Militzer & Münch Magazine issue 02 | 2010

ChallengeRussia

Transit Country and More: Belarus

Last year, we presented here, at this same spot, our altered strategic orien-tation. With new organiza-tional structures, newly de-fined business sectors, and a new road traffic concept, we set to work on refin-ing the Militzer & Münch Group and developing our strengths as a transport logistics specialist for the Eurasian region.

In the mean time, we have successfully mastered many stages on this road: Our central key account management is working on a number of interna-tional customer projects; we are systematically expanding our network in our core regions – North Africa, Europe, and Asia – with targeted investments; and our customers benefit from the growing range of standardized products and services we offer in these regions.

Russia is the main topic of this issue of COMPASS. The country constitutes one of the world’s largest national economies, and thus plays a key role also in the further develop-ment of the Militzer & Münch Group. It was as a transport logistics pioneer that Militzer & Münch started its activities in Russia about two decades ago. Today, two Militzer & Münch country units oper-ate in Russia, with a staff of almost 800 working from 18 locations country-wide. Our Russian activities got new impetus from the complete integration of our Russian joint venture GERH that has been trad-ing since the beginning of September under the

Dear reaDername of Militzer & Münch.A circumstantial interview with Werner Albert, Alexei Kovalenko’s very personal plea, and an interview with Richard Hartmann com-bine to offer a comprehen-sive picture of Russia as seen from different per-spectives. Marina Dshegrij and Eugene Shakalida pro-vide a good insight into the activities of Militzer & Münch and Trasko. More on this: page 6 ff.

Not only geographically is Russia closely linked to its neighbor Belarus, but also economy-wise and culturally. Owing to further privatization and liberalization programs, Belarus’ emerging market is becoming still more at-tractive, and the country is shifting from transit coun-try to up-starting produc-tion location and growing sales market.

In Belarus, too, we now offer our customers the services of all five Militzer & Münch business sectors. M&M Militzer & Münch SOOO was founded in 1992, just months after the country won its independ-ence, and today counts among the country’s leading transport logistics companies. Just recently, the Militzer & Münch Belarus head office moved to ultra modern premises, from where it will push the company’s further de-velopment. More details and background informa-tion on Belarus in Victor Blazhuketvitch’ contribu-tion on page 16 f.

At this point, I would like to extend my thanks not only to the staff in Russia

and Belarus, but to all our personnel, for advancing the development of our Group with their high commit-ment, great willingness, and above average performance. With determination, we will continue along the chosen path also in the future; we will continue expanding our regional presence and our business sectors, too. This is the way to advance our Group – and our customers will profit from more com-prehensive services also in those regions that are not included in other providers’ standard operations port-folio.

As always, let me conclude by saying: Enjoy reading this new copy of our COMPASS!

With my kindest regards,

Ewald Kaiser

02 | EDITORIAL

ewald KaiserChief Executive OfficerM&M Militzer & Münch

International Holding AG

05 | NEWS

Heavy Lift Airfreight for PetroChinaMilitzer & Münch has been doing transports for PetroChina for quite some time – like the recent heavy lift transport via airfreight.

12 | FOCUS

Militzer & Münch in Russia: Success in the Double PackWith two companies, and a staff of almost 800 working at 18 locations, Militzer & Münch counts among the leading providers of transportation logistics on the Russian market. Militzer & Münch is aiming at further developing this strong market posi-tion.

04 | NEWS

New Center of Compe-tence in AlmatyIn Kazakhstan, Militzer & Münch now operates a regional center of competence for Central Asia.

CONTENTS | 03

16 | REGION

Belarus: Much More than a Transit CountryIntersection of major Eurasian traffic routes, upcoming production location and growing sales market – the Republic of Belarus has many facets.

PublisherM&M Militzer & MünchInternational Holding AG Zwinglistr. 25 9000 St. GallenSWITZERLAND

Contact: Deborah MüllerPhone: +41 71 22715 63 Fax: +41 71 22715 50 Internet: www.mumnet.com

Responsible for contentsEwald Kaiser, CEO

Editorial Office | LayoutSTROOMER PR | CONCEPT GMBHRellinger Straße 64a20257 HamburgGermany

Phone: +49 40 853133 0Fax: +49 40 853133 22eMail: mail@stroomer-pr.de

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04 05 16

06 | FOCUS

Challenge RussiaNine time zones, 142 million inhabitants on an area of approximately 17 million square kilometers – Russia is a country of grandiose superlatives. Yet huge as the country are also the challenges. COMPASS reports on these challenges, the Russian market, the economy, and the logistics.

news//

New Center of Com-petence for Central Asia

04 |

To strengthen the Central Asian Militzer & Münch companies, Militzer & Münch set up a regional center of competence in Almaty, Kazakhstan. “Kazakhstan is a very appropriate loca-tion for the new center of competence”, says CEO Ewald Kaiser, “especially as the local Militzer & Münch company has a wealth of experience in handling major logistics projects. The center will contribute considerably to the strengthening of the whole area.”

Among the main tasks of the new competence center is the coordination and smooth implementation of customer projects across national boundaries. The center is also to be the starting point for the development and harmonization of all Militzer & Münch services in Central Asia. Large scale investments in sales and business devel-opment accompany the new measure.

