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Bucharest Academy of Economic Studies
ASE
International Economic Relations

The key role of international road transport in the
economic integration of the Moldovan economy into
the EU economic circuit
International Transport Thesis

Potloja Maxim
REI 955 Series D Yr3
2012

Coordinator: Cojocariu Cezar, Ph
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Introduction………………………………………………………………………………
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1 Background…………………………………………………………………………………………………………………
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2 Scope………………………………………………………………………………………………………
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3 Overview…………………………………………………………………………………………
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Moldova…………………………………………………………………………………………………………………6
2
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6
2
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12
2
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13
2
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……………………15
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6 Popular trucks in use…………………………………………………………………………………………………
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7 Environmental Impact………………………………………………
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Austria…………………………………………………………………………………………………
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1 Background…………………………………………………………………………………………………………………25
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…………………………………………26
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……………26
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Conclusion……………………………………………………………………………………………………………29
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2 Evaluation……………………………………………………………………
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3 Recommendations………………………………………………………………………………………………………30
5
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Introduction
1
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Situated between Romania and Ukraine, it has been an independent state since the
Dissolution of the Soviet Union in 1991, becoming officially recognized by the United
Nations in 1992
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Coat of arms of Moldova

Map of Moldova

Flag of Moldova

Moldova is a member to the Council of Europe and is currently attempting to join the
European Union
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Also Moldova is currently benefiting of EU’s Autonomous Trade Preferences regime which
grants Moldova access to EU markets duty free, on some of its largest agricultural products,
such as wine, barley, maize and wheat
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g
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3

The country’s boarders are mostly made up by the two large rivers that run along: Prut and
Dniester
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The section for navagation
of large vessels is of respectively 40 km and 556 km
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However things might change once
the petroleum terminal at Giurgiulesti is completed, as currently the infrastructure in the
area only allows for storage of gasoline and diesel; as water transport has its advantages
such as being greener and relatively cheaper
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Currently the railway transport plays a
significant role in Moldovas import and export economy, as for the longest time that was
the only way to travel and transport goods with
...
This is
because these countries use a different gauge from Central and Western Europe
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It can take a minimum of 3 hours for a simple passanger train with under 10 cars
to have all of its gauges replaced
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Compared to
neighboring and EU Accession countries, Moldova has an on par rail network density
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It transports about 2,000 tons of cargo per year on
average, which makes it a very small airport by volume
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1
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I will be doing this by:
 Reporting the most up-to-date information regarding road transport and its logistics
 Analyzing the gathered information
 Comparing the fleet of trucks in Moldova to a EU member state’s
 Present the technological level, its progress and evolution
 The environmental impact and the imposed requirements and movement towards
greener vehicles
...
3

Overview

I will be analyzing the infrastructure, the most popular freight forwarding company in the
country, the type of trucks being used and also talk about the carbon footprint left by them
as there is a general movement towards reducing emissions
...

In some respects Austria is similar to Moldova, in that they are both surrounded by other
countries and lack sea access and for this water transport plays a much smaller role in their
transportation industry
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5

2
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1 Economy
Moldova’s geographical location between Western Europe and CIS2 gives the country a
strong economic potential, as being a border state between the two regions it can benefit
from trade and act as the middle-man in trading
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Moldova has shown an impressive economic growth from 2000 until 2008
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At the start of 2009:




GDP dropped by 7
...
2%
Foreign direct investments dropped by 42
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And
as such growth has somewhat halted
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2

The Commonwealth of Independent States (CIS) is a regional organization whose members are ex-Soviet
Republics, which were formed during the breakup of the Soviet Union
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GDP by sector, of Moldova
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Fast forward ten years and the most dominating sector, with ½ of the GDP, is comprised
by Services
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And Agriculture while still a strong presence is in a declining phase
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Industry was able to maintain its quota of 19% and Agriculture has been reduced to
1/10th of what it was two decades before
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Moldova’s agricultural sector which, as seen above, suffered the most changes and as such
decreased its consumption internationally and domestically
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This is a direct result from the Central European countries joining
the EU, and more significantly Romania, with which Moldova shares a boarder
...
So the gateway for Moldova’s diversifying exports is
quite literally at their door step
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5% whereas to the Commonwealth of Independent States 41
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In 2010 Moldova requested a three-year arrangement under the extended credit facility to
the International Monetary Fund
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Their opinion is that Moldova’s current economic
situation is situated in such a way that it allows for improvement
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7

Figure 2
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(Source: The Observatory of
Economic complexity)

