Konstantin Stolpovitsky: “Liners will be given high priority when being serviced in the port”

RF Transport Ministry has developed a draft federal law “On introduction of amendments into Merchant Marine Code in the part of the state regulation of line shipping” setting forth normative legal regulation of conditions for creation and functioning of line shipping in the Russian Federation. As it is noted at the Ministry, the purpose of the bill is to ensure favorable social and economic environment for creation and functioning of line shipping and for improvement of Russian seaports’ competitiveness with their development as international transport and logistic centers. Konstantin Stolpovitsky, Head of Transport Ministry’s Shipping Department, tells IAA PortNews about the new document.

- Mr. Stolpovitsky, what is the current status of the documents on line shipping regulation?

- The draft federal law has been prepared already. Positive comments have been obtained from the Ministry of Finance, Federal Customs Service, Federal Tariff Service and Ministry of Regional Development.  Editorial remarks of the Economic Development Ministry and the Federal Security Service have been taken into consideration in the revised document. The next step is submitting of the draft law for anti-corruption expertise in the Ministry of Justice and for regulatory impact assessment in the Economic Development Ministry and Institute of Legislation and Comparative Law of under the President of the Russian Federation. We expect this bill to be submitted to the government as early as in May 2013. 

The shipping community had criticized the existing procedure applied for the organization of line shipping in the Russian Federation as it does not comply with the contemporary context of this market which served as a background for initiate development of this draft law by the Ministry of Transport.
Following the meetings and the document discussions, business community confirmed that legal regulation in the sphere of line shipping is generally quite urgent as the industry needs it today. We have agreed to continue joint work on the draft law during the discussions in the government and the State Duma.

It should be noted that the bill will regulate not the economic activities sphere but exclusively the form of its organization. Any company can be engaged in normal shipping without being registered as a line even if the services provided by it are typical for line shipping. Otherwise, it can be registered as a line to be provided with corresponding benefits in the port.  The form of shipping organization is the choice of the shipping company.

The line shipping implies certain conditions of carrier’s operation like publicity of services provided to general public, informing of this public before signing a contract for sea transportation, announcement of sea line schedule, preservation of work conditions in the part of cargo and passenger capacity of vessels. All these conditions are obligatory for operation in the form of line shipping. All these criteria are among the liabilities of the carrier providing line shipping services.

- Tell more about benefits provided for line shippers?

- Line shipping is connected with certain risks including underloading of a vessel and the obligation to comply with the schedule despite any conditions. In this respect the government presents the following preferences: discounts for port dues and priority servicing in the port including all procedures involving activities of a commission, border/customs issues, inward/outward processing of vessels by Harbour Master.  The entire package of issues is supposed to be solved with a high priority given to liners.

- Are the discounts to be large?

- Current rates of port dues are set by the Federal Tariff Service. The discount for cargo liners is 20% today.

Shortfall in seaport income caused by discounts provided for liners is expected to be compensated with more frequent calls on the seaport over the period of the line registration (minimum half a year or during the navigation period) as well as with income from cargo handling and passenger servicing.

International practice shows that line shipper in foreign port usually gets the same preference in the form of port due discount but it will be differentiated. In particular, if a line makes one call a year it will get the minimal discount from port dues. In case of frequent calls or growing number of calls in the course of the line operation it is reasonable to regulate tariffs for port dues discount as it raises the attractiveness of the port as a transport hub and sometimes ensures social availability of maritime transportation.

- Will the Russian legislation apply this system?

Tariff regulation is the competence of the Federal Tariff Service. The bill systematizes the procedure and conditions for line registration as well as general requirements to line carrier. 

Differential approach to providing discounts from port dues seems to be reasonable when used as a regulating instrument serving as a lever for creation of social and economic conditions for line shipping development in any separate port.  

- What is the current system of line shipping regulation in Russia and what is going to be changed in line registration in the future?

- Current procedure of opening and registration of sea lines is the competence of Federal Marine and River Transport Agency in compliance with “Recommendations of Government Marine Fleet Service of RF Transport Ministry on opening, registration and functioning of cargo, passenger and cargo-passenger sea lines” of 2002. These recommendations are not a regulatory act. Besides, they are outdated and require revising.

The body in charge of line registration is still Federal Marine and River Transport Agency (Rosmorrechflot) but the procedure will change considerably.

First of all it is tariff publicity. The bill sets forth a condition obliging container, ferry and passenger lines to provide public information about their activities and tariffs they apply. The bill implies that tariff changes are to be introduced under on-line basis.

Secondly, equal requirements to foreign and Russian shippers while former procedure implied additional requirements for foreign carriers. The document also provides for registration of a line by a group of carriers.

The bill suggests legal formalization of specific terms and concepts, basic requirements to line companies, conditions of their registration and termination of registration, causes of termination. The bill also envisages enactment of a specific act about sea lines concerning the registration procedures and issues related to termination of line operation in case of breach of obligation.

The bill comprises the mechanism of recovery of funds received in the form of discounts for port dues during the operation period if the line fails to implement its obligations. 

- Who is to register the violations?

- The violation of line operation will be registered upon appeals of citizens, municipal and regional authorities to Rosmorrechflot. The facts of such violations will be checked by the Federal Agency for Transport Supervision (Rostransnadzor). In case of a conclusion confirming that the company violates the legislation, Rostransnadzor conclusion will be enough for Rosmorrechflot to terminate the line operation. If the registration is terminated before the expiry of the first minimal period (half a year), the line carrier should compensate for the preferences received during this period. If the carrier was registered only for this minimal period, it should compensate for the preferences received during this period in the form of discounts, if it was registered for a longer period, the compensation should cover only the first minimal period of operation.  

- How much time is given Rosmorrechflot for registration of a new line?

- Today the registration takes 30 and more days and this period is not regulated anyhow. The new law is to set forth a 10-day period for registration from the date of application. The only reason for rejection is the failure to provide data required for a line registration.

Interview prepared by Nadezhda Malysheva and Margarita Babkova