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Article by Alexander Ostrovsky, Ambassador Extraordinary and Plenipotentiary of the Republic of Belarus to Finland, “Transit Potential of Belarus” in the edition “Baltic Rim Economies” (February 2015)

The route from the Varangians to the Greeks was first mentioned in the Primary Chronicle, but its effects were reported much earlier, in the early 10th century. It was a major route between Scandinavia, Northern Europe, rich Byzantium and the East, which prompted the traders to use the logistics of present-day Belarus, Russia and Ukraine. That was a long-distance way which began in Scandinavian trade centres, crossed the Baltic Sea, entered the Gulf of Finland, followed the Velikiy Novgorod, and in today’s Belarus – along the Dnieper, and passed through Kiev entering the Black Sea.

At the time of the collapse of the Soviet Union, Belarus served as a cargo transshipment base for the countries of the Council for Mutual Economic Aid and the EU. Given this history, the article is intended to brief on the level and quality of the logistics supply in Belarus in the context of global trends of these services development.

Located at the intersection of highways, Belarus endeavours to obtain the status of an international center for goods transfer. Its strategic geographical position is highly favourable to the development of logistics centers en route for Europe and Asia.

Belarus’ high transitivity owes to five E-category roads of the 2nd and 9th international transport corridors that cross the country: Number 2 Berlin–Warsaw–Minsk–Moscow–Nizhny Novgorod; Number 9 Helsinki–St.-Petersburg–Moscow/Pskov–Kiev–Chisinau–Bucharest–Dimitrovgrad–Alexandropolis, Number 9B Kaliningrad/Klaipeda–Kaunas–Vilnius–Minsk–Kiev–Odessa. The key road corridors are now being upgraded to the 1st category standard with dual separated carriageway, paved shoulders and controlled access.

The present-day transit potential of Belarus is framed by geo-economic conditions and exploitation of the benefits. Transport is an important economic sector in Belarus. The sector generates large state budget revenues from transit services, facilitates internal and external trade, contributes to the country’s balance of payments and accounts for about 6% of total employment in the country.

The annual European cargo turnover through Belarus exceeds 100 mln t, of which nearly 90% fall to Russia-EU share, whereupon Belarus fully ensures transit efficiency and safety.

Belarus has been a net exporter of practically all modes of transport services, which is especially true for automobile and railway transport. Most of the revenues in the roadway sector are provided by transit round-trip transportation.

One of the specific obstacles to the development of transport services sector, which according to the judgmental forecast will dominate world service market in the near future, is an underdeveloped transport logistics. However, there is certain progress. In 2009 the share of the logistics component in Belarus’ GDP barely exceeded 1%. Today the logistics accounts for about 7.5%.

Belarus is set to increase investments into construction and development of the logistics centers and is drafting a “road map” for the sector development until 2030. It is expected that in 2015 these investments will amount to about $1 bln, while financial investments into logistics development in 2014 – $150 mln. The expected growth of the logistics space is 150,000 m2.

According to the Logistics Performance Index 2007 (LPI), Belarus outperformed its CIS peers in three areas: efficiency of customs clearance process, transport infrastructure, and shipment tracking and tracing (the latest LPI does not include Belarus).

It is clear that Belarus needs to make a more active use of logistics outsourcing. In that regard we study extensively the experience of our Chinese partners whose share of outsourcing for the transport service market is 48%.

Belarus does have the equivalent of a national transport strategy and action Plan, but the key pillars for its transport sector are: the Strategy for the Development of Transit Potential of the Republic of Belarus for 2011–2015, and the Concept of Belarus’ Transport System Development. The latter defines the goal, priorities, tasks, key focuses and parameters of Belarus’ transport system development until 2025 including mitigation of impacts generated by and 2 emissions.

Challenges in logistics facing Belarus today include:

  • attracting investors in the transport and logistics sector;
  • acceleration of logistics development through the use of foreign experience and adoption of the relevant technologies and guidance methods;
  • ensuring legal conditions for the development of logistics services market;
  • promoting competition in the logistics market;
  • providing comprehensive and simultaneous development of logistics infrastructure facilities;
  • ensuring the coordination of the various elements of the logistics market;
  • simplification of taxation and workflow for logistics operators;
  • liberalization of customs legislation in the field of transit of goods.

It is blindingly obvious that the development of the market of transit services in our country is inextricably linked to the general geopolitical and economic transformations in Eurasia. For the last 10-15 years, there has been a downward trend observed in the capital and service flows between Western Europe and the Asia-Pacific region as a share of the global volume. Nevertheless, Belarus is ready to ensure stock movement between West and East in present and even larger volumes.