Figure 3
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(Source: The Observatory of
Economic complexity)
The largest portion of Moldova’s imports is refined petroleum oils, this is due to Moldova
not having sufficient mineral resources and as such must import all of its energy supplies
from Russia
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Once again in 2009 gas supplies were cut to Moldova
8

during a week long dispute between Russia and Ukraine; as Moldova is engulfed between
Romania and Ukraine, it does not have a direct link to Russia, and as such all the oil pipes
must pass across Ukraine
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The most common sight
is seeing car carriers, which are trucks with many passenger cars loaded onto its trailer
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Moldova’s import from countries - graphical representation
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Moldova’s import from countries - numerical representation
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China and Germany each
12%
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Romania exports
clothing to moldova, such as garnishes and breeches
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Figure 6
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(Source: The Observatory of
Economic complexity)

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Figure 7
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(Source: The Observatory of
Economic complexity)
As Figure 6 shows Wine from fresh grapes is
Moldova’s largest single exporting good; this
comes to no surprise as Moldova is
renowned for its fields upon fields of grape
making Moldova quiet established in the
wine industry
...

72% of Moldova’s vineyard acres are used for commercial production, of which the
remaining 28% are used by vineyard owners in the manufacturing of home-made wine for
personal use
...
e
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So on one hand
agriculture accounts for only 25% of the GDP; it’s the major exporting industry of Moldova
...


Figure 8
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(Source: The Observatory
of Economic complexity)
3

The list of the top 40 wine-producing countries is ranked via the calculated by volume of wine production in
metric tonnes by the Food and Agriculture Organization (FAO) which is an agency within the United Nations
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Moldova’s export to countries - numerical representation
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Which compounded with the Moldova’s participation in several free
trade agreements between countries from the CIS (12 former Soviet republics), bilateral
Romania-Moldova free trade area, and many other individual European countries which
today have become EU member states
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However, there still remain significant legal disputes which affect
Moldova’s relationship with the CIS which directly affects the exports between those
territories
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2 Legal issues
In 2006 Russia declared an import ban of Moldovan (and Georgian) wines, due to claims of
heavy metals and pesticide traces being found within them
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This leads Moldova to believe that the ban is an economic blackmail, because Moldova was
considered as having “anti-Russian policies” by the Russian government
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And new wine importing partners had to be made, which involved
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coming up with new trading routes
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There have also been stern constraints between the Ukraine and Russia which due to not
having found adequate dispute settlement deals with one another endangers the free trade
agreement between Moldova and the CIS countries; as Ukraine acts as a transit country for
CIS access to Moldova
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Regional transit fees for instance were demanded to be paid to Ukraine in local
currency at very high exchange rates
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So to this day a free
transitional environment has yet to be achieved
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With increasingly limited access to the East,
Moldova’s only chance is to shift towards the West
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2
...


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Figure 10
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(By: Index Mundi)
The entries displayed count the total length of all roads within Moldova’s road network
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At present the Moldovan road network is made up of 16,800 kilometers of road, of which
around only 10% is in good condition, i
...
up to European standards, which is due to the
very long time it has taken for the Moldovan government to act and begin investing heavily
into the infrastructure
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A research conducted in 2004 concluded that upgrading
road quality would save upwards of 20 million Euro annually
...

Between 1995 until 2002 an equivalent of 0
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In order to become more competitive with neighboring
countries, a minimum of 1% of the GDP should be used; or upwards of 12 million Euro
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Figure 11
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(Source:
World Bank - 2002)

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Figure 11 is a comparison between surrounding countries and the graphical representation
of the percentage in relation to its GDP that is each country spends yearly on maintenance
and administration of its national road network
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The largest investment by far to date came from the
European Bank of Reconstruction and Development (EBRD) co-financed with the European
Investment Bank (EIB) which financed €75 million in sovereign loans with the purpose of
rehabilitating Moldova’s national road network and to support the transport infrastructure,
in 2010
...
The EBRB has been financing the rehabilitation
of Moldova’s roads from as early as 1995
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The International Monetary Fund has also provided Moldova with over 80 million Euros
from a loan of €370 million in Special Drawing Rights to fund the restoration of Moldova’s road,
with the intent of promoting exports by improving Moldova’s business environemnt
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4 Road Transportation and Logistics
Moldova’s trucking companies have the lowest operational cost in Europe
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This reduces the amount of transporting permits
these companies receive from other countries
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In early 2000 there were no major European freight forwarding firms operating in Moldova,
due to the small size of the market and cost-inefficient administrational procedures
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imposed by the government
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The range of services, quality and their reliability are
very low
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The trucking industry in Moldova is made up by three different types of operators:
1
...
Operators with bilateral permits, for CIS trade
3
...

