of goods. Such centers perform a coordinating and an integrating role in the logistic system of cargo circulation and transportation.
Implementation of such technologies requires creation of a net of accumulating and distributive logistic centers, performing functions of an interaction between transport means and the organization of material distribution within an economic region. They make up a basis for running material flaws, ensure an interconnection between shippers, customers, transport agents, forwarders, ensure timely mutual settlements throughout banks.
In the opinion of specialists, existence of such centers enables to reduce cargo delivery time by 20 %, enables to reduce total expenses on transportation of cargoes and to decrease warehousing stocks by ÇÎ %, as well as to reduce an average load on processing of transport documents by 50 %.
An important geopolitical location of the frontier crossing points in the Transcarpathian region predetermines a specific basic role of the region in ensuring of Eurasian transport-trading interconnections. Existence at the territory of the region bordering with four states - Slovakia, Hungary, Romania, Poland, one of the largest frontier transport complexes, composed of 6 international and 4 international railroad and automobile crossings, an international airport and also possibilities for development of the river transport, objectively defines Transcarpathia as a natural transit bridge between Europe and Asia. A potential volume of transportation through the Transcarpathian region has been evaluated at the amount of 52 m tons of export-import and transit cargoes per year, exceeding the present volume in two times.
Existence and prospects of further development of the frontier transport infrastructure of the Transcarpathian region predetermine objectively all the necessary preconditions for establishment of the International Transport-Logistic Centre of Chop on the basis of successfully functioning enterprises and leading companies of the countries-operators of cargo flows being a part of Chop-Zahony transport junction.
The main objective of the project is to ensure an efficient delivery of goods to the final consumer at the process of transportation by means of various transport vehicles at the mode of export, import and transit in the shortest possible terms and with the minimum losses. This may be accomplished only within the frames of functioning of a logistic-transport centre, while the whole complex of services is to be minimized what concerns losses of time and money, moreover, the customers will be provided all required adjacent services.
In this respect, such appealing transport junctions like Chop and the frontier Transcarpathian region in general, have always been attracting attention of foreign companies with an only aim, however, to make use of all the region’s advantages in their own interests as regards the market extension. In order to forestall their expansion in this direction, it is necessary to concentrate efforts on establishment of a logistic centre at the western border of Ukraine.
At present the traffic capacity of this crossing point makes up 5000 cars, 80 buses, 500 trucks per day. Capacities of Chop’s railroad junction exceed 130 trains per day with transloading of cargoes. The general volume of transloaded cargoes passing this junction makes up 60 thousand tons per month, ànd the potential capacity of Chop’s transport junction is about 140 thousands tons of cargoes per month.
However, the capacities may be realized only after fundamental changes in the approach to logistic processes and after establishment of a modern international transport-logistic centre for intermodal transportation on the mentioned relation.
On condition of the future development of other transport means (the river shipping, airways) and introduction of modern technologies, such logistic centre will be able to ensure transportation, processing, storage, sorting out of cargoes, dividing them into parties, provision of the customs-brokers’ and other attendant services at intermodal transportation of foreign-trade and transit cargoes.
Thus, there are all reasons for considering establishment of the International transport-logistic centre objectively necessary, opportune and expedient at the territory of Ukraine in the town of Chop, the one with the functions of an operator of flows of export-import and transit cargoes providing complex services on transloading, sorting out, packaging, storage, consignment and other, and contributing to activation of bargaining transactions between the countries of the EU and the CIS at the direction of ITC-5 due to economically legitimate tariff politics of the centre, as well as an extension of the scope of the main and attendant services, enlargement of the nomenclature of cargoes (with a possibility of transportation and processing of special and hazardous cargoes), minimizing of cargo processing terms (with a possibility of transshipment of hazardous cargoes), introduction of advanced technologies for processing of information on warehousing and operational works and, what is of a particular importance, due to an increase of quality of works performed on cargoes.
