Adjusted forecast for the Russian transport sector's social and economic development in 2002-2004

Total transport revenues are estimated around 249 billion rubles (USD 8.3 b) - for comparison: in 1999 the revenues were 150 billion rubles (USD 5 b).

Rapid growth in domestic waterway, air and motor transport was observed, starting with the first half of 2001. Transit of container cargo through Russian territory is expected to increase approximately 30-35 percent this year. Commercial cargo transportation in 2001 totaled 1.9 billion tons, a growth by 28.5 percent within two years. For the first time in reform years it seems that Russian transport may be able to recover lost positions.

Motor transport. Motor transport accounts for some 60 percent of total cargo turnover. There are some 24 million units of motor transport vehicles in use in Russia. About 20 million units are passenger cars, 3.4 million are trucks and the rest are buses.

FOR INFORMATION ? To put an end to discrimination of Russian carriers on the international transportation market alone would yield annual revenues of 5-6 billion US dollars without additional capital investments.

Share of Russian motor carriers in transportation of export-import cargo in 2001 was more than 40 percent (due to cuts of transit permits issued to foreign carriers). Foreigners still prevail in some regions, however. (Graph 2)

The motor vehicle pool has the following main shortcomings: only 7 percent of cars have been in service for less than 5 years, 48 percent of trucks are fully depreciated and have been in service for more than ten years. Truck fleet replacement/ renewal rate at motor transport companies is 2.7 percent instead of the statutory 10 percent. At the same time, over 14.5 percent of the fleet is being written off.

Sea transport. In most cases reloading of export-import cargo is being done at foreign ports. Tax pressing has pushed the Russian fleet beyond the admissible limits of competitive ability, which accounts for its withdrawal to offshore zones. Today Russian ships are still in the business of international maritime communications, but income from their operations replenish the budgets of other countries.

Out of 162 vessels built since 1992, over 90 percent have been registered under foreign flags. Russia's annual losses from lost tax revenues from ships registered in offshore areas exceed 150 million US dollars.

The key problems of Russian sea transport is the inadmissible fast aging of the fleet. Number of ships entered in Russia's national registers fell from 799 to 226 units over last eight years. By 200 already the average age of Russian vessels was over 20 years while the average age of most  foreign fleets is 14 years.

Domestic waterway transport. A total of 1,675 shipping companies in different forms of ownership are operating in this sector in Russia. Commercial cargo transportation last year was 122.4 million tons, yielding 20.4 billion rubles (USD 680 b) in revenues.

The average age of river-marine vessels is 22.6 years. Nearly 85 percent of boats used to provide shipping services have been in use longer than the statutory service life period. Of the river fleet totaling 11,530 vessels, 1,200 are in inadequate or only partly adequate technical condition and 34 percent are past the statutory service life period. By standards, 5,500 boats or 47.7 percent of the existing fleet should be written off.

With the purpose to reorganize the Russian transport sector, the Russian government adopted the federal target program Russian Transport System Modernization. Its costs will reach 4.5 trillion rubles at 2001 prices (USD 150 b). Of this, 22.5 percent will be taken from the federal budget, 30.4 percent from budgets of the federation subjects and 47.1 percent will come from out-of-budget sources.  

Cargo turnover in main Baltic ports, mln.tons

	1996	1997	1998	1999	2000	2001
Finland	70.0	75.2	76.9	77.0	80.6	81.2
Russia	21.4	26.5	26.0	32.3	36.8	42.7
Estonia	14.1	17.1	21.4	26.5	29.3	32.3
Latvia	45.4	50.3	51.6	48.4	51.1	56.1
Lithuania	14.8	16.1	15.0	15.0	19.4	17.2
Poland	50.0	51.3	50.5	46.6	43.4	47.4

Source: Port statistics