This means that the only way to access into the EU is by upgrading the fleet of trucks, but
the shift to higher standard vehicles reduces the cost benefits of Moldova, and will reduce
the profits the companies in the transport sector make
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In Moldova however the most common way of
purchasing of new equipment for trucking companies is using own equity, due to high
interest rates and monthly leasing fees
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Comparison of the Compliance of the Moldovan and Latvian Truck Fleets (%)
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As Figure 11 shows, there wasn’t a single registered
truck in 2002 in Moldova, with scarce percentages of Euro-2 and Euro-1 standards4
...

4

European emission standards have presently 5 classifications, with two more recently proposed and still in
discussion
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Euro 4 having the lowest emissions at
present and as such being the best figure
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The compliance with Euro standards is what determines the number of permits that are
issued to road haulage firms; therefore the better the truck fleet in Moldova will evolve and
the greener they become, the more opportunities there will be for its international
transport towards the EU
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Freight Traffic Usage
Road

Rail

28%
72%

Figure 12
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(Source: TransInfo)
The pie-chart above does not include Air and Ship transport as play practically no role in
freight cargo transport of goods, as they are mostly used for passenger transport
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And its
trend is on the rising; therefore the Rails are being used less and less as road infrastructure
continues to be improved by foreign financing
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Multiple stops can be made during the transportation of goods so it provides
“door-to-door” service
...


17

In 2002 the Agency for the International Automobile Conveyances of Moldova (AMTAI)5
collected statistics at the boarder stations on Moldovan trucking firms
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1/10th of
Moldova’s fleet of international freight was engaged in transportation from CIS countries to
other countries: such as transport of Russian goods to Turkey, Greece or Romania
...


2
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Truckload shipping by definition is the movement of
large quantities of homogeneous cargo, in semi-trailers or intermodal containers
...

It has evolved from an average transportation company to one with a modern fleet
of vehicles

5

Agency for the International Automibile Conveyances of Moldova (AMTAI) was a governments owned agency
which since then has been shut down and its functions passed down to Moldova’s Ministry of Transport and
Roads
...

Trans Ager is also the only company in Moldova which offers heavy truck towing services; so
when a large truck gets stuck, has failures or other technical problems, they can be called to
transport the truck
...
So it is a very
fruitful operation
...
6 Popular trucks in use

As the picture above shows, Trans Ager’s fleet is predominantly made up by MAN trucks
...

The MAN F2000 is also winner of the coveted International Truck of the Year award, which it
won in 1995
...


6

International Association of Road Hauliers of Moldova (AITA), founded in 1992, is the freight transport
organization of Moldova
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It assists it’s
members at issuing TIR carners (19,600 in 2000), transport authorizations and other logistical assistance
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One of the
biggest truckload carriers in Moldova has a decade old fleet of trucks which is way out of
sync with the current demands for fuel regulations
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ZiL or Zavod imeni Likhachova, which literally means "Factory named after Likhachov" is one
of the largest trucks and heavy equipment manufacturers in Russia
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During the 30’s up until 1956 the company was in fact called as ZiS, or Zavod imeni Stalina;
after Joseph Stalin
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One of the most popular and iconic trucks from the Soviet era is undoubtedly the ZiL-130
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During its three decades of production,
3
...
What made it stand the test of time and become so
popular was the variety of modifications and designs it came in as well as the simplicity and
reliability of said truck
...
e
...
Where it still can be seen on a daily basis
running in the capital of Chisinau and very likely around the country; mostly for daily
deliveries to and fro stores and shops
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The original basic ZiL-130 model has a fuel consumption of 38 liters for every 100 kilometers
traveled
...
Engine’s with an “s” because there
are very many models of engines, with different horsepower and fitting in different
European emission standards7, the best diesel engine having the least amount of toxic
emissions of Nitrogen Oxides, Carbon Monoxide, THC, NMHC and PM is a Euro 3 engine
variant
...

A secondary benefit from the diesel engines is the exceptional increase in torque
...
Diesel engines due to their construction and operation
have naturally a significantly higher toque than petrol engines
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This is distinctly
important for the ZiL-130 since the roads in the countryside are not as of high quality as the
asphalt in the city; include mud, dirt and uneven terrain and a truck can get stuck easily and
have difficulty in driving off
...


