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SPEECH/10/657

Siim KALLAS

Vice-President of the Commission, responsible for Transport

Global challenges for transport in the European Union

Fourth International Forum on "Transport of Russia"

Moscow, 17 November 2010

Ladies and Gentlemen,

Our citizens and businesses have benefitted greatly from development in the area of transport. Transport allows people to enjoy a freedom of travel that is unprecedented in history. Transport has enabled the economy to organise the production of goods in a most efficient way. Transport is a huge part of our economy – 10% of the average costs of end products are related to transport and logistics; 13.5% of the household budget in Europe goes to transport. At the same time, our European air space is saturated, our land transport is congested and the environmental impact of transport is considered unsustainable.

To develop the European single transport area, the European Union intends to implement following main actions:

First, reduce barriers to competition and to smooth out the functioning of transport. This means the completion of the European single market also in terms of transport. In aviation it means mostly the plan called the Single European Sky – the creation of a united area of air traffic management together with the modernisation of air traffic management technology. The Single European Sky project is expected to deliver considerable savings, to increase efficiency and to reduce CO2 emissions. It continues in 2012 with the completion of the so-called "functional airspace blocks". In maritime transport our actions are focused on the reduction of administrative barriers for short sea shipping, on the safety of ships, security and on the social agenda to improve the lives of seafarers. In rail, we attempt to overcome politico-national fragmentation of this mode of transport, to create good, competitive pan-European railway services for our passengers and businesses. In road transport we will go ahead with the abolition of cabotage restrictions. Our biggest priority is the increase in road safety.

The second main set of actions concerns technological development, first of all promoting intelligent transport systems, IT applications, new fuels, new engines, and modern management of traffic flows.

And third, we are preparing the new Trans-European Networks plan for the next financial perspective, 2014–20.

In all our activities to develop transport we have two main constraining frames. One is the set of environmental constraints. We have to reduce the emission of greenhouse gases, CO2 and other negative environmental impacts of transport (noise etc.) Second is the financial environment. There will not be any increasing availability of taxpayers' money for the infrastructure investments that are urgently needed. We need bigger involvement of private capital. We need solutions to make infrastructure investments attractive to private money. The key element is to foresee the long-term revenue stream. In this regard, fair pricing in all transport modes becomes especially important.

There is money in the world available for good infrastructure projects. But private money is only available under certain conditions.

The main recommendations from large private investors are the following:

First: Cut politics from business and guarantee that the rule of law dominates above all. It can be done, ensuring the independence of economic operators. The best way to have independence is to have private enterprises. Private investors are of the opinion that there are a lot of interesting entities which can be privatized and revenues from the privatization can be used for public investments, also in those parts of infrastructure where private money cannot be involved. An essential element in separating the economy from political interference is the existence of strong independent regulators which must also execute efficient supervision on undertakings and enterprises.

Second: Cut bureaucracy. This is mostly the bureaucracy of permits needed to launch infrastructure projects. We have occasionally a situation when almost every interested party can stop investment projects for an unlimited time. The private sector cannot accept to wait indefinitely for the permission decisions. Of course, procedures need time but this must be reasonable and predictable, following the rule of law.

Third: Conditions for infrastructure investments must not be changed for 30 years. A change in government should not reverse the decisions made for the long term.

Fourth: Projects must be of a reasonable size; not too small, but also not too big. Then they can be handled.

Transport faces global challenges. Maritime transport is already practically global, so the regulations must also be global. They can be done in the context of the International Maritime Organization where cooperation and understanding between member states is essential.

In aviation, during the next ten years we will see global consolidation of the sector. We will have global carriers instead of regional and national carriers. To meet global challenges international cooperation is vital. The latest decisions of ICAO provide a good basis for such cooperation.

Creating bigger aviation areas can also help to meet global challenges. The EU has an open skies agreement with the United States. Together we account for 60% of world civil aviation. We propose to further develop the EU–US open skies area based on five points:

First, to establish a common security environment based on mutual trust, not mutual suspicion; second, to develop commercial space with common rules and common opportunities for aviation business; third, to cooperate in technological development (air traffic management), fourth, to develop a common environmental policy to reduce CO2 emissions; fifth, to create a common approach concerning third countries.

