POTENTIAL AND PROBLEMS OF PJSC “UKRAINIAN DANUBE SHIPPING COMPANY” IN IMPLEMENTING THE EU STRATEGY FOR THE DANUBE REGION

Дунайська стратегія

Dmytro Chaliy, Chairman
of the PJSC “Ukrainian Danube Shipping Company” Management Board

Marine and inland water transport is one of the backbone industries of the Danube region, the stable and efficient operation of which is one of the essential components of the economic stabilization ensuring, sustainable development of the Ukrainian part of the Danube region and rise in living standards of its population. The location of the Danube region of Ukraine at the intersection of major international routes from Europe to Asia, which contributes to the realization of the marine and inland water transport system potential, in particular the Danube shipping, is especially noteworthy.

Дмитро Чалий
Dmytro Chaliy
The PJSC “Ukrainian Danube Shipping Company” (UDSC) is a leading transport shipping company in the Danube region.

The commitment to the EU integration obliges Ukraine to take into account all-European trends, in particular, how much attention the EU pays to the development of water transport as ecological, safe and efficient. By 2020, the EU plans to increase the existing market share of water transport shipping at 10%, which, according to calculations, should provide saving of freight costs to the cargo owners of 2 billion Euro per year. With that said, within the framework of the European Union Strategy for the Danube Region, an increase in cargo traffic in shipping along the Danube by 2020 at 20% is defined, due to the modernization of the Danube fleet, investment in the Danube infrastructure, canals, branches, coordination of national policy of the Danube countries, support for the Danube Commission, development of ports in the multi-modal centres logistics, improvement of integrated Danube waterways management, etc.

Within the framework of the current approach to the development of transport infrastructure and the Trans-European Transport Network (TEN-T), nine transport corridors were defined: two in the North-South direction, three in the East-West direction, and four diagonal transport corridors. In the direction of the Ukraine territory, the Rhine-Danube transport corridor passes in conjunction through the waterways of Main and Danube, with a branch from Munich to Prague, Zilina, Kosice and to the Ukrainian border. TEN-T is a project of the European Union and covers the main transport routes within the EU with the aim of equalizing the imbalance between the level of development of the transport networks of the Member States.

At the same time, the EU Strategy for the Danube Region addresses the issues of the interaction of the essential for UDSC priority direction 1a (inland shipping) and direction 1b (vehicular, railroad transport) of the Strategy, that is, the combination of inland water transport with vehicular and railroad transport in order to achieve synergy of the Danube region transport system.

Fig. 1. Rhine-Danube transport corridor
One of the EU Strategy primary objective for the Danube Region is the creation by 2020 of efficient multi-modal terminals in river ports along the Danube and its shipping inflows in order to combine effectively inland waterways, vehicular and railroad transport.

Today, a number of joint EU promising programs and projects for the development of European inland waterway transport are being implemented in this context, it concerns Danube shipping, such as NAIDES, PLATINA, TEN-T, EDDINNA, NEWADA , “NELLI”, “WANDA”, etc., but they do not provide for the participation of Ukraine. In particular, the Ukrainian part of the Danube (neither the Kilia estuary, nor the way to the Black Sea through the Bystre estuary) is currently not provided by projects. Thus, the Rhine-Danube corridor ends in the Romanian artificially straightened Sulina canal (the Sulina estuary of the Danube) in the port of Sulina.

Over the past two decades, the way to the Black Sea through the Ukrainian part of the Danube gradually lost its significance. At international events at various levels concerning to the problems of the Danube transport route, the through-track Danube-Black Sea only through the Romanian canals – Sulina and Cernavodă-Constanta is only considered and analysed. In previous years, more than 1 million tons of cargo was transported annually to the ports of the Mediterranean and in the backward direction only through the Ukrainian ports of Ust-Dunajsk, Izmail and Reni in the Trans-Danube-maritime traffic. Currently, the Romanian port of Constanta annually transships on the Danube river more than 10 million tons of cargo and it is practically an inexhaustible source of cargo traffics downward and upward direction along the Danube.

Against this background, the issue of coordination with requirements of current legal regime of international shipping on the Danube is relevant. The principles of the international mercantile shipping freedom on the Danube and the principle of non-discrimination of ships based on their national affiliation must be properly confirmed.

The main existing issues of international Danube shipping today can be divided into two main groups – the problems of ensuring navigation conditions, passage depths and the problems of Danube fleet renewal. With that said, the issues of Ukrainian shipping are almost the same: the aging of the fleet, depreciation of fixed assets for cargo transshipment, the lack of sufficient depths of the deep-water fairway of the Danube – Black Sea in the Ukrainian part of the Danube.