Matthäus Radner, 31, former Managing Director of Militzer & Münch Baku Ltd. in Azerbaijan, was appointed Regional Sales Director Cen-tral Asia – a new position – as of August 1st.

Cooperation with Balnak Intensified

Since June 1, 2010, the Ger-man Militzer & Münch Group has been co-operating with the Turkish logistics company Balnak, too. Balnak is head-quartered in Istanbul. The German Militzer & Münch Group now processes all shipments from Germany to Turkey through Balnak, while, in return, it distributes, Germany-wide, all Germany-bound shipments from Bal-nak. The contract is valid for road transportation.

Balnak is among the lead-ing logistics companies in Turkey and operates its na-tional distribution network with company-owned trucks. Since 2006 already, the Mil-itzer & Münch companies in Morocco, Tunisia, and France have been successfully work-ing with the Turkish partner. “Our partnership with Bal-nak has had a very positive development”, says Ewald Kaiser, Chief Executive Of-ficer M&M Militzer & Münch International Holding AG. “It is only logical then that we, as a specialist for Eurasia and North Africa, should intensify this constructive co-operation and execute our transports between Germany and Tur-key via the cooperation with Balnak, too.”

Militzer & Münch Apppoints Thorsten Meincke

Since August 1, 2010, Thorsten Meincke has been a member of the Militzer & Münch International Hold-ing AG management. He is responsible for the busi-ness sector “sea” and the IT development of the Group. He also has been appointed Regional Managing Direc-tor for Asia and the Pacific region.

In the “sea” sector, Meincke is primarily in charge of the development and imple-mentation of a new product and growth strategy, with the main focus on developing the ocean freight business from and to the Far East and, in this context, especially from and to China. In his function as Chief Information Officer, Thorsten Meincke is going to develop and realize one IT strategy for the whole Group. Thorsten Meincke works from Hamburg.

Meincke, who holds a de-gree in Economics, has been working in the logistics sec-tor for over 20 years. He held various management posi-tions. In the last three years, he was with Kühne + Nagel, where he coordinated the global distribution and mar-keting activities of the Group as Senior Vice President Sales & Marketing.

NEWS | 05

Heavy Lift Airfreight for PetroChina

etroChina Company Limited is China’s largest producer and supplier of oil and gas. With over 18,000 filling stations, the energy company is among the strongest selling com-panies in the People’s Re-public.M&M Militzer & Münch Tianbao is transporting parts from all over the world to China as PetroChina in Liaoyang, 600 kilometers east of Bei-jing, is expanding one of its production lines. The parts are shipped by air to Dal-ian, Beijing, and Shenyang.

Transporting an out-of-gauge butterfly valve from Germany to Beijing was a particular challenge. The part weighed 4,550 kilograms and came in a special 16 cubic meter box. The first leg, 600 kilometers from the production site in Munich to Luxemburg, was

done via heavy duty truck. For this, the Militzer & Münch Dalian team coop-erated with the colleagues from Militzer & Münch in Munich. After the part was loaded onto a freight plane at Luxemburg airport, it was transported to Beijing in a direct flight.“What with the cargo’s over-size and heavy weight, we had to plan every single detail for this transport very carefully in advance”, says Wei Li, Branch Manager Militzer & Münch Dalian. “In the end, all went well in spite of the tight time slot.”

For over two decades, the Chi-nese oil and gas company PetroChina Liaoyang has been working with M&M Militzer & Münch Tianbao. In June, the Mu-nich based Militzer & Münch team helped their Chinese colleagues with an air freight transport – the piece weighed 4.5 tons.

06 | FOCUS

Challenge

RUSSIANine time zones, 142 million inhabit-ants on an area of 17 million square kilometers – Russia is a country of superlatives. Yet huge as the country are also the challenges. In this article and on the following pages, COMPASS reports on these challenges, the Rus-sian market, the economy, and the lo-gistics.

Near – and Yet so FarFor many, especially West-erners, Russia has been and remains a mystery. To many, the country is still strange, un-known, in some cases even: suspect. And this, although the distance between Zurich and Moscow or Frankfurt and St. Petersburg is not so great. The real distance is the one that originates in our heads – this subconscious, subjec-tively perceived difference as to mentality and culture. Are these differences still there? Is Russia still so unknown, so far, and are the differences so insurmountable?Since the collapse of the Soviet Union in December 1991, Russia has come far. Especially remarkable is the way Russia mastered the challenges during the transi-tory period, when the country changed from a communist state to one of the most dynamic economies in the world – an economy that is freeing itself from its depend-ency on the export of raw materials, an economy that is on its way to become one of the most attractive markets worldwide.

The Russia pioneers“The thing is, you simply have to believe in Russia” – a well-known German TV journalist used this quotation from the Russian poet Fyodor Tyutchev in the 1990s, at a time when it was difficult to do so. Yet Militzer & Münch followed this belief, stayed true to its pioneering spirit, and set off for Russia almost 20 years ago. As with any enterprise of that kind, not everything went smoothly, and there were ups and downs – but in the end, they only propelled the com-pany forward.

Today, the Russian market has become part and parcel of Militzer & Münch: Russia is, next to Germany and France in the West and China in the East, one of the four core markets from which all other country and regional units of the Militzer & Münch Group get positive impulses for their own development.

