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Friday 22.02.2019 | Name days: Rigonda, Adrians, Ārija

BATL: we hope the new transport minister will put an end to ‘feasts' at ports and LDz

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUBaltic Association – Transit and Logistics board member Ivars Landmanis says the industry expects the new transport minister in Latvia to sort things out to improve the industry’s international competitiveness. «This includes implementation of rather brave reforms for railway freight and port administration, which is something the industry has either not seen at all or something that has been implemented very poorly.»

Considering the commitment of Latvia’s new transport minister to implement objectives detailed in the government declaration, as well as his own professional work in the transport sector, BATL believes the minister could pull it off.

BATL stresses that the new minister should first and foremost establish a dialogue with representatives of all players in the industry, not maintain the same «dogs bark, caravan continues» approach. «I cannot comment on other transport sectors, but in transit sector, representatives of private companies – ones that attract cargoes and secure income for LDz and ports – are left ignored, their opinions are simply not taken into account. Current policy-makers, port administration and state capital associations largely continue pushing their own agenda and lobby it through different associations that represent them.»

BATL mentions the assessment of the work performed by LDz, considering indexes of recent years show that resource use and investments remain ineffective and continue having a negative effect on railway freight costs, as one of the main topical directions for work. «It is important to optimize costs, primarily putting an end to unrelated costs, such us sponsoring and advertisement projects. It should be reminded that LDz’s main function is ensuring modern and effective infrastructure and its maintenance, not cargo freight.»

Landmanis adds: «In a situation when a relatively small Latvia has to compete globally, it is important to make sure every transit section ensure processes are made more efficient. Otherwise it turns out that while transit industry has entered lean years and all people working in the industry have tightened their belts as far as they can, LDz continues feasting at other people’s expense! The company should be reviewed and modernization should be performed with a specific goal in mind – reduce long-term costs, increase efficiency and competitiveness. LDz presents a unique case that does not fit the definition of improved efficiency of processes, because its administration, development strategy and modernization efforts have only caused costs to go up, which requires carriers and clients to cover compensate costs for the entire industry. The association and industry experts had previously pointed towards existing problems. Unfortunately, LDz has yet to react to any of them and change its processes. It should be said that Transport Ministry under the Union of Greens and Farmers has left this problem with no attention all these years.»

Putting an end to the monopoly situation in the railway sector is also a priority objective, because it goes against free competition. This is especially present for cross-border or «the first mile», in which cargo freight is only permitted to be performed by LDz subsidiary LDz Cargo, which applies tariffs based on its own views, BATL experts say.

‘LDz thereby creates unfair competition is created for cargo carriers, as only LDz Cargo is authorized and lobbied for rolling stock registration, transportation coordination for cross-border movement, cargo reception and cargo document preparation. As a result of all this, cargo freight market remains closed for free competition, causing private cargo carriers to suffer because they are forced to overpay for services provided by LDz,’ BATL comments.

The association supports the initiative in favour of also sorting activities of Latvia’s largest ports to further improve their administration.

«Members of the association are preparing proposals for improvement of port and railway function to be included in the government plan. I can personally say we most definitely need to improve the function of ports by using principles of capital association management from OECD member states as foundation. We should review the order of approval of board members, establishment of their responsibilities, duties and functions, terms, etc. I agree it is necessary to replace the existing port administration model if there are more appropriate ones. What is most important is excluding the role of municipalities and making sure their main goal is not making profits from increasing costs of use of the transit corridor. One way or another, experience shows that the management model in ports should be changed every now and then. Klaipeda port is a good example. Last year, Lithuanian government decided to reform Klaipeda port’s directorate into a state joint stock company. Lithuanian state and Klaipeda municipality are shareholders there, and the port is required to secure state and municipal interests,» comments Landmanis.

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