BUSINESS PRACTICE. Goals and Reality or Transit to the Music of a Snitch?

 

The 23rd transport and logistics exhibition and conference, which took place at the end of September in Almaty (Kazakhstan), attracted nearly 2 thousand visitors from 33 countries.

This international fair is regarded as the most important transport and logistics event in Central Asia.

What are the goals of the participants, introducing their companies at events, which have been taking place in Kazakhstan for three decades?

27 per cent of the respondents at the exhibition said that they hope to find new partners and clients.

What were the goals of the Lithuanian delegation, led by Vladislavas Kondratovičius, Vice-minister of Transport and Communications, which began its visit to Central Asia in Uzbekistan and continued it in Kazakhstan, introducing Lithuanian transport sector in a joint stand?

The priority of creating favourable conditions for a transit cargo flow between East and West

The press release of the Ministry of Transport and Communications of the Republic of Lithuania says that the meetings with representatives of these countries involved discussions regarding the possibilities of closer mutual cooperation and cargo transit through Lithuania, and other relevant issues of trade and transport, because cooperation with Uzbekistan and Kazakhstan has not been used to its fullest potential and should be strengthened.

Lithuania has enough capacity to ensure fluent transit for cargo from Uzbekistan and Kazakhstan. We see opportunities for strengthening economic, trade and logistics connections in the future. Lithuania could become the gates to the West for Uzbekistan, aiming to export cargo to Europe. The handling and storage capacities of Klaipėda seaport and the Lithuanian Railways could open opportunities for Uzbekistan to increase its cargo flows to Europe through Lithuania.’ said Vice-minister Kondrotavičius.

A mixed commission of Lithuanian and Uzbekistani representatives on the issues of freight forwarding using motor vehicles discussed the current issues and defined the quota for the number of permissions of transit to/from the third parties for both countries for 2020. A quota of permissions was also defined with the Republic of Kazakhstan.

The Transport Working Group meeting, which took place in Almaty, discussed mutual cooperation in the field of transport, also issues of trade and economic cooperation. The focus of the bilateral meeting was on the possibilities of increasing the volumes, carried by container trains and freight forwarding through the port of Klaipėda. It was also decided to examine the possibilities of organising container freight and continue an active dialogue on this issue.

The meeting with Kazakhstanian representatives also discussed cooperation in aviation, possibilities of renewing direct flights between Lithuania and Kazakhstan, and developing cooperation in training aircraft pilots.

The priority of our cooperation is highest-quality transport and logistics services, as well as to create favourable conditions for transit cargo flows between East and West, to the directions of the port of Klaipėda, Lithuania-Belarus, Kaliningrad, considering the increasing needs of our partners in China, Kazakhstan, Mongolia and other Asian countries.’ talked Vice-minister Kondrotavičius.

The reality is different

Creating favourable conditions for transit cargo flow between East and West and favourable conditions for the carriers, transporting the said cargo is a serious and noble goal of international cooperation. It is the subject of international exhibitions, conferences and working groups.

It would seem like excellent projects and agreements, but the situation in reality is, unfortunately, much more complicated.

If we do not solve the problems on the Lithuanian-Belarusian border, many of the cargo, carried by road, will turn towards Latvia and Poland.’ says Vytautas Varasimavičius, founder and head of TL Nika Group, operating in Lithuania, Germany and Kazakhstan, making a grim forecast.

He says that in recent several months Kazakhstanian vehicles, carrying consolidated cargo, accompanied with several import declarations, were forced to wait for a check on a Lithuanian-Belarusian border from 3 to 7 days. And these are the additional checks, in addition to the customs lines. The vehicles are subject to unreasonable additional checks due to possible complaints about alleged violations. Upon receiving such a complaint, a vehicle is detained until the arrival of a Lithuanian transport inspector. This takes 2–3 days and sometimes even longer. Such inspection terms not only cause additional costs to the carrier, but also damage the cargo.

According to the businessman, who has more than twenty years of experience of working with Kazakhstanian partners, this situation raised the eyebrows of KAZATO (Union of International Road Carriers of the Republic of Kazakhstan) directors, whom he addressed, asking for help in resolving the issue.

Let’s try to analyse the situation by giving clear and precise answers to questions and perhaps we will find the solution right there.

Transit to the music of a snitch

Questions to Vytautas Varasimavičius,

Head of TL Nika Group

Mr Varasimavičius, when did the transport detentions, which you believe to be unreasonable, start?’

We always had them, but recently the situation has intensified so much that it makes it impossible to work. We feel like we are at war.’

How many were there recently?’

Recently, with a flood of false complaints, many.’

What actual losses have you experienced because of that?’