Top service and qualitySince Militzer & Münch got on board of GERH, the joint venture that has been operat-ing since the beginning of

September under the name of Militzer & Münch, the development of Militzer & Münch in Russia has reached a new level. Together with our reliable Trasko, Militzer & Münch now counts among the strongest West-ern logistics companies in Russia, with a staff of 800 working at 18 locations. Our customers value our excel-lent service in all five busi-ness sectors, and every day, the professionalism of our staff and the top quality of our services assure our cus-tomers of this excellence.

alexei KovalenkoChief Financial Officer, Regional Managing Direc-tor North East Europe, M&M Militzer & Münch International Holding AG

and political tasks ahead – and how we as a company will be able to develop and strengthen our market posi-tion in Russia and sustain-ably expand our business here.

Please find more on Russia, our commitment there, and our successes in Russia’s neighbor Belarus on the fol-lowing pages.

With my kindest regards,

Alexei Kovalenko

Challenge

RUSSIA

Often, people ask me whether “wild West “ methods still prevail in Russia, whether corrup-tion in the bureaucracy or among business partners lets companies only per-form sub-optimally. A lot of those procedures that were standard in the nineties for “doing business in Russia” have now been replaced by normal, civilized busi-ness conduct. Today, such terms as compliance and corporate governance are no longer foreign words for Russian managers. Of course, it is going to take quite some time yet until the business culture in Russian companies has changed, until yesterday’s practices have been com-pletely un-learned. In its codex for corporate gov-ernance, Militzer & Münch defined values and princi-

ples concerning customers, staff, suppliers and au-thorities. Militzer & Münch Russia is committed to this codex.

Local and international know-howAlthough Russia and the West are slowly moving closer to each other, Russia still remains a special coun-try – in the positive sense of the word – with a special people. “You cannot under-stand Russia intellectually” – Fyodor Tyutchev’s famous aphorism from the 19th century is still valid today for us Westerners. Maybe that is the reason why Militzer & Münch leaves the managing of business in Russia to our Russian colleagues? As in every other country in the

Militzer & Münch geogra-phy, but especially in Russia, the knowledge of the local market of our Russian col-leagues, combined with their international know-how, allows the company to always meet the high de-mands of our customers.

When writing about Rus-sia, one mustn’t forget the women of Russia! It is very noticeable that, especially in the Russian Militzer & Münch companies, whether in Moscow or in Perm, in St. Petersburg or in Yekaterin-burg, women are the major-ity, performing excellent work day after day as logis-tics experts or as managers.

Strengthening the market positionTo me, Russia and the Russian people are still very near, for diverse busi-ness and private reasons, although I haven’t been living in Russia since the end of the year 1993 – so, maybe there is a chance I am not wholly objective. Yet, one thing is clear: The future and the success of the West, but also the success of our Group, depend in my opinion to a large extent on how successfully Russia will master all the economic

The GianTIS AWAKING

08 | FOCUS

As a transit territory between Europe and Asia, and as a huge domestic market, Russia offers immense potential to the logistics sector. The challenges are big, in view of the recent acceleration of economic growth, the growing international trade relations – import and export wise - of the Russian Confederation, and taking into consideration the relative low standard of the country’s logistics sector. International transport and logistics companies play an important role in expanding the service portfolio and in filling in logistics know-how deficits. Militzer & Münch is among the leading companies that are active in this field on the Russian market.

t the beginning of August, an IMF prognosis forecast a 4.25 % growth for the Rus-sian gross inland product in 2010. A growth that will not compensate for the 7.9 % decrease owing to the crisis in 2009 – yet there is growth expected also for the next few years. For 2011, the figure is 4 %.

The big crisis in Russian economy was caused mainly by two-digit decreases in industrial production and the construction sector. The recovery of the economy this year was slowed down by the record heat wave with its losses in harvest and export goods, and by the high costs of the fight against the catastrophic fires and the damages they caused. Agriculture is in a difficult situation now, and experts fear that this will put additional inflationary pres-sure on the economy. The

IMF prognosticates an infla-tion rate of 6 % in 2010, and of 5.5 % next year, for the Russian Confederation.

To a large extent, the IMF forecasts coincide with other estimates. International and Russian experts expect a moderate recovery of busi-ness in Russia in the coming years.

Better performance, new-er technologyRussia’s wealth today lies in its huge resources. Oil, natural gas, coal, and metals account for about 80 % of all Russian exports. In 2010 again, these resources were behind the growth in exports – a plus of 56.1 % (calcu-lated on a USD basis) in the first five months of the year. Imports, which had shrunk drastically last year, were up by 25.8 % in the same period.

The Russian government plans to focus more on in-novation and investments in modern technologies. Private initiatives are to be given more space. Experts expect the biggest privatiza-tion wave in Russia between

2011 and 2013, with the budget deficit of the Rus-sian Confederation acting as a strong impulse. The deficit grew enormously during the crisis. To de-crease the deficit, the government wants to sell off minority shares it holds in several companies in the oil sector, the energy sector, in water supply and distri-bution, and in the financial sector.

More modern, and with better performances, Rus-sia wants to establish itself as an important economic power and hub between Europe and Asia. The trans-portation and logistics sec-tor plays a special role here, as it is a prerequisite for the functioning of an innovative and diversified economy.