Taking into consideration interest of the Russian party in the establishment of the International logistic centre, it would be expedient to create the structure with the involvement of four parties – the Ukrainian, Russian, Hungarian and Slovakian ones, but definitely at the territory of Ukraine.
Major principles of functioning of the International transport-logistic centre.
The logistic center’s work shall be based on the following major principles:
• offering of a maximum complete list of transport and attendant services on the basis of contractual relationships with each participant of the logistic chain (formation of a data bank of logistic chains);
• organization of an integrated transport service on the basis of a single contract on integrated servicing and a single contract for all services, determining tasks for participants of the logistic chain on the basis of orders of the transport services consumer, centralized monitoring of fulfillment of orders;
• maximum standardization and unification of transport and other documents, necessary for realization of forwarding and used by participants of logistic chains with the purpose of ensuring the possibility of establishment of a single information area;
• a single marketing strategy and tactics of participants of the logistic chain at the transport services market, common studies of markets and marketing measures providing advancement of all participants of the logistic centre at the transport services market and formation of the demand for integrated transport services;
• a geographical allocation of structural subdivisions of the ITLC with the purpose of a maximum coverage of the transport services market, operative management of logistic centers at the places of creation of cargo flows and their crossing;
• arrangement of collaboration with Ukrainian and international organizations dealing with transport logistics;
• work shall be based on the world standards and international contracts, agreements, conventions;
• integration with international logistic centers and ensuring an informational exchange with them;
• increase of the transport services efficiency by means of reducing the part of an unjustified traffic (an incomplete load);
• standardization of an informational communication of the ITLC with participants of logistic chains.
The ITLC’s major principles shall ensure realization of new kinds of services and also meet consumers’ high requirements as regards transport services, integrity and quality of servicing taking into account the principle «all services at the same place", the "door to door" delivery, «precisely in time" and with "minimum costs”. The logistic centre realizes its objectives through its partners – participants of the logistic chain. Transport organizations, the Customs authorities, terminals, insurance companies and other transport and attendant services companies may become partners of the ITLC. The centre shall arrange and perform at the most advanced level all the necessary major actions on cargo processing and transportation, providing the following services: warehousing, transport-forwarding, customs-brokers’ services, insurance of vehicles and the personnel, banking services, consignment trading, technical servicing of automobiles, services for the personnel and drivers, as well as other attendant services.
Functional activity of the logistic centre includes the following spheres:
- organization of transport logistic chains;
- monitoring of maintenance of logistic chains;
The ITLC’ work is arranged on the basis of planning and efficient shipment (transportation) of cargoes (goods) from points of their production to points of their consumption by means of calculation and realization of optimum transport logistic chains.
The necessary precondition of establishment and functioning of the logistic centre is organization of providing of information which can completely ensure cooperation between customers and partners of the LC, as well as determining of an optimum transportation route and monitoring of a delivery schedule, settlement of accounts with all participants of transportation and other definite ITLC’s functions.
First of all, it is necessary to install the system of a telecommunication server in the logistic centre that would provide a regular connection with analogous servers of transport companies of the countries participating in international cargo transportation.
Alongside with this, transport information service at the territory of every country will be able to provide services on marketing and data studies, as well as it will be possible to connect subscription centers of organizations and companies engaged with the communication server of the logistic centre dealing with running the transport-forwarding process.
Taking into account the fact that marketing relationships require reduced delivery terms with minimum expenses for transportation, improvement of quality and security of transportation from the as well as requiring, in general, reduction of the transportation component in the cost-price of goods, one of the newest tendencies of an increase of efficiency and competitiveness of the transport system is application of new information technologies by means of use of the information system of arrangement of cargo transportation by an auction method that can be integrated with trading, transport informational systems, with freight markets, and that will be able to simplify and minimize time consumption and material resources for accomplishment and arrangement of the whole complex of works.
Monitoring of performance of transport logistic chains is also the ITLC’s important function which is realized on the basis of data rendered by partners, ensuring thus provision of transport services in the course of and after accomplishment of stages (links) of the transport-logistic chain.
Production objects allocation scheme.