The losses consist of several parts: drivers get fined and sanctioned for unduly delivered cargo, and there are also complaints from the cargo senders and receivers.’

What service in particular does delay the company’s vehicles?’

Upon receiving a complaint, the customs do not open the gate, but direct the transport to the ‘red channel’. They keep the truck there for the entire Friday, Saturday, Sunday and Monday. Then they issue a fine, ask us to pay it and let the truck go.’

Were there situations like this before?’

These ‘red channels’ were introduced a while ago. They were supposed to facilitate the situation, because there should be no further checks after the internal customs check, but, unfortunately, the situation only grew worse.’

What do you know about the alleged complaints?’

I know that our transport is photographed by unidentified persons. I suspect that the photos with information about imaginary violations are delivered to certain institutions.’

Do you know the content of the complaints?’

Based on what causes us most trouble, it seems that they say that our transport is a road train, the length of which exceeds the length standards. However, our transport fleet consists of trailer or semi-trailer trucks.’

Does anyone officially inform you about a complaint? Or are they anonymous?’

Only anonymous. These complaints intimidate our drivers. They are afraid to stop somewhere on the road. There is a possibility that taking photos, excessive cargo inspections and collecting other information may be related to roadside robbers that our long-distance drivers have already encountered.’

Is it likely that a possible author of a complaint and the services, detaining the transport, are actually cooperating?’

Could anonymous complaints influence business so much if it was otherwise? All of our letters seem to be hitting a concrete wall.’

Do you see certain signs of racketeering?

Drivers flinch at every case of stopping them on the road. I believe that it’s not without a reason.’

What do you do in cases of detained transport?’

Drivers keep us informed on where they are and what checkpoints were passed. If they are detained by official services, we follow the law: examine the situation, write and send letters.’

What support did you hope for by addressing KAZATO, after all, the situation is located on the Lithuanian border?’

I don‘t understand, why do we get complaints from the Lithuanian customs, when we take cargo to Kazakhstan – not back to Lithuania. We are often told that we should address our issue to KAZATO. That’s why I wanted them to explain it to me, why can‘t we carry a cargo in a cargo and why the customs have been penalising us upon leaving from Lithuania to Kazakhstan.’

What was KAZATO’s answer?’

I was shown a letter, signed by the Ministers of Transport and Communications of Kazakhstan and Lithuania, which contains carriage regulations that make no sense. Why can’t the current ministers review these regulations and sign a new document, which would help strengthen the transit between the countries instead of being detrimental?’

What other institutions are you planning to address?’

I have tried many, from local institutions, to KAZATO and the Lithuanian Embassy in Kazakhstan. Povilas Varasimavičius, Director of Šturvalas, is working on the same direction in Lithuania, but everyone keeps shrugging their shoulders and saying that we should address someone else. The Lithuanian Embassy in Kazakhstan says that our interests should be defended by Linava – after all, we are their members. Yes, we are also members of Lineka and FIATA.’

Why do you think that in case of a failure to solve the issues on the Belarusian-Lithuanian border, the flow of cargo will turn towards Latvia and Poland? After all, these countries, just like Lithuania, follow the same EU regulations and transport requirements. Or do they not?’

I cannot say for sure, but I believe that perhaps there are certain different agreements. To my knowledge, more than one company, operating in Kazakhstan, has already refused to cooperate with Lithuania and started working with Latvia.’

Questions to Povilas Varasimavičius,

Director of Šturvalas Company of TL Nika Group

Mr Varasimavičius, what are the problems and when did they begin?’

Recently exported cargo is directed to the ‘red channel’. That is a procedure, when the goods are subjected to a customs inspection. As long as the cargo is not loaded on a vehicle, we cannot issue export declarations, although it used to be possible before, with the goods in the customs warehouse. This procedure increases loading documentation procedures, which influences the transit time – we are late to deliver the goods to our clients and that sometimes can even result in production downtime. Our drivers are forced to sit in one place, while the carriers experience huge losses. In some cases, these procedures used to delay our trucks for an entire week.

The ‘red channels’ are not adapted to work with cargo, owned by several clients. This significantly stretches the transit time and increases carrier costs.

It was very hard to work in summer, when all cargo, exported to Kazakhstan, used to end up in the ‘red channel’. We experienced enormous downtime for two months and received receiver complaints regarding long delivery terms. At the time we asked all senders, who can, to compile their export declarations in their own countries, instead of Lithuania, because we had difficulties here. It’s a paradox – we took so long to move the export declarations to Lithuania and now we were forced to make opposite requests. Which means that the money, which could have contributed to our state’s budget, did not. So, here is a reasonable question: why do we need a detailed customs check upon leaving Lithuania – after all, we are taking the goods out of Lithuania, not into Lithuania?’