“Russia’s geo-political situation is perfect”, says Ewald Kaiser, CEO Militzer & Münch Interna-tional Holding AG. “Al-ready today, the country is a significant focal point in the Asia-Europe traffic as well as on the North-South axis from Northern Europe to-wards Iran, the Persian Gulf, and India. This potential will increase in importance over the next few years.”

Fewer customs barriersThe customs union be-tween Russia, Belarus, and Kazakhstan is a substantial step. Since the beginning of 2010, the three countries have agreed on common import tariffs and non-tariff related trade regulations. On July 1st, 2010, a com-mon customs codex was put into effect. Practice shows that there will be a considerable transition pe-riod until the customs union functions smoothly. Authori-ties have begun working on the necessary implementa-tion regulations. In all three countries, documentation forms and processes have already been harmonized to a large extent.>>>

FOCUS | 09

A

The GianTIS AWAKING

>>>In principle, the customs union is a promising step to lay the base for an economic union of the countries in question and, in the ideal case, of other member states of the CIS. The customs union is to give important impetus for the trade and cooperation between the three coun-tries and for their economic development. For the big trade partners – in 2009, the majority of Russian imports came from China, Germany, Ukraine, the United States, France, and Italy – the customs union can mean simpler proce-dures. The harmonized documentation and the fewer customs barriers for transit transports through the region will make essen-tial cost reductions pos-sible in the coming years. Overland transports from Western Europe to Central Asia will profit from this and become more competitive, too.

Growing demand for logistics “The demand for logistics services for the long-haul Euro-Asian transports to

the Far East is certainly go-ing to grow continuously, not least because of the customs union”, is Ewald Kaiser’s assessment of the situation. “At this time, we see enormous growth in road transportation and the logistics services involved. In view of this development, we are constantly expanding our road haulage product line and connecting impor-tant economic hubs in West-ern Europe with hubs in Russia and its southern and eastern neighbors. We also connect hubs inside Russia.”

Russia’s two dominating and most state of the art logistics centers are in Moscow and St. Peters-burg, cities where Militzer & Münch operates more than one branch office. As a consequence of the growth in trade and indus-try in these regions, other economic centers such as Samara, Nizhniy Novgorod, Kazan, Yekaterinburg, Nov-osibirsk, and Rostov gain more and more importance as logistics locations. Al-most 800 persons work for Militzer & Münch Russia; they work from 18 locations all over the country.

Big challengesFor the logistics sector, Rus-sia’s unsatisfactory road infra structure and the deplorable road conditions are a factor that limits growth, as Kaiser explains. “Approximately 20 billion USD were invested recently in road construc-tion – by far not enough when we consider the state many roads are in. Plans are to construct toll roads to be able to get hold of some private funds. In the long run, the chances for growth of the whole transportation and logistics sector depend on the development and modernization of roads, but also of port facilities, air ports, motorways and rail tracks.”

The number of modern cargo handling centers will also have to grow consider-ably over the next few years. In order to be able to com-ply with the higher quality demands of the custom-ers, large sums need to be invested in rolling stock. “While in other countries we often use sub-contractors or lease vehicles, we operate our own fleet in Russia and Belarus”, continues Kaiser. And he explains: “We thus guarantee consistently high service quality that complies

with Western standards. In the Russian Confederation, modern trailer pools as we use them are not standard yet in the industry. Local companies are restrictive in their investments in their own fleet or in logistics real estate.”

In Russia, the railway is the main carrier – not surprising in view of the long distanc-es. The railway is also the backbone of the country’s exports. Mainly bulk goods such as oil and oil products, coal, metals, fertilizers and similar goods are trans-ported as rail freight to the country’s ports or towards the ports of the neighbor-ing countries. With imports to Russia, the story is differ-ent: Here, trucking plays an important role, especially for imports from Western Europe. The majority of the goods flow from the EU to Russia goes via road. At the same time, the portion of goods that comes into Rus-sia via the European inter-national ports like Hamburg and the ports on the Baltic Sea, in Finland, in North West Russia is growing, with the huge cargo port in St. Petersburg playing an outstanding role. Most of the containers arriving there

Refuge for Rare animalsTo this day, vast parts of western Russia are covered by virgin forests. They have become the last refuge for those animal species that can no longer find a habitat in over 30 other European countries: Among them are large predators like brown bears, wolves and the lynx.

Caviar from RussiaCaviar, the real (Russian) caviar, comes from the sturgeons in the

Black Sea, the Caspian Sea, or the Sea of Azov.

This caviar is considered the best,

and is sometimes referred to as

“the black gold”.

are on-forwarded by road if their destination is in the European part of Russia.

More than transportationAs the economy has be-gun to grow again, the demand for transportation and logistics services has augmented markedly, too. And Ewald Kaiser is certain that “especially transports between Western Europe and Russia will continue to grow in the near future.” Customers demand not only more logistics services, they also demand more complex solutions: “If, so far, the logistic core services such as transportation and warehousing were the most important market segment, we will now face increasing demands for expert know-how”, he prognosticates. “We are already offering our customers both these facets of the business, in a thoroughly reliable fashion. And our recent integra-tion of the Russian logistics company GERH into our Group will enable us to offer even farther reaching services in all our business segments in Russia.”

For more background in-formation and details on the local service portfolio – see next page.