A typical structure of the logistic centre of an international level presupposes erection of a powerful terminal-warehousing transport complex with the area of at least 140 hectare where there should be a railroad track of 1435mm and 1520mm, convenient internal automobile roads, open and closed storage areas and buildings of the CLW and TSW types, concrete container places, platforms for unloading of trucks of the ROLA type, open and closed footlights unloading of railway cargoes. The complex should have a proper locomotive and a system for running of the flow of trains at the terminal. The terminal should also be equipped with a car-tipper with a system of band-conveyers, transloading portal cranes, sorting and resifting plants, a crusher, automobile and railway scales (1435mm/1520mm). At the terminal complex there should be modern equipment for transloading of bulk cargoes and metallurgical products (fork-lift trucks, excavators, cranes etc.), cargoes on pallets, in big-bags, in bags, as well as chemical liquids transported in tank-cars, including those requiring heating.
There should also be a maintenance area at the territory of the terminal for repairing of transloading devices and equipment for ensuring normal working conditions of service personnel in winter and in adverse weather conditions. With a purpose of creating additional warehouses and a maintenance zone, prefabricated modular metal constructions may be used. Office premises for the administration can also be lodged in similar prefabricated modular constructions. The working schedule of the logistic centre presupposes non-stop work in the mode of cargo processing and issuing of attendant cargo-transport and customs documen
General description of the enterprise to be established
It is expedient to realize the project on establishment of the ITLC at the above-mentioned territory on the basis of the functioning terminal complex “Variant-Logisitc”, which, starting from the year of 2003, efficiently masters functions of the international logistic centre as a part of Chop-Zahony transport junction, ensuring complex servicing of customers of terminal-transport and forwarding services at the border of Ukraine and the EU.
Nowadays this enterprise has a modern terminal complex with warehousing areas of the CLW and TSW types equipped with newest technical loading-unloading measures, acting in the mode of the customs control zone at the admission point of Chop station.
The rate of logistic services is closely connected with an efficient performance of the customs operations due to a low quality of which logistic operators and consignees often incur considerable losses. In order to reduce an adverse influence of this factor, it is necessary to establish a non-stop point of customs clearance and control at the territory of the logistic centre and render it a capacity of a maximum contribution to performance of the customs operations. It will be most reasonable to establish a customs control zone with a special customs procedure at the territory of the ITLC and synchronize it with the “porto-franco” procedure acting at the territory of the port in Trieste since 1719 and being an initiation of the 5-th (Cretan) corridor.
Alongside with this, it is necessary to develop and implement together with the Customs modern technologies of the customs clearance and control, those similar to ones functioning at the current market. The following are among them: the principle of a simplified customs clearance, an electronic clearance of cargoes, the customs accounting electronic card etc.
An efficient functioning of the ITLC requires changes in the tax policy:
· Determination of a procedure of paying the value added tax on service providing operations, connected with transportation (forwarding) of passengers and cargoes on transit through the territory and ports of Ukraine at the “zero” rate in the Law of Ukraine “About the value added tax”.
· Resumption of p.6.2.2 art.6 of the Law of Ukraine “About the value added tax”, active before the changes introduced on 31.03.2005 and defining the notion of “the export of work results” and the procedure of paying the tax at the “zero” rate on works (services), assigned for usage and consumption beyond the customs territory of Ukraine.
Solution of the above-mentioned issues will considerably decrease a price-cost of the transport component, will increase competitiveness of transport services at the international market of transportation and also will provide for Ukraine’s transit appeal.
The market and marketing researches.
Although the logistic service market is quite developed at present, but it still has its peculiarities and drawbacks. The services are being provided by a number of forwarding and transport companies, acting in places of cargo accumulation and large transport junctions (railway stations, sea ports, airports). On the other hand, the tendency of integration of logistic services prevails more and more in integrated powerful centers, like it is abroad. Such centers, providing all the complex of servicing cargoes, eliminate unnecessary links of servicing and suggest quite a broad choice of attendant and additional services appealing clients. Thus, being a competitive alternative for existing structures, the logistic centre brings the level of cargo servicing to a new qualitative level corresponding to the existing world standards.