Are you informed of the exact reason for detention?’

We receive a message about a possible violation.’

What do you do in cases of detained transport?’

We go to the customs checkpoint, they ask us to make the vehicle available for an inspection and call for the State Road Transport Inspectorate (SRTI).’

Does your company duly follow all legal procedures?’

We keep to the law and rules, but many of them are reasonably questionable. For example, the prohibition on loading trucks with transit licence plates, although they have the permissions. Recently such prohibitions are applicable even to trucks that are registered in the appropriate country and have a permission, but have a newly-purchased trailer. A question: what is the point of towing a trailer to Kazakhstan or another country in Central Asia for 5,000 and more kilometres empty, polluting the environment with no use? Such a prohibition encourages entrepreneurs, who have bought a vehicle in Europe, to return to Kazakstan by not going through Lithuania, not staying at its hotels, not buying its auto-repair services and not getting fuel here, but taking a route through some other state, which offers more favourable transit conditions.’

Do you regard cargo detention as illegal?’

We get letters, which falsely indicate that a trailer truck exceeds the general allowed transport length (somebody takes a picture and submits a complaint to the SRTI that the transport may exceed the length limits). The customs forbid leaving the customs territory until the arrival of the SRTI. If the loading was done on Friday, the transport with all of its cargo is stuck in the customs territory until the arrival of the SRTI on Monday. There was an instance, when the SRTI was unable to arrive for an entire day and finally the customs let the truck out of the territory.

Another important fact is that the allowed transport length is exceeded only by road trains. The said letter contains a false information (and that happened more than once) with the trailer truck being referred to as a road train.

As we know, the allowed total length of a road train in Russia and Kazakhstan is 20 metres, while in the European Union it is 18.75 m. Earlier 6 axle road trains, that exceed the length limit could buy permissions for entering Lithuania. This money also went to the state budget. I doubt if 1.25 m has any influence on road safety, particularly when 6 axles reduce the load on the road. Scandinavians have long been using even longer – 25.25 m formations with up to 150 m3 load capacity. They claim that such a road train is the best method for effective and environmentally-friendly cargo transportation on roads.’

How do you inform your clients about the cargo being late for several days?’

We have to make calls and talk to everyone in person, apologising and explaining the situation.

It is not pleasant, not to mention that also time-consuming and does not make things better.’

What are the client reactions?’

Since we focus on small consolidated cargo, our clients represent small businesses and companies with small turnovers. Releasing the new goods into the market is very important to them. When we do not deliver their goods on time, they experience losses. And that is very painful to small companies. Clients are worried, nervous and angry. It is particularly relevant, when we deliver cargo to events and fairs, which take place only for 3-4 days. If the transport is stuck with this type cargo, the situation is hopeless – our client may end up in a very big trouble and losses.’

Is there a risk of losing some of the clients?’

A large share of our clients could really move to other countries – Poland or Latvia, offering better conditions. Some of the companies from Kazakhstan have moved their entire logistics from Lithuania to Latvia, because there they can purchase a permission for their road trains. Lithuania used to offer this possibility too.’

Do you think other carriers experience similar problems too?’

All forwarders and logistics experts work to ensure larger cargo flows through Lithuania and, undoubtedly, the situation is detrimental to everyone. The case of Šturvalas is not an exception.’

Have you discussed this issue with other carriers or is this out of discussion due to competition?’

We have not discussed these issues with our competitors, but we’ve heard that the majority of those, who work in Kazakhstan or other Central Asian countries, encounter the same problem.’

Have you asked for help from some organisations?’

I went to the Road Transport Inspectorate. Their answer was clear: use shorter vehicles and there will be no problems. We have also discussed this issue with the President of Linava.’

What were the answers?’

That we need to fill out documents and write appropriate texts. But we are logistics, not writing experts. Writing would take lots of time and there is no guarantee that it would make any use. In general, everyone is aware that our ropes are being pulled by some snitch and everyone is supposed to react to his complaints, but we can only sense a faint idea, where the root of all this lies...’

What measures did you take to prevent other transport detentions?’

We are still searching for ways to solve this problem.’

The customs feel caught in between

Questions to Jonas Miškinis, Head of the Customs Department under the Ministry of Finance of the Republic of Lithuania

Mr Miškinis, are you aware of the problems the Lithuanian carriers experience at the customs’ warehouses and border?’

Yes, we know about the situation. As companies compete and submit complaints on each other, the customs are caught in between. According to the law of the Republic of Lithuania, the customs have been assigned with inspecting transport carriage permissions, issued according to Lithuania’s international agreements regarding international passenger and cargo transportation using vehicles.  As a reaction to complaints, the customs apply various inspection methods.’