FOCUS | 11

Mr. Hartmann, since the beginning of the year, your company has been working closely together with Militzer & Münch, since September 1st, the joint venture has been operating under the name of ZAO Militzer & Münch. Why did you opt for Militzer & Münch?

Over the last years, especially in 2008/09, we had several enquiries for cooperation contracts or the founding of a new company. Our aim used to be to keep our independence – and it served us well, as we worked very successfully for 16 years. In summer 2009 though, we decided to go look for a strong partner, a partner with an international network, with a focus on Russia, and with whom we can join forces to develop business. In Militzer & Münch, we have found the ideal partner. Incidentally, the decision for Militzer & Münch was greatly influenced by the personality of Ewald Kaiser, whom I have known for years.

This cooperation – how do you see it?

The cooperation took off very nicely, and soon we routed our transports via Militzer & Münch. Thus, we now already have established business connec-tions with almost all countries in Europe and East Asia. And this is only the beginning! Groupage overland transports are to be one focus of our coop-eration. Experience has shown that groupage traffics in all East European countries grew substantially with the liberalization of trade conditions and the simplification of customs procedures. The same process will happen in Russia, and this is what we are preparing for.

What chances do you see on the Russian logistics market for the coming years?

To quote Victor Hugo: The future has many names. For the weak ones, it is the thing they cannot attain, for the fearful, it is the unknown, for the courageous, it is a chance. Which means: We must be courageous! The courageous ones don’t wait for their chance – they look for it! A country with 150 million inhabitants, almost immeasurable resources, and an immense land area – this really is a huge chance. So, from now on, the order of the day is: Release brakes, shift into forward gear, and go!

What is your most important aim at this time?

We want Militzer & Münch to be recognized on the Russian market and be-yond as a specialist for East-West transports. We want our employees to be proud to be with Militzer & Münch – and I am sure, proud they will be!

4 Questions for Richard hartmann

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Richard Hartmann, former man-aging director of ZAO GERH, will join the supervisory board of ZAO Militzer & Münch as chairman of the board.

ZAO Militzer & Münch Whether road transports, rail freight, airfreight, ocean freight, or project business: ZAO Militzer & Münch offers the whole range of services in all five business sectors of the Group. “The road sector is by far the most important one”, says Marina Dshegrij, Managing Direc-tor ZAO Militzer & Münch, “as we transport 60 % of all cargo by road. Yet our offer doesn’t stop here: Our customers get not only the mere transportation service; we do the complete im-port and export service for goods to and from Russia. This includes swift cus-toms clearance and transit management as well as an insurance service, tracking and tracing from start to destination, and profes-sional warehousing.”

For its warehousing, the company has at its disposi-tion four logistics centers with a combined storage area of circa 17,000 square meters in the Moscow region and in Chelyabinsk. “Here, we offer short and long term storage, but we also execute the whole range of IT-aided order processing, including pick-ing and packing, and inven-tory management according to the customers’ specifics, be it FIFO, LIFO, or sell-by date”, explains Marina Dshegrij. “Actually, we are at the moment working on a big project for the logistic product processing of an Internet store. If everything runs according to plan, we will surely intensify our activities in the fulfillment sector.” All goods can also be delivered by rail, as one of the warehouses comes with its own railway siding.

MiliTzeR & MünCh

in RussiA:TwiCe as good in The douBle PaCK!

12 | FOCUS

Militzer & Münch Russia was given a new structure on September first: The logistics company ZAO GERH that Militzer & Münch had been closely cooperat-ing with since the beginning of the year, is now part of the Group and operates under the name of ZAO Militzer & Münch. A staff of 400 offers comprehensive logistics services in Russia. Another 370 employees work for the Militzer & Münch subsidiary Trasko. Militzer & Münch aims at further developing the strong market position it holds in Russia.

ZAO Militzer & Münch trans-ports cargo from Europe via the CIS to China by rail, offering door to door ship-ping, on all transport routes, with all pertaining handling services and pre- and on-carriage.

The same all-embracing services are also offered in the ocean and air freight sectors: “We mainly choose ocean freight for shipments from Asia and America”, the ZAO Militzer & Münch Managing Director explains: “In these cases, we use the Russian and European ports and then get the goods to their destination by road or rail. For the professional handling of national and international airfreight shipments, complete with customs management, we go via the Moscow airports Sheremetyevo and Domod-edovo, or St. Petersburg’s Pulkovo.”

Trasko – reliable transport carrierWhile ZAO Militzer & Münch works with certified partners in its transport logistics sector, the Russian Militzer & Münch company OOO Trasko has special-ized solely on acting as a transport carrier with a truck fleet of its own. “In 1995, we started out modestly, with a staff of just five per-sons”, remembers Eugene Shakalida, Trasko’s Manag-ing Director. “Yet we soon established our reputation as a highly professional carrier – owing to our safe and fast deliveries, our top

quality performances, and the close cooperation with our customers. Today, 370 competent staff members work for our company at nine locations all over Rus-sia.”

The Trasko-owned fleet con-sists of 120 articulated trucks with 90 cubic meters loading space each. All vehicles are equipped with GPS systems and mobile phones so they can be traced and contact-ed at all times.

“We offer our customers IT supported, customized services that meet western standards, and we are con-stantly expanding the range of our services,” says Shaka-lida. “Thus, we recently added the transportation of automobiles to our product portfolio.”