Measures on development and advancement of logistic services at the international transport market.
Development and implementation of a pilot project of the ITLC into a research exploitation involve a wide circle of scientific and practical objectives of an organizational, informational, economic, normative-legislative, technical, technological, innovational and investment character, resolution of which requires the use of corresponding methods of development and acceptance of management solutions (a systemic approach, an integral approach, a complex analysis, a program-purposeful method of solution acceptance, etc.).
A peculiarity of the ITLC is its international character requiring corresponding functions and a corresponding normative-legislative provision. All the preparatory work and arrangement of fulfillment of the priority-driven scientific and practical tasks on development and implementation of the ITLC pilot project into research exploitation is possible only on condition of the state support of the Conception in consideration. The state’s efforts should include involvement of the state funds for modernizing the most important means of communication and objects of the frontier transport infrastructure at the border of Ukraine with the EU in the shortest possible term.
The specification of the ITLC under experiment requires development and implementation of certain projects, their organization with achievement of the following major objectives:
• estimation (prediction) of marketing factors of the ITLC arrangement on the basis of ÒSC and territories with the special customs and investment regime, or special economic zones (SÅZ) established at the territory;
• analysis and prediction of transport-trading connections (international, import, transit and domestic);
• working out of a conception and a technical equipping program of the ITLC;
• determining of the volume of capital investment into the ITLC;
• working out the project budget;
• estimation of the investment efficiency;
• preparation of an information memorandum;
• a tender for the project customers and contractors;
• a tender for the project investor and conclusion of contracts on financing of investment projects;
• working out of technical documentation of the investment project;
• building-erection works.
The experiment program on organization and estimation of the ITLC efficiency requires a unified methodical managing for solution of general matters and taking into consideration the specific factors peculiar for certain ITLCs.
Prospective tendencies of the International Transport Logistic Centre development.
Marketing researches and the experience of formation of competitive rates for transportation prove for the urgency of an additional link of automobile transportation by the private car fleet to the integral logistic chain.
The project purpose is organization of an intermodal transportation component – combined transportation of export-import cargoes passing from the countries of Central and Southern Europe to the countries of the CIS and Asia, and backwards, by automobile/railroad transport.
The project presupposes an active use of advantages of the combined automobile/railroad transport for rational organization of cargo flows as well as the use of the rolling-stock, formation of competitive service rates and ensuring of the logistic transportation scheme “door to door” on the optimum relations.
Realization of the project will enable establishment of an outgoing basis for the logistic chain organization, of a service complex for foreign-trading and transit cargoes, ensuring thus a high quality level of the transport-logistic service within the ITLC, will enable to engage additional cargo flows, to increase currency and budget incomes.
The sea port
Taking into consideration a great interest of cargo owners and forwarders of the countries of the CIS, Central, Southern and South-Eastern Europe in intermodal transportation of cargoes according to the scheme of the railroad-automobile-waterway transport and with the purpose of realization of measures on development of the international transit infrastructure, ‘The Complex Program on Ukraine’s affirmation as a transit state” presupposes erection of a port on the river Tisa in the region of Chop town (at the border of Ukraine, the Hungarian Republic and the Slovakian Republic).
Erection of the above-mentioned port at the area of Chop on the 630-th kilometer of the Tisa with the processing power of 1mln. tons of cargoes and the matter about arrangement of navigation has been initiated by the opened joint-stock company "Zakarpatinterport" with the future cooperation with the “Variant-Logistic” LTD. Working out of the project of the port erection is being held by the project-research and engineering-designing institute of the river transport «Richtransproect». Building works presuppose engagement of Ukrainian and foreign investors, technical support of the EU’s structural funds in the amount of 20 mln. USA dollar. It is worth mentioning that arrangement of transportation is possible only on condition of opening the river Tisa for international navigation, what requires conclusion of the Convention on the navigation regime on the river Tisa by the countries of the river basin (Ukraine, the Hungarian Republic, the Slovakian Republic, the Republic of Yugoslavia).