Are the customs services obliged to react to anonymous complaints and detain the road transport, departing Lithuania, for several days?’

Customs inspection is based on risk analysis, thus the customs analyses and assesses any information that is available or received, including received from anonymous sources.

The legislation, implemented by the customs, clearly states, when the customs can detain goods and (or) transport vehicles inspected.’

What would help simplify the ‘red channel’ procedures in order to make them faster?’

In order to improve the ‘red channel’ procedures, the customs advises the Lithuanian companies, offering logistics services, that they should also get to know these international agreements, signed by the Republic of Lithuania in the field of road transport, and refrain from loading their goods into vehicles, which belong to the third parties and do not meet the provisions, established by the international agreements.  

Also, companies that are unsatisfied with the current situation, should raise these issues and initiate their solutions – perhaps even a review of the international agreements – through an association, which represents them, rather than through state institutions.’

Questions to Aleksandras Stupenko, Senior Advisor of the Road and Air Transport Policy Group at the Ministry of Transport and Communications of the Republic of Lithuania

Mr Stupenko, do inter-governmental commissions and working groups discuss the issues, raised by carriers?’

Before starting to answer the questions, I would like to introduce the legal regulation of the said issue. Article 17 of the Governmental Agreement Regarding International Passenger and Cargo Transport Using Road Vehicles, signed on 21 July 1993 between the Republic of Lithuania and the Republic of Kazakhstan, states that ‘The carriers of one of the Parties of the agreement, being in the territory of the other Party of the agreement, must keep to the rules and standards, applicable in the said territory.’

Part 3 of the Article 17 of the Law on Roads of the Republic of Lithuania, states that roads can be used only using vehicles and their combinations complying with the maximum permitted road vehicle characteristics, approved by the Ministry of Transport and Communications under the implementation of the European Union legislation. In the European Union road vehicles or their technical parameters are subject to the Council Directive 96/53/EC of 25 July 1996 laying down for certain road vehicles circulating within the Community the maximum authorized dimensions in national and international traffic and the maximum authorized weights in international traffic (further referred to as the Directive 96/53/EC).

In the Lithuanian national legislation, the provisions of the Directive 96/53/EC are implemented by the Description of the Maximum Authorized Technical Characteristics of Road Vehicles or Vehicle Combinations, approved by the Order No. 3-66 of the Minister of Transport and Communications ‘Regarding the approval of the Description of the Maximum Authorised Technical Characteristics of Road Vehicles or Vehicle Combinations’, issued on 18 February 2002.

Moreover, as of 20 May 2019, rules for the organization of roadworthiness tests of road vehicles of categories M2, M3, N2, N3, O3 and O4 and wheeled tractors of category T5 on the roads of the Republic of Lithuania came into force, approved by the Resolution No. 132 of the Government of the Republic of Lithuania. Based on these rules, the officers of the Lithuanian Transport Safety Administration and Police officers have a right to inspect the technical condition, parameters and cargo fixing of the transport vehicles on the road. Article 18 of the above-mentioned agreement states that ‘In order to ensure the duly implementation of this Agreement, the Contracting Parties shall establish a Mixed Commission from representatives of their competent institutions’.

Before each negotiations, the Ministry of Transport and Communications organises meetings with Lithuanian carriers’ associations regarding the issues that should be raised in the meeting of the Mixed Commission. It should be noted that representatives of the organisation, representing carriers, are always invited to the Lithuanian negotiation group to raise issues and participate at the discussion.

Lithuanian carriers have not raised the issue regarding road vehicles’ dimensions. Lithuanian side keeps raising another issue – different interpretation of the cargo, transported from Lithuania to Kazakhstan. According to the legislation of the Republic of Kazakhstan, when the cargo for Kazakhstan was brought to the terminals, located in the territory of the Republic of Lithuania, where they were consolidated and then transported to Kazakhstan, the Lithuania carrier must have a permission of the third party of the Republic of Kazakhstan, while Kazakhstan’s carriers – a bilateral permission of the Republic of Lithuania. In Lithuania’s opinion, such interpretation contradicts the provisions of the above-mentioned agreement.

Kazakhstan’s side has raised the issue regarding the dimensions of road vehicles this year.’

Do carriers address the Ministry of Transport and Communications with their problems?’

The road vehicles of the Lithuanian carriers meet the technical parameters, established by the legislation – just like the vehicles of other countries, for example, the Russian Federation or the Republic of Belarus. Only vehicles registered in the Republic of Kazakhstan have discrepancies in vehicle dimensions.’