Yet the development of the Group in Russia does not stop here, with the addi-tion of such new services to the product portfolio, as Alexei Kovalenko, CFO and Regional Managing Director North East Europe, explains: “With the integration of ZAO GERH, we laid the base for our successful ex-pansion. I am sure that with these two companies, we will be able to further stabi-lize and develop our strong market position - adding new services, and adding new branch offices.”

FOCUS | 13

MILITZER & MüNCH IN RuSSIA//////////////////////////////////////////////////

zao Militzer & Münch

founded: 2010headQuaRTeRs: MoscowBRanChes: 4sTaff: 400seRviCe PoRTfolio: Road, Rail, Air, Sea, Projects, WarehousingConTaCT: ZAO Militzer & Münch Sharikopodshipnikovskaya st. 4 RU-115088 MoscowRussian Federation

Phone: +7 495 933 53 53 Fax: +7 495 933 52 42 E-Mail: mumrumo@mumnet.com

ooo Trasko

founded: 1995headQuaRTeRs: MoscowBRanChes: 9sTaff: 370seRviCe PoRTfolio: Transport CarrierConTaCT: OOO Trasko Arkhangelskoye settlement bld. 84 km Ilyinskoye HighwayKrasnogorsk districtRU-143420 Moscow regionRussian Federation

Phone: +7 495 564 87 14 Fax: +7 495 564 87 12/13 E-Mail: info@trasko.ru

Russia

MOSCOW

St. Petersburg

Chelyabinsk

Yekaterinburg

Novosibirsk

Perm

Tver

ufa

YelabugaKazan

SmolenskBryansk Chekhov

AttrActive FoR BuSInESS

Werner Albert, Chairman of the TransInvest Hold-ing AG, has a profound knowledge of Russia. For decades, he has been closely linked to the coun-try through his work, and through other activities. Werner Albert is at the helm of the TransInvest

Group. The Militzer & Münch Group is part of TransInvest, as are several other companies that operate in Russia’s trans-portation and logistics sectors, like the rail freight specialists InterRail, Multimodal, RailService, and TSES. In his function as Vice Chairman of the International Coor-dinating Council on Transsiberian Trans-portation, CCTT, and as President of GETo, the Association of European Trans-Siberia Forwarders and opera-tors, Werner Albert focuses his com-mitment especially on the development and advancement of international rail transports to, from, and through Russia.

Mr. Albert, how do you see the present situ-ation of the Russian economy?Russia’s gross inland product fell by 7.9 % in 2009, with a two-digit decrease in the construction and industry sectors – these figures make clear that Russia was hit harder by the world wide crisis than the big industrial nations. Growing exports of raw materials and energy sources, and governmental interventionism, helped con-tain the impact of the crisis on the economic and social structure of the country.As diverse basic, structural, economic problems have not yet been solved, some Russian experts fear a sec-ond wave of the crisis is soon to be felt. At this time, though, we are witnessing a phase of relative calm. In-dustrial production and the transportation sector have begun getting out of their lows. We should not, how-ever, over-estimate the high increase rate figures that are being communicated, as these increases have to be seen against the low levels during the economic crisis. All in all, the economy has not yet reached the volume it had before the crisis.

Is Russia nevertheless still attractive for inter-national business?It is, at any rate! Just take into consideration such factors as the country’s wealth of raw materials and energy sources, the huge dimensions of the market that still has to be saturated, the high demand for modern technologies, for investments in infrastructure and logistics. The geo-polit-ical situation of the country between Europe and Asia adds another facet to the country’s attraction. A further positive factor is the country’s relatively stable political situ-ation at the moment. Numer-ous privatization projects in Russia will make investments and commitments there especially interesting in the next few months. This is a good time to invest locally.

Are there any special problems when doing business in Russia?Over the past few years, the frame conditions for business - including investments - have become measurably better as far as the legal regula-tions and the competence of the staff go. Unfortunately, there is still this tendency for over-extensive, long-winded bureaucratic processes, and there are unsatisfactory implementation rules for legal regulations. As a conse-quence, there is little trans-parency, and there are lots of problems in the transition phase when new laws are im-plemented. As a typical and very up-to-date example, let me mention the new customs codex in connection with the customs union between Rus-

14 | FOCUS

sia, Belarus, and Kazakhstan. For months, the documents necessary to prepare for the switch-over to the new regulations were missing, so that at this time, old and new regulations exist side by side. During the first few weeks, this disorder caused confusion and numerous problems at the border crossing points.

Is corruption still a big problem?The fight against corruption is not over yet. Not by far. During the summer, Russia’s President Dmitri Medvedev gave a detailed statement on this problem, in which he also emphasized that corrup-tion always has two sides. Not only those who take secret commissions are guilty – those who pay the bribes are guilty, too. Medvedev regretted to say that in Russia, corruption was a problem of mentality, a problem of everyday usage. This is why initiatives like the “Contract of compliance with the company ethics code when doing business in the Russian Federation” are so important. The IBLF, the International Business Leaders Forum, and the foreign trade chambers of several countries set the contract up, and many company leaders signed it in April. The Code of Compli-ance of the TransInvest Group includes a clear-cut anti-cor-ruption obligation that all the companies within the Group comply with, and have com-plied with for years already.