Clearly the diesel engine offers a quiet significant benefit to the truck, in addition to the
reduced level of emissions and reduced fuel consumption
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The classification starts from Euro 1, which has the highest emissions and as the level of NOx drops
by grams per kilometers (g/km) the Euro figure increases to 2, 3 and 4
...
Currently Euro 5 and 6 are being drafted
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7 Environmental impact
In the past, 15 to 20 years ago, the amounts of toxic gases expelled into the air in Moldova
was dominated by the Industrial sector
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Vehicle
Type
Cars
Busses
Trucks <3,5 tonnes
Trucks >3,5 tonnes
Total

CO
2255
2275
5337
2679
9546

Toxic substances emissions (1
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1
305
286
895
417
139
45
1709
1316
222
52
...
7
0
...
09
1
...
66
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Figure 13
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(By: Maxim Potloja)
Road transport accounts for the largest part of toxic emissions into the atmosphere in
Moldova, as it’s the most used means of transportation of people and especially
international transport of goods, in and out of the country
...


Figure 14
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(By: Norbert Dentressangle)
Figure 14 shows the evolution of the Euro standards for emission
...
The trend is to lower the amount of all pollutants by
as much as possible and as quick as possible
...

Therefore a truck which uses less fuel will have a smaller carbon footprint
...
The more aerodynamically
efficient the shape of the truck is, the less air resistance there will be for it
...
This
means that an engine in such a truck will burn less fuel, than an engine which must
produce more power to overcome the friction with air
...

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

Where possible, the top freight companies who have access to multiple methods of
transport, tend to combine shipping, as to reduce their companies’ emissions
...




Changes in truck development also bring forward new technological alternatives, such as
the development of hybrid diesel-electric trucks, so as to not always rely on diesel
trucks
...
) design, in order to
have better fuel economy and increase fuel efficiency
...




Quickest routes must be selected in order to lower the distance a truck must travel,
which will save the company fuel consumption money and also reduce pollutants
produced
...


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3
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1 Background
Austria is a well developed market economy and has a large service sector and receives high
demand in foreign exports for Austrian goods
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Austria has 200,000 kilometers of motorways, all of which is paved (100%)
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1 million
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1% in comparison to 2010
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Modal split of Freight Transport usage – Austria 2012
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Therefore the numbers of
new vehicles being purchased and replacing aging fleets has fallen significantly
...

25

As many of the trucking companies took a blow when the recession stricken and due to
demand for purchase of goods lowered, so did the need for goods to be transported
...
2 Truckload Carrier – LKW Walter

LKW Walter logo









LKW Walter a transport organization is the market leader for European full truck
loads
...

It was established 88 years ago in 1924
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LKW Walter has over 1,000,000 full truck loads transported each year and has had a
turnover in the last year of 1
...

Their analysts are expecting another turnover of 1
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Over 3,500 daily FTL orders
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They have achieved market leadership through permanent innovation and adaptation to the
changes in the transport industry and economic development
...


3
...

LKW Walter’s most iconic and popularly used truck is the DAF XF which has the most
appearances in LKW Walter commercials and other advertising media
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DAF exists as a
company since 1928 and produced their first truck in 1949
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As with all successful truck models, the XF has also had adaptations for army usage
...
In
April 2012 DAF announced that Euro 6 engines specifications have become available, which
further reduces toxic emissions by over 75% in comparison to Euro 5 engines
...

The DAF XF truck is equipped with a 12
...

DAF trucks have a reputation for having the most economical trucks in Europe, which
reduce expenses on fuel by 10-15% n comparison to other trucks
...
4 Environmental Impact
LKW Walter has a strong self-imposed responsibility in their impact on the environment
...

Since the 50’s the company has been planning for truck trips which transported cargo to
reduce empty mileage; therefore they would plan the trip in such a way that the way to and
fro, the truck would always be actively working and transporting goods
...

In addition to the normal road transport trucks LKW Walter also offers combined transport
of road and rail and short sea shipping, which has also significantly helped reduce the total
emissions the company makes annually
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LWK Walter also cooperates with international environmental organizations which help to
improve the environmental standards
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4
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1 SWOT Analysis
Strengths




Geographically positioned as an
intermediary between West and East
(EU and CIS)
Lowest operational cost in Europe
Export demand increasing

Weaknesses







Opportunities





Substantial investments and loans
from various organizations and
countries into enhancing of road
infrastructure
WTO leverage as a member
EU dominates Moldovan exporting
destinations

Political instability
Inadequate monetary policies
Corruption
Aging truck fleet
Poor Euro standards
Poor infrastructure

Threats


Ukraine produces
trading with CIS

difficulties

in

4
...
Moldova clearly has a lot of potential in its reach and
is located as the cross-road between EU and CIS, which offers tremendous opportunity from
growing from its exports
...

