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President Vladimir Putin: Good afternoon, colleagues!

This joint session with the Marine Collegium is devoted to developing sea transport infrastructure. I spoke about the importance of this sector for Russia a week ago in the Address to the Federal Assembly.

This form of transport, which accounts for almost 90 percent of all international cargo traffic in the world, has particular significance and is very much in demand. Around 60 percent of our foreign trade freight turnover is transported by sea.

Sea transport encompasses the ports, the ships themselves, and freight terminal facilities. It also encompasses modern means of ensuring safe shipping and navigation. This all makes for a diverse and complex system overall. Today we have seen this for ourselves: the governor, the ministers, our colleagues who work here in the port, gave a lively and interesting description of how each component in this infrastructure plays its part. It is therefore all the more important to ensure coordinated development of all these different elements in our country’s sea transport system, above all in order to make it more competitive.

I remind you that the Marine Doctrine, adopted for the period through to 2020, makes this a priority. After all, Russia’s effective integration into the global transport system – and its overall economic development — depends on having a competitive sea transport system.

There are already generally accepted criteria and parameters for the competitiveness of sea transport in the world, above all, the existence in a country of ports with high throughput capacity and a large transport fleet. Also needed are effective auxiliary structures working in logistics, expediting, customs services and related transport services.

The State Council’s working group and the Marine Collegium have carried out a thorough analysis of the situation in the sector, and the documents you have received set out a number of concrete proposals. I suggest that we take a look now at what I consider to be a few of the most important points, perhaps indeed the key areas for action.

The first priority is to develop our sea ports. Russia currently has 62 port enterprises in operation, but as I have already said, much of our freight traffic continues to go through foreign ports, unfortunately. The reasons for this are well known: our enterprises and institutions, our ports, do not meet modern standards and do not measure up to the demands of the Russian economy today. This applies to the big ports on the Baltic and at Novorossiisk, in the Far East and on the Far North sea routes.

The government needs to come up with an urgent package of measures to develop these ports first of all. A specific action plan needs to drawn up for each individual port. There is no time to wait until the relevant laws are passed, and their passage should also be speeded up. I think that with this aim in mind, the Marine Collegium should take charge of coordinating work to develop the sea ports. Sergei Borisovich [First Deputy Prime Minister Ivanov] heads the Marine Collegium, and we have already discussed how this coordination should take place. There were even proposals to create a special group, but I agree with those who say that the Marine Collegium could take responsibility for this work, all the more so as it has representatives of all the agencies involved.

The need could arise to amend the current federal targeted programme, Modernisation of Russia’s Transport System. I stress that our priority is to boost the capacity of ports that are part of the system of transport corridors. We need to build new facilities and modernise existing port facilities, and this will enable us to increase our country’s transit capacity substantially. We also need to develop the road and railway infrastructure around the country’s major ports and along the routes leading to them, and we need to create the conditions for ensuring that all cargo is delivered on time and without any loss of quality. Only through competent management can we ensure that our ports are able to meet these demands, and this competent management needs to extend right throughout the transport and technology chain.

It is clear that we will need to develop big logistics centres in order to resolve these problems. These centres need to meet the demands of both Russian and foreign users.

These kinds of projects for the strategic planning of port development are urgently needed today, but they can be carried out only on a public-private partnership basis. This is particularly true of port infrastructure organisation and freight traffic management projects.

I also think it important to establish free economic zones with preferential tax regimes in our biggest ports. Such projects must be based on a corresponding law, of course, and we need to pass such a law without delay.

Furthermore, we need to resolve all land use issues in port areas this year. Practice shows that this is one of the key problems holding back development because 50 percent of the red tape involved is just about sorting out land use issues.

The next issue we need to examine is the current state and development of the country’s sea transport fleet. Russia currently operates more than 1,500 ships with total deadweight of around 15 million tons, but 60.3 percent of this tonnage is operated by Russian ship-owners under foreign flags of convenience. The number of ships operated in this way is growing all the time and has almost quadrupled since the start of the 1990s. The average age of ships operating under flags of convenience is around nine years, while the average age of those operating the Russian flag is 24 years.

The shipping fleet has been undergoing a modernisation process over recent years. But new ships are mostly being built at foreign shipyards. As I said in the Address to the Federal Assembly, we have decided to establish the United Shipbuilding Corporation and we think that this decision will help improve the situation in the shipbuilding sector, which today is not in the best state.

I should also note that over the last 15 years, the shipping fleets have decreased 4.8-fold. The Baltic shipping fleet no longer exists, for example, while the Far East fleet has decreased by almost 66 percent.

This all indicates that not enough attention is being paid to shipping issues. I think the government must draw up measures for speeding up development of the shipping fleet, including the passenger fleet. The average age of passenger ships is more than 30 years, and all transport on international routes is now being carried out by foreign fleets.

We also need to put in place the conditions for ships to make a gradual transition to operation under the Russian flag. We need to begin this work without delay and taking into account the proposals made today.

While we are here in Murmansk we must also examine proposals to modernise the Arctic transport system. This applies to the Arctic ports, the transport and icebreaker fleet and navigation and aviation support for ensuring the use of the Northern sea route.

I also want to note in particular that sea transport is playing a greater part with every passing year in developing Arctic oil and gas deposits. We expect a considerable increase in transport of energy supplies in the western region of the Arctic by 2015 – up to 40 million tons according to the forecasts. This means that we not only need to actively develop the Arctic transport system but also take environmental protection measures (we all know how fragile the ecosystem is in this region) and work overall to ensure Russia’s strategic economic, scientific and defence interests in the Arctic.

We have a wide range of issues on the agenda today. In my opening remarks I have mentioned the main points, but these are just a few of the issues that we need to resolve in the sea transport sector.