How do you see the future development of this market?Due to the factors already pointed out, Russia will remain a very attractive field for investors. Yet there are strong indicators that the country is at a crossroads – and no one seems to know which way it will take. There are, to name an example, the conflicting ap-proaches between far-reaching liberalization of the economy on the one hand, and the gov-ernment-supported promotion of monopolies on the other hand – a situation that reminds us of past practices.

The TransInvest Group is active mainly in the transportation and logistics sector. How about reforms in this sector in Russia? Is there development?The economic crisis also hit the transportation and traffic sector enormously. With rail freight, the trans-port volume decreased by 15 % in 2009. Of course, this decrease also slowed down the reform tempo in this sector.We have to differenti-ate between the different carriers, though: General aviation and cargo trans-portation have been largely liberalized and restructured. With the railways sector, we look at a different picture: Here, the order of the day is that the government still dictates the tariff policy and widely uses its power for protectionism. As a conse-quence, we see confusing developments: On the one hand, there are about 2000 private carriers operating today in the Russian railroad system, on the other hand, the state-owned railway company holds the monop-oly of traction and of man-aging the infra structure. This means that the private carriers depend, in many respects, on the railway monopolist; and that they are thus hindered from de-veloping their potential. But they have formed their own associations and are try-ing to influence the state’s transportation policy. In this, they are even supported by some leading politicians.

Do these contradict-ing developments affect your business directly?Yes, they do. The Russian Railway Company AG com-plies with the request to privatize the railway sector by outsourcing subsidiaries, for instance for container transports or for the gen-eral cargo transport, and by announcing that these subsidiaries are going to be sold, or sold at least in part.

But now, these railway sub-sidiaries have the tendency to want to do everything on their own, instead of entering into partnerships with the for-warders and operators with their competent know-how, their experience and their close contacts to their cus-tomers. In this respect, there needs to be some learning process!

What about the logistics sector?The logistics field in Russia is still very new; and it was literally paralyzed during the crisis. At the moment, it is on an upwards trend, but only very slowly. As far as high-quality logistics facilities are concerned, we are looking at a surplus – a balance in the market is not expected be-fore 2012. For its future devel-opment, the Russian logistics sector depends mainly on the importation of the necessary know-how and an increase in the quality of the services. The companies within our Group are highly commit-ted in this field in their local activities, to improve logistics know-how in Russia.

What part does the M&M Group play in TransInvest’s commit-ment in Russia?In 1967, our Group was granted the first license for Trans-Siberia trans-ports – which shows that the Russia business in our Group has a long tradition. Several companies within the Group operate in Russia today. Militzer & Münch has been active on the Russian market for two decades with its own companies. In the forwarding and logistics fields, Militzer & Münch has achieved a solid market posi-tion, and enjoys its custom-ers’ trust. This summer, the Militzer & Münch commit-ment in Russia was restruc-tured. As a result, the service portfolio has been strength-ened and the product policy has been made more efficient. Another advantage for Militzer & Münch custom-ers is that Militzer & Münch

can rely on the cooperation with other companies in the TransInvest Group in numer-ous ways.

We know about your strong commitment for the support and devel-opment of Euro-Asian railway corridors. How realistic is the vision of a functioning land bridge?The land bridge does already function! So far, it is mainly Russian foreign trade traf-fic that gets transported on it. The Russian government aims at winning over for the Trans-Siberian route also international transit transports between Western Europe and China or other Far East destinations. An aim that is supported by many projects, investments, and concerted actions, including the activities of the International Coordinat-ing Council on Transsiberian Transport CCTT. I am con-vinced that we will be success-ful in our endeavor.

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16 | REGION

The Republic of Belarus has many facets – it is the Eurasian junction point of traffic axes connecting East and West, north and South, an up-starting production

location, and a growing sales market.

BELARuS – FAR MORE THAN A TRANSIT COuNTRY

eographically, the country is character-ized by its central situation between Poland, Lithuania, Latvia, Ukraine, and Russia, and is thus an important tran-sit place for traffic between Europe, the CIS, and East Asia. Five European traffic routes and two pan-Europe-an traffic corridors cross the country. Belarus’ extensive rail and road system offers good framework conditions for transport companies. 98 % of all transports in and through Belarus go via road or rail.

Among the pioneersMilitzer & Münch made good use of these positive condi-tions very early: Already in 1992, just months after the country had won its sov-ereignty, M&M Militzer & Münch Belarus SOOO, head-quartered in the country’s capital, Minsk, started oper-ating. Today, 18 years later, the former pioneer is among the country’s leading trans-port and logistics services providers, and serves a grow-ing number of customers with a staff of more than 350, at twelve locations across the country.

“We profit from the infra-structural potential of the country, and do pioneering work at the same time”, says Victor Blazhukevitch, Manag-

ing Director M&M Militzer & Münch Belarus. “We see our most important task in offer-ing the country’s economy an efficient transport logistics system. We need to meet the requirements of compa-nies here and abroad, but at the same time, we take into consideration also the requirements of the national population.”