Now what about transport relations between the European Union and Russia?

We have a large variety of issues to discuss and to develop. I cannot cover all possible ideas and problems, but allow me to make some remarks.

In maritime transport we have positive achievements in EU–Russia relations, especially in the field of port state control and cooperation as regards the exchange of vessel monitoring data.

In total, 373 million tons of goods were imported from Russia – mainly via pipelines, 6% by railways, 2% by roads. From the EU, 19 million tons of goods go to Russia – mostly by road and the products are manufactured products, chemicals, foodstuffs. The East–West flows are substantially larger than the West–East flows. The main goods transported are oil, liquid fuel and other liquid chemicals, followed by dry bulk and metals.

Volumes of transport of these products have substantially decreased over the last few years partly as consequence of economic slowdown, partly because of structural changes. Except for liquid fuel, we do not foresee substantial increases in transport of other large-volume goods in the future. Transport of manufactured goods will increase, according to the economic development in Europe and Russia – first of all in value, not so much in terms of volume.

In the development of road transport we see the following obstacles:

  • border crossing difficulties, especially complicated customs procedures;

  • the poor state of roads, especially at sections close to borders;

  • problems with road safety;

  • security of drivers and cargo;

  • different and non-transparent road charging policies.

Overall the export performance in tonnes of EU hauliers is three times more than the import performance, resulting in an amount of trucks returning from Russia empty.

Russia can play an important role in transit transport between Europe and Southeast Asia.

Interesting work has been done by Deutsche Bahn and Russian Railways to develop transcontinental rail freight corridors between Europe, China and further east. This project can only be appreciated and supported. The economy needs diversification, and possible choices for customers to transport goods in the most efficient way. But to offer a real alternative to maritime transport is a big challenge. It must be commercially viable. What can help to develop an economically beneficial continental alternative for businesses interested in transporting their goods from China to Europe and vice-versa?

The crucial elements are quality of services, price and speed.

This transcontinental route needs substantial investment, especially to pass the critical junctions of big cities and to increase the capacity of Russian railways to handle increased freight traffic, also to overcome the difference between gauges in China and Europe (1435 mm) and Russia (1520 mm).

The economic conditions – customs procedures, transparent and fair track access charges and tariffs – play very important role.

In my view Russia has paid too little attention to the huge potential it has in world aviation. Aviation in Russia has been until now developed in isolated way. In my opinion, this is not a viable way and it is very costly. Russian aviation has lost time and profits.

There is no advanced and competitive Russian airline competing in global aviation markets. Aeroflot has about 100 airplanes; Air France-KLM, 624.

Apart from Moscow and St-Petersburg, there is a lack of modern airports. Over the past 15 years the number of operating airports has decreased considerably. There is no big international transit hub (except perhaps Moscow), especially concerning the opportunities offered by Russia's vast territory and its location between Europe and Asia. There are few modern service facilities. There is a big need for investments in runways and airport facilities.

Air traffic management needs also considerable modernisation to cope with the needs to manage increasing air traffic.

And of course there is the non-transparent and obscure set of taxes, custom procedures and tariffs which hinder competition and international division of labour.

The European Union has its own economic interest in developing cooperation with Russia in the transport field. Our current relationship, especially in aviation, is a waste of opportunities. Together with the Russian Ministry of Transport we have started to explore possible steps to get out of the current impasse in EU–Russia aviation relations.

Ladies and Gentlemen,

The world is becoming increasingly global. This is especially visible in the developments in transport. Politico-national fragmentation is terribly damaging as concerns the possible benefits for citizens and business. Economic isolation is costly. Fair competition is good for everybody.

We in the EU are convinced that working towards cross-border and global solutions, as well as removing barriers, is beneficial for everybody.

Thank you for your attention.


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