What issues are usually raised by carriers?’

Recently Lithuanian carriers have been raising the issue regarding the outcome of the Mobility I package on the transport sector and increasing the minimum wage rate for drivers from 1.3 to 1.65.’

Is the Ministry aware of the problems at the border crossing points and customs?’

Although responsible only for the infrastructure of the border crossing points, the Ministry of Transport and Communications receives the information on the procedures implemented there as well.’

What measures should be taken to limit the unnecessary long-term vehicle detention at border customs zones?’

Talking about the road vehicle parameters, the only advice would be to follow the legislation.’

Questions to Romas Austinskas,

President of the Lithuanian National Road Carriers’ Association Linava

Mr Austinskas, it seems that you are aware of Šturvalas’ situation regarding transport detention at customs. What is your opinion?’

Do other members of your association encounter similar problems?’

Is transport detention for several days a typical situation or an exception?’

Does Šturvalas violate any regulations?’

Why do you think this problem emerged namely now, although it seems that there were no recent new limitations to the cargo transport, passing the CIS and EU border and customs?’

Can the Lithuanian carrier’s association influence the situation?’

Questions to Mečislovas Atroškevičius, Secretary General of the Lithuanian National Road Carriers’ Association Linava

Mr Atroškevičius, could it be that Šturvalas’ situation in the customs warehouses, where, according to the company’s leadership, their vehicles are unreasonably detained for a long time due to complaints, is a manifestation of the competition between carriers?’

What is your opinion on the prohibition on using long 20 m, six-axle vehicles on Lithuanian roads?’

What is your opinion of the experience of the EU members – Scandinavian countries, which allow 25.25 m road trains – in this context?’

What is your opinion on loading vehicles with transit licence plates, passing through Lithuania to Central Asian countries? Is the prohibition to load them purposeful?’

These questions were answered by the Lithuanian National Road Carriers’ Association with a comment:

The material that you have provided discusses the situation, defined by the Governmental Agreement Regarding International Passenger and Cargo Transport Using Road Vehicles, signed in 1993 between the Republic of Lithuania and the Republic of Kazakhstan. Article 9 of this agreement states that road vehicles, used for international cargo transportation, must feature their countries’ registration and distinction marks. Article 10 of this agreement states that the carrier can transport cargo upon obtaining a permission from a competent institution of the other country. The maximum permissible dimensions of road vehicles and their combinations are approved by the order of the Minister of Transport and Communications. All of these acts are valid and must be complied with as long as they are not amended.

It is obvious that in the situation that you have described, a specific carrier is disputing the enforceability of these acts, referring to persons, who act according to the law, as ‘snitches’. Association Linava follows the Lithuanian law and other legislation and thus cannot support those, who seek to ‘circumvent’ it.’

Transport rules are not the Holy Scripture. They should be improved

Having received all answers, we asked Vytautas Naudužas, Ambassador Extraordinary and Plenipotentiary of the Republic of Lithuania, and former Ambassador of Lithuania in Kazakhstan, to comment on the situation.

I agree with those, who say that the law should be adhered to. The rules of the European Union did not come from nowhere, nor are they artificial. They reflect the interests, infrastructure, safety and security requirements of all the EU members. If the European Union and its citizens keep to the rules and requirements of the Eurasian Union based on certain agreements, it is only natural and logic that the citizens of this union, including the transport participants, must adhere to the rules and requirements of the European Union.

They can be imperfect. So, we need to try to improve them, making suggestions on what should be changed and giving a reasonable motivation.

I also agree with those, who raise questions and invite for a discussion. Only open discussions produce best solutions, while fair cooperation helps to reduce possible risks.

There are no universal solutions. But there is the good practice that we can follow. These include the Integrated Border Management (IBM), I-declarations and the UTD, applied in a larger region.

On the other hand, Lithuanian state institutions should be flexible, but not bendable... If we can help companies both from Lithuania and Kazakhstan, then our support will confirm that business in Lithuania is attractive, while institutions – friendly and attentive.

The transport success in the future will mostly be determined not by small local conflicts, but open information, innovations and digitalised transport market. That is the future. We should not be afraid of innovation and change in order to build our future however we want it. Thus, imperfect rules can and must be improved and changed too. The only untouchable book is the Holy Scripture.

Information from JŪRA MOPE SEA.

 

The magazine SEA has been published since 1935
International business magazine JŪRA MOPE SEA has been published since 1999
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Ltd. Juru informacijos centras


The magazine JŪRA has been published since 1935.
International business magazine JŪRA MOPE SEA has been
published since 1999.

ISSN 1392-7825

2017 © www.jura.lt