Visit of the World Bank experts in Ukraine: in the “field of vision” – logistics

From 28 to 31 March, a team of the World Bank experts had an official visit to Ukraine. In the framework of Road Transport Corridors Project implemented by the World Bank team, several meetings were held between Peter Kraus, senior adviser, Professor Lauri Ojala and the representatives of the automotive industry in Ukraine. The Centre for Transport Strategies is the local adviser of the World Bank and coordinator of the transport projects implemented by the World Bank in Ukraine.

The purpose of the visit is to track the activities related to the identification of priority road transport corridors, to contribute to the preparation of the Plan of Logistics Activities and to remove the obstacles to the development of automotive logistics in Ukraine.

To understand the practical situations faced by the participants of the domestic logistics market, the World Bank experts met and held a Skype conference with the representatives of one of the largest Ukrainian logistics operators – ZAMMLER Group.

The problems of international transport, in particular, periodic lack of transportation permits, were on the agenda. Guided by long-term practical experience in international transportation, Sergey Shelestyuk, CEO of ZAMMLER POLSKA SP. Z.O.O., noted that the main volume of transportation to/from Ukraine accounts for Ukrainian carriers. In view of a number of factors (condition of the roads, bureaucratic obstacles, carriage tariffs), not all international carriers are eager to operate in Ukraine. In the second half of the year, the problems with the transportation permits, even transit permits, typically emerge. Frequently, the pricing at this time is dictated by major companies that own ECMT books (European Conference of Transport Ministers – an intergovernmental organization founded in 1953, ECMT permit which entitles the holder to unlimited and unrestricted cargo transportation and travel through the territory of the countries set out in this permit). This significantly reduces competition in the market and leads to a kind of monopoly, which results in raising prices on transportation in some directions. In addition, the issuance of ECMT permits and single permits invokes a risk of corruption. Therefore, it is necessary to negotiate with the European Union on the partial cancellation of transit and two-way carriage permits. This will be beneficial for both the EU and Ukraine, since it will increase competition and, as a consequence, improve the quality of services provided.

Licensing of carriers is another topical issue. A representative of ZAMMLER Group, expressing the position of an operating business, stressed the inappropriateness of additional licensing for carriers. “This will create additional bureaucratic obstacles, which is enough as is it. It is necessary to introduce and strengthen control over the enforcement of existing laws and regulations, namely traffic rules, AETR (European Agreement concerning the Work of Crews of Vehicles Engaged in International Road Transport), etc. Currently there is no proper control over AETR that is why the drivers often work for 18-20 hours a day. This, in turn, leads to higher accident rate. Similarly, there is no control over weight parameters of trains, which results in overload and road surface damage”, said Sergey Shelestyuk. Meanwhile, both Ukrainian and international logistics operators and transport companies should comply with the global quality and business requirements. For example, compliance with the standards of the International Organization for Standardization (ISO) should be an essential condition for the operation of a company that claims to be a reliable partner in the global market.

Two other issues that require urgent solution for the development of logistics business and industry in general include customs operations and road conditions.

To accelerate the clearance of import/export cargo and border crossings, it is necessary to work on simplifying customs operations and procedures. Currently, the customs clearance procedure is too bureaucratic and non-transparent.

Regarding the state of Ukrainian roads, the business is of unanimous opinion – one needs to pass from the dissatisfaction with the road surface to actions. It is important to define road corridors for priority repair and development, and to develop a system of “toll roads”.

Also during the visit the World Bank experts held meetings with the representatives of the Ministry of Infrastructure, Ukravtodor, the State Statistics Service and professional associations of road carriers. Following the negotiations, the World Bank representatives will provide recommendations to the Ukrainian Government regarding the reform program to overcome obstacles and improve the efficiency of road transport.

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