Undoubtedly, today the issues of development of the transit potential of Ukraine and the participation of the UDSC in this process is even more relevant due to the effect of the Association Agreement between Ukraine and the EU, which contains a number of provisions regarding the work of enterprises of the maritime and river industry. For example, Section 7 of Part 6 of the Agreement defines the principles for the liberalization of the transport services sector. Thus, in the field of international maritime shipping, the most-favoured-nation treatment is established for ships sailing under the flag of Ukraine or EU member states or under the control of a service provider registered in these states. This, in particular, applies to such areas as access to ports, the use of infrastructure and port services, maritime cargo handling services, and warehouse services.

Ukraine is extremely interested in the full implementation of the full range of activities and projects envisaged by the EU Strategy for the Danube Region. But it is also obvious that other Danube countries will receive some preferences in the case of successful implementation of projects in the Ukrainian Danube region. First of all, it is the implementation of a transport project alternative to the existing – the deep-water fairway (DWF) Danube-Black Sea. This is one of the elements of the national network of international transport corridors and its integration into the transport system of the countries of Europe, Asia, the Baltic and Black Sea regions. The sustainable functioning of the DWF will contribute to the formation of conditions of effective competition and a balanced tariff policy, improving the quality of services, optimizing the carrying capacity of the Danube-Black Sea conjunction and increasing cargo traffics through the Ukrainian ports on the Danube and in its estuary. The project provides for bilateral round-the-clock all-the-year-round shipping traffic, which is ensured by the compliance of the safe shipping traffic management system with EU standards and international convention requirements The renewal of shipping traffic on the Ukrainian part of the Danube could be one of the most powerful real measures of the European integration course announced by Ukraine.

The creation of the reasonable viable mechanisms of government regulation and assistance in solving transport problems in the Ukrainian Danube region are the necessary conditions for the development of water transport in accordance with the EU Strategy for the Danube Region for Ukraine:

– security upgrade of shipping traffic in the Danube region

– creation of conditions for the coordinated and coherent development of multimodal shipping through the ports of the Ukrainian Danube Region to the countries of Europe, the Black and Mediterranean Sea;

– fleet modernization in order to support international shipping conditions, ensure high-speed traffic, quality service, safety guarantees;

– activation of international cooperation and improvement of the image of Ukraine in the international market of transport services;

– development of investment programs and investment promotion for the modernization of the fleet and ports;

– promotion and postreduction of cargo traffic through the Ukrainian Danube ports of Izmail, Reni, Ust-Dunajsk;

– improvement of the regulatory and legislative framework and the termination of discriminatory actions by Romania to the ships sailing under the flag of Ukraine on shipping to ports of “third” countries.

Currently, the UDSC is actively involved in activities aimed at improving the situation in the field of summer shipping traffic, which is determined by the priority direction 1a of the EU Strategy for the Danube Region. Among other things, it joins the work of the Danube Commission at the expert level; addresses problematic issues at the Danube Shipping company Directors’ Conferences, where shipping companies-participant in the Bratislava Agreements decide how to increase the attractiveness of Danube shipping companies and ensure reliable partnership and fair competition on the Danube; in cooperation with the Ministry of Infrastructure, discusses measures for the implementation of the project “Reconstruction of industrial objects“ Creating a deep-water fairway Danube – Black Sea in the Ukrainian part of the delta “and others.

UDSC at different levels constantly brings up an issues of including the Ukrainian part of the Danube in the TEN-T network, as well as Romania’s ban on discharging / charging and embarkation/ disembarkation of passengers for ships sailing under the Ukrainian flag during shipping between the ports of Ukraine and the EU countries.

For UDSC, it is extremely important that Ukraine to be included into the TEN-T Trans-European Transport Network at the level of EU-joint projects and programs. On June 21, 2016, in Rotterdam, the Ministers of Transport of the Eastern Partnership Countries, EU member states and the European Commission decided to extend the TEN-T network to neighbouring countries, including Ukraine, and to divide the regional transport network into a “core” and “basic”.

TEN-T network on the territory of Ukraine
Fig 2. Indicative map of transport corridors of the TEN-T network on the territory of Ukraine
Today, Ukraine is already included in indicative maps of the TEN-T network. Integration of inland waterways, including the Ukrainian part of the Danube River, into the overall logistics network TEN-T is also one of the priorities of the National Transport Strategy of Ukraine for the period up to 2030 – and this evaluates the prospects of joining the projects, aimed at implementing the EU Strategy for the Danube Region for the Ukrainian Danube Shipping Company.

October 2018

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