Opening of Ukraine’s waterway with the countries of the basin of the Danube through the territory of the Hungarian Republic and the Republic of Yugoslavia will be of great importance at the international, national and regional levels, ànd in the international aspect as follows:
- erection of the port, which will become the initial (and the final) point of the waterway network of the river Tisa, will ensure a direct approach to a shorter and, correspondingly, to a cheaper, in comparison with the route through the alternative ports, transport way from the CIS countries to the markets of Central and Southern Europe and backwards;
- taking into account Ukraine’s western neighbours’ joining the European Union and Ukraine’s closer approach to “Schengen borders», the common use of the waterway network will contribute to Ukraine’s integration into European transport system as a transit state making it, thus, an integral link between the countries of Europe and the CIS.
Establishment of an efficient intermodal system by means of erection of the river port on the Tisa in the area of Chop due to competitive tariffs and extra volumes of transit cargoes through Ukraine will ensure the production capacity in the amount of 34,7 mln. dollar per year, besides the budget income of the region will make up 1,3 mln. dollar per year.
Domestic cargo and passenger transportation.
In order to extend services provided and to increase the volume of works within the frame of the logistic centre it has been planned to introduce a project on development of internal regional transportation with the use of the existing network of the narrow-gauge railroad. This network was built for production needs of the wood harvesting and woodworking industries of Transcarpathia and ³t is in an abandoned state at the majority of its parts. There are working just a few sections of the network long about 100 km out the general length of over 1000 km.
Reconstruction of the existing narrow-gauge network is possible with the engagement of investments for the project on establishment of a local railroad transport-passenger company.
The general amount of investments for reorganization of the narrow-gauge transport network may make up about 18 mln. UAH. The reconstructed transport network will be able to provide services on transportation for about 8-9 thousands ton of cargoes and 80-90 thousands of passengers per year.
Transportation by the internal narrow-gauge lines are intended to be included into the general logistic transport scheme of the ITLC’s services.
The international transport-logistic centre (ITLC) in the town of Chop (Ukraine) may become a unifying management body for intermodal transportation at the western border of Ukraine, representative offices of which should be located in the tons of Zahony (Hungary), Chierna-nad-Tisou (Slovakia), large international trading-transport centers at the cross-sections of transport flows from Europe to Asia and backwards.
In view of the prospective of cooperation in the sphere of transport logistics and the many-years’ experience of Ukrainian terminal companies, as well as considering the national strategic interests of the parties participating in the project, establishment of the International Ukrainian-Hungarian-Slovakian-Russian Transport Logistic Centre at the territory of Ukraine is a complex prospective of a successful international cooperation.
Due to participation of all the parties involved there will be an increase of the quality level and of the efficiency of cooperation of the centre with administrations of certain railways, ànd there will also be an improvement in the business and social climates of the adjacent territories. Marketing researches held by specialists of the EUUTC Association presuppose that establishment of the ITLC in the form defined by the given Conception may result in the future in additional 30 thousand workplaces (9 thousand per each country-participant on average!) and at the same time it may considerably enrich their budgets.
At present a group of companies engaged in the foreign-trade activity on the relation of the ITC-5effciently works on establishment of a commodity exchange at the border with the EU. The commodity exchange functioning in that area is presupposed to be an efficient tool of activation of bargaining transactions between the countries of the EU and the CIS.
All these factors enable us to affirm that there really exists an intellectual as well as a material basis for establishment and equipping of a powerful transport megalopolis at the turn of the EU borders, what contributes to a dynamic development of Ukraine’s transit potential on the given relation.
In case of involving investments on equally and mutually beneficial for the parties conditions, and taking into account existing capacities of the frontier transport infrastructure of the Transcarpathian region, the project in consideration may be realized in short terms, what will certainly have a positive effect on resumption of the Great Silk Way in the railway communication.
European Association of Ukrainian Transport Companies © 2006