Dmitry Potapenko: Afanasy Nikitin Association is involved in development of the North-South transport corridor

North-South transport corridor is a window of vast opportunities. In his interview with IAA PortNews, Dmitry Potapenko, President of Afanasy Nikitin Association, tells about the challenges of launching the corridor and the ways to meet them in current conditions.

- What are the bottlenecks of the North-South transport corridor. What should be done to sort them out?

- The key problem now is the absence of an adequately made-up project: there is no plan for establishment of management structures or a definite concept of what structures, when and how will create and manage the international transport corridor (ITC). Most significantly, there is no ideology of the corridor, no understanding of conditions or regulation of its functions, conditions of entry and application of Standard International Trade Classification for customers and operators. Besides, there is no stage-by-stage approach to creation of the transport corridor, its division into directions or force distribution for its launching. However, basic ITC elements are being developed and launched by Afanasy Nikitin Association.

First of all, a unified body of strategic management should be defined, responsible persons in the Russian Government should be appointed and an ideology with basic regulatory and schedule elements should be developed. Then it should be approved by the member states and a unified ITC operator should be established. Upon completion of those steps a plan can be developed for creation of the North-South ITC, from a strategic point of view, not virtually but with the dates and figures.

Essential also is the considerable technical and organizational difference between countries crossed by ITC. A unified ITC structure is needed to play a role of international and interdepartmental organizer and regulator. In the result it would create a technical, technological and organizational foundation of ITC.

The difficult thing in the North-South ITC project is to get all the conditions including operational, technological and financial ones approved by all countries involved in the project. Without specific measures on approval of the activities for creation of infrastructure facilities and organizational systems it will be impossible to launch the corridor as it was planned for a faster and cheaper transportation of cargo.

For our part, we are striving to sort this all out. At the pre-project phase, the team of Afanasy Nikitin Association held numerous meetings with ad hoc ministries of Russia, authorities of the Volga Federal District and representatives of the Russian business community. Business contacts have been established with the governmental and commercial structures of Iran and India. Considerable interest of all the potential stakeholders has been revealed. There are preliminary agreements on participation of India and Iran in the project financing. Agreements have been achieved with Russian manufacturers of agricultural products on supplies to Iran and on further re-export to neighboring countries in cooperation with Iran companies (particularly to India). Contracts have been signed between companies of Afanasy Nikitin Association and consumers of Russia’s agricultural products from Iran and India. Agreements have been achieved with a number of ports in the Astrakhan Region on reconstruction works involving foreign co-investors attracted by the Association.

Moreover, a concept of a unified operator has been developed to coordinate activities of companies and organizations representing various industries and regions.

A concept has been also developed for a digital service on resource information. That service is to help monitoring of commodity flows, logistic processes and transport traffic along the entire route to ensure its enhanced technological and safety level.

- Which ports in the Caspian region do you consider the most promising for the development of facilities focused on transshipment of export cargo? How can the interests of different countries’ ports be balanced within the project?

- It is important to decide clearly, what is the purpose of the North-South ITC and related projects. It is needed either for a stable transport and logistic servicing of cargo as a multimodal link between the countries or for arranging exports from the Russian Federation to the Asian and APR countries.

The first scenario inevitably requires the creation of a comprehensive transport infrastructure complying with the current requirements on high-class and fast logistic turnover and focused facilitated introduction of the latest technological and organizational developments. In this case, the project should be based on what is available today and what can be developed and modernized. That is at the phase of launching and establishment of the corridor structures.

In the other case, it is not reasonable to create anything fundamental. The available facilities should be retrofitted with a new technical and technological base. Besides, a complete reorganization is required with establishment of a unified optimization module and a mechanism of privileges and special conditions applied.

Experts of our Association opt for the first scenario. The idea of creating a multimodal transport and logistic corridor already offers advantages for cargo owners as it is purpose is to provide clients with tariff and time advantages. Quality is an additional advantage. Organizationally, ITC is a structure consisting exclusively of some permits and regulations for cargo owners and logistic operators interested in them.

Consequently, a dialogue with any ITC operator is limited by the ideology and conditions which offer advantages to the customer of the ITC services. If an operator is not prone to create such conditions there is no sense in participation. When developing the rules and conditions of the corridor, it is reasonable to avoid its rigid ‘forever and complete’ connection with the infrastructure units and operators since he corridor is a volatile mechanism. It is better and easier to include the mechanisms developed by the Afanasy Nikitin Association into the newly created corridor.

Only ports with narrow specialization can operate for exports alone. There are no such ports in the south of Russia. All ports service a variety of cargo flows. The North-South ITC project is not of mono-specialization. Therefore, all ports available today should be used at the phase of the project development and undergo service improvements.

It should be taken into consideration that hydrological situation in the Caspian Sea is cyclical and it is a down cycle now. It is quite probable that the Big Caspian Canal will have to be considerably extended in 20-25 years instead of construction of new ports.

As for railway infrastructure, the corridor is profitable for railways when there is a clear understanding of volumes for at least three-five years. This understanding can only be ensured by such structure as ITC. However, the railways should create conditions foreseen by the ITC ideology. The work on creation of ITC structure should be conducted with respect to the above-mentioned aspects.