The demand for Moldovan exported goods is on the rising and the only thing that needs to
be covered is the enhancements of the infrastructure, which will allow for more goods to be
transported to destination countries as well as faster and fresher (as the majority of exports
are perishable goods)
...


4
...
Economically it’s been proved that it will save a significant amount
of money from the state budget if it’s invested into maintaining the roads, rather than
repairing the damages caused by bad roads
...
This in turn will benefit the state and will make Moldova more competitive on
the international market
...


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5
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Bureau of European and Eurasian Affairs, July 2011, Background Note: Moldova
http://www
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gov/r/pa/ei/bgn/5357
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John Clancy, Helene Banner, December 2011, EU launches trade negotiations with
Georgia and Moldova
http://europa
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do?reference=IP/11/1504&format=HT
ML&aged=0&language=EN&guiLanguage=en
3
...
lkw-walter
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uk/en/company_profile
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World of Moldova, Transport in Moldova
http://www
...
com/ru/transport/transport-in-moldova/
5
...
wikipedia
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Anonymous, June 2011, Transport in Moldova
http://en
...
org/wiki/Transport_in_Moldova
7
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wikipedia
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Amo-ZiL, 2011, Zavod imeni Likhachova
http://www
...
ru/
9
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lefora
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CIA World Fact Book, May 2012, Austria
https://www
...
gov/library/publications/the-world-factbook/geos/au
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Evan Armstrong, February 2012, Top 25 Global Freight Forwarders
http://www
...
com/top25_ff
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NationMaster, 2007, Transportation stats: Austria vs Moldova
http://www
...
com/compare/Austria/Moldova/Transportation
13
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europedia
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eu/books/Book_2/6/20/03/01/index
...
europa
...
eu/legislation_summaries/transport/road_transport/index_en
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European Commission, 2006, Road Transport Policy
http://ec
...
eu/transport/road/doc/road_transport_policy_en
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http://ec
...
eu/transport/logistics/freight_logistics_action_plan/action_plan_e
n
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Anonymous, 2010, The European transportation industry
http://www
...
com/dissertations/transportation/the-europeantransportation-industry
...
European Commission, December 2011, Road freight transport statistics
http://epp
...
ec
...
eu/statistics_explained/index
...
European Commission, July 2010, Competitiveness in EU road freight transport
http://epp
...
ec
...
eu/statistics_explained/index
...
SovAvto Website, June 2002, Zil 130
http://sovavto
...
htm
21
...
net/zil/133-e
...
B2B marketplace, March 2010, Diesel Engines To Re-equip ZIL-130 Trucks
http://www
...
com/productfree/117016717/Re_equipping_ZIL_130_131_trucks
...
B2B marketplace, March 2010, Diesel Engines To Re-equip ZIL-130 Trucks
http://www
...
com/productfree/109440837/Automobile_diesel_engines_EURO_3
...
Alexander Simoes, Trade in Moldova
http://atlas
...
mit
...
Anonymous, May 2012, 2006 Russian ban of Moldovan and Georgian wines
http://en
...
org/wiki/2006_Russian_ban_of_Moldovan_and_Georgian_wines
26
...
worldbank
...
pdf
27
...
wikipedia
...
International Monetary Fund, April 2011, IMF Country Report No
...
imf
...
pdf
29
...
ebrd
...
shtml
30
...
ebrd
...
shtml
31
...
osw
...
pl/en/publikacje/osw-commentary/2012-05-28/ukrainebelarus-and-moldova-and-chinese-economic-expansion-east
32
...
V
...
daf
...
aspx

32

33
...
V
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paccar
...
pdf
34
...
youtube
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World Bank, December 2002, Moldova: Transport Strategy Update With Emphasis on
the Road Sector
http://siteresources
...
org/INTMOLDOVA/Resources/transport_update
...
Norbert Dentressangle, February 2012, Europe’s leading transport company, Norbert
Dentressangle, takes delivery of the very first EURO VI truck
http://www
...
com/Supply-Chain-solutionsservices/News/Europe-s-leading-transport-company-Norbert-Dentressangle-takesdelivery-of-the-very-first-EURO-VI-truck
37
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statistik
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Trans Ager SRL, 2011, Trans Ager
http://www
...
md/ru/
39
...
R
...

http://totul
...
html
40
...
wikipedia
...
Truckplanet, Man F2000 Evolution
http://www
...
com/catalog/model
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Consulate of Moldova, 2011, Business Opportunities in Republic of Moldova
http://www
...
in/business-opportunities
...
IndexMundi, June 2012, Moldova – gdp
http://www
...
com/facts/moldova/gdp
44
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50megs

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