For Alexei Kovalenko, CFO and Regional Managing Director North East Europe, the development of the Be-larusian M&M country units can be regarded as a prime example for the strategic orientation of the whole Militzer & Münch Group: “M&M Militzer & Münch Belarus expanded its service portfolio consistently, and today offers services in all five business sectors – with employees who provide, in their physical work as well as in their IT- aided jobs, top quality performance, a qual-ity that definitely meets west-ern standards. In Belarus, we want to continue in this vein, and we also aim at transfer-ring this model onto other Militzer & Münch country units."

Express services in high demandIn Belarus, Militzer & Münch today offers a broad range of services: With its own truck fleet, the company executes groupage transports, as well as full truck load and less-than-full truck load trans-ports. There are 120 units in the fleet, of different types, with loading capacities rang-

BELARuS – FAR MORE THAN A TRANSIT COuNTRY

/////////////////////////economy on the go

Belarus generates two thirds of its gross inland product in exports. The country’s main trade partners, for imports as well as for exports, are Russia, ukraine, Germany, Poland, the neth-erlands, Great Britain, and China. The main export goods are: machinery, vehicles, mineral products, chemical products, metals, textiles, and food.

The Belarusian economy is still structured according to government-controlled, central economic planning. Yet privatization and liber-alization programs are already gaining ground. In 2009, the government agreed on a pilot project with the International Monetary Fund – to privatize five of the largest state-owned companies. Moreover, 160 other large, state-owned companies have already been converted to stock corporations.

As a consequence, Western investors are now investing more and more in Belarus. In 2007, the volume of investments from abroad reached 1.8 billion uSD. now, with simplified adminis-trative procedures and better rights for inves-tors, the country wants to be even more attrac-tive to foreign investors. Already now, there are decisive advantages for Western investors: the country’s direct neighborhood to the markets of Russia and ukraine, the highly developed infrastructure of the country, and last but not least the well-trained skilled workers – Belarus used to be regarded as “the workbench of the Soviet union”.

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18 | REGION

FedEx Corporation, one of the biggest express delivery and airfreight companies world-wide. Says Blazhuke-vitch: “Through this success-ful cooperation over many years, we are able to offer our customers high qual-ity express courier services round the globe. And for area-wide express delivery across the country, we have our own “M&M Express”, an express courier network that we founded in 2002.”

Right on track!The railway plays a key role in Belarus, not in the express delivery field, but in the national transporta-tion system. 133.8 tons of freight were transported in 2009 on the 5,500-kilometer railway ntwork in Belarus.

ports of 13.2 per cent. M&M Belarus reacted to the posi-tive development and moved its headquarters in Minsk to a new building. Here, the personnel and their future colleagues have office space of 1,000 square meters at their disposal – fully air con-ditioned, and equipped with the latest technology and conference facilities.

Victor Blazhukevitch an-ticipates further positive develop ment for the com-pany: “Our strong points are our top quality and our comprehensive transport logistics services. These give us the optimum start position to get our share of the future development of the country. The transportation and logis-tics sector in Belarus is only just warming up!”

ing from 500 kilograms to 21 tons. “We use our long-time experience on the local mar-ket purposefully: to deliver the goods fast and reliably”, explains Blazhukevitch. “As for transit transports, we hold the necessary licenses to handle valuable goods; and at the customer’s re-quest, we can also include insurance services, customs management and warehous-ing services. Nation-wide, customers are asking more and more for our services when it comes to danger-ous goods and out of gauge transports.”In Belarus, there is also con-tinuously growing demand for Militzer & Münch express services. Since 2001, the company has been the of-ficial service partner of the

Victor Blazhukevitch speaks highly of the cooperation with the state-owned railway company: “The coopera-tion is very good, even with innovative projects. Let me name the freight train called “Marco Polo Express” as an example, a train that has been running since March, connecting Italy with the CIS and the Baltic states. We use this service a lot.”

Geared for growthMilitzer & Münch Belarus targets further growth. The country’s economy is on the rise again after the losses during the economic crisis. The Statistics Committee of the Republic of Belarus reports a rise in exports by 29.5 per cent from January to April, and a plus in im-

Guests and the Militzer & Münch Belarus team celebrate the inauguration of the new offices in Minsk

REGION | 19

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M&M Militzer & Münch Belarus sooo at a glance

seRviCes:• FTL,LTLandgroupagetransports• Expressdelivery,domesticandinternational• Airfreightandoceanfreight• Railfreight• Transittransports• Dangerousgoodsandoutofgaugetransports

loCaTions: Twelve locations across BelarussTaff: over 350TuRnoveR: Approx. 9 mio Euros

headQuaRTeRs:M&M Militzer & Münch Belarus SoooVictor Blazhukevitchul. Melezha, 1-902BY - 220113 Minsk

Phone: +375 17 268 41 11fax: +375 17 268 44 48e-Mail: mumbymi@mumnet.com

Poland

Russia

MINSK

Vitsyebsk

Polatsk

Mahilyow

BobruyskBaranovichy

Brest Pinsk

HrodnaLida

Homyel

Mazyr

ukraine

Lithuania

Latvia

Russia

Whether in Russia or any place else: With our transport logistic solutions you get more! Com-prehensive service, unusual routes, and non-stop quality according to international standards – from Europe to Asia and from North Africa to the Far East. Take advantage of our dense network with 120 locations in over 30 countries, our deeply rooted local know-how, our pio-neering spirit, and our innovative energy.

Militzer